Less choice but more diversity
A recent New Yorker article by James Surowiecki
talks about the industry segmentation issues in the proposed merger between the two US satellite radio companies XM and Sirius. He expands some of the points we have already proffered.
As he points out, "Thanks to an intellectual revolution that, over the past three decades, has transformed the way the government assesses mergers and monopolies, we may yet end up with only one satellite-radio provider in America."
The issue he argues is how we define the market segment in which the two satellite company, both bleeding money, are competing. As he notes, many who might get the service are holding back until they see which one wins in the end.
The point is that they have plenty of radio competition, especially from the broadcast chains. In fact, the loudest voices for prohibiting the merger come form the tradition broadcast chains.
But more important may be the way in which once very demanding antitrust regulation has settled down into an exercise in measuring what might hurt the consumer as a basis for taking action against a deal.
And by that measure, the merger won't have any negative effect, Surowiecki argues. "XM and Sirius, which offer real diversity across three hundred channels, are a gain for consumer choice. And there's no reason to think that this diversity would ebb after a merger; no one wants to pay thirteen dollars a month to hear the same songs he could have got free from his local KISS-FM."
Allowing satellite radio a chance at profitability will tend to give typical listeners more variety not less. As he puts it "Paradoxically, by reducing choice you could stimulate more diversity. "
