This paper assesses a common view that has surfaced recently in a growing number of Government, industry and academic studies, that first claims streaming media services are likely to have adversely affected competition in media markets (both screen and music), and second recommends additional regulation of competition, or market power in streaming media markets. This paper exposes a number of common fundamental mistakes in the economic analysis underlying this view, in order to minimise the risk these mistakes are perpetuated, and adversely affect law and policy.For this purpose the focus of analysis in this paper is on an assessment of a 2021 report commissioned by Screen Producers Australia (SPA), and prepared by Lateral Economics (LE) that focuses on screen production in Australia. The LE report is fairly representative of analysis that promotes competition law interventions into streaming media markets globally for two reasons. First the LE report is fundamentally based on the hypothesis that there is significant oligopsony market power, indeed LE claims a “profound imbalance in market power”, in this case between buyers and production companies in the screen production market in Australia. Second LE recommends additional regulation. Specifically LE recommends adoption of a UK-style terms of trade regulatory regime for the screen production market in Australia. The regime would regulate screen production contracts, and essentially require collective bargaining between a coalition of screen producers represented by an industry peak body (i.e. SPA) on the one hand, and streaming companies, as well as commercial and public service broadcasters on the other. LE recommends that the Australian Competition and Consumer Commission oversee this.I explore four common general mistakes made by those advocating more regulation of competition in streaming markets, that are clearly manifest in the LE Report. The first common general mistake is lack of clarity about the objective of the additional recommended regulation. As I show the LE report poses multiple narrow goals or objectives for its proposal. This multiplicity of goals begs questions about which goal takes primacy, and how to make trade-offs between them, while the narrow goals chosen neglect significant relevant wider concerns. I instead focus on the Government’s more fundamental, overarching, or higher-level objective, namely, the promotion of overall wellbeing, or social welfare as a whole. This is consistent with the Australian Competition and Consumer Act 2010 (CCA) that declares the general object of the law is “to enhance the welfare of Australians”. In this regard, LE explicitly acknowledges that it fails to address the impact of its proposed UK-style regulation on consumer welfare in Australia, claiming its discussion is only concerned with the relationship between buyers and sellers of screen productions. This is a serious mistake, as consumers will be considerably worse off under LE’s proposal, implying significant harm to the welfare of Australians, and therefore weighing heavily against LE’s recommended policy change.The second common general mistake made by LE (and others) is that they do not clearly establish the problem their policy recommendation is supposed to solve. The common basis, or reason LE (and others) claim there is a need for additional regulation is the alleged existence of oligopsony market power – in LE’s case an alleged “profound imbalance in market power between buyers and production companies”. On the contrary however as I show there is no imbalance in market power. LE (like others) simply makes mistakes on three issues underlying market power, as follows.• Market definition. The usual mistake made by those advocating more regulation of competition in streaming media is to adopt a market definition that is too narrow, which increases the likelihood of market power. LE made this mistake by focusing solely on incumbent streaming companies. As a result LE result calculated that the four firm market share of this narrowly defined market in Australia was 70-80% suggesting a high market concentration result. Given free-to-air (FTA), Internet-based protocol television (IPTV), and pay-tv services are however part of the same market, market shares should be calculated for the combined market, not separately as LE does. When one analyses streaming, FTA, IPTV and pay-tv services in one combined market, the level of the four firm market share (or concentration) is clearly very low, between 35% and 40% - much lower than the 70-80% cited by LE. This does not reveal a “profound imbalance” or very high concentration as claimed by LE. • Barriers to entry. Another common mistake made by LE and others, is the failure to recognize that even if there is high market shares, or high concentration, low barriers to entry would limit any attempt to abuse market power, as such attempted abuse would encourage new entrants into the market, and therefore be disciplined by loss of market share to new entrants. LE does not carefully identify or assess barriers to entry. Relevant media markets however are contestable, with low barriers to entry, as shown by the recent entry of streaming companies into the Australian market. • Cartel or collusive behaviors. A further common mistake is the failure to recognize that the abuse of oligopsony power requires explicit or tacit cartel or collusive behaviors. However, such behaviours would be hard to sustain in the current market, given the incentives for cartel participants to compete and cheat on any tacit or explicit cartel agreement to capture market share off other cartel participants, and the low barriers to entry. LE provides no evidence of the existence of cartel or collusive behaviors to refute this.A third general common general mistake made by LE (and others) is to rely on little or nor evidence, and ignore alternative legitimate or efficient business or market explanations for the contractual or commercial behaviours they allege to be problematic. Despite the absence of any reason to be concerned with a profound imbalance of market power I nevertheless review the changes in contract terms that LE describes as evidence of abuse of market power between screen producers as sellers, and the buyers of their productions, including;1) Price falls, or claims that Australian screen producers’ incomes have fallen; and2) Scope widening: or claims the rights transferred to buyers by contract has widened to cover worldwide distribution and sequels; and3) Duration Increases: or claims the rights transferred to buyers by contract has increased, from 2 to 4 year contracts, to 7 and 10 years, and even in perpetuity.LE however fails to clearly establish factually that these contractual outcomes have actually occurred, and more importantly fails to refute reasonable alternative explanations for them: namely, that the new terms result from legitimate or efficient competitive market arrangements. On price falls for example, I conclude that even if they were to exist, they are most likely due to the more competitive market putting pressures on costs, or prices paid to producers, and that this is good for consumer’s welfare. On the other two alleged problems, contract scope widening and duration increases, again no evidence is presented that even support the claims made, but even if there were, these are likely to be efficient outcomes as the large streaming companies are likely to need broad scope and long duration contracts to justify the higher investment in the projects they fund, as well as in technology and in worldwide marketing and distribution. More efficient terms on scope and duration would also benefit consumers, and any regulation that threatens to alter such terms would be damaging to consumer interests. A fourth general common mistake made by LE (and others) is their failure to consider whether current law adequately deals with any of the alleged problems or risks with contract terms. I show however that current Australian law in fact already clearly addresses the problems raised by LE. I also show that LE makes the further common related mistake of failing to look at the marginal effect of the proposed UK style law, compared to the current competitive market outcome and regulatory regime. I identify substantial marginal costs and little to no benefits to the regime as proposed by LE
