[Room Tone] Monopoly’s less famous cousin

It has been interesting to watch the coverage of the recently held Lumiere Summit.

As a member of the filmmaking community, there was something encouraging about seeing so many important voices in one room, talking openly about the pressure building inside the theatrical film business. There was also something sobering about hearing Korean director Lee Chang-dong, who appears to be entering what could be a remarkable awards season, speak about the difficulties facing even someone of his stature.

Throughout the coverage and discussion surrounding the event, the word “monopoly” came up in a number of different contexts. And it reminded me that monopoly also has a less famous cousin, one that receives only a fraction of the attention.

That word is “monopsony.” If my memory from eighth-grade economics class serves me correctly, a monopsony is a market with one buyer and many sellers.

With the ongoing contraction of the Korean theatrical film business, I have been thinking about what happens when a market shrinks to the point where the conditions of a monopsony begin to emerge.

In a monopoly, a single seller has the power to set higher prices because buyers have few alternatives. In a monopsony, the power sits with the buyer. A single dominant buyer can push wages lower because sellers have fewer places to take what they are selling.

Monopsonies can result in lower wages, fewer jobs, and ultimately lower quality. When monopsony power becomes too great, some form of intervention often follows, whether through minimum wage laws, antitrust regulation, collective bargaining, or other mechanisms to restore some balance.

Professional sports leagues such as the NFL, NBA and MLB can function as monopsonies in the market for elite professional athletes. The rookie draft system makes the imbalance even clearer. An incoming player does not enter an open market where every team can compete for his services. He is drafted by one team and, at least initially, must negotiate with that team, allowing for very little competitive bidding.

As a response to this imbalance, the leagues negotiate collective bargaining agreements with their players' unions. These agreements establish wage scales, revenue sharing, contract lengths, health and pension plans, and other protections.

Now before anyone assumes this extended prologue is leading toward an argument for collective labor agreements in the Korean film industry — sorry to disappoint, but I am not going there.

For a creative industry like theatrical films, a lack of competition among buyers eventually hurts everyone involved, including the buyer. I would be remiss not to mention that the inverse is also true; a lack of competition amongst the sellers would be no more beneficial. Creative industries need friction on both sides.

As much as any one entity might love the idea of becoming the exclusive buyer of theatrical films, I suspect they understand this as well: that eventually, the lack of competition would produce an inferior product for them too.

The Lumiere Summit was a good start in amplifying conversations that have already been taking place in dark corners and late at night throughout the industry. But the conversation cannot end with just a multi-day summit and a short news cycle; it needs to remain loud and ongoing.

We need the brightest minds in the industry trying new solutions, including ideas that may initially feel uncomfortable or unrealistic. The problems facing theatrical film have become too structural for temporary salves or hasty patch-overs. And we should be careful about allowing the strong performances of a handful of films (literally one or two films!) to convince us that the industry is in recovery.

At what now feels like regular intervals, another theatre chain, distributor, or production company announces that it is reducing operations or ceasing them altogether. I doubt new companies are being created at the same rate that the existing ones are disappearing. And with each disappearance, the market becomes a little smaller and a little closer to a monopsony.

And despite how dire some of the reporting already sounds, the reality may be worse.

Thomas Suh is a producer and screenwriter exploring the people, ideas and stories that shape storytelling and culture. "Room Tone," the title of his column series, refers to the ambient sound of a space in which filming takes place. He can be reached at tommysuh@me.com — Ed.