Communications Business
What are the differences between vertically and horizontally integrated media firms? Which represents a greater monopoly threat to a competitive market?
The greater overall consolidation of the media market is not simply a concern for competitors within the market; it is also of vital importance for every citizen of a free market. A vertically integrated firm dominates one segment of the media in a single market, for example, television, the Internet, or print. While it does have inroads in some other areas, Google is best classified a firm -- for example, there is no 'Google TV' or Google print books, merely Google e-books. Vertically integrated firms, depending on the industry they dominate, can be quite powerful. The profit of a vertically integrated firm is usually based upon an economy of scale, in other words, by having large production facilities to produce large amounts of a particular product, or by virtue of becoming a 'first mover' in a new industry, and claiming a large base of consumer loyalty that its competitors cannot overcome.
However, horizontally integrated media firms dominate a variety of media in a wide array of markets. Disney is an excellent example of this -- it produces children's cartoons, children's and adult films, hosts several theme parks, publishes books, videos, and toys, as well as owns ABC.
Vertical integration, within its sphere, seems most immediately damaging to competition. Google has effectively vanquished its competition within the search engine market. Disney has considerable competition in the sphere of network programming with CBS and NBC, and other movie studios compete with it for dominance of the cinema. However, in terms of the competitive market of ideas in a democracy, horizontal integration seems more dangerous. When you turn on the television, surf the Internet, listen to the radio and open up a newspaper, and hear these diverse media blare the same headlines, many stories are likely to be lost, as well as different points-of-view. Very few people only access one type of media, so if one firm dominates a single market, consumers at least have access to other ideas, in other media venues.
