In an article published today, the Guardian wonders if Rupert Murdoch's announcement (a few months back) that News Corp will introduce pay-walls across its online portfolio amounts to collusion. The key bit:
When Murdoch announced that he intended to introduce charges for access to all his news websites, he said that he believed other publishers would follow suit. [Alan Davis of legal firm Pinsent Masons] said that a pattern of such statements, in effect a signal to rivals to do the same, can be interpreted as a "tacit cartel", even if no meeting or explicit deal has taken place.
I am not a lawyer, so I won't comment on the legality of this. But I'll make two related comments.
First, Murdoch's move can be seen as a textbook case of strategic commitment. Suppose that you and your competitors would all like to do something that nobody wants to do on his own. So you announce that you intend to make the risky move even if nobody follows you, and you do it in such a way that your announcement is public, credible and irreversible (you are 'committed'). If you succeed in being credible, now a competitor – without ever talking to you – would feel reassured that if it also makes its move, it won't stand to lose as much as it might if it had moved on its own. If you are big enough, the change in your competitor's strategic calculation may be big enough to compel it to move as well. And since you know this from the beginning, your initial move was not as rash as it seemed. Granted, Murdoch's move was hardly irreversible – all he did was make an announcement in an earnings call. But he would lose a lot of credibility if he were to back down, and in this sense he is committed. Presumably this is what the Guardian has in mind. But note that – as I've hypothesised it – this move doesn't involve any talking behind closed doors.
Second, all of this may be a moot point. Talk of anti-competitive coordination presupposes that erecting a pay-wall is a profitable move only if your competitors do the same. But that is far from clear. To be sure, if you just slam a big all-or-nothing wall that refuses to serve any free content to anyone then you might lose most of your readers to your competitors and end up worse-off – unless your competitors erect walls too, and hence the coordination point.
But such 'hard' walls are out of fashion. What is in fashion is 'smart' pay-walls that only affect a small percentage of your readers (see my previous post on this). The thinking is that – if done right – this should result in a net increase in profits regardless of what your competitors do, essentially because you are only charging those readers who are loyal enough not to go to the competition.
This is not to say that with 'smart' pay-walls competitors' actions are irrelevant, or that there would be no point in price-fixing. If your 'smart' wall can make you some money even if your competitors don't follow suit, it can make you even more if they do (because you could then cast your net wider and charge more people, or charge a higher price). But that's another discussion – it's about refinements to the walls and not about whether to erect them in the first place.