Ruinous Competition in News, the Postal Internet, and the Three Laws of Techno-Legal Change

47 Pages Posted: 15 Mar 2021 Last revised: 20 Apr 2021

See all articles by Ramsi Woodcock

Ramsi Woodcock

University of Kentucky College of Law

Date Written: March 11, 2021

Abstract

Policymakers’ current approach to the problem of online misinformation, which revolves around defining the circumstances under which content platforms like Twitter and Facebook may be held liable for the speech of their users, fails to get at the root cause of the problem: the low cost of communication. The theory of monopolistic competition teaches that businesses respond to low-cost entry into their markets, and the cutthroat competition it creates, by differentiating their products, sometimes in legitimate ways, but sometimes through deceit. Misinformation on the Internet has the same source: speakers using deceit to compete for attention in a highly competitive speech market. The solution, as in all cases of ruinous competition, is to replace the falling technological barriers to market entry that have given rise to the excessive competition with new legal barriers to entry.

The way to create legal barriers to online speech is not to license speech, an approach that would violate the First Amendment, but rather to treat the Internet like a brick-and-mortar postal system. In the United States, the Postal Service enjoys a “letter-box monopoly:” the exclusive right to place mail in mailboxes. This exclusivity gives the Postal Service the power to charge a price—postage—for each communication delivered to an American mailbox. The U.S. Congress—or the Postal Service itself through reinterpretation of existing law—should give the Postal Service a letter-box monopoly on social media posting: the exclusive right to charge a fee for every Tweet, Facebook post, or other social media missive delivered in America. That would greatly increase the cost of being heard on the Internet, for as the number of a poster’s followers increases, the total cost of social media “postage” would increase as well, reducing competition and the incentive to misinform. Because the letter-box monopoly has survived constitutional scrutiny for two centuries, this approach would necessarily survive First Amendment scrutiny as well.

Keywords: misinformation, postal service, price regulation, ruinous competition, competition, newspapers, news industry, product differentiation, fake news, first amendment, letter-box monopoly

JEL Classification: D45, D82, L15, L50, L82, L87,

Suggested Citation

Woodcock, Ramsi, Ruinous Competition in News, the Postal Internet, and the Three Laws of Techno-Legal Change (March 11, 2021). Available at SSRN: https://ssrn.com/abstract=3802884 or http://dx.doi.org/10.2139/ssrn.3802884

Ramsi Woodcock (Contact Author)

University of Kentucky College of Law ( email )

620 S. Limestone Street
Lexington, KY 40506-0048
United States

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