Korea Herald columnist warns of monopsony risk in South Korea’s film market
South Korea’s film market may be approaching monopsony conditions amid a contraction in the operations of theater chains, distributors and production companies. Producer and screenwriter Thomas Su expressed this view in a column for the Korea Herald.
The author linked the issue to the state of theatrical distribution and discussions at the recent Lumiere Summit. According to him, participants openly discussed the pressure building up in the industry. South Korean director Lee Chang-dong also spoke about the difficulties facing the industry, despite his status and possible prospects for a notable awards season.
What is a monopsony
A monopsony is a market in which there is one buyer and many sellers. Unlike a monopoly, in which one seller can raise prices because buyers lack alternatives, in a monopsony the market advantage belongs to the buyer. As Su notes, a dominant buyer can reduce payment because sellers have fewer opportunities to offer their goods or services to others.
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In the columnist’s view, excessive monopsony power can lead to lower wages, fewer jobs and declining quality. As an example, he cited U.S. professional sports leagues, where the draft system limits rookies’ ability to negotiate with multiple teams. To balance such conditions, leagues conclude collective agreements with players’ unions that determine, among other things, pay, contract duration, and medical and pension guarantees.
Reduction in market participants
At the same time, Su stressed that he is not directly calling for the introduction of collective labor agreements in South Korea’s film industry. In his view, both a lack of competition among buyers and a lack of competition among sellers are harmful to the creative sector.
The author also cautioned that the successful results of one or two films should not be considered evidence of the industry’s recovery. According to him, theater chains, distributors and production companies regularly announce reductions in operations or their cessation, while new companies are likely not emerging at the same pace. This, Su believes, narrows the market and brings it closer to monopsony conditions.
