Power in online music, movies shifting to Internet providers

[Commentary] AT&T's $67 billion debt-and-equity offer for DirectTV, along with Comcast's pending $45 billion deal for TimeWarner Cable, make clear that the market for digital entertainment delivered over the Web has moved from a high growth to a growth-and-consolidation phase.

With telecomunications networks in Dallas and New York squaring off against cable companies in Philadelphia and the Big Apple for control of the pipes that deliver Web video and music, the pricing power in digital entertainment is shifting decidedly east. That unfortunately may introduce a broader swath of online subscribers to the concept of service bundling, which has been no friend to consumers in the past. The ranks of network operators -- and consumer choices -- will be winnowed again, now that AT&T has loaded up with satellite services for its battle against Comcast, Verizon and other large network owners.

The companies in control of the delivery of digital music, shows, movies, sports and news delivery are now in a consolidation phase. Those tend to lead to more pricing power for industry survivors. As consumers face fewer choices, Google, Facebook and Amazon have been variously buying or building their own Internet server farms, attempting to get around the problem. Their need to do so looks likely to increase.