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What's somewhat ironic about the "monopolies lead to absentee landlords" theory is that competition can sometimes have exactly the same effect, if the differenc

by gwd 6y ago

What's somewhat ironic about the "monopolies lead to absentee landlords" theory is that competition can sometimes have exactly the same effect, if the difference in quality isn't immediately obvious to the consumer. Imagine this story instead: There are two companies, A and B, which are competing (among other things) for gyms to sign up with them. Company A requires extensive background checks, inspections, and lots of other things to make sure their programs are free of sexual predators. These are effective, but are expensive and invasive, and gyms really don't like them. Company B is far more lax; and so gyms start to go over to Company B. A is forced to lower their standards in order to continue competing. Yes, in theory A could try to advertise that they're safer; but suppose (hypothetically) that the economics makes it infeasible to advertise directly to the end-consumers, leaving gyms to do it; and gyms as we've seen have a short-term advantage to just going with the lower standards and not mentioning that particular difference in their advertising.

gamblor956 6y ago
Or, you could assume a hypothetical based on how the gym industry actually works (outside of COVID lockdowns): Company A gyms successfully advertise that their gyms are nicer, safer, cleaner, and members pay several hundreds of dollars each month, while Company B gyms rely on being cheap and get members who are only willing to pay $10/month. I am of course talking about gyms like Equinox and David Barton, which were flourishing and adding new locations, vs gyms like Planet Fitness which were shutting down gyms because $10/month/member means you need a lot of members just to pay rent. OTOH, middle-market gyms like Golds, 24 Hour, and LA Fitness compete directly against each other and live or die based on the quality of their facilities and staff, and any reduction in a gym's quality generally boosts its nearby competitors.
- gwd 6y ago
  > any reduction in a gym's quality generally boosts its nearby competitors. Right, but the question is how visible that quality is to customers. If you skimp on your ventilation or equipment maintenance, your customers will notice pretty quickly. If you skimp on background checks for your cheerleading coaches, nobody's going to notice on their own until the scandal hits. The only way customers know there's a difference in the coach vetting if the gym or the cheerleading company tells them. And while it may be possible for Company A and its gyms to distinguish themselves from Company B, it may not be; it depends a lot on the particulars. If they can't, they'll be at a disadvantage.

by gwd 6y ago

gamblor956 6y ago

Or, you could assume a hypothetical based on how the gym industry actually works (outside of COVID lockdowns): Company A gyms successfully advertise that their gyms are nicer, safer, cleaner, and members pay several hundreds of dollars each month, while Company B gyms rely on being cheap and get members who are only willing to pay $10/month. I am of course talking about gyms like Equinox and David Barton, which were flourishing and adding new locations, vs gyms like Planet Fitness which were shutting down gyms because $10/month/member means you need a lot of members just to pay rent. OTOH, middle-market gyms like Golds, 24 Hour, and LA Fitness compete directly against each other and live or die based on the quality of their facilities and staff, and any reduction in a gym's quality generally boosts its nearby competitors.

gwd 6y ago
> any reduction in a gym's quality generally boosts its nearby competitors. Right, but the question is how visible that quality is to customers. If you skimp on your ventilation or equipment maintenance, your customers will notice pretty quickly. If you skimp on background checks for your cheerleading coaches, nobody's going to notice on their own until the scandal hits. The only way customers know there's a difference in the coach vetting if the gym or the cheerleading company tells them. And while it may be possible for Company A and its gyms to distinguish themselves from Company B, it may not be; it depends a lot on the particulars. If they can't, they'll be at a disadvantage.