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But you really can't just "go to the mall next door", since your faithful customers cannot follow you and your entire merchandise has to be remade from scratch.
by toyg 3y ago
But you really can't just "go to the mall next door", since your faithful customers cannot follow you and your entire merchandise has to be remade from scratch.
For that reason, no real mall-owner ever can even dream of extracting 30% from every sale. Why can Apple/Google/Sony/Microsoft/Nintendo get away with it? Because they don't suffer competitive pressure in the same amount. Most of them are effective monopolies in their segments, thanks to network effects, so they can get away with the worst type of feudal rent-extraction.
- rahilb 3y agoThey do extract money from every sale… if rent was free the companies would be way more profitable as a major cost is removed. To put it another way, if you open a physical shop the first X% of your sales every day go only to costs and you must reach a certain amount of sales before your shop is profitable.
- toyg 3y agoOf course, but it's a fixed cost that, if the shop is even mildly successful, will quickly become a single-digit percentage. London retail space (most expensive in UK, of course) goes for around £50 per square feet p/y, with revenues that will easily go 5x to 70x that. Elsewhere the difference is even higher. Which is why the richest companies in the world are the ones running appstores, not the ones holding retail properties: because they can get away with unescapable feudal rents that would not be tolerated in meatspace.