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I don't know how true that really is Everything I've read suggests that exercising monopoly power requires very high market shares when it comes to fungible pro

I don't know how true that really is Everything I've read suggests that exercising monopoly power requires very high market shares when it comes to fungible products with low marginal cost, like delivery of e-books. Example citation: section A.2. of http://www.justice.gov/atr/public/reports/236681_chapter2.htm http://www.justice.gov/atr/public/reports/236681_chapter2.ht...

ewzimm 12y ago
I think monopoly power is especially difficult with digital distribution because the company is using technology that everyone else has access to. If Amazon suddenly started overcharging, it would not be difficult for Barnes and Noble or someone else to take over their business. This is why free software like Apache and Linux is so important. However big Amazon gets, as long as other companies, however small, have the necessary technology to provide similar services and the option to scale operations with increased business, Amazon has to offer superior services and prices to stay competitive. Book publishers, on the other hand, use specialized factories and distribution networks to throw their power around. With commoditized servers, free software, and an open Internet, Amazon can't leverage those same unique advantages.
- shykes 12y ago
  I disagree, the technology is necessary but not sufficient. To compete as a distributor of mass consumer goods, you need a distribution infrastructure (warehouses, trucks, servers and the logistics operation to run them). The technology that makes up trucks, warehouses and servers may be commoditized, but the ability to own and operate hundreds of millions of dollars worth of them, with enough profit to keep growing the fleet every year - that's a very real barrier to entry because customers like getting their purchases the next day or even the same day, and doing that consistently for many customers requires that kind of a fleet. On top of that, you need a way to reach customers online. The brand is sticky enough that many people start their book search directly on Amazon. To get a chance to compete for that search (presumably on Google) you'll need to hope that they find the price outrageous enough to overcome the promise of a convenient and reliable next-day delivery, pre-configured shipping and billing, etc. Lastly Amazon is working hard to move the battle away from the open web: once a customer has a Kindle, the bar is even higher to compete for their future purchases.
  - ewzimm 12y ago
    I agree with what you are saying, but I was talking specifically about digital distribution. Closed platforms like Kindle definitely cause some lockdown, but Kindles are relatively cheap and replaced as often as yearly. If Amazon did start gouging on prices, a lot of people would switch to Kobo or Nook. With digital distribution, you can guarantee that everything you're selling is always available for free (with the risk of legal fines) from other channels. Companies like Spotify, Netflix, and Amazon's digital distribution are aware that they are competing with free and tailor their services to be worth the cost. Physical goods that require factories and distribution centers will be a barrier to entry for a long time, at least until commodity 3d printers can compete with large-scale factories, which will take some time.

ewzimm 12y ago

I think monopoly power is especially difficult with digital distribution because the company is using technology that everyone else has access to. If Amazon suddenly started overcharging, it would not be difficult for Barnes and Noble or someone else to take over their business. This is why free software like Apache and Linux is so important. However big Amazon gets, as long as other companies, however small, have the necessary technology to provide similar services and the option to scale operations with increased business, Amazon has to offer superior services and prices to stay competitive. Book publishers, on the other hand, use specialized factories and distribution networks to throw their power around. With commoditized servers, free software, and an open Internet, Amazon can't leverage those same unique advantages.

shykes 12y ago
I disagree, the technology is necessary but not sufficient. To compete as a distributor of mass consumer goods, you need a distribution infrastructure (warehouses, trucks, servers and the logistics operation to run them). The technology that makes up trucks, warehouses and servers may be commoditized, but the ability to own and operate hundreds of millions of dollars worth of them, with enough profit to keep growing the fleet every year - that's a very real barrier to entry because customers like getting their purchases the next day or even the same day, and doing that consistently for many customers requires that kind of a fleet. On top of that, you need a way to reach customers online. The brand is sticky enough that many people start their book search directly on Amazon. To get a chance to compete for that search (presumably on Google) you'll need to hope that they find the price outrageous enough to overcome the promise of a convenient and reliable next-day delivery, pre-configured shipping and billing, etc. Lastly Amazon is working hard to move the battle away from the open web: once a customer has a Kindle, the bar is even higher to compete for their future purchases.
- ewzimm 12y ago
  I agree with what you are saying, but I was talking specifically about digital distribution. Closed platforms like Kindle definitely cause some lockdown, but Kindles are relatively cheap and replaced as often as yearly. If Amazon did start gouging on prices, a lot of people would switch to Kobo or Nook. With digital distribution, you can guarantee that everything you're selling is always available for free (with the risk of legal fines) from other channels. Companies like Spotify, Netflix, and Amazon's digital distribution are aware that they are competing with free and tailor their services to be worth the cost. Physical goods that require factories and distribution centers will be a barrier to entry for a long time, at least until commodity 3d printers can compete with large-scale factories, which will take some time.