Quote:
Originally Posted by DMcCunney
Indeed. What happens if Amazon does obtain a monopoly on ebook sales (or even a strong majority of the market? Want to bet they won't raise prices, because you don't have an alternative and they can, if they think they need to?
Dennis
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Sorry, people always talk about this in reference to iTunes, Microsoft, Walmart, Amazon...and other companies, too, I'm sure. In point of fact, this *never* happens (with the exception of Standard Oil in the 1890's). The reason it doesn't happen is pretty well understood by economists: (1) the barriers of entry in most markets are low enough that other competitors can come in if the prices are too high; and (2) people will substitute other goods for the pricey goods.
If Amazon had 90% of the e-book market (which they almost do in the US) and jacked up their prices, new e-book vendors would enter the market almost immediately with lower prices (although probably not as low as Amazon's originally low prices). Some people would simply opt not to buy the more expensive e-books and would go back to reading paper books. Other people would buy DVDs or use their entertainment money elsewhere: books are only one entertainment option (and one that is struggling for its share of the entertainment dollar at present).
Amazon would (and already does) use it's market power to try and keep publisher costs down so as to keep prices for the consumer low. I'm not a publisher and I don't have a particular problem with this. If prices get too low for publishers, they will find other outlets: they aren't required to sell to Amazon, and if they want to set up their own online sales system, they are certainly able to do so. Due to the internet, publishers and authors are in a much better position vis-a-vis retail outlets than they were when B&N and Borders had a lock on retail.
[Standard Oil was able to enforce monopoly pricing because it controlled both the entire supply of oil as well as all of the distribution channels. (I.e., it controlled the supply, the distributors, and many of the retailers). If books are too expensive, you have a lot of other options; this was not (and still is not) the case with oil.]