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Originally Posted by Ralph Sir Edward
This is particularly important in the digital I.P. business. It is currently in a deflationary phase, because the end customer, who is the only one who matters is not willing to pay the prices the producers say they need.
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It's obvious some consumers are wiling and able to pay $15 for new content. The open question is whether they will pay $15 for new
digital content. Similarly, it's an open question as to how much older ebooks will get discounted in an agency model. My expectation is that if the publishers utilize dynamic pricing, and a new ebook's price drops to $10 or $12 in a few months, consumers will have less reason to fear or complain -- especially since $15 is still a price drop for many new hardcover releases, just not the blockbusters that retailers like Amazon and Walmart use as loss-leaders.
As to digital content being "deflationary," ebooks have barely gotten started; as such the pricing is not really set, nor is there likely to be a drastic reduction in the costs of, for example, converting a title into electronic form. Paper costs for books aren't that huge anyway, that's a public misperception. Those paper costs are also far from gone, and won't be eliminated any time soon, ergo the cost of producing a new title isn't changing much yet.
More importantly to the OP's point: There is just no way to predict future pricing. If I told you 3 months ago that Apple was going to use agency pricing, or that Macmillan would browbeat Amazon into agency pricing and accepting a $15 price on new ebooks, you'd probably tell me I was nuts. I don't think we can accurately forecast typical prices a year from now, let alone 20.
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Originally Posted by RSE
Because the firms that already have are in a position to slowly take end customers away from the big boys. Look at GM from 1970 to date. From the biggest carmaker in the world to a bankrupt basket case. And I'm certain that no one would have picked Toyota and Honda to eat the American big three's lunch in 40 years, either.
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You may have a point, but this is a terrible example.
• American auto manufacturers have been terrified of the Japanese since the mid-1970s.
• Toyota was not a scrappy upstart in the 60's when it started importing cars to the US, let alone in the early 00's when they really started killing Detroit; they were already a sizable company in the 60's.
• GM didn't fall apart because of the factors you imply. E.g. Ford avoided bankruptcy and bailouts, for example, not because they offered better or more popular or less expensive cars or were a more efficient producer than GM. Ford stockpiled cash and reduced dealerships in the mid 00's, sold off brands like Jaguar and Land Rover, and largely avoided the subprime mess that GMAC got into.
• GM still has the highest market share in the US, by the way; Ford is #2 and Toyota recently fell to #3.
There are definitely instances were an upstart surpasses an established giant, but:
- Typically this is due to the smaller company taking advantage of a disruptive technological shift (e.g. Amazon vs B&N, Microsoft vs IBM, Google vs Microsoft).
- We usually notice this when the upstart becomes the New Giant.
- On occasion, the Old Giant survives or revives anyway (IBM, HP), or the upstart collapses (Sun) or gets utterly clobbered by the Old Giant (Netscape).
Ergo I don't think we can accurately pick the identities of the Winners of 2030 today, let alone how anyone will price books in 20 years. But I think we can reasonably infer that even if today's big publishers get railed, there will be companies performing highly similar roles to today's retailers and publishers, and some of these will be quite large.