A Monopoly is Not Necessarily Bad

Sydney's Mom · 04-13-2012, 11:04 AM

There is a lot of discussion about the fear of Amazon obtaining a monopoly in ebooks. But monopolies are only an issue when there is a limited amount of the product, or there are high barriers to entry. Even if Amazon had 99% of the market in ebooks, anyone could open up an ebook store at minimal cost. So Turow's argument about the appearance of competition reads nice, but the issue is more nuanced than that.

The issue of predatory pricing is the same. This would have been a great argument against Target to save the independent book store. But I think the law would let the market work in the case of ebooks, and the Agency agreement is precisly about NOT letting the market work.

Why the publishers didn't study the music industry more closely puzzles me. I guess they thought Apple, which destroyed the CD, would be their savior. The problem is Apple came out with the ipod, so we went along with Apple being the sole source (for awhile) for music. But Amazon had the ipod (kindle) in this episode.

Shack70 · 04-13-2012, 11:10 AM

I don't disagree with you but I think the worry is that Amazon will eventually be the only game in town. They agressivly pricematch competitors pricing and and even underprice stuff to get people to buy from them. This is nothing new to retail it's just Amazon is spreading out into everything and in doing so are gaining the ability to force publishers to lower prices. I hate saying all of this becuase I love shopping at Amazon.

LuvReadin · 04-13-2012, 11:34 AM

I can't think of a single situation in which a monopoly is a good thing - for the consumer, at any rate. Yes, it's true anyone could open up an ebook store - the question is whether they could make a profit on it. Possibly, if it aimed at a very specialised niche market but going head-to-head against Amazon? Unlikely. As Shack70 says, Amazon attacks competitors agressively, and with the advantages it already has by being able to negotiate prices, there really isn't much chance of any independent store lasting against them, any more than most of the independent bookstores (in the UK at least) have managed to hold out against the combined weight of large chains and now supermarkets.

I don't agree with Agency pricing, either, mind you - the publishers had it their own way for too long. It is, however, long, long past time for quite a number of companies to be reined in - really, when a company gets bigger and richer than some of the countries in which it operates, it ceases to be controllable.

Sydney's Mom · 04-13-2012, 11:45 AM

I need to clarify - as a consumer, I think monopolies are a bad thing. And they may be. But as a legal matter, the reason we bust up monopolies doesn't exist with electronic commerce. As long as you can design a website and accept paypal, you are in business. I have bought items from some really small sellers over the internet- so long as the website where I enter my information is secure.

JSWolf · 04-13-2012, 11:55 AM

If it does end up that Amazon is the only eBook game in town, it will stifle creativity. For example, if ePub didn't exist, there would not be KF8 and only Mobipocket and no going forward. As it is, KF8 is still not as forward as ePub given that it's s binary format and even without DRM you cannot edit it.

HarryT · 04-13-2012, 12:10 PM

Quote:

Originally Posted by JSWolf

If it does end up that Amazon is the only eBook game in town, it will stifle creativity. For example, if ePub didn't exist, there would not be KF8 and only Mobipocket and no going forward. As it is, KF8 is still not as forward as ePub given that it's s binary format and even without DRM you cannot edit it.

ePub is also a "binary format", Jon. Try to open an ePub file in "Notepad" and you won't get very far

.

Barty · 04-13-2012, 12:36 PM

Apple didn't destroy the cd. Mp3 and the Internet did. Before apple, there was napster and all its clones. Apple just provided an easy legal way to get music. And apple didn't have much to do with selling music before the iPod. They were and still are a h/w company. I don't think they ever had a dominant position in music sales as amazon does in ebook sales.

to be analogous, there would have had to be an explosion in illegal ebook sharing b4 amazon came along. But amazon was already a big player in book selling, then they as far as most people are concerned created the ebook market. The kindle leveraged and extended amazon's dominance, like windows did for Microsoft on the PC.

Sydney's Mom · 04-13-2012, 12:44 PM

Apple is selling songs at $1 to tie you in to itunes (and the neverending updates - I don't want Quicktime!). People don't buy the entire albumn - they just buy the song. I read big musicians now have to tour to make money (Michael Jackson).

If Amazon raises prices, or we just get too sick of mobi, the publishers could sell books themselves, or create their own retailer, to compete with Amazon. Although I like Amazon, a majority of my books were ePub, originally. Thank heavens for Calibre!

LuvReadin · 04-13-2012, 12:46 PM

Quote:

Originally Posted by Sydney's Mom

As long as you can design a website and accept paypal, you are in business. I have bought items from some really small sellers over the internet- so long as the website where I enter my information is secure.

I agree - it's probably never been easier to open up a retail business than it is now. But I'd be interested to know why you chose those sellers over Amazon.

There are usually three main influencing factors on people's decision to buy: availability, price and customer service. Obviously, we can discount the first - if one stocks it and the other doesn't, the comparison is meaningless. I would say the third is usually fairly meaningless to most people who buy over the internet because there's usually more protection than when buying in-store. Hence, if the only discriminating factor is price, it becomes very difficult for small businesses to compete with something the size of Amazon, especially in view of the fact that Google (the most widely used search engine) ranks companies in order of popularity, thus Amazon will usually be one of the top hits. Therefore, the small company is disadvantaged, and the larger company keeps edging closer to a monopoly. It's no different from having a massive Tesco or Borders move in next to a small family grocery or newsagent - the little guy might stagger along for a bit, but eventually, he'll croak. And eventually, far, far too late, the penny might drop and the monopoly will be split into several companies, which will behave like the Hydra's heads and start getting bigger again.

andreabc · 04-13-2012, 12:52 PM

Quote:

Originally Posted by Sydney's Mom

But monopolies are only an issue when there is a limited amount of the product, or there are high barriers to entry. Even if Amazon had 99% of the market in ebooks, anyone could open up an ebook store at minimal cost.

Just wanted to link to an article that I read the other day that mentioned that opening an ebook store is probably not that simple (or cheap) because of DRM.

paidContent - DRM is crushing indie booksellers online

QuantumIguana · 04-13-2012, 12:53 PM

If any one company gains too much power, it won't matter that someone can set up their own little web business. A monopoly can demand exclusivity, and the small retailers would not have access to the books.

murraypaul · 04-13-2012, 12:55 PM

Quote:

Originally Posted by andreabc

Just wanted to link to an article that I read the other day that mentioned that opening an ebook store is probably not that simple (or cheap) because of DRM.

paidContent - DRM is crushing indie booksellers online

That article is so over the top is it hard to take it seriously.

Quote:

Publishers told us that if we did not have digital rights management (DRM) technology, they weren’t interested in letting us promote and sell their products. DRM is the set of technologies that encrypt and prevent the reproduction of e-book files. A new bricks and mortar bookstore, even the tiniest one, could have easily opened accounts with all the major distributors. But to sell electronic versions of those exact same books, publishers told us that you have to be a mega corporation. We were confused, and set about finding out why this counterintuitive business practice has taken root.

DRM is supposed to prevent piracy and illegal file sharing. In order to provide DRM, you need at least $10,000 up front to cover software, server, and administration fees, plus ongoing expenses associated with the software. In other words, much bigger operating expenses than a small business can afford. By requiring retailers to encrypt e-books with DRM, big publishers are essentially banning indie retailers from the online marketplace.

Having $10k makes you a mega-corporation?

There is also an obviously wrong statement later on, which makes me question the accuracy of the entire article:

Quote:

The Amazon/Apple near-duopoly on e-book sales is cripplingly destructive for readers, writers, and publishers.
[...]
While Apple uses the same file format and DRM standards as other major online booksellers, Amazon has its own proprietary file format and DRM scheme.

DiapDealer · 04-13-2012, 01:11 PM

Quote:

I can't think of a single situation in which a monopoly is a good thing - for the consumer, at any rate.

Public utilities. After deregulation, I started getting bombarded by offers to deliver the same gas through the same pipes at cheaper rates, the same phone calls over the same lines cheaper (and remember long distance "slamming"?). Sure, you might get cheaper service for a few months, but the constant monitoring/switching to make sure you aren't getting screwed just isn't worth the pennies you could save if you stay on top of it all.

Granted, those were legal monopolies that were overseen by government, but yeah... I dream of returning to the days of one gas company and one long-distance phone service. That was heaven.

And sports.

Sydney's Mom · 04-13-2012, 01:18 PM

Quote:

Originally Posted by LuvReadin

I agree - it's probably never been easier to open up a retail business than it is now. But I'd be interested to know why you chose those sellers over Amazon.

I have used smaller retailers for specialty stuff Amazon doesn't carry. For example, I found HippieStore when my daughter was obsessed with peace sign jewlrey. And my other hobby is knitting. I buy yarn from all over the net (lots from England), and recently found a small cooperative of artists under the name Esty (a color chart).

Namekuseijin · 04-13-2012, 01:36 PM

"Even if Amazon had 99% of the market in ebooks, anyone could open up an ebook store at minimal cost."

they sell public domain ebooks usually at the 10 bucks price range. That's clearly not minimal cost. Ebooks will eventually sell full-price as a pbook. How will you know it's alright when they are the only game in town?

All monopolies suck real bad. They are only acceptable when you live in an Idiocracy.

04-13-2012, 11:04 AM	#1
Sydney's Mom Wizard Posts: 2,896 Karma: 6995721 Join Date: Dec 2008 Location: Idaho, on the side of a mountain Device: Kindle Oasis, Fire 3d Gen and 5th Gen and Samsung Tab S	A Monopoly is Not Necessarily Bad There is a lot of discussion about the fear of Amazon obtaining a monopoly in ebooks. But monopolies are only an issue when there is a limited amount of the product, or there are high barriers to entry. Even if Amazon had 99% of the market in ebooks, anyone could open up an ebook store at minimal cost. So Turow's argument about the appearance of competition reads nice, but the issue is more nuanced than that. The issue of predatory pricing is the same. This would have been a great argument against Target to save the independent book store. But I think the law would let the market work in the case of ebooks, and the Agency agreement is precisly about NOT letting the market work. Why the publishers didn't study the music industry more closely puzzles me. I guess they thought Apple, which destroyed the CD, would be their savior. The problem is Apple came out with the ipod, so we went along with Apple being the sole source (for awhile) for music. But Amazon had the ipod (kindle) in this episode.

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04-13-2012, 11:10 AM	#2
Shack70 Guru Posts: 777 Karma: 1043626 Join Date: Dec 2010 Location: York, Pa Device: Kindle Paperwhite 11th Generation	I don't disagree with you but I think the worry is that Amazon will eventually be the only game in town. They agressivly pricematch competitors pricing and and even underprice stuff to get people to buy from them. This is nothing new to retail it's just Amazon is spreading out into everything and in doing so are gaining the ability to force publishers to lower prices. I hate saying all of this becuase I love shopping at Amazon.

04-13-2012, 11:34 AM	#3
LuvReadin Addict Posts: 372 Karma: 1925568 Join Date: Oct 2011 Location: England, UK Device: Sony PRS-T1 and Cool-ER	I can't think of a single situation in which a monopoly is a good thing - for the consumer, at any rate. Yes, it's true anyone could open up an ebook store - the question is whether they could make a profit on it. Possibly, if it aimed at a very specialised niche market but going head-to-head against Amazon? Unlikely. As Shack70 says, Amazon attacks competitors agressively, and with the advantages it already has by being able to negotiate prices, there really isn't much chance of any independent store lasting against them, any more than most of the independent bookstores (in the UK at least) have managed to hold out against the combined weight of large chains and now supermarkets. I don't agree with Agency pricing, either, mind you - the publishers had it their own way for too long. It is, however, long, long past time for quite a number of companies to be reined in - really, when a company gets bigger and richer than some of the countries in which it operates, it ceases to be controllable.

04-13-2012, 11:45 AM	#4
Sydney's Mom Wizard Posts: 2,896 Karma: 6995721 Join Date: Dec 2008 Location: Idaho, on the side of a mountain Device: Kindle Oasis, Fire 3d Gen and 5th Gen and Samsung Tab S	I need to clarify - as a consumer, I think monopolies are a bad thing. And they may be. But as a legal matter, the reason we bust up monopolies doesn't exist with electronic commerce. As long as you can design a website and accept paypal, you are in business. I have bought items from some really small sellers over the internet- so long as the website where I enter my information is secure.

04-13-2012, 11:55 AM	#5
JSWolf Resident Curmudgeon Posts: 79,189 Karma: 144286760 Join Date: Nov 2006 Location: Roslindale, Massachusetts Device: Kobo Libra 2, Kobo Aura H2O, PRS-650, PRS-T1, nook STR, PW3	If it does end up that Amazon is the only eBook game in town, it will stifle creativity. For example, if ePub didn't exist, there would not be KF8 and only Mobipocket and no going forward. As it is, KF8 is still not as forward as ePub given that it's s binary format and even without DRM you cannot edit it.

04-13-2012, 12:36 PM	#7
Barty doofus Posts: 2,543 Karma: 13089041 Join Date: Sep 2010 Device: Kobo Libra 2, Kindle Voyage	Apple didn't destroy the cd. Mp3 and the Internet did. Before apple, there was napster and all its clones. Apple just provided an easy legal way to get music. And apple didn't have much to do with selling music before the iPod. They were and still are a h/w company. I don't think they ever had a dominant position in music sales as amazon does in ebook sales. to be analogous, there would have had to be an explosion in illegal ebook sharing b4 amazon came along. But amazon was already a big player in book selling, then they as far as most people are concerned created the ebook market. The kindle leveraged and extended amazon's dominance, like windows did for Microsoft on the PC.

04-13-2012, 12:44 PM	#8
Sydney's Mom Wizard Posts: 2,896 Karma: 6995721 Join Date: Dec 2008 Location: Idaho, on the side of a mountain Device: Kindle Oasis, Fire 3d Gen and 5th Gen and Samsung Tab S	Apple is selling songs at $1 to tie you in to itunes (and the neverending updates - I don't want Quicktime!). People don't buy the entire albumn - they just buy the song. I read big musicians now have to tour to make money (Michael Jackson). If Amazon raises prices, or we just get too sick of mobi, the publishers could sell books themselves, or create their own retailer, to compete with Amazon. Although I like Amazon, a majority of my books were ePub, originally. Thank heavens for Calibre!

04-13-2012, 12:53 PM	#11
QuantumIguana Philosopher Posts: 2,034 Karma: 18736532 Join Date: Jan 2012 Device: Kindle Paperwhite 2 gen, Kindle Fire 1st Gen, Kindle Touch	If any one company gains too much power, it won't matter that someone can set up their own little web business. A monopoly can demand exclusivity, and the small retailers would not have access to the books.

04-13-2012, 01:36 PM	#15
Namekuseijin affordable chipmunk Posts: 1,290 Karma: 9863855 Join Date: Feb 2011 Location: Brazil Device: Sony XPeria ZL, Kindle Paperwhite	"Even if Amazon had 99% of the market in ebooks, anyone could open up an ebook store at minimal cost." they sell public domain ebooks usually at the 10 bucks price range. That's clearly not minimal cost. Ebooks will eventually sell full-price as a pbook. How will you know it's alright when they are the only game in town? All monopolies suck real bad. They are only acceptable when you live in an Idiocracy.