Saturday, January 30, 2010
Amazon vs. Macmillan
Say there are four companies in the world who make widgets. These widgets are basically of the same quality of make, the only difference is the companies that sell them. And let's say that one of those companies, Ajax Widgets, is run by a charismatic, visionary leader who, using aggressive sales tactics and undercutting the prices of their competitors, manages to claim a significantly larger share of the widget market than the other three companies. But capitalism being capitalism, that's not enough for Ajax- they want the whole pie. So they set out to crush their competition, either by selling widgets at a loss until the competing companies can't sell any widgets, or just using their deep pockets to buy up the competition. In the end, there is only one widget maker in the world. And any small entrepreneurial company foolish enough to try their hand in the widget market will be set up and destroyed with lawsuits and unfair pricing. And we know what happens next: with no competition, the price of widgets goes up. That's why the government regulates monopolies.
Well, I was planning on blogging about something else today until I saw this article in the Los Angeles Times. Seems Amazon has gotten into a squabble with one of the largest publishers in the country, and has stopped selling their books. I've said it before and I'll say it again: I think Amazon is basically a criminal enterprise. They quite obviously want to use their market share, gained from years of selling at a loss while being propped up by venture capital and money from the sale of stocks, to become the only bookstore on the planet. And when that happens, I'm guessing the prices won't stay quite so cheap. And not just that. A company that is willing to stop selling an item that its own customers want just to make a point is a company that would make sure that a book it didn't want published, say an expose on Amazon, didn't get published. I'm just saying...