If you want to maintain a libertarian approach, the thing to do would be to investigate in what way the monopolists’ market position is due to government intervention. Think of business plans that would break the monopoly, find the obstacles that block them, and figure out if the obstacles come from government actions that violate libertarian principles.
If they do, then see what you can do about them. Ideally get rid of them, but if that’s infeasible, then perhaps you can consider a principle that, to the extent that a monopoly is propped up by government suppression of competition, some proportional amount of government regulation of that monopoly might be permissible. (If, for example, company X is granted a complete monopoly by fiat, then price controls on company X seem … distasteful, of course, but possibly appropriate.) Or perhaps you wouldn’t go so far as to support such regulation, but at least you wouldn’t put effort into opposing it.
For payment processing in particular, I think Yaron Brook commented that banking was more heavily regulated than any other industry except perhaps nuclear reactors. Subtract some hyperbole and my impression is that it’s roughly correct. Presumably this creates large barriers to entry. If that’s the case, then some laws to force payment processors to be “fair” might be tolerable.
If you want to maintain a libertarian approach, the thing to do would be to investigate in what way the monopolists’ market position is due to government intervention.
This is true if “wanting to maintain a libertarian approach” is already a goal but wouldn’t it be better epistemics to investigate the cause monopolists market position without the already fixed opinion that it will be due to government intervention? Having that as a strong prior is fine of course but not something you “want” to be true.
I see how the wording of that sentence could be interpreted that way. Wasn’t my intention; by “in what way” I meant to encompass “to what degree”, and the answer could be “to a small or negligible degree”. I’ll note that in the next sentence I say “if the obstacles come from government intervention”, and again “If they do” in the sentence after that.
I usually agree with that approach, but I’m not convinced it applies in this case, where the monopolist gets a benefit purely from having a larger market share. I agree that if this situation was created by the government in the first place that would be a better place to target, but my understanding is that this is just a first-mover advantage for Audible. I would expect payment processors to take somewhere around 3%, but Audible takes 60% even with an exclusivity deal.
Part of this is also presumably advertising (being on Audible.com is worth a lot, and I think it’s fine that Audible benefits from creating that advertising channel), so I wouldn’t expect the cost of publishing an audiobook to drop to the cost of storage and distribution, but I’m skeptical that 60% is where the market would settle without a monopoly.
I usually agree with that approach, but I’m not convinced it applies in this case, where the monopolist gets a benefit purely from having a larger market share.
Copyright is a government-granted monopoly. Audible can only even exist because the government said that you’re not allowed to copy things. And it can only have exclusivity contracts because the things it sells can’t be legally copied in the absence of a contract.
That’s a good point. Maybe my actual least-libertarian belief is that copyright law is probably fine.
I think you could have this same problem with physical goods and services to though, as long as the government enforces contracts.
Say I want to sell tickets to a concert and have the option of listing with TicketMonopolist[1] which has 81% of the market and will charge me 60% of the cost of a ticket if I give them an exclusivity deal or 75% if I list it anywhere else, and I could list it at TicketCompetitor (19% of the market) and they will only charge me 50%. This is exactly the same deal as with audiobooks (the profit-maximizing decision is to only list with the monopolist), and I think most libertarians would agree that it’s legitimate for the government to prevent people without tickets from attending the concert (if the venue wanted them to).
I agree that the Ticketmaster scenario demonstrates the problem. But then, I have a lot of libertarian sympathies, but I’m not really libertarian.
I do observe, however, that only certain markets work that way. It seems that those are markets where the monopolist is much larger than the individual seller. That covers companies like Ticketmaster (Madison Square Garden is big, but it’s nothing compared to Ticketmaster), Amazon, and Nintendo. But if some car dealership tried to force Toyota into an exclusivity deal, Toyota would just say “no, we’re fine having our own dealers”—they’re big enough to have economy of scale even without the reseller. Also, the product can’t be a commodity—forcing a farmer into an exclusivity deal with a supermarket wouldn’t do much good, since other supermarkets are fine with other farmers. Even forcing Kraft into an exclusivity deal wouldn’t do much good.
I can’t actually think of a lot of scenarios other than intellectual property, tickets, and the non-IP part of Amazon where this happens.
Can someone create a meta-service that combines the offerings from TicketMonopolist and TicketCompetitor? Sort of like how chat clients like Adium/Pidgin had interfaces to lots of different messaging protocols and put all your contacts and conversations together. If it worked well, then the market might shift to lots of customers using the meta-service; and then, since TicketMonopolist charges higher prices, presumably it would start losing market share.
Something like this has been tried a few times with Craigslist, with services that grab data from it and provide a better interface: example. Craigslist seems to have used (a) terms of service requirements and (b) copyright claims to the users’ posts, for legal arguments. I think the copyright claim, for ads that are frequently 1-3 sentences, is risible (morally speaking). As for terms of service… I’m skeptical that the terms can simultaneously (1) be sane and enforceable, (2) allow customers to do what they currently do, and (3) prevent customers from using meta-services that collect the data and do things with it. (Versions of (3) that come to mind tend to forbid antivirus scanners, accessibility tools like screen readers, and web browsers in general.)
I think any aggregator has the same problem customers do: There’s only one place to buy the tickets. If the aggregator wants to sell tickets, they have to buy them from TicketMonopolist (and pay their fees), so they can’t sell tickets any cheaper without losing money.
For audio books, there are a bunch of distributors like this. For example, PublishDrive charges a monthly fee and distributes to every platform “for free”, but they can only give their customers the amount of money that Audible gives them, and Audible only gives them 25% royalties[1] (since they’re not exclusive).
The value-add of the aggregator, compared to TicketMonopolist, would be finding tickets in the cases where they’re available at one of the competitors. The aggregator would charge either a nominal fee or even zero fee when the customer ends up buying tickets that come from TicketMonopolist. Either there’s an upfront or subscription cost for using the aggregator, or they can charge a fee specifically on the non-Monopolist tickets.
(I assume part of the picture is that customers find it highly inconvenient to go to more than one place to find their tickets—otherwise TicketMonopolist couldn’t charge much of a premium, hosts would just use the competitors and the customers would find them there.)
If you want to maintain a libertarian approach, the thing to do would be to investigate in what way the monopolists’ market position is due to government intervention. Think of business plans that would break the monopoly, find the obstacles that block them, and figure out if the obstacles come from government actions that violate libertarian principles.
If they do, then see what you can do about them. Ideally get rid of them, but if that’s infeasible, then perhaps you can consider a principle that, to the extent that a monopoly is propped up by government suppression of competition, some proportional amount of government regulation of that monopoly might be permissible. (If, for example, company X is granted a complete monopoly by fiat, then price controls on company X seem … distasteful, of course, but possibly appropriate.) Or perhaps you wouldn’t go so far as to support such regulation, but at least you wouldn’t put effort into opposing it.
For payment processing in particular, I think Yaron Brook commented that banking was more heavily regulated than any other industry except perhaps nuclear reactors. Subtract some hyperbole and my impression is that it’s roughly correct. Presumably this creates large barriers to entry. If that’s the case, then some laws to force payment processors to be “fair” might be tolerable.
This is true if “wanting to maintain a libertarian approach” is already a goal but wouldn’t it be better epistemics to investigate the cause monopolists market position without the already fixed opinion that it will be due to government intervention? Having that as a strong prior is fine of course but not something you “want” to be true.
I see how the wording of that sentence could be interpreted that way. Wasn’t my intention; by “in what way” I meant to encompass “to what degree”, and the answer could be “to a small or negligible degree”. I’ll note that in the next sentence I say “if the obstacles come from government intervention”, and again “If they do” in the sentence after that.
I usually agree with that approach, but I’m not convinced it applies in this case, where the monopolist gets a benefit purely from having a larger market share. I agree that if this situation was created by the government in the first place that would be a better place to target, but my understanding is that this is just a first-mover advantage for Audible. I would expect payment processors to take somewhere around 3%, but Audible takes 60% even with an exclusivity deal.
Part of this is also presumably advertising (being on Audible.com is worth a lot, and I think it’s fine that Audible benefits from creating that advertising channel), so I wouldn’t expect the cost of publishing an audiobook to drop to the cost of storage and distribution, but I’m skeptical that 60% is where the market would settle without a monopoly.
Copyright is a government-granted monopoly. Audible can only even exist because the government said that you’re not allowed to copy things. And it can only have exclusivity contracts because the things it sells can’t be legally copied in the absence of a contract.
That’s a good point. Maybe my actual least-libertarian belief is that copyright law is probably fine.
I think you could have this same problem with physical goods and services to though, as long as the government enforces contracts.
Say I want to sell tickets to a concert and have the option of listing with TicketMonopolist[1] which has 81% of the market and will charge me 60% of the cost of a ticket if I give them an exclusivity deal or 75% if I list it anywhere else, and I could list it at TicketCompetitor (19% of the market) and they will only charge me 50%. This is exactly the same deal as with audiobooks (the profit-maximizing decision is to only list with the monopolist), and I think most libertarians would agree that it’s legitimate for the government to prevent people without tickets from attending the concert (if the venue wanted them to).
In case anyone is curious, TicketMaster is only 63% of the online ticket sales market but seems to use exclusivity deals in an even sketchier way than Audible does.
I agree that the Ticketmaster scenario demonstrates the problem. But then, I have a lot of libertarian sympathies, but I’m not really libertarian.
I do observe, however, that only certain markets work that way. It seems that those are markets where the monopolist is much larger than the individual seller. That covers companies like Ticketmaster (Madison Square Garden is big, but it’s nothing compared to Ticketmaster), Amazon, and Nintendo. But if some car dealership tried to force Toyota into an exclusivity deal, Toyota would just say “no, we’re fine having our own dealers”—they’re big enough to have economy of scale even without the reseller. Also, the product can’t be a commodity—forcing a farmer into an exclusivity deal with a supermarket wouldn’t do much good, since other supermarkets are fine with other farmers. Even forcing Kraft into an exclusivity deal wouldn’t do much good.
I can’t actually think of a lot of scenarios other than intellectual property, tickets, and the non-IP part of Amazon where this happens.
Can someone create a meta-service that combines the offerings from TicketMonopolist and TicketCompetitor? Sort of like how chat clients like Adium/Pidgin had interfaces to lots of different messaging protocols and put all your contacts and conversations together. If it worked well, then the market might shift to lots of customers using the meta-service; and then, since TicketMonopolist charges higher prices, presumably it would start losing market share.
Something like this has been tried a few times with Craigslist, with services that grab data from it and provide a better interface: example. Craigslist seems to have used (a) terms of service requirements and (b) copyright claims to the users’ posts, for legal arguments. I think the copyright claim, for ads that are frequently 1-3 sentences, is risible (morally speaking). As for terms of service… I’m skeptical that the terms can simultaneously (1) be sane and enforceable, (2) allow customers to do what they currently do, and (3) prevent customers from using meta-services that collect the data and do things with it. (Versions of (3) that come to mind tend to forbid antivirus scanners, accessibility tools like screen readers, and web browsers in general.)
I think any aggregator has the same problem customers do: There’s only one place to buy the tickets. If the aggregator wants to sell tickets, they have to buy them from TicketMonopolist (and pay their fees), so they can’t sell tickets any cheaper without losing money.
For audio books, there are a bunch of distributors like this. For example, PublishDrive charges a monthly fee and distributes to every platform “for free”, but they can only give their customers the amount of money that Audible gives them, and Audible only gives them 25% royalties[1] (since they’re not exclusive).
For what it’s worth, PublishDrive passes on “up to” 45% of royalties for audiobooks on Apple Books, which is actually higher than ACX’s exclusive rate.
The value-add of the aggregator, compared to TicketMonopolist, would be finding tickets in the cases where they’re available at one of the competitors. The aggregator would charge either a nominal fee or even zero fee when the customer ends up buying tickets that come from TicketMonopolist. Either there’s an upfront or subscription cost for using the aggregator, or they can charge a fee specifically on the non-Monopolist tickets.
(I assume part of the picture is that customers find it highly inconvenient to go to more than one place to find their tickets—otherwise TicketMonopolist couldn’t charge much of a premium, hosts would just use the competitors and the customers would find them there.)
One might very well argue that copyright itself is a government granted monopoly that, under libertarian principles, ought not to exist.