I cam across an interesting article today in the Vancouver Sun. The author makes a pretty good case for calling Amazon a robber baron:
As a temporary loss leader marketing exercise, undercutting rival prices is just another form of healthy competition that’s good for markets.
But when a company such as Amazon is in a dominant or monopoly position and sells below its own costs, the market is destroyed by driving rivals out of business or keeping new entrants at bay. So the attorneys general are looking at whether Amazon’s pricing behaviour constitutes a form of market abuse under antitrust laws called “predatory pricing.”
Amazon argues it has helped publishers with its cheap pricing by expanding the e-market. But the same could have been said by the robber barons of old whose predatory pricing ushered in a host of antitrust laws designed to protect markets from monopolism.
I have to disagree. You see, there’s one detail that everyone seems to have forgotten about digital content. You can’t monopolize the market for digital content because there will always be one supplier that can’t be defeated: piracy. Raise prices too much and people simply won’t buy.
And the other detail everyone seems to have forgotten is that ebook prices have a natural upper limit: the price of a paper book. Ebooks aren’t being sold in a vacuum; they are just one segment of the market. If one f0rm costs to much more people will get the their books another way.