Topic Archive: Business

Betting Your Business on the iPhone

Dietrich Kappe, Tuesday, September 23, 2008 @ 12:35 pm

Monopsony - the market condition that exists when there is only one buyer.

We all have heard the term "monopoly" and even know a little bit of what it means - a market where there is only one seller. But the related term "monopsony," a market where there is only one buyer, is not as well known and it's dangers not as well understood.

Certainly both monopolies and monopsonies will reduce competition, innovation and consumer choice, but they further constitute a big risk for the sellers. For businesses on the seller side a monopsony can be the kiss of death. Just ask Walmart's suppliers how good it's been for them.

Not all monopsonies are as obvious or as overtly damaging to suppliers as that of Walmart, but Apple's iPhone and iTunes appstore looks like a benign monopsony. A monopsony in that although the iphone consumer is the ultimate buyer, Apple determines what is permitted in it's appstore, and benign in the fact that Apple hasn't flexed that restrictive muscle more than a few times.

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