MAP Pricing ... the death of capitalism

[R.Elder]

Ultimate goal is to dominate, no? Monopolize and screw the hell out of anyone you can! True capitalism to my mind.

Capitalism is about making the best out of resources. Allowing the market to dictate value through supply and demand.

 

[lovinthehd]

Capitalism is about making the best out of resources. Allowing the market to dictate value through supply and demand.

Sure, that's what they say until they monopolize and screw you at will.

 

[highfigh]

I'm not addressing the wisdom of doing it, just the feasibility!
If a seller thinks he is losing business because of having to sell at MSRP, it may be beneficial. For example if a customer is ready to buy a complete system with multiple speakers and subwoofers, and the last item is the AVR with MAP constraints, and he realizes the AVR is going to exceed his fixed budget (good example is a student with a tax refund check) it may be worth pulling the "open box" trick to close the deal.
But I am pretty sure I can give you a better example:
https://www.ebay.com/itm/Denon-AVR-X4400H-Black-9-2-Channel-Network-A-V-Receiver-OPEN-BOX-PERFECT/312218588465?hash=item48b1ad9531:g:TbUAAOSwFvZbojWQ&frcectupt=true

So these guys are selling "open box" X4400H's at $800 each. That is no super deal since it is last years model, but I recall $900 as the going price for these NIB after the 4500 came out.
However, if you look above the "Buy It Now" button they show 8 available and 319 sold. How does someone end up with 327 open box AVR's? I could be wrong, but it seems likely these guys are going for high volume sales to cover the losses in profit. You have a better idea of how the numbers might work, but at 320+ units sold I bet they are making money.
Obviously, Sound_Distributors is not a brick and mortar operation and I appreciate that a B&M operation is not likely to see the volumes to readily justify doing this. However, I believe one of the original poster's messages involved his asking someone up the chain about offering the items at a discount as if he had occasion to want to do that!

Again, the reseller can put any price they want on an item, as long as they don't advertise it below MAP, so that applies to factory sealed, repacks, demo, accidentally opened, etc. Also, 'Open Box' usually means 'refurb' and some manufacturers may have favorite resellers who support the brand extremely well, so they return the favor. If you look at the Sound Distributors policies (in the 'About Us' section), they'll take anything back, for any reason. That makes open box items much more common and if a reseller is large enough, the manufacturer will be more willing to take something back and dump it off to someone who's willing to take them.

I don't know for a fact that this still happens, but when I worked for a Sony dealer, we got a whole lot of that kind of equipment and two of the pieces I got had been on display at CES (the boxes had McCormick Place as the 'Ship To' address). We were also one of the first fifty CDP-101 dealers in the US- those were good times, but the corporate mentality has changed so much that I don't know if they have the same kind of relationships with small dealers like we were.

 

[highfigh]

Ultimate goal is to dominate, no? Monopolize and screw the hell out of anyone you can! True capitalism to my mind.

That's just greed. This is a simple definition, from Wiki that explains it pretty well-

"Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. "

Competitive markets are best for all- greed is what drives one company to gobble up the competition and become, well, ATT, Amazon, etc.

When competition exists in a way that everyone is on friendly terms, business can be fun- there's usually enough for all, everyone can pick the brand they want but if more than one seller has brands, stock can be shifted when the manufacturer approves it (otherwise, it's called 'trans-shipping and it violates the dealer agreement) and if people at one place make up 'facts' about the products or competition, it was possible to stop it by making a phone call. I enjoyed that time in the business- when we had a big Pioneer Truckload sale, we sold so much that Pioneer didn't have enough to supply us for the back-orders, so they arranged for us to pick up what we needed from another dealer in Madison- this was the same place that used to come into Milwaukee to have a big sale and stir up the market, had four stores at the time and was doing hundreds of millions of dollars in annual business. When we arrived, the owner of that company came out to talk to us to find out who was selling so much Pioneer out of one small store. He even came out to our place when he was in town- ever hear of TV Lenny?

 

[Irvrobinson]

Competitive markets are best for all- greed is what drives one company to gobble up the competition and become, well, ATT, Amazon, etc.

I don't think it's valid to compare the AT&T of old, which is what I assume you're discussing (because they're not much of a force now) to Amazon. AT&T was an empowered and regulated monopoly. Amazon - and Google and Facebook for that matter - are not monopolies. Not even close. (Elizabeth Warren is an attention-seeking fool, as usual.) Amazon has lots of competition, and even their acquisition of Whole Foods has been nearly a non-event. Google does have the largest market share as a search engine, but there are other viable search engines. Using Google is a choice; AT&T wasn't. As for Facebook, millions of us survive just fine without Facebook, and there are numerous other social networking sites. I remember when AT&T was an absolute necessity, and the only way to have a phone line. In my life the most annoying monopoly remains Comcast - the only viable source for high-speed internet at my house. (DSL sucks.)

 

[R.Elder]

Again, the reseller can put any price they want on an item, as long as they don't advertise it below MAP, so that applies to factory sealed, repacks, demo, accidentally opened, etc. Also, 'Open Box' usually means 'refurb' and some manufacturers may have favorite resellers who support the brand extremely well, so they return the favor. If you look at the Sound Distributors policies (in the 'About Us' section), they'll take anything back, for any reason. That makes open box items much more common and if a reseller is large enough, the manufacturer will be more willing to take something back and dump it off to someone who's willing to take them.

I don't know for a fact that this still happens, but when I worked for a Sony dealer, we got a whole lot of that kind of equipment and two of the pieces I got had been on display at CES (the boxes had McCormick Place as the 'Ship To' address). We were also one of the first fifty CDP-101 dealers in the US- those were good times, but the corporate mentality has changed so much that I don't know if they have the same kind of relationships with small dealers like we were.

I showed a link that explicitly explains the company sets a “unilateral minimum price”. You can ignore it but it’s there and invalidates your comments above about prices.

 

[R.Elder]

I don't think it's valid to compare the AT&T of old, which is what I assume you're discussing (because they're not much of a force now) to Amazon. AT&T was an empowered and regulated monopoly. Amazon - and Google and Facebook for that matter - are not monopolies. Not even close. (Elizabeth Warren is an attention-seeking fool, as usual.) Amazon has lots of competition, and even their acquisition of Whole Foods has been nearly a non-event. Google does have the largest market share as a search engine, but there are other viable search engines. Using Google is a choice; AT&T wasn't. As for Facebook, millions of us survive just fine without Facebook, and there are numerous other social networking sites. I remember when AT&T was an absolute necessity, and the only way to have a phone line. In my life the most annoying monopoly remains Comcast - the only viable source for high-speed internet at my house. (DSL sucks.)

I like that you get monopolies don’t exist without someone to enforce them... in other words the government.

 

[Irvrobinson]

I like that you get monopolies don’t exist without someone to enforce them... in other words the government.

True, and reminds me of the most abused monopoly scheme of all - the US Patent system.

 

[highfigh]

I don't think it's valid to compare the AT&T of old, which is what I assume you're discussing (because they're not much of a force now) to Amazon. AT&T was an empowered and regulated monopoly. Amazon - and Google and Facebook for that matter - are not monopolies. Not even close. (Elizabeth Warren is an attention-seeking fool, as usual.) Amazon has lots of competition, and even their acquisition of Whole Foods has been nearly a non-event. Google does have the largest market share as a search engine, but there are other viable search engines. Using Google is a choice; AT&T wasn't. As for Facebook, millions of us survive just fine without Facebook, and there are numerous other social networking sites. I remember when AT&T was an absolute necessity, and the only way to have a phone line. In my life the most annoying monopoly remains Comcast - the only viable source for high-speed internet at my house. (DSL sucks.)

I didn't write that those are monopolies but they are trying to be a dominant player in many markets. A better example would be power companies.

The Amazon/Whole Foods thing hasn't been much up to now, but I heard they're planning to open run of the mill grocery stores, which is their way of going after Kroger (#2, nationally).

I had ATT until last Fall, when I switched to Spectrum. I had used Time Warner until I was fed up and ATT had a better price but ATT pissed me off for far too long- neither is great WRT customer service, but by comparison, Spectrum has been a walk in the park and I deal with them on behalf of my customers- far more use Spectrum than ATT.

I have yet to hear good things about Comcast, which is usually referred to as 'Comcrap'.

 

[R.Elder]

True, and reminds me of the most abused monopoly scheme of all - the US Patent system.

Between that and regulatory capture it makes it hard for competition to say the least. I had a friend that was a anarchist and he explained his criticisms of the patent system which I had never questioned, he made a lot of sense. I’m still on the fence but I no longer leave it unquestioned.

 

[highfigh]

I like that you get monopolies don’t exist without someone to enforce them... in other words the government.

Or allowing them. That usually happens when said monopoly has paid the politician(s) for letting it happen and when caught, the response is usually hand-wringing and "apologies. for not staying on top of the situation".

 

[R.Elder]

I didn't write that those are monopolies but they are trying to be a dominant player in many markets. A better example would be power companies.

The Amazon/Whole Foods thing hasn't been much up to now, but I heard they're planning to open run of the mill grocery stores, which is their way of going after Kroger (#2, nationally).

I had ATT until last Fall, when I switched to Spectrum. I had used Time Warner until I was fed up and ATT had a better price but ATT pissed me off for far too long- neither is great WRT customer service, but by comparison, Spectrum has been a walk in the park and I deal with them on behalf of my customers- far more use Spectrum than ATT.

I have yet to hear good things about Comcast, which is usually referred to as 'Comcrap'.

Power companies rely on government’s imminent domain and have been made to accommodate different carriers. It’s rather complicated because the carriers are different but the supplier is the same. They maintain the infrastructure mainly.

 

[highfigh]

True, and reminds me of the most abused monopoly scheme of all - the US Patent system.

Do you hold any patents? If not, would you want to spend time and money as you invent something that's unique and useful, but then give it to everyone?

A reminder that patents can be used to help others- patent rights can be granted to others and some corporations, like Proctor & Gamble, donate patents to colleges so they can have perpetual income. Milwaukee School Of Engineering is one of the colleges that has received this kind of gift.

 

[highfigh]

Between that and regulatory capture it makes it hard for competition to say the least. I had a friend that was a anarchist and he explained his criticisms of the patent system which I had never questioned, he made a lot of sense. I’m still on the fence but I no longer leave it unquestioned.

Care to paraphrase his comments?

 

[highfigh]

I showed a link that explicitly explains the company sets a “unilateral minimum price”. You can ignore it but it’s there and invalidates your comments above about prices.

Not all manufacturers have a UAP policy.

 

[R.Elder]

Or allowing them. That usually happens when said monopoly has paid the politician(s) for letting it happen and when caught, the response is usually hand-wringing and "apologies. for not staying on top of the situation".

Yeah that’s mostly regulatory capture that prevents competition through regulatory hoops that a new guy can’t possibly jump through.

Not all manufacturers have a UAP policy.

Some do though ... in fact many do ... they started with MAP but the many work arounds caused this approach.

 

[Trell]

I like that you get monopolies don’t exist without someone to enforce them... in other words the government.

Erh, that someone can very well be the monopolist itself having it's own private army. The East India Company had three private armies until the company and it's armies was taken over by the British Crown.

 

[R.Elder]

Erh, that someone can very well be the monopolist itself having it's own private army. The East India Company had three private armies until the company and it's armies was taken over by the British Crown.

The East Indian company was basically a government business. You said it all in your last sentence. They operated at the behest of the crown ... until they didn’t armies or not.

 

[Trell]

I don't think it's valid to compare the AT&T of old, which is what I assume you're discussing (because they're not much of a force now) to Amazon. AT&T was an empowered and regulated monopoly. Amazon - and Google and Facebook for that matter - are not monopolies. Not even close. (Elizabeth Warren is an attention-seeking fool, as usual.) Amazon has lots of competition, and even their acquisition of Whole Foods has been nearly a non-event. Google does have the largest market share as a search engine, but there are other viable search engines. Using Google is a choice; AT&T wasn't. As for Facebook, millions of us survive just fine without Facebook, and there are numerous other social networking sites. I remember when AT&T was an absolute necessity, and the only way to have a phone line. In my life the most annoying monopoly remains Comcast - the only viable source for high-speed internet at my house. (DSL sucks.)

Krugman argues in an 2014 Op-Ed that Amazon is a monopsony in some business sectors, specifically in selling books.

Apart from the monopoly/monopsony question I think of these companies has become too powerful.

 

[Irvrobinson]

Do you hold any patents? If not, would you want to spend time and money as you invent something that's unique and useful, but then give it to everyone?

A reminder that patents can be used to help others- patent rights can be granted to others and some corporations, like Proctor & Gamble, donate patents to colleges so they can have perpetual income. Milwaukee School Of Engineering is one of the colleges that has received this kind of gift.

I'm not arguing that a patent system isn't necessary, but the US Patent system has been and is a nonsensical and abused government-enforced monopoly system. Perhaps my most despised aspect of it happened in 2011, when we changed it from being "first to invent" to "first to file". Who invented something is now irrelevant. Longer term there have been the abusers, the people who patent ideas, don't productize them in any way, and then chase after hapless companies who have products that use similar concepts. Big companies routinely pay expensive license fees to people who do nothing but file, as ransom to avoid legal costs. Make up your own mind, but read about Jerome Lemelson some time if you want to see one example of what I'm talking about.

The US Patent office has also changed its policies over the years to allow virtually anything to be patented with enough supporting paperwork, including patents that are very difficult to prove infringement for, which allows corporations to build up huge portfolios of nearly useless patents. But thousands of useless patents can add up to effective legal leverage that forces oligopoly-creating cross-licensing agreements and industry groups, that reduce competition by threatening expensive litigation, and by limiting artificially who is allowed into the cross-licensing club.

Drug patents are perhaps some of the most arguably good patents, but then it's legal for pharma companies to pay off competitors to not produce competing drugs when the patents expire, in a weird profit-sharing scheme that in the end keeps drug prices artificially high.

These are but a few of a long list of reasons I consider the US Patent system an abused monopoly scheme.