SCOTUS Case May End Sale Prices

An anonymous reader writes "If you own a mom & pop store and can't get rid of some of your inventory, you can always clear out some shelf space by holding a sale. If the Supreme Court sides with business interests in a case they heard today, however, such sales may no longer be possible. Since 1911 it has been illegal for manufacturers to force retailers into setting a price floor for products — individual retailers get to decide how much they sell products for. But today the Supreme Court heard oral arguments in a case seeking to overturn this longstanding rule. Should the Court do so, it would drive up consumer prices across the board. This case is particularly salient in the era of Internet shopping: consumers are now easily able to shop around to multiple retailers to find the best price. The Court could wipe out this advantage." From the article: "Should the Court abandon the... rule against minimum resale price maintenance... it would send a signal that the Roberts Court will continue to narrow the application of the antitrust laws and that the Court may disregard settled precedent and Congressional will in other areas of the law as well."

Comments

adam smith is rolling in his grave

[User 956]

If the Supreme Court sides with business interests in a case they heard today, however, such sales may no longer be possible.

I don't care what the free marketeers say, these are exactly the types of questions that capitalism can't solve by itself.

Re:adam smith is rolling in his grave

[Anonymous Coward]

I doubt it will happen. 1. IANAL but I can't forsee any good legal arguments to overturn the law. 2. This is the exact sort of thing that gets large sections of the populace up in arms, like gas prices. Even if they do overturn the law, expect Congress to enact a new one anyway. For similar reasons, I don't expect them to overturn it.

Re:adam smith is rolling in his grave

[hike2]

Are you serious? Capitalism never calls for the producer to dictate the cost that the 3rd party buys the product at... There is NOTHING in there that states that the shop owner cannot sell the goods at a loss (instead of a total loss by not selling at all). In other words, your statement makes NO SENSE.

Re:adam smith is rolling in his grave

[robyannetta]

Just imagine what will happen to Wal-Mart if they had to sell retail...

Re:adam smith is rolling in his grave

[Anonymous Coward]

But capitalism dictates the freedom to choose who you do business with. The manufacturer will choose not to do business with anyone who does not follow the guidelines set by the manufacturer.

Re:adam smith is rolling in his grave

[Anonymous Coward]

That's because they're always talking about perfect markets, which is like a communist extolling perfect communism, neither will ever exist. The market fails to optimize profit and cost due to a number of existing issues, such as imperfect knowledge, duplicity, and greed.

It's become obvious that the Republican elites are concerned only with installing an oligarchy. They support a free market less than many "dirty hippies".

Re:adam smith is rolling in his grave

[profplump]

And the free-market answer to that is that no manufacturer will be able to sell the price-fixed product because no retailers will do business with them. While I'm sure you could come up with a few counter-examples, in many markets manufacturers are at the mercy of retailers, and exactly the *opposite* problem occurs -- retailers dictate price to manufacturers. This is one of the thing people whine about when the bash Wal-Mart.

Re:adam smith is rolling in his grave

[644bd346996]

In many states it is already illegal to sell gasoline below cost.

Re:adam smith is rolling in his grave

[yoder]

"these are exactly the types of questions that capitalism can't solve by itself."

User956, you know of course that you are going straight to hell for that kind of thinking. Blasphemer!

Re:adam smith is rolling in his grave

[nomadic]

Are you serious? Capitalism never calls for the producer to dictate the cost that the 3rd party buys the product at... There is NOTHING in there that states that the shop owner cannot sell the goods at a loss (instead of a total loss by not selling at all). In other words, your statement makes NO SENSE.

No, it makes a lot of sense. See, the free marketeers/libertarians are really into contracts. These are basically the manufacturers only selling to people who are willing to enter into a contract where they only sell for what the manufacturer mandates.

How is this anti-free market? If the stores don't want to accept the terms, they're perfectly able to go elsewhere for those types of products.

Re:adam smith is rolling in his grave

[alisson]

Well both small and large retailers do it; and most manufacturers don't care, or have a reason to. Small retailers do it to get rid of stock that isn't selling well; large ones do it to get rid of... the small retailers.

Although most manufacturers do set a minimum advertiseable price. But again, many major retailers refuse to follow such rules, and most small ones aren't really subject to scrutiny.

Re:adam smith is rolling in his grave

[ehrichweiss]

I was thinking this exactly. Mom and pop shops would have lots more chance at competition, and you could have a lot of fun monitoring Walmart and report them if they offered anything at a discount. The best thing that Walmart would be able to say then would be that you could pickup everything in the same place instead of shopping 2 or 3 places.

I for one welcome our price-leveling overlords.

Re:adam smith is rolling in his grave

[Capsaicin]

And the free-market answer to that is that no manufacturer will be able to sell the price-fixed product because no retailers will do business with them.

As a player in the market I play not just for profit, but for market share. My aim is to put all competitors out of business, and since I'm in a market with very high barriers to entry I can keep them out of business. Now that I have achieved a monopoly (and monopoly rents), the retailers have no choice but to do business with me and I will certainly dictate the exact conditions under which my products can be sold. If I'm unable to achive a monopoly, I will instead collude with the other surviving players to our mutual advantage, and again to the disadvantage of retailers and consumers.

This scenario is historically why Anti-trust law was necessary in the first place.

Are you seriously suggesting that retailers are refusing to stock Microsoft products because these products come with strings attached? Reality check: Should their sales agreements specify minium resale prices, the mum & dad computer shops will be in no position to refuse MS. And they won't.

This is but one of the reasons that the intervention of the state is necessary to a healthily functioning capitalist economy.

Re:adam smith is rolling in his grave

[Tanktalus]

Actually, I would expect Walmart to continue to dictate to the manufacturers just as they do today, even if SCOTUS were to overturn this. Walmart has shown its willingness to cut out manufacturers that don't toe the Walmart line in the past - don't think that just because the manufacturers may gain the legal right to negotiate a price point with their retailers that they will suddenly have power over Walmart.

Let those price-leveling overlords try. Walmart will still crush them.

Of course, then I wonder which side /. will take - the evil manufacturers trying to gouge the end-customer, or the evil Walmart trying to shepherd all consumers into its (very large) walls, crushing all opposition.

Really, manufacturers who deal with Walmart will not bother forcing their other retailers to a fixed point because, as much as they like the volume that Walmart does, they don't particularly want to have a single retail outlet (Walmart) who will then have even more power to dictate to them. It's only premium manufacturers that may care about the outcome of this case.

(And I'm not sure what the laws are like in other countries - so we may see spam advertising for "cheap Canadian iPods!!!!" soon if SCOTUS does overturn it.)

Re:adam smith is rolling in his grave

[Anonymous Coward]

retailers dictate price to manufacturers. This is one of the thing people whine about when the bash Wal-Mart.

Except that there's only one Wal-Mart, and what will happen is that Wal-Mart will dictate that they get a price floor that is 75% less than everyone else's, and they mop up their competition.

Personally, I think that contractual price floors are repugnant, not because of antitrust concerns, but because it's a contract that affects me directly without permitting me to have any negotiation rights or to even agree to it.

Re:adam smith is rolling in his grave

[tkrotchko]

"Just imagine what will happen to Wal-Mart if they had to sell retail..."

They already do. They're only cheaper on stuff that you can't compare to other stores, mostly made to sell relatively inexpensively.

Every time I go into Wal-Mart, I always see the highest prices on stuff that I can actually compare to another store. Electronics, video games, car parts Wal-Mart is about the most expensive place to buy them.

Re:adam smith is rolling in his grave

[good soldier svejk]

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices." - Adam Smith (Wealth of Nations, p 145)

Re:adam smith is rolling in his grave

[theshowmecanuck]

Tell that to Dell and other PC makers who have to cave in to Microsoft. (I'm not MS bashing here, it is the first example that came to mind.) If you have a true or effective monopoly you can dictate price, especially if the manufacturer chooses to abuse the monopoly. Even more so if the government/courts choose to ignore and/or abet the abuse. In the case of MS, the republican direction to the justice department was to basically ignore the fact that MS was found guilty of abusing their effective monopoly.

It sounds like if the SCOTUS finds in favour of the manufacturers, they will inadvertently abet monopoly abuse. So cases similar to MS's monopoly abuse might be harder to prosecute since the monopolist will be able to legally dictate conditions to the downstream consumers... retailers and their customers. All they have to do is come up with some excuse as to why they keep raising prices, and no-one can stop them. Or they might insist on lower prices that huge volume retailers can subsist on because of the volume, but modest businesses will die because they need to have a higher markup due to lower volume sales... when it should be the choice of the retail business only.

Re:adam smith is rolling in his grave

[dytin]

As a player in the market I play not just for profit, but for market share. My aim is to put all competitors out of business, and since I'm in a market with very high barriers to entry I can keep them out of business. Now that I have achieved a monopoly (and monopoly rents), the retailers have no choice but to do business with me and I will certainly dictate the exact conditions under which my products can be sold. If I'm unable to achive a monopoly, I will instead collude with the other surviving players to our mutual advantage, and again to the disadvantage of retailers and consumers.

The problem with your scenario is that it relys on a market that has a "high barrier to entry", or a market whose barrier to entry is so high that no other players can enter, no matter what. The reality is though, in a true free market this is never the case. No matter how high the barrier to entry, there is always room for another player.

There are two things that can help overcome high barriers to entry. Large companied with lots of capital, and innovation of new technologies. Large companies help because, for example, if every widget company decided to start selling their widgets for double the price that they should, then some other rich company with lots of capital to invest in making widgets is going to come in and start selling widgets for less.

The most important equalizer to high barriers to entry though is innovation. No matter what, new technologies will always be invented, and no monopoly can ever rest on its laurels forever. The market may be unbalanced for a short while, but it will even itself out, quicker and fairer than slow moving anti-trust laws can.

The only way that there can be a market with an infinitely high barrier to entry is when the government is involved, through patents, copyrights, subsidies, and other protectionist laws.

Re:adam smith is rolling in his grave

[Capsaicin]

The problem with your scenario is that it relys on a market that has a "high barrier to entry", or a market whose barrier to entry is so high that no other players can enter, no matter what. The reality is though, in a true free market this is never the case.

You don't need to achieve a pure monopoly to dictate to retailers or charge near monopoly rents. Look at the example I cited, ie. the PC OS market Sure you can point to MacOS, and Linux, but these don't seriously dent Microsoft's power, especially in regard to small business computer retailers (maybe someone as big as Dell can get away with shiping PCs without that OS installed ...). Note the barrier to entry here isn't capital expenditure, as it is in chip manufacturing for instance, but primarily network effects.

The most important equalizer to high barriers to entry though is innovation. ... The only way that there can be a market with an infinitely high barrier to entry is when the government is involved, through patents, copyrights, subsidies, and other protectionist laws.

While I'm against the overweening IP regime we are currently subjected to, we should not loose sight of the necessity of IP regulation. IP addresses another market failure, namely the 'free rider effect,' (again demonstrating the necessity of some limited state intervention for a functioning capitalist economy). For innovation to be an effective equaliser to barriers to entry, it requires that very IP protection you decry! Otherwise the innovator will simply have their innovation taken from them by the established players in the market. The innovator bears the research costs, while big guys use their market power to cut that innovator out from the profits of their own innovation. Not a good look.

The market may be unbalanced for a short while, but it will even itself out, quicker and fairer than slow moving anti-trust laws can.

That is a very romantic notion ... unfortunately history demonstrates the exact opposite.

Re:adam smith is rolling in his grave

[Achromatic1978]

I would actually have used Apple as a better example here. MS software on sale = not common, but not rare.

Now, just watch the reaction (and how much stock - read, 'none at all' - you get next shipment) if you dare to have the gall to sell iPods under Apple's Retail Price (I won't call it a 'recommended retail price', because Apple exerts its power and control to ensure that it is no less recommended than death or taxes).

Re:adam smith is rolling in his grave

[Capsaicin]

I would actually have used Apple as a better example here. MS software on sale = not common, but not rare.

I was talking prosepectively, if SCOTUS change the law. An better example of MS's exploitation of its market power would be the refusal to supply to any retailer that sells new boxes which are not bundled with MSWindows. Apple's power in this regard has more to do with branding (why buy another mp3 player when you can get an IPod for 4x the price?) than market power and network effects.

Re:adam smith is rolling in his grave

[dbrutus]

It's not anti-free market. It just puts the onus on consumers to financially kneecap producers who set such contracts. That's going to be ugly. The problem isn't that the producers get this power. The problem is said financial kneecapping is likely to be stopped by congressional intervention. *That end game* is what is going to be anti-free market.

Re:adam smith is rolling in his grave

[dytin]

Would you truly say that you are unhappy with the state of the desktop OS market? I really don't know enough to comment decisively, being a Linux user my views are probably slighly skewed, I feel like I have all the choice in the world. But, I think that most consumers aren't all that unhappy either. The price of Windows has not gone up over the years, and the OS itself has gotten better. Additionally, I would argue that MS's "monopoly" has been gradually slipping year by year. IE is no longer the only legitimate browser (most sites support FF these days, and the numbers are growing), Office now has some serious competitors (Google Apps, and openoffice to a lesser extent). And, although again, my view may be skewed, I think that Linux is only becoming more and more of a threat.

In a free market, monopolies do die on there own. Sadly, there have been very few monopolies in recent history that weren't a result of the government.

As for IP, I didn't actually decry it, I just said that it is one of the only ways for infinitely high barriers to entry to exist. I do think that it could be possible for most IP to be protected through trade secrets and contractual aggreements. However, I agree that in today's society, limited patents and copyrights play an important role, and I am not going to argue against them.

Re:adam smith is rolling in his grave

[Melfina]

I wish I had mod points for you.

Re:adam smith is rolling in his grave

[mosb1000]

The word capitalists use is free market. In a free market people would be free to exchange goods and services whenever both sides of the equation wanted to. In a free exchange, both parties gain and neither loose.

Lack of information does lead to mistakes, and it should be illegal for one side to mislead the other. But, I see no reason that any contract should be illegal so long as each party understands what they are getting into, and does so willingly. I don't see how greed enters the equation. If one side is too greedy, the other will simply refuse the exchange.

Re:adam smith is rolling in his grave

[Brickwall]

Um, but M$ forces retailers to promote their products and penalizes them if they advertise other operating systems such as, say, Linux. And there seems to be no shortage of retailers eager to do business with them.

Re:adam smith is rolling in his grave

[aztracker1]

This isn't really a free market issue... a "free" market would allow for people to be able to sell at whatever price they like...

Re:adam smith is rolling in his grave

[AliasMarlowe]

Not a problem. Minimum prices do not apply to auctions (such as eBay).

Items on the shelves or web site of a discount store (oops, I meant auctioneer, of course) would be marked with two prices: the alleged minimum price would be a fictional "buy now" price and the real/discount price would be the "opening bid" level.

A discount vendor (oops, auctioneer) could simply hold a quick 1-customer auction for the contents of the customer's shopping trolley at the checkout. The checkout would just tally up the opening bid prices, and accept the customer's bid at or above that level. Auction ends and sale completed, because only one bid was received.

Re:adam smith is rolling in his grave

[AliasMarlowe]

...oh drat! I forgot to patent that idea as a business method....

Re:adam smith is rolling in his grave

[Anonymous Coward]

the evil manufacturers trying to gouge the end-customer, or the evil Walmart trying to shepherd all consumers into its (very large) walls, crushing all opposition.

Considered the possibility that we're against both? ;)

If it's overturned, it's entirely possible that walmart will use its clout to dictate that the company set a price floor for everyone but wal-mart.

Re:adam smith is rolling in his grave

[ultranova]

Lack of information does lead to mistakes, and it should be illegal for one side to mislead the other. But, I see no reason that any contract should be illegal so long as each party understands what they are getting into, and does so willingly. I don't see how greed enters the equation. If one side is too greedy, the other will simply refuse the exchange.

If you get to an accident at a lonely road late some night, and I happen to pass by and agree to call an ambulance if and only if you sign a contract giving me all your property - and if we're going with total contractual freedom, selling yourself to slavery to me too - in exchange for this service, should the contract be enforced ? You did enter it willingly, and does fill all the requirements of a contract (you pay me, I perform a service calling the ambulance on your behalf); your other choice was to bleed to death, but that was no fault of mine.

And if the above contract shouldn't be enforced, should I be forced to pay the bill for food I bought on credit - after all, I can't survive without food, so I only entered that particular contract on pain of death ?

Total contractual freedom sounds good on paper, but has far too much potential for abuse to work in the real world.

Re:adam smith is rolling in his grave

[cayenne8]

"Now, just watch the reaction (and how much stock - read, 'none at all' - you get next shipment) if you dare to have the gall to sell iPods under Apple's Retail Price"

I dunno..Amazon.com often has them below the usual 'retail price'...sometimes you have to first add it to your cart to see the price, but, still I don't think Apple witholds supply from Amazon.com.

Re:adam smith is rolling in his grave

[ElectricRook]

these are exactly the types of questions that capitalism can't solve by itself

I disagree, I see this as an attempt to install a "prohibition" against the free market. I believe this problem will be solved by the gray market.

Meaning that when you can't go to a local retailer, to buy a new CPU for less than say US$2,000... A Taiwanese company will pop up to sell you one for $300. Next your Mom will want to upgrade, and you'll buy one for her, then your cousins and friends, and the local hands-tied retailer will go under.

Hence, the problem of a restricted free-market will be solved by free-market capitalism itself.

Of course today there is another /. article about controlling the ability to make transactions with just anybody...

Re:adam smith is rolling in his grave

[Pollardito]

The price of Windows has not gone up over the years, and the OS itself has gotten better. everything about the cost of buying a new PC has gone down in price over the years...except the cost of Windows. they sell more and more copies and because it's software their own cost to develop it is less linked to the number of copies sold versus something like RAM or Hard Drives, but their piece is the one that doesn't get cheaper.

Re:adam smith is rolling in his grave

[default luser]

everything about the cost of buying a new PC has gone down in price over the years...except the cost of Windows. they sell more and more copies and because it's software their own cost to develop it is less linked to the number of copies sold versus something like RAM or Hard Drives, but their piece is the one that doesn't get cheaper.

You are generalizing a rather complex market.

The price of Windows sed to be easy to track 15 years ago because these was only ONE version. The OS was fairly simple, and Microsoft could make the incredible profit ratios they did without charging through-the-nose.

Then, we had a home line (Win9x/ME) and a professional line (NT), merged together under the same OS with XP Home and Professional. By then, the price of entry was double for Retail, but still the OEM price of XP Home was relatively low.

Today, the OS is incredibly complex, and it is that way because these is a constant demand for new features: new hardware standards, new software standards, new drivers, new bundled applications, new interfaces...you name it! While you personally may not want ALL of these features, there is demand for every one of them.

But Microsoft has answered your plea - even Vista comes in price-points that are affordable. You have three options for home-users now: Basic, Premium and Ultimate. Basic doesn't come with many new features over XP, but then Basic really only exists so OEMs can offer low prices, and tempt your to upgrade to Premium. Premium comes with most of the features any home user could want (much more than came with the old XP Home), all below the price-point of XP Professional, which I think is a nice improvement. Finally, we have Ultimate, which has EVERTHING - even more features than Business. Most people don't need all these features, but it is there for those that do.

I do think it's a mistake for Microsoft to only include Media Center with Premium (better to have tons of media center PCs out to entice peope to buy extenders like the 360), but that's the only real feature gap I see with this.

Face it man: MS cannot charge more than it currently does for a baseline OS - OEMs would skin them alive. What they can do is charge extra for new features, and that is why we have multiple home versions this time around.

Re:adam smith is rolling in his grave

[Anonymous Coward]

The Mom & Pop computer shops are in the BEST position to refuse Microsoft... they seem in my experience to be most likely to ALREADY tell Microsoft to shove off and just put Ubuntu or something onto their systems (since they are not getting the special deals that Dell etc. are.)

Re:adam smith is rolling in his grave

[JesseMcDonald]

Personally, I think that contractual price floors are repugnant, not because of antitrust concerns, but because it's a contract that affects me directly without permitting me to have any negotiation rights or to even agree to it.

This sentiment -- that everything that might affect my environment should be under my control, subject to my own personal veto -- is at the heart of authoritarian politics. In essence it declares society subservient to the individual's will. The policitally successful become the masters; everyone else becomes their slaves.

The opposite philosophy, that things can rightfully exist which may affect me and which I have no rightful control over -- that other have a right to their own decisions -- is the essence of the libertarian position, which places all the individuals in society on the same level under the common law. (Which, incidently, is why it's called the common law.)

Libertarianism is social by nature; authoritarianism, anti-social. The economic end of libertarianism is cooperation and the libre market; the economic end of authoritarianism is isolation and self-sufficiency.

Re:adam smith is rolling in his grave

[Erpo]

You don't need to achieve a pure monopoly to dictate to retailers or charge near monopoly rents. Look at the example I cited, ie. the PC OS market Sure you can point to MacOS, and Linux, but these don't seriously dent Microsoft's power, especially in regard to small business computer retailers (maybe someone as big as Dell can get away with shiping PCs without that OS installed ...). Note the barrier to entry here isn't capital expenditure, as it is in chip manufacturing for instance, but primarily network effects.

Hear hear! Anti-trust laws are great. Still, there's nothing like starting your own business to give you perspective. I grew up in a community of lefties so I've always felt that regulating businesses to limit the harm they can do is a good idea. Then I started a business in New Mexico (a low-regulation state) and in California (a high-regulation state), and the difference is eye-opening. I still believe in regulations that limit the actions of businesses, especially corporations where the owners are shielded from a lot of the legal liability resulting from their choices, but I'm gentler with my judgments now.

While I'm against the overweening IP regime we are currently subjected to, we should not loose sight of the necessity of IP regulation. IP addresses another market failure, namely the 'free rider effect,'

This is not a good line of reasoning. It goes like this:

• We have a problem.
  
• Doing A solves this problem.
  
• Therefore, we should do A.
  

This is a logical fallacy. It ignores the potentially serious consequences of doing A (i.e. having copyright and patent laws). It also ignores the possibility that there may be another way to solve the problem.

Ian Clarke, the founder of freenet, has a great argument that says freedom of speech and copyright are incompatible. I, for one, think freedom of speech is more important that copyright. And for the curious, there are several ideas floating around about how to encourage innovation without resorting to copyrights and patents. Try searching for the "patronage system" or "ransom licensing". They're not perfect, but they are proof that alternatives to copyrights and patents exist.

P.S.

There is at least one logical fallacy and at least one grammar error in my post. See if you can find them!

Re:adam smith is rolling in his grave

[jwiegley]

Ok... Start competing for internet service. Several large (HUGE) companies and lots of good technologies.

Clients want high speed bandwidth. Currently US providers have very high prices and you want to take advantage of this opportunity. It is very hard for wireless types of services to provide the level of bandwidth possible with land based solutions and land-based technologies are cheaper so you select to provide land based internet service.

Now... Go build another land based service. Oh wait you can't. You don't, and can't, own the land the wires run over. You will have to lease pre-existing bandwidth from the Large companies.

Infrastructures are where classically a lot of profit has been possible. Railroads, Telephones, Television, Cable TV, shipping, etc. These are all perfect examples of where you are either one of the first or you will have a high cost of entry and all the large companies in the world and innovation in technology won't make a difference.

It seems to me that your theory has a fundamental flaw in that it assumes both a perfectly free market and a perfect socialist society where nothing is actually owned to get in your way (like the land and telephone poles.) In a political system that allows ownership and contracts then companies can always maneuver to lock somebody out through ownership or agreement. I.E. "You can't do that because I own it and I won't let you" or "You can't do that because he owns it and I have already paid him to agree to my terms which exclude you."

Yes, it seems to me that anti-trust laws are a requirement of capitalist society (though I think we could do with less legislation in this and other areas). It's a fact that some humans are inherently evil/greedy/unethical/immoral/whatever-you-want-to -name-it and will take action to harm or inhibit others to maximize their own profit. Therefore it is necessary for some government control over their behavior to make life bearable for everybody. (Unless you are fan of anarchistic systems, in which case... please invite me to your world I have lots of good unethical/immoral tendencies that I wish to cater to.)

Re:adam smith is rolling in his grave

[Grant_Watson]

That's the annoying bit; TFA didn't state the arguments in favor of overturning the law. Perhaps it reaches too far into intrastate commerce?

Re:adam smith is rolling in his grave

[jonbryce]

In a genuinely free market, the retailer would just go to another manufacturer and get the same goods from them.

Re:adam smith is rolling in his grave

[jonbryce]

Large retailers do it to get rid of stock as well. At this current moment, I am eating something I bought from a large retailer, Sainsburys, which was reduced from £3.69 to £0.30 because its sell-by date is today and there was still a load of them on the shelf. They are happy because they got something for the stock, rather than having to pay someone to empty it out of the bin, and I'm happy because I got some cheap food.

Re:adam smith is rolling in his grave

[alisson]

Very true! And their problems are typically on a larger scale, as they buy massive amounts of what they think will sell, and then are stuck with dozens, hundreds, or even thousands of what did not.

Yet, this cam be a problem of a different magnitude for small retailers, which likely sell a much smaller variety of goods, decreasing their chances of a good return. Because of this, they end up with a more vested interest in every sale. So, you'll typically get better service at a small store, because they do need to sell you that widget to stay in the green. Walmart can lose a case of widgets, and still do relatively well.

Which is also why produce is so expensive, but that's a bit off topic :)

Re:adam smith is rolling in his grave

[246o1]

"In a free market, monopolies do die on their own."

Usually, this is true. For instance, if I have made agreements with every country to gain the rights to their oil, and thus have a monopoly, one of these things will happen, all of which EVENTUALLY result in the death of my oil monopoly:

1) I am an idiot, and let those rights slip away. Not bloody likely.
2) They break the agreements and screw me, letting another player in the market. Within the rights of a government dealing with a corporation in my opinion, but not an aspect of an ideal free market.
3) After years/decades/centuries of my price gouging, during which period I become the dominant economic player on the planet, someone devises a good alternate fuel and expands the marketplace, forcing me to lower my prices in order to compete.
4) After years/decades/centuries of my price gouging, during which period I become the dominant economic player on the planet, I use my massive wealth to buy the rights to all alternative energy technologies, and either withhold them or let them out at equally monopoly-leveraged prices.
5)After years/decades/centuries of my price gouging, during which period I become the dominant economic player on the planet, there are no alternative energy sources developed and we run out of oil. I am still the richest person on Earth, but that's useless (we've already passed this possibility, technologically).

As you can tell, only number 3 is realistic and good for consumers, but even that would take an extremely long time. And, as the economist says, "In the long run, we're all dead."

A true monopoly on something important to the economy (or even more minor components, really) could be massively disruptive to society. If you gave me a global oil monopoly in 1900 and I didn't have the most powerful organization in history by 1970, then I would be either a philanthropist or an idiot. And modern economic ideas say companies shouldn't be philanthropists.

All of this ignores the disproportionate power of wealthier interests on the governments of many countries, which also plays in the favor of monopolies.

All in all, a world without anti-monopoly legislation is a world that would suck for more people. Which is the opposite of good, in my moral framework

Isn't this the definition of the Free Market?

[tentimestwenty]

As a retailer, I would simply stop stocking any product that forced me to sell at price higher than the market could bear. This would backfire on manufacturers and have a terrible effect on availability and ultimately amount of goods sold, i.e. recession time... In some cases Internet retailers sell at or below cost as loss leaders, or the volumes are so much higher than a small store could sustain but I don't see how you could apply this equally to all products sold.

Re:Isn't this the definition of the Free Market?

[SRA8]

Umm...unless all the major manufacturers executed this change together.

Re:Isn't this the definition of the Free Market?

[High Hat]

The Problem being, this way other stores can get a competitive advantage over you by stocking the products, in effect probably driving you into ruin long before your boycott has had any noticeable impact on the manufacturer's business decisions...

Re:Isn't this the definition of the Free Market?

[TodMinuit]

So then I start a manufacturing business that doesn't price fix and become the new overlord.

Re:Isn't this the definition of the Free Market?

[Anonymous Coward]

Yes, I'm sure you would.

Wait, why haven't you done that already?

Re:Isn't this the definition of the Free Market?

[Anonymous Coward]

NO, then you get sued out of existence for patent violations.

Re:Isn't this the definition of the Free Market?

[Alpha830RulZ]

Most specialty retailers don't have a problem with the price maintenance contracts. They give the small guy an even chance against the interent powerhouses. In areas of destination oriented specialty gear, like golf clubs and fly rods, price maintenance programs allow the small shop to stock merchandise and have a shot at making money on it, that wouldn't happen if you were able to get discounted Ping golf clubs over the internet. Price maintenance programs work well for the manufacturers and the widespread retailers, they only hurt consumers and big box/internet retailers.

I'm of a bit of a libertarian mind here. If someone makes a good, and wants to sell it with a price maintenance restriction, I think that they should be able to do that, especially if, as is the case under current US law, the sole retaliation allowed to the manufacturer is simply ceasing to sell the retailer more of the good. I don't think anyone who hasn't paid for the goods has a dog in the hunt.

Re:Isn't this the definition of the Free Market?

[aeoo]

Right now they are setting a minimum price, so you can at least stop stocking that item. Soon Congress might make a law that requires certain types of shops to stock certain types of good if they want to stay in business. Then what will you do?

As your freedoms are eroded, you can say in your whiny voice "fine..fine...but then I won't do it". But there is only so much you can tolerate. Instead of saying "fine it doesn't matter" you should maybe pay attention. It matters.

We have so many laws that look bad, that right now being an outlaw is not necessarily being a bad person. And that's very unfortunate.

Re:Isn't this the definition of the Free Market?

[soft_guy]

So then I start a manufacturing business that doesn't price fix and get my legs broken.

Fixed that for you.

Re:Isn't this the definition of the Free Market?

[McGiraf]

"As a retailer, I would simply stop stocking any product that forced me to sell at price higher than the market could bear. This would backfire on manufacturers and have a terrible effect on availability ..."

Is your name Mart?? as in Wal-Mart , otherwise i don't think you would have much effect on anything as a retailer is you refuse whatever.

Re:Isn't this the definition of the Free Market?

[theonetruekeebler]

As a retailer, I would simply stop stocking any product that forced me to sell at price higher than the market could bear. So what? I'm pretty sure the idea is to force you out of the market so they can sell their products directly, taking home the full retail margin instead of mere wholesale.

Step two will be to announce "tiered" pricing floors, where retailers with monthly volumes of 0 to 10 units are required to have a floor of 1.0*x, with 11 to 999,999 units have a floor of 0.99*x, and Wal*Mart has a floor of 0.75*x. Oh, they'll find a way around public outrage, like offering absolutely identical Silver, Gold and Platinum Editions of the same product, but only when they're purchased in quantity profiles matching, well, whatever the hell they want them to match.

SCOTUSblog has a writeup on today's arguments. Interesting is Justice Kennedy's question that if it's illegal for a whole bunch of retailers to band together and fix the price on a product, why is it okay for the manufacturer to do the same?

I just finished reading Theodore Rex, a history of Theodore Roosevelt's presidency. I am absolutely blown away by the parallels between America now and America a century ago, and the differences between how Roosevelt and Bush are executing their duties. In this case it's to do with whether corporations consolidating their power and reducing the free market to a tight little oligarchy controlled by a single politician's prayer breakfast is a good thing or a bad thing.

Re:Isn't this the definition of the Free Market?

[SageMusings]

Since 1911 it has been illegal for manufacturers to force retailers into setting a price floor for products -- individual retailers get to decide how much they sell products for.

Why does Apple get to dictate the price of the iPod?

Re:Isn't this the definition of the Free Market?

[Slow Smurf]

I would imagine, though I have not looked it up, that they refuse to continue to do business with a store that charges less than the official price, or they have a contract that stipulates the final price. They have a monopoly on ipods, which are perceived as at least a somewhat different thing than "general" MP3 players. Apple can get away with this, most other companies can't.

This would make selling it for less illegal under any (most?) conditions.

Re:Isn't this the definition of the Free Market?

[shark72]

"Why does Apple get to dictate the price of the iPod?"

Apple has a MAP program. You can sell iPods for less; you just can't advertise them for less if you expect to get any support (cash or otherwise) from Apple.

Fry's gets around this. They'll run newspaper ads in which they state that the price of the iPod is $X and that you'll get a $Y rebate, but they stop short of the usual step of pointing out that your final price is $X - $Y.

By the way, Universal Music tried doing a similar MAP program with Tower Records a few years back, and Best Buy and Wal-Mart put a stop to that real fast. We all got settlement checks from Universal, and Tower eventually went out of business. Great news for anybody who doesn't like record companies, subscribes to "what's good for Wal-Mart is good for the country," and doesn't particularly mind the slow death of the indie music retailer at the hands of outfits like Best Buy and Wal-Mart which can afford to use CDs as loss leaders.

Re:Isn't this the definition of the Free Market?

[Brandybuck]

Then one manufacturer comes along who doesn't and starts vacumning up marketshare.

Seriously. Stop imagining conspiracies of collusion between cutthroat competitors. For example, suppliers today *could* collude to aggressively collect on unpaid accounts, and put the screws to mom-and-pops. But they don't, because it would drive business into the arms of suppliers who don't. If SCOTUS rules in favor of this silly idea, it would be no different. A few wholesalers may decide to act like imperious assholes, but they'll end up like SCO wondering what happened to their revenue stream.

Re:Isn't this the definition of the Free Market?

[quanticle]

That would work only as long as the other manufacturers couldn't temporarily undercut you for the purpose of driving you out of business. Now, officially they can't do that; each manufacturer is supposed to set his or her price independently. However, if there is an established market price, and you go below that, it would be very possible for the other marketers to undercut you long enough to put you out of business. After all, you are the newcomer to the market and therefore have less capital to burn than the older, more established companies. You could sue under the antitrust provisions of US law, but even a victory would be cold comfort if your business was dead by the time your case got resolved.

Re:Isn't this the definition of the Free Market?

[CCFreak2K]

Sounds familiar.

Re:Isn't this the definition of the Free Market?

[Anonymous Coward]

The solution to this would be for manufacturers (or really, their agents and distributors) to offer to take back unsold merchandise for partial or even full credit. Taken to an extreme, a store might not pay until or unless the item sells. This sort of take-back for credit trade IS done now with books, magazines, movie DVDs, video games and software among other niche markets.

This reduces the burden to the store to pay for inventory, however it also reduces the stores ability to cut prices to move product.

Anyway, IF the SCOTUS changes the game, the solution seems simple to me: prices would be fixed by distributors or something, right? So the stores would just need to source from somewhere else and break the contract train to get out from any obligation to hold pricing. If you don't buy direct from GE, then you've got no obligation to them to sell the light bulbs for a dollar. If you buy bulbs from Joe down the road, your pricing obligation would be to him and I bet he'll tell you want you want him to say.

Where he gets his product is not your concern for the most part.

I think they'd be nuts to screw around with the free market and I don't expect them to do so.

Re:Isn't this the definition of the Free Market?

[Logic and Reason]

+5 insightful? What is this crap? Yeah, like the Hershey's cartel is really going to hire a bunch of goons to "take care of" a rogue chocolate maker...

Re:Isn't this the definition of the Free Market?

[forgotten_my_nick]

You make a good point but try to see it from the other end. Lets say there is no bottom price, certainly larger shops can come in and offer goods at way below market price which puts all the others out of business. They make a loss on that while still making a profit in other areas. After the competition is mostly killed off they can start to work the prices again.

This already goes on in the USA. Walmart and its famous gallon jar of pickles for example.

http://www.fastcompany.com/magazine/77/walmart.htm l

Re:Isn't this the definition of the Free Market?

[maynard]

Oh. Of course not. Such things have never happened in the past.

The Pinkertons specialized in such corporate sponsored actions.

Re:Isn't this the definition of the Free Market?

[IamTheRealMike]

Then one manufacturer comes along who doesn't and starts vacumning up marketshare.

You're forgetting about cost of entry. If the top 3 x86 chip vendors started colluding, the market wouldn't respond because the costs involved in designing and manufacturing a fast x86 chip are stupendous. Intel/AMD/etc would damn near have to withdraw their products from the market to stimulate competition and it'd still take years for the newly founded company to catch up.

Markets aren't perfect at all, that's why they're regulated in the first place ...

Re:Isn't this the definition of the Free Market?

[Anonymous Coward]

That sort of thing worked in the past, but do you genuinely believe it would work today?

Your point might have more validity if your examples weren't nearly a century old.

There are mechanisms that protect against such abuses these days.

Re:Isn't this the definition of the Free Market?

[Brandybuck]

Markets aren't perfect at all, that's why they're regulated in the first place ...

You're saying the regulations and the politicians and bureaucrats who write them are perfect? Give me a freaking break!

Re:Isn't this the definition of the Free Market?

[Brandybuck]

The Matewan case is not so straightfoward. The workers were being evicted from company property. Pinkerton, however, should have been dissolved and its owners imprisoned. Not because they were exemplars of a free market, but because they were extramarket criminals. The only legitimate role of government in a free market is to protect the lives and properties of the people. By deliberately and willfully turning an eye to the excesses of Pinkerton, the government failed in its responsibilities.

Just because some people are criminals does not make everyone a criminal. The fact that some criminals over a century ago broke strikes by breaking legs DOES NOT mean that it's the normal state of events today! The grandparent post was not insightful, it was idiotic.

Good news for the black market

[Anonymous Coward]

Right now, many dealers show "prices too low to list" or "call" to get around distribution rules. You're gonna see creativity like never before if this happens.

Re:Good news for the black market

[GiovanniZero]

It's called MAP(minimum advertised price), I don't think the rule needs to change because MAP is plenty good. You may think it's bad because you may not be able to find what you want for quite as cheap but it allows small scale retailers to compete with the big boys. In the end it's probably a net positive effect for the economy.

Re:Good news for the black market

[phoenixzorn]

This applies currently to many sales venues, including mail-order, internet sales, and even local retail sometimes. What people don't realize, is that even when Ma & Pa put their 35% off sale on at the end of the year to clear out merchandise, they aren't lowering the price below cost in 99% of the cases. The manufacturers would have to be retarded to force distributors - or even retailers for that matter - to sell their products at anything more than cost. Enforcing such laws would cause Ma & Pa to just go find a different manufacturer.

Re:Good news for the black market

[publius1234]

Price controls/manipulation are never a long term positive economically speaking. These kinds of things always lead to inefficiencies, which have a net negative economic impact.

They do, however, make excellent fodder for populist politicians and the pathologically uninformed. Bread and circuses, anyone?

Re:Good news for the black market

[mikelieman]

EVERY single transaction will involve a haggle.

I ain't buying it for 149.95... I'll GIVE YOU 134.50 for it. Deal or No Deal?

I'm thinking they'll TAKE the offer.

Re:Good news for the black market

[monopole]

You keep using that word. I do not think it means what you think it means.

Populism A political doctrine or philosophy that proposes that the rights and powers of ordinary people are exploited by a privileged elite, and supports their struggle to overcome this

Um, populist politicians arguing for price floors as a bread and circuses measure? Oh yeah, which popular constituency asks for higher prices and rewards politicians for them? This is a massive dilution of anti-trust law a cornerstone of populist doctrine in favor of large monopolies and oglipolies. This directly serves 'malefactors of great wealth' as Teddy Roosevelt, the most notable populist of his time, would say.

Re:Good news for the black market

[maetenloch]

Oh yeah, which popular constituency asks for higher prices and rewards politicians for them?

Farmers. Farmers in Iowa seem especially popular with politicians.

Re:Good news for the black market

[publius1234]

The poster to whom I replied wrote "...allows small scale retailers to compete with the big boys". That's the same rhetorical style generally attributed to implementors of the political doctrine or philosophy called populism. I was responding the manner in which the OP framed his argument and was not trying to imply that price floors are popular. Sorry for the confusion.

Re:Good news for the black market

[mr_matticus]

It depends where you draw the line. Maximum efficiency for markets can easily deplete a given resource, producing a glut of supercheap finished products, but then forcing the industry to shut down. Therefore, 100 years from now, the best thing for the economy would have been to regulate the production rates early on--consumers are not reliable for pacing.

What's absolutely best economically speaking is not always desirable. Take fossil fuels--there's plenty of demand for cheap, low priced fuels. But supply and demand simply aren't capable of pacing over time. What do you do when all the farmers grow the profitable crops and not the essential ones? What happens when "the market" uses all the old growth wood and there's nothing but saplings left and prices skyrocket?

There's the counterargument, of course, that prices will increase as supply diminishes to compensate, but by the time that mechanism kicks in, it's too late. If the people at Y0 paid 10% more, you'd have gotten Y+15 of reasonable prices. Charging more up front artificially can result in net financial savings, something raw supply and demand could not provide.

Re:Good news for the black market

[bnenning]

Maximum efficiency for markets can easily deplete a given resource

When you have a product that's currently widely available but is being used up quickly, some people might realize that it will become more scarce in the future, and try to lock in a guaranteed supply. If enough people do that, the price rises, thereby discouraging rapid consumption. Of course, when this is done with oil, we call them evil speculators and demand that they be stopped so we can have artificially cheap gas (while simultaneously demanding that we "do something" about global warming).

If the people at Y0 paid 10% more, you'd have gotten Y+15 of reasonable prices. Charging more up front artificially can result in net financial savings, something raw supply and demand could not provide.

Evidence?

Re:Good news for the black market

[mr_matticus]

Speculation only works for non-perishable goods that can survive persistent storage. It further requires a tremendous number of speculators to influence a national- or global-scale supply. There's also the great risk with speculation that your stockpile will ultimately become worthless before you can capitalize on it--the planet shifting suddenly away from fossil fuels, for example (it's not all that likely in energy, but it happens frequently in other markets).

As for evidence for the latter, it's basic math. If the price is higher from the offset, the steep acceleration at the end of the curve is delayed as a function of the difference between the "market" and "regulated" prices (from the resultant extended supply time frame). The specific numbers were arbitrary for illustration. The shallower curve that comes of this ensures a more stable price over the long term--instead of cheaper prices up front and super-high prices at the end, you have ultimately spent less because the massive price upswing was delayed longer, more than offsetting the initial surcharge. The amount of the surcharge would of course have to be selected in a non-arbitrary fashion.

One thing's for sure...

[Anonymous Coward]

The RIAA would have a field day with this.

This impacts botique items the most

[davidwr]

Designer merchandise manufacturers will just tell vendors like you "buh-bye."

Ditto vendors who have a lock on their product, such as Microsoft. As it is, it's very difficult to find MS-Windows below MSRP. Under these rules, it would be impossible.

Re:This impacts botique items the most

[Grishnakh]

As it is, it's very difficult to find MS-Windows below MSRP. Under these rules, it would be impossible.

You've never heard of BitTorrent, have you?

Re:This impacts botique items the most

[pluther]

Or froogle.

I legally purchased my copy of XP-64 for $80, which is considerably below the MSRP of $299. I just had to wait a week for it to arrive.

Re:This impacts botique items the most

[Anonymous Coward]

Was that OEM that someone neglected to make you buy hardware with O_O

There are other ways.

[ScentCone]

You'd see a vastly improved rebate industry ramp up, and more importantly, you'd see retailers "bundling" things that they would then instantly take back for a substantial credit/refund. Anyone who's worked retail (especially IT supporting retail!) knows how creative someone can get while competing with someone else two doors down in the strip mall. Where this would get ugly is the little stuff... like, toothbrushes.

Another solution? Retailers who thrive on competitve pricing all become like Costco, and sell things "wholesale" to their member customers. It's sort of like those bars where you have to become a "member of the club" (for $0.01) in order to have a drink poured.

This effort will flop, or there will be a legislative cure anyway. Wal-Mart alone would lobby that one right into the stratosphere.

Re:There are other ways.

[searchr]

"Wal-Mart alone would lobby that one right into the stratosphere." uh, no they wouldn't. In fact it's directly in their interests for just such a thing to happen. Walmart doesn't sell below cost, they buy in such huge bulk that they can profitably sell for mere pennies over cost. This would be just the thing to help them crush the remaining small town stores, and without having to use a bulldozer.

Re:There are other ways.

[nine-times]

Why would Walmart worry? Apparently, Walmart can strong-arm their suppliers to do whatever they want.

Re:There are other ways.

[kent_eh]

You'd see a vastly improved rebate industry ramp up,

I'm sorry, but it's never appropriate to use "rebate" and "improved" together in the same sentence.

Re:There are other ways.

[Martin Blank]

Walmart doesn't sell below cost, they buy in such huge bulk that they can profitably sell for mere pennies over cost.

But WalMart still sets their own prices. They may sell for eight cents over or twelve cents under their costs, but that is WalMart's call. The worry here is that WalMart would be forced to sell, say, a shirt at $14.98 even if they want to sell it for $6.92, or a mower for $149.99 even if they wanted to price it at $105.96.\

Substitute the name of your favorite local mom-n-pop for 'WalMart.'

Re:There are other ways.

[searchr]

Right, but if all things are equal, Walmart wins. If the manufacturer sets a $14.99 pricepoint (which they won't, the point is still for make them money, they just don't want product dumped and sold for LESS than wholesale, which is the point of many sales. but for the sake of argument) then Walmart can sell that for $15.01 and still make money, whereas the smaller shops can't move that much product, and thus have to sell for more, and thus buyers will go to Walmart to buy the thing.

In all things, Walmart would win.

Re:There are other ways.

[Anonymous Coward]

Walmart makes money because they have the lowest prices. If Walmart is forced to sell for the same price as mom&pop, there is no advantage. Walmart is able to reduce costs because of buying in bulk and being very efficient at procuring and distributing merchandise. Chicken and egg here, they have bulk and efficiency because of the prices. Can they sustain there dominance of they were forced to sell at the same price? I don't know. I think the whole thing would come crashing down but maybe the efficiency part would keep them going. Lack of efficiency is what seemed to kill Kmart

Re:There are other ways.

[corbettw]

WalMart wouldn't bother legislating, they'd just do what they do now: dictate the terms of the contract, and if the manufacturer doesn't like it they can crawl down that shithole they crawled up from (to paraphrase Gladiator).

Re:There are other ways.

[tverbeek]

Do you really believe that Walmart doesn't use "loss-leaders" - merchandise priced unprofitably - to draw customers into their stores?

The use of mom-and-pop stores as an example by the OP is rather disingenuous, since they're actually the least likely to undercut larger retailers on price. Their competitive advantage (if any) is personalized service. Don't get me wrong: I think price-fixing is a Very Bad Thing, and should remain illegal. But striking down this law would hurt big corporate discounters more than it would hurt small businesses.

Re:There are other ways.

[ScentCone]

Why would Walmart worry? Apparently, Walmart can strong-arm their suppliers to do whatever they want.

Because it isn't about what Wal-Mart pays for the goods, or what the fixed price would be if the legal issue at hand went another way... no, for Wal-Mart it's all about being able to sell things for substantially less than pretty much everybody else. If Sony, or Tupperware, or DeLonghi, or any of a jillion other manufacturers were able to fix a price on everything sold through their legitimate dealers, Wal-Mart would lose the main thing that separates them from most other normal retailers. They may also do what Costco does, and just house-brand pretty much everything. That wouldn't surprise me a bit (just like Costco's "Kirkland" brand).

Re:There are other ways.

[Martin Blank]

Not necessarily. WalMart could actually lose out, depending on what the consumer wants. Many people shop at WalMart solely because of the low prices. I tend to shop at Target or Sears rather than WalMart specifically because I have more room to move around in Target, even if I pay slightly more. (The only think I buy at WalMart with any semblance of regularity is ammunition when I decide that I want to go shooting and don't have much on-hand. It's usually early in the morning, so there are fewer customers there, and I know I can go straight to the one area, pick and pay, and walk right out.) WalMart would not be able to compete on price, but would have to work on selection (which they have) and atmosphere (which they often lack).

Re:There are other ways.

[silas_moeckel]

Ah but your forgetting to many if walmart does not sell it it does not exist. This is not a store known for it's variety for example want pickles they stock there own and one other brand name (who is probably oeming there store brand) so walmart does a we want to sell it at x the manufacture says no they say ok we will get a company that will allow us to sell it for x take it or leave it. Unless your talking about things that are sole source like toys etc they can pick and chose a vendor that lets they sell at whatever price they choose. The sole source stuff has to comply or not be sold in walmart and thats can mean seriously lower sales expectations and sales numbers drive stock prices.

Re:There are other ways.

[otopico]

Wal-mart goes to manufacturers and tells them what Wal-mart will pay for an item. If the manufacturer doesn't like it, they don't get to sell in Wal-mart. This frequently means the manufacturers lose out on cost in order to be able to have access to Wal-mart shoppers. This has in turned leads to loss of jobs as manufacturers find ways to cut costs to stay in business.

All that so people can buy cheap crap all collected in one place.

Re:There are other ways.

[joe_bruin]

WalMart would not be able to compete on price, but would have to work on selection (which they have) and atmosphere (which they often lack)

You're confused. Walmart prices would remain lower than everyone else's. It will now be the manufacturer that sets the prices. However, Walmart is still strongarming the manufacturers by choosing whether or not to carry their products. So the manufacturer will set a different price for Walmart than for everyone else or lose out on a huge amount of sales. They'll get around laws that everyone's prices must be the same by selling alternate versions of the same product (in fact, they already do this) at Walmart. What in reality would happen is that now it will be illegal for anyone to compete with Walmart on price.

Re:There are other ways.

[General Wesc]

Supplier: No one can sell our product for fewer than X dollars.
Wal-Mart: We want to sell it for X-1 dollars. If we can't, we won't bother stocking it at all.
Supplier: Oops, we meant to say that no one can sell our product for fewer than X dollars, unless they're Wal-Mart, who can sell it for X-1 dollars.

Maybe this will be made illegal, but until then, this is how it will work. Walmart is the one with the power in this situation.

Re:There are other ways.

[bprime]

Substitute the name of your favorite local mom-n-pop for 'WalMart.'

In Corporate America, you substitute WalMart for your local 'mom-n-pop'.

Re:There are other ways.

[UbuntuDupe]

But WalMart still sets their own prices. They may sell for eight cents over or twelve cents under their costs, but that is WalMart's call. The worry here is that WalMart would be forced to sell, say, a shirt at $14.98 even if they want to sell it for $6.92, or a mower for $149.99 even if they wanted to price it at $105.96.

So? Who the fuck cares? This is *Wal-Mart* you're talking about, ya know. They can't always call the shots. Let 'em suffer.

Substitute the name of your favorite local mom-n-pop for 'WalMart.'

WHAT???? A mom-n-pop being forced to sell above a price floor??? THIS IS OUTRAGEOUS! [/public's mentality]

Re:There are other ways.

[adrianmonk]

Wal-Mart alone would lobby that one right into the stratosphere.

Wal*Mart won't give a flying fuck whether, on paper, its suppliers gain the legal right to walk away if Wal*Mart won't agree to minimum price rules. Wal*Mart has its suppliers firmly by the balls, and if they want to continue selling to Wal*Mart, they do whatever Wal*Mart says. And they do want to keep selling to Wal*Mart, because Wal*Mart is literally the largest retailer that has ever existed in the known universe, and no longer being able to sell to them is not good for business.

Re:There are other ways.

[nine-times]

I understand all that and I was somewhat joking, but that's what's been scary about Walmart: they have so much power right now that they can strong-arm distributers, suppliers, and whole industries. I sometimes imagine they have enough of a lobby to make sure Congress does something to ensure their business model. Like, if it took a constitutional amendment, they'd get it done.

Re:There are other ways.

[nine-times]

Oh, but to explain, what I sort of had in mind is something like getting all the various brands to make Walmart-only models and things that could be priced independently of any other store. Not that I have any idea what they'd actually do, but come hell or high water, Walmart will get their opportunity to screw us all.

Re:There are other ways.

[NormalVisual]

The only think I buy at WalMart with any semblance of regularity is ammunition when I decide that I want to go shooting and don't have much on-hand. It's usually early in the morning, so there are fewer customers there, and I know I can go straight to the one area, pick and pay, and walk right out.

Unless they're out of the Winchester White Box 100-round boxes in .45ACP, which always seems to be the case whenever I'm there. Ammo is one of those things that I find to be more convenient to buy online, even though it's a bit more expensive with shipping.

Re:There are other ways.

[NormalVisual]

...Wal*Mart is literally the largest retailer that has ever existed in the known universe, and no longer being able to sell to them is not good for business.

Not always.

Re:There are other ways.

[brarrr]

As far as rebates go, I would like to think that the situation could only get better...

Re:There are other ways.

[Kadin2048]

So? Who the fuck cares? This is *Wal-Mart* you're talking about, ya know. They can't always call the shots. Let 'em suffer.

I think you're forgetting that Wal-Mart basically owns dozens of Representatives and bunches of Senators; if something threatens their business model they will find a way to legislate around it. Experience has shown that legislation bought by corporate interests tends to be incredibly bad and destructive in the long run; therefore, anything which causes Walmart to call in all of its favors at once and get a lot of stuff rushed into the U.S. Code should be avoided. (Because if you don't think Wal-Mart could in about ten minutes get the "Flying Happy Face" turned into the national bird, and Sam Walton's face printed on all U.S. Currency, you're smoking crack. Walmart has a gun to the head of the government, in the form of the ~1.2M people it could suddenly dump onto unemployment.)

If you think the telecommunications industry, the music companies, or big IT (Microsoft, etc.) have an overabundance of power in government, Walmart is orders of magnitude more powerful than them. It's just that Walmart really doesn't have to do anything very often, because it's busy making money hand over fist the way things are.

As other people have pointed out, Walmart's opening move would probably be easy: they'd just force manufacturers to produce slightly different versions of products for their stores, with lower minimum MSRPs. Rather than forcing everyone to sell at the same price, Walmart would just use the law to its advantage and use the law to prevent anyone from ever competing with them on price, even if they wanted to sell certain products at a loss to get people in their stores.

Since manufacturers already package things specifically for Walmart anyway (with different SKUs, etc.) it's a pretty trivial change in many cases. You just package it a little differently, maybe throw in some different add-ons or different configuration options, or create a new "product line" to market it under (particularly good with clothing), and make the minimum MSRP whatever Walmart demands. Since nobody else can buy the 'Walmart version' (Walmart would insist on exclusivity, of course -- and don't think that's ever going to be legislated against; nobody in government would ever really take on Walmart in a fight) there's no way to compete on price.

Re:There are other ways.

[Lord Ender]

Well, no, an improved rebate would be a rebate which is credited at the checkout line and compensates for sales tax.

But then they wouldn't get a chance to steal $50 from you every once in a while when you accidentally transpose some number on the envelope.

Re:There are other ways.

[Lars T.]

Exactly - or put another way: Walmart today tells the manufacturers the price they will buy a product from them, tomorrow they will tell them what they should tell Walmart what to sell it for.

Questionable

[seanadams.com]

it would drive up consumer prices across the board.

Is the submitter suggesting that the periodic sales by mom & pop storesare responsible for keeping retail prices in check "across the board?"

Anti - price fixing laws are actually becoming quite a real problem or manufacturers and retailers, because they have to juggle the retail channel (which really needs 30%) with the online channel, which can be profitable on only about 6% margin. Preventing online from undercutting retail means giving them less margin, which is fair, but even then they can undercut until their margin is absolutely microscopic and still make money, whereas the retailer can not.

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

Re:Questionable

[Anonymous Coward]

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices. It sounds like what you're saying is actually: Free market forces => manufacturers can't control their street prices.

Re:Questionable

[Anonymous Coward]

Justice Roberts, is that you?

Re:Questionable

[P3NIS_CLEAVER]

What are they going to do with merchandise they absolutely can't get rid of? Maybe it's out of fashion or there was a scandal about the product? They will have to write them off as shrinkage and throw them in the trash. Sounds like a recipe for higher prices to me.

Re:Questionable

[seanadams.com]

It sounds like what you're saying is actually: Free market forces => manufacturers can't control their street prices.

No that's not what I'm saying. In a free market, as a manufacturer I could say "if you want to sell my product, you must charge this much." However, what we have currently is restrictions that prevent them from dictating street price to their channel. I'm suggesting that while this might have been a reasonable thing before e-commerce, it should probably be reevaluated now.

Re:Questionable

[rewt66]

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

Um, forgive me, but "because manufacturers can't control their street prices" sounds to me exactly like "free market forces". "Price control" is the antithesis of a free market.

Re:Questionable

[HTTP Error 403 403.9]

What are they going to do with merchandise they absolutely can't get rid of? Maybe it's out of fashion or there was a scandal about the product? They will have to write them off as shrinkage and throw them in the trash. Sounds like a recipe for higher prices to me.

The owners could torch the store and collect the insurance money for the full price of the merchandise.

Re:Questionable

[etymxris]

There are two responses:
1) So be it. That's the market at work.
2) Speed and convenience will still win out much of the time. For example, people can buy chicken from the grocer and bake it themselves much cheaper than they can pick up food at KFC, but people still buy chicken at KFC. Similar with all types of products. I may be able to get an RJ-45 cable a little cheaper online, but I often don't feel like waiting a week for it.

Computer equipment is an extreme example anyway. Other that time and ease of return, there is little advantage to buying most computer products in a brick and mortar. Does being able to pick up and handle the video card box make for any more compelling a shopping experience than simply reading its specs online?

Re:Questionable

[nine-times]

I'm not entirely sure that online retailers undercutting brick-and-morter is a horrible thing. I'll think about this one for a while, but for the most part, this seems to be a case where the free market is preferable.

For one thing, it seems to me that price-fixing might harm brick-and-morter stores. If you set it so online stores necessarily make a much larger profit margin, it seems to me that many people might be more likely to try to push business online for those higher profit-margins. Since their costs are lower, the prices are the same, investors would then get a better return on online business and so they might try to figure out ways to close brick-and-morter shops in order to push the purchases to their online store.

I'm not saying that it will happen this way, but rather that there's room for this to backfire. On the other hand, I have a clear division between what I buy at the store vs. online. Do I want it today, in 2 hours, or now? Then I'll have to go to the store. Am I going to want to see the product, try it out, talk to a salesman? The store. Do I want to have a physical location where I can go and talk to people if I have a problem with the product? Store. The only things I buy online are general commodity parts where I'm getting a predictable product that I don't need within the next few days.

In this sense, it seems to me that it's perfectly possible for many brick-and-morter stores to keep on going without price-fixing. In fact, in those instances where brick-and-morter is just completely, flat out, no question, less efficient than online, and inefficient without any benefit that customers aren't willing to spend an extra dollar or two, then why not let those products/services move online? What's wrong with efficiency? What's wrong with obsolete business models going out of business, so long as they're truly obsolete.

Re:Questionable

[bigdavex]

Anti - price fixing laws are actually becoming quite a real problem or manufacturers and retailers, because they have to juggle the retail channel (which really needs 30%) with the online channel, which can be profitable on only about 6% margin. Preventing online from undercutting retail means giving them less margin, which is fair, but even then they can undercut until their margin is absolutely microscopic and still make money, whereas the retailer can not.

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

If people aren't getting a service they value, why [i]should[/i] there be a B&M?

Re:Questionable

[raehl]

Is the submitter suggesting that the periodic sales by mom & pop storesare responsible for keeping retail prices in check "across the board?"

They may be, but the point they should be making is that internet retailers are responsible for offering a much lower price to consumers who don't want to pay for the benefits of a brick and mortar store. If you let manufacturers dictate pricing, you eliminate the ability of internet retailers to undercut brick and mortar stores, and we're all forced to pay more money for an inefficient (as defined by what the market is willing to spend resources on) means of distribution.

Re:Questionable

[seanadams.com]

Um, forgive me, but "because manufacturers can't control their street prices" sounds to me exactly like "free market forces". "Price control" is the antithesis of a free market.

Sorry but that is dead wrong. In a FREE market, manufacturers are FREE to make pricing agreements with their dealers. Dealers in turn, a FREE to refuse to carry products if they don't like the terms, and consumers are FREE to not buy the products if they feel they are overpriced.

I'm not saying that a free market is a panacea. But you are really confused if you think that's what we have now!

Re:Questionable

[pizpot]

How can the USA even consider such a communist idea? Why not just set everything free and let the central government decided who gets what?

Re:Questionable

[rewt66]

Fair enough - as long as there are enough suppliers in the market to keep each other honest. If I've got two possible suppliers, and one will sell the product to me with no strings attached, and the other will try to control the price that I can sell the product at, all other things being equal, I'm going to choose to not have my hands tied. Enough other people are going to do likewise to make it painfully obvious to the first supplier that this is not what the market wants, and either he learns or he becomes a marginal player.

But if there aren't enough suppliers to check one another, then we get into either a monopoly situation or a price-fixing situation, and the free market breaks down. At that point, we need the law that makes this kind of thing illegal, for the exact same reason that we need the antitrust laws.

Re:Questionable

[whoever57]

Sorry but that is dead wrong. In a FREE market, manufacturers are FREE to make pricing agreements with their dealers.

Your definition is not in agreement with the definition on Wikipedia:

A free market is a market where the price of an item is arranged by the mutual consent of sellers and buyers, with the supply and demand of that item not being regulated by a government

Now, if the manufacturer is setting a minimum price, then clearly, the price is not being set by mutual consent of sellers and buyers, since in your definition, the only remedy for the retailer if he feels that the price is too high is to not stock the item.

In addition, your definition would suit a monopoly just as well:

In a monopoly, manufacturers are FREE to make pricing agreements with their dealers. Dealers in turn, a FREE to refuse to carry products if they don't like the terms, and consumers are FREE to not buy the products if they feel they are overpriced.

Re:Questionable

[Anonymous Coward]

Regarding price differences between brick and mortar retailers v. internet retailers, there is one significant factor that gives brick and mortar stores an inherent advantage: instantaneous delivery. There have been dozens of times where I've paid more than twice the internet price in a retail store for the simple fact that I have it now, not 2-3 days from now (although admittedly, I was almost exclusively going to Best Buy and Circiut City). However, as the frequency of such purchases has gone way up for me, I've subsequently found a few mom n' pop stores around that are quite close to internet prices. The one thing I've noticed about these stores is that they rarely (if ever) sell so called "name brands." I'm referring to items like ethernet cables and cards, fans, thermal grease, etc. Lets face it, Best Buy sells ethernet cards that cost between $50 and $80! There's absolutely no advantage to spending that much for an ethernet card....a damned ethernet card!

I'll probably regret this statement, but I don't think the Supreme Court is quite that stupid.

Re:Questionable

[seanadams.com]

This article (linked from this comment) makes the salient point that what we are talking about here is one very specific form of price fixing, which is agreements between a manufacturer and its dealers. It is not about allowing collusion between would-be competitors. I would agree that the latter is quite harmful.

Re:Questionable

[CodeBuster]

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system and they will die, and not because of free market forces, but because manufacturers can't control their street prices.

The natural order of things in the marketplace is for new technologies and new ideas to cause creative destruction of old technologies and old ideas. This is normal, healthy, and good for society because it maximizes the the benefits to all citizens and prevents the undue concentration of wealth as a direct result of state protected privilege. The repeal of anti-price ceiling laws would not, as the parent suggests, drive up prices for the consumer because there will always be competitors who are willing to undercut the prices, or if the market starts with no competitors and one firm is earning monopoly profits then other firms will enter the market in order to capture a share of these economic rents for themselves and the prices will be bid down to the equilibrium levels once more. The marketplace will see to itself so long as the government protects the commons, prevents coercion, and settles disputes through the judicial system while resisting the temptation to intervene directly.

Re:Questionable

[asninn]

If you're happy with a world where brick and mortar retailers just can't exist, then by all means keep the current system

If you're happy with a world where horse carriage manufacturers just can't exist, then by all means keep the current system where car manufacturers are not being regulated so that horse carriages can still compete with cars.

Re:Questionable

[LunaticTippy]

People can't enter the market if the product is trademarked, patented, and copyrighted.

For an example of what will happen with this...

[badboy_tw2002]

Check out the scuba equipment market. Most stores that stock scuba gear are mom & pop's - the big box stores don't bother with this niche stuff. The mom & pop's sign price floor agreements with the manufacturers in order to sell the gear and get the warranty. Now they're getting slammed by oversea's "grey" marketeers that are shipping stuff over the Internet for half the costs. They aren't under warranty, but the retailers themselves have provided an aftermarket warranty to get around it, as they're making enough cash that its worth it just to replace the item. You just can't have these kinds of agreements anymore with the transparency and information exchange the internet allows. New business model time boys! Oh, wait, I'm sorry, I mean -- call the lawyers!

Re:For an example of what will happen with this...

[electrosoccertux]

So my friend owns and operates his own lighting and audio equipment online retailer. I remember a discussion we had where he was telling me about the minimum price he's allowed to sell his products for, or the manufacturer and others in league with that manufacturer won't sell him anything more. Something like he buys a given product from them for ~$40 but he's not allowed to sell it for less than $80. The manufacturers require all businesses looking at selling their audio and lighting equipment to agree to do the same. This is why you can't find anything cheaper than $80 for a given product, even though the seller could go much lower.

I don't know if this is illegal or not, but is this not what the article is discussing?

Re:For an example of what will happen with this...

[nomadic]

Now they're getting slammed by oversea's "grey" marketeers that are shipping stuff over the Internet for half the costs. They aren't under warranty, but the retailers themselves have provided an aftermarket warranty to get around it, as they're making enough cash that its worth it just to replace the item.

But honestly, does it really matter that every once in a while your regulator fails at 120 feet below sea level?

Re:For an example of what will happen with this...

[NetJunkie]

I hate this. You run in to this a lot in higher end home theater gear. I'm looking to buy a new receiver and would love to get a Pioneer Elite except they only sale through authorized dealers. If I go grey market I lose my factory warranty, including firmware updates to fix known issues.

Re:For an example of what will happen with this...

[that this is not und]

Does it matter wether the store you bought it at honors the warranty if your regulator fails at 120 feet below?

Your next of kin can always walk right up to the store and get that refund or exchange.

Re:For an example of what will happen with this...

[StikyPad]

Such as? I'm looking for a BCD, but all the stuff I see online is comparably priced with my local mom & pop dive shop..

Re:For an example of what will happen with this...

[aaarrrgggh]

Retail scuba equipment has a 200% markup; it is the lifeblood of most dive shops. Price fixing is done to keep the incentive to the dive shops to sell equipment and foster interest in the field.

I use DiversDiscount.com when I can't get trade prices; good service and prices.

Re:For an example of what will happen with this...

[SpectralDesign]

That's interesting -- I know that in the States audio gear (and related equipment/instruments) are one of the few (only?) types of things you can plan to buy and expect to be able to haggle... I wonder where this fits in...

Re:For an example of what will happen with this...

[phantomfive]

No, there are tons of things you can buy and expect to haggle. Cars, houses, refrigerators, memberships at healthclubs (specifically 24 hour fitness), beds.....pretty near anytime there is a salesman getting paid on commission, you can expect to be able to haggle. If you aren't sure, try, and you may get a good deal.

Re:For an example of what will happen with this...

[Achromatic1978]

Do you understand what 'gray market' items are? They're the same item. Explain to me how your example would be resolved by forbidding these imports?

Re:For an example of what will happen with this...

[jgs]

In fact even things you would never imagine you can haggle on, you can. Case in point, I've witnessed my uncle (who is a shameless haggler) get 10% off a small pile of books at a chain bookstore just for asking. I'm sure many of us have done the same at big box electronics stores -- "I can get this disk for $x00 from J. Random Internet Merchant, can you match that?" As you say, if you're not sure, try -- and you might be surprised where it works.

No minimum price? Fine. No product for you.

[tepples]

Capitalism never calls for the producer to dictate the cost that the 3rd party buys the product at... There is NOTHING in there that states that the shop owner cannot sell the goods at a loss (instead of a total loss by not selling at all). A retailer has the right to refuse price floor contracts. Likewise, under a pure free market, a producer has the right to refuse to sell its product to retailers that refuse price floor contracts.

Re:No minimum price? Fine. No product for you.

[maxume]

In high minded theory land, doesn't a more efficient producer step in in that case?

Re:No minimum price? Fine. No product for you.

[whoever57]

A retailer has the right to refuse price floor contracts. Likewise, under a pure free market, a producer has the right to refuse to sell its product to retailers that refuse price floor contracts.

We are increasing moving away from a free market, the DMCA and other laws have created new government sanctioned monopolies -- for example, you can't buy anything except an iPod and expect it to work with iTunes. Increasingly, products are intangible and as such are protected from competition by copyright law, or they are tangible products that are protected by patent law. Free markets really only work when there are viable alternatives.

Re:No minimum price? Fine. No product for you.

[User 956]

In high minded theory land, doesn't a more efficient producer step in in that case?

Well, then you're entering the murky world between the pure capitalism of a commodity market, and the non-price-sensitive premium product space which is driven by marketing.

For example, if Apple wants to lock the price of iPods, there isn't going to be a more efficient producer of iPods that will undercut their price lock. Another type of MP3-player, sure, but the premium consumer product space is not one that responds in the normal way. It's completely different, than say, selling gasoline.

Re:No minimum price? Fine. No product for you.

[maxume]

My instinct is that the 'that's lame' penalty would be quite a bit higher though(econ literacy would be somewhat higher in high minded theory land right?).

Re:No minimum price? Fine. No product for you.

[User 956]

My instinct is that the 'that's lame' penalty would be quite a bit higher though(econ literacy would be somewhat higher in high minded theory land right?).

Well, the irony of free-market capitalism is that free-market capitalism always tends toward strictly-ordered monopoly. (The most profitable company is the one that controls the most aspects of the market, right?)

Re:No minimum price? Fine. No product for you.

[Anonymous Coward]

Even when you restrict to non-Premium segment you still have to have Atomistic competition to ward off attempts of one retailer or one manufacturer to dictate the market.

Re:No minimum price? Fine. No product for you.

[that this is not und]

For example, if Apple wants to lock the price of iPods, there isn't going to be a more efficient producer of iPods that will undercut their price lock.

Why not? Have you bought into the myth that Magick Elves work at the iPod factory and their elvish goodness can ONLY be had by purchasing an iPod??

Re:No minimum price? Fine. No product for you.

[User 956]

Why not? Have you bought into the myth that Magick Elves work at the iPod factory and their Apple DRM compatibility can ONLY be had by purchasing an iPod??

Fixed that for you.

Re:No minimum price? Fine. No product for you.

[cooldev]

for example, you can't buy anything except an iPod and expect it to work with iTunes. . . Free markets really only work when there are viable alternatives.

Huh? I must have been hallucinating when I walked into Best Buy over the weekend and saw non-iPod MP3 players. I must have also had the same fever when browsing the web learning about services such as Zune and Yahoo! Music, which let you not only purchase non-iTunes music for use with those hypothetical non-iPod players, but also subscribe to services which let you download unlimited music for a monthly fee. Alternative business models - imagine that!

Now, if the government regulated that all music players must be iPods and forced everybody else out of the industry then we would have cause for concern. Until then, use iPod if you like it or you think it makes you look cool, and use whatever else if you like that. But don't complain that you don't have choices, because you do.

Oh, and while you're at it, please favor either subscription services or services where when you buy a song you get the *rights* to play that song in perpetuitity regardless of how technology progresses. Buying the same music over and over is lame. (I have yet to see a business promoting the latter, but if there's more demand...)

Re:No minimum price? Fine. No product for you.

[D.A. Zollinger]

I am sorry to say, but I think you are completely incorrect. You are confusing free trade with free information. Many of us who regularly visit Slashdot have become anti-copyright because media companies have formed a monopoly, and can dictate their terms to individuals who enter the market, such as, sign over your copyright to us, or we won't distribute your work. However, once your work becomes popular, you can dictate your terms to the media companies, because if they don't let you retain your copyright, one of their competitors will let you keep it.

However, government sanctioned copyright is an incentive for people to invest in works of art, such as creation of a song, writing a book, or creating a film. Without copyright, what incentive is there to invest $100 million into the next great Hollywood blockbuster? Especially if one of the other studios can infiltrate their organization, steal the unreleased film, duplicate it as their own, and sell it to the regional cinema players? I believe that the DMCA give copyright owners too much power without due process for example, but for the most part the DMCA is an untested legislative work, and until there is a landmark DMCA case, copyright owners are free to interpret the law as they see fit.

Now that I have said all of that, I can tell you that there is a difference between copyrighted works, and proprietary information. While those of us in the open source realm operate using open standards, many companies do not, and there is nothing preventing them from adopting their own standards (with the exception of market forces, and some governmental regulations requiring interoperability). For example, what would happen of the next version of Windows did not have a TCP/IP stack, instead using a proprietary Microsoft only communications protocol that was incompatible with anything on the Internet so far? Or General Motors created a new initiative where new vehicles would only run on GM-Fuel which was only offered at a General Motors service station. Both sound ridiculous because they would be attempting to change an existing market where many alternatives exist. However, when Apple created the iPod and iTunes, they were able to define a new market where one previously did not exist, and monopolize the market. They have become the de facto standard and have no incentive to change their standard to allow for interoperability. If Apple's competitors created an open standard that worked and considered the consumer, then Apple would be force to adopt, or find themselves as a minority player in a market they created (again).

When it comes to the business world, you need capital to operate, which usually comes from outside investors. These investors want to make sure you are going to repay their investment. Investors want to know if you own the rights to what you are making, or can someone else copy what you are doing and undercut your sales. This requires intellectual rights, and proof of ownership of those ideas (such as patents). Your ability to return the investor's investment with interest insures that he will be able to invest in other startups, increasing the overall economy.

What this decision by the Supreme Court of the Unites States of America possibly has impact on will help decide the state of the free market as we know it. There are many possible ways that SCOTUS can rule, but the top two options are that they will leave the free market system as it is (no change), or they will revert our economy to a system that we had in the United States before our anti-trust legislation. Considering the conservative majority makeup of SCOTUS, I believe they will leave things just as they are.

Re:No minimum price? Fine. No product for you.

[whoever57]

Huh? I must have been hallucinating when I walked into Best Buy over the weekend and saw non-iPod MP3 players. I must have also had the same fever when browsing the web learning about services such as Zune and Yahoo! Music

Ah, but each service carries some subset of all the music available -- in other words, what has happened is that the monopoly copyright provides is effectively transfered down the chain to music players.

To explain: if iTunes is the only service that provides the song, then the only way to buy it is through iTunes and thus, the only way to put it on a player is if the player is an iPod. Sure, today, you could buy a CD instead and rip it (except that copy protection and the DMCA can make that illegal), but there is no guarantee that unprotected CDs will be available in the future.

Re:No minimum price? Fine. No product for you.

[whoever57]

I am sorry to say, but I think you are completely incorrect. You are confusing free trade with free information. Many of us who regularly visit Slashdot have become anti-copyright because media companies have formed a monopoly, and can dictate their terms to individuals who enter the market, such as, sign over your copyright to us, or we won't distribute your work.

That whooshing noise was my point flying over your head.....

My point was not anti-copyright. My point was that copyright is inherently a monopoly and thus there cannot be free trade, furthermore, interoperability requirements and DMCA mean that this government sanctioned monopoly can be extended to hardware. Imagine that you want to put a song onto a mobile player and that song is only available through iTunes (it is not even available in a CD form from which it can be legally ripped). You no longer have a free choice on your purchase of player. If one player cannot be substituted for another, is there a free market?

Re:No minimum price? Fine. No product for you.

[cooldev]

Ah, but each service carries some subset of all the music available -- in other words, what has happened is that the monopoly copyright provides is effectively transfered down the chain to music players.

Intuitively, I find that fixing this is the least offensive of the "everything copyable should be freeeee!" movement, but at the same time the difficultly is that the alternative actually restricts the ability for other companies to try alternative business models.

For example, let's say I want to buy a song from Garth Brooks. Curiously, none of the music services I've tried (as far as I can remember) offer his songs for download. Maybe iTunes does; I haven't tried that one. But that's perfectly fine in my view -- he (or his distributor, or whatever) decided he didn't want to distribute his songs under that model. Who am I to force him to?

One of the great things about the music business is that there's a lot of talent out there. This means there's a lot of opportunity to create and try new business models, even if not everybody signs on. Exclusivity can be used to push business models, both to an individual consumer's advantage and disadvantage. But that's OK.

Re:No minimum price? Fine. No product for you.

[jadavis]

In high minded theory land, doesn't a more efficient producer step in in that case?

Where are these price floors likely to exist in a market economy?

Not in commodities and staples. It would make no sense; another producer would jump in.

Where it does make sense is with things like an iPod or some other gotta-have-it where they want to associate their brand with quality and status, and not "cheap". Price floors will hurt the people who need brand names, and new gadgets.

So don't act like people will be starving in the streets because some "big company" forced prices to be high. A big company can already drive up prices by simply selling their goods at a higher price, and a retailer can only last so long selling at a loss.

This whole thing just makes no sense to me as a consumer rights issue. Price floor does not equal high prices. Sometimes prices are just high because that's what the supplier sells them for. And sometimes the product isn't really so necessary to begin with.

Re:No minimum price? Fine. No product for you.

[D.A. Zollinger]

That's not the definition of a free market. As an owner of a protected piece of work, I can license that piece of work to anyone or no one. In fact the situation you described is completely feasible if Mr. Jobs were able to convince Disney (of which he is a member of the board) to sell their music exclusively through iTunes. However, that is his prerogative, and the prerogative of the company he works with.

A free market is one where the supply and demand of a commodity is not regulated whatsoever. A good example might be the automotive industry, where the supply of vehicles is not regulated, and consumers are not limited on the number of vehicles they can purchase. There are government regulations on safety standards required for every vehicle sold, and there may be tariffs on vehicles manufactured outside of the United States, but over all, no matter what choice you make in vehicle purchase, the vehicle will do what it is suppose to do. This is because other than styling, all automobiles are basically the same thing.

Unfortunately this does not hold true to works of art. While it is possible to make copies of art, those copies are made at the discretion of the copy right holder in order to offset the cost of producing the work of art. Therefore works of art will never be in a free market because the copyright holder will always be able to dictate how many copies will be made, for what price, and to whom they can be sold. This directly effects the supply side of a free market equation.

Re:No minimum price? Fine. No product for you.

[pla]

for example, you can't buy anything except an iPod and expect it to work with iTunes.

I know, right? Like, just the other day, I needed a driver for an older Radeon but only had the newewst NVidia ForceWare driver - And it wouldn't recognize the ATI card! What blatantly anticompetitive behavior, someone should investigate! And don't even get me started on how the PS3 online store won't let me buy XBox360 games, the rotten bastards. ;-)

Sorry, I mostly agree with your point, and normally I lose karma for daring to disagree with The Steve, but in this case... His toy, his store. And I want nothing to do with either of the DRM-laden pieces of crap. You can get DRMless MP3 players cheaper than the iPod, and you can still, last time I checked (yesterday afternoon at around 3:30pm), buy music on CD and rip it yourself.



We are increasing moving away from a free market

We do not now, have never, and will never, have a "free market" economy. The closest we've ever seen (at least in the US) occurred in the "wild" west in the 1800s, and in today's black market - But even both of them had strong external influence on them causing artificial price inflation (gold and unnatural scarcity, respectively).

Re:No minimum price? Fine. No product for you.

[zotz]

"My point was not anti-copyright. My point was that copyright is inherently a monopoly and thus there cannot be free trade,"

Bingo! Choose which you prefer... Free Markets, or copyrights and, or patents. If you decide to have copyrights or patents, your free markets are gone for works or goods protected by either.

Now perhaps you think that government granted copyrights solve the problem better than the free market could, fine, make the case, but don't take copyright or patent protection to the detriment of the free market and then cry loudly to let the markets deal with the problems when people want problems fixed.

BTW, I get your point and agree, that was the generic "you" above in case I was not clear...

all the best,

drew

http://www.youtube.com/watch?v=biOFnAlXrV8
A UFO takes a potcake for nefarious purposes.

Re:No minimum price? Fine. No product for you.

[BBandCMKRNL]

Correct. I have no intention of ever buying anything from itunes, so I avoided paying the Apple tax by buying a generic MP3 player.

Re:No minimum price? Fine. No product for you.

[Hijacked Public]

Leaving aside whether or not anyone 'needs' a brand name, other producers will appear even for high end luxury items and even when the market is not particularly large.

Part of my geekiness manifests itself in the form of flashlights. I like nice ones. 10 years ago if you wanted a nice flashlight you bought a Surefire, the only decent alternative was a Mag light which is not even close to Surefire quality or functionality. Surefire's dealers used to compete with one another and a visit to CPF would usually reveal one of them running a sale or whatever.

Dealer A complained loudly that Dealer B was underselling him. Dealers with no web presence complained about dealers with one. And on and on. (I know this because I work for Surefire sometimes). So to stop the complaining Surefire started a pricing policy that prevents any dealer from offering a flashlight below a minimum price, it also prevents any dealer from selling a light on the internet and shipping it directly to a customer, the light has to ship from Surefire's warehouse. This scheme works and the price of their flashlights has steadily risen, even on Ebay. Their policies were modeled after Oakley's (who I also work for sometimes).

Today one can buy any number of very nice flashlights from any number of companies. Arc is back in business. Fenix. And Jetbeam. There are even more guys making lights in their garages now than there were before the policy change. They all compete directly with Surefire, and the offerings from indirect competitors like Inova and Pelican have diversified. There are even companies competing in the weaponlight market, where as little as 5 years ago Surefire was really the only choice at any price point.

So in the flashlight market Surefire's pricing policies seem to have enabled their competitors. Indeed, if you want a big SF stamped on your flashlightyou still have to buy from them, but if you just want a nearly indestrucible metal bodied light that fits in your shirt pocket yet packs 60 lumens into its artifact free LED beam...you have a lot of choices.

Re:No minimum price? Fine. No product for you.

[gfxguy]

That's a very interesting post.

So, in other words, manufacturers were already able to fix prices and set conditions on the sale of their goods? Wait, that's a rhetorical question, because we've already seen it...

This is a great example, so is the video games market, and while I'm annoyed at the high prices and haven't bought the newer systems, I can't really fault the companies who are limiting their market and allowing me to get tons of last generation games dirt cheap. Also, like other industries, a new business models will form (like the used game market).

I do think that the producer of an item can set the price of that item when they sell it, I don't like them dictating anything about their products after they sell to the stores, but it's one of those things that, especially for commodity products, is self correcting.

Frankly, all the bitching about pricing of non-essentials is really annoying anyway. I see a lot of examples using the iPod for example. Boo hoo. So it costs more to be a poser, as if there aren't any alternatives.

Re:No minimum price? Fine. No product for you.

[gfxguy]

Another good post in this thread...

The thing that really bothers me about the complaints here is that you won't see this happening with necessities and commodities. It's true that an iPod could end up costing the consumer more, but so what? If you don't want to pay, you're free to buy another music player.

But then the argument goes that if a song is only available on iTMS, then that's the problem... but it's not, because there's no need for you to buy that song. You buy from producers/sellers that sell you what you want at prices you can accept. It doesn't matter that they don't sell the exact song you want, you can live without it - and when they see their sales drop, they'll change their business model or they'll lose money.

Capatilism is generally a pretty good self correcting system, the only problem we have here in 2007 is that everybody is so damn impatient, it's got to correct immediately or they won't accept it. Too bad. You can live without your iPod and you can live without some specific songs; it's not as if you have to live without music entirely.

Or, of course, you're free to pay up and get what you want. But then you are validating that business model.... but if they are offering products that people will pay more for, then that's part of capitalism, too, and there's nothing wrong with it just because you don't like it.

Re:No minimum price? Fine. No product for you.

[Hijacked Public]

The complaining annoys me as well. I liked buying Surefire E2s for $60, but I am not going to complaint too loudly about them being closer to $100 under the new policy, I'm not having to choose between food and flashlights either way.

My understanding of both Surefire and Oakley dealer policies is that they include a requirement to sell at a minimum price. Violate that and you're dealer status is revoked. That gets around the antitrust laws because the dealers agree to follow the policy 'independently'. Someone can buy up a bunch of flashlights and sell them below the price, and Surefire can not stop them, but they choose to stop selling that person lights.

Re:No minimum price? Fine. No product for you.

[Bastard of Subhumani]

Choose which you prefer... Free Markets, or copyrights and, or patents. If you decide to have copyrights or patents, your free markets are gone for works or goods protected by either.

Choose which you prefer... Free Markets, or locks and, or policemen. If you decide to have locks or policemen, your free markets are gone for works or goods protected by either.

Re:No minimum price? Fine. No product for you.

[Gospodin]

Bingo! Choose which you prefer... Free Markets, or copyrights and, or patents.

I call BS on this. Copyrights and patents are merely property rights applied to intellectual property. Would you make the claim that you can either have free markets or the legal right to own land - but not both? It's the same thing from an economic point of view.

Now you can still argue that copyrights and patents are stupid, or counter-productive, or an OK idea but poorly implemented, or lots of other things. But don't tell me they imply the lack of a free market.

Re:No minimum price? Fine. No product for you.

[Austerity Empowers]

I think his point is that while Garth may not have wanted to do business with iTunes, but saw fit to do it with other providers, the likely end goal of all this is that unless you have the hardware that works with the service that he DID choose, he is hurt, and you are hurt, and the only happy people are the middlemen who'd rather you had to buy all of them. You're then down to this game-console type business model, where you eventually are giving HW away to prop up some bogus content business you locked down and marginalized by contract. Restricting the market to a few really big, powerful players is still not a free market.

Any time you put a monopoly in the system, capitalism breaks and the only person that benefits is the one with the most money.

Re:No minimum price? Fine. No product for you.

[jedidiah]

Your post is pure BS.

Ownership of my land does not interfere with you and the use of your land. Just because I own my land I can't suddenly sue to to prevent you from using your land effectively.

This notion that you "own" a creative work is pure bullshit because it's based on the bullshit notion that you are it's sole creator. You're not. You take advantage of 10,000 years of combined human effort in the arts and sciences. It's fine to whine about how inventions are like land except eventually someone else will need to make the next and better mousetrap. Those naieve ownership concepts you advocate WILL PREVENT NEW WORK FROM HAPPENING.

The next guy that tries to make a space western will be sued by the estate of George Lucas.

That idea was absurd 30 years ago but it is becoming increasingly less so. Fools like you are eager to jump on the corporate bandwagon.

Your notion of copyright is best summed up as: exploit the work of others and then prevent others from doing likewise.

Naptser et all should be FULL of everything that would be rightfully in the public domain already. THIS is really what the MPAA and RIAA are worried about. Traditional copyright would liberate the vast bulk of works that are currently being milked as cash cows or hidden from view and effectively destroyed.

The current drek wouldn't be able to compete.

Re:No minimum price? Fine. No product for you.

[bkr1_2k]

Your iTunes example isn't a good example of a monopoly (though I don't disagree with your overall assessment) because a) there are plenty of mp3 players out there that aren't iPods b)many manufacturers produce their own software to interact with the player they produce c) there are other avenues of purchasing music online, d)apple dominates the market, but doesn't control the prices of the other players.

Re:No minimum price? Fine. No product for you.

[bkr1_2k]

Until Apple removes the ability to encode iTunes songs in variant formats, which is possible although unlikely, then there is still not a monopoly. You can re-encode songs in mp3 using various codecs directly from iTunes. Then you can load them on the player of your choice.

Re:No minimum price? Fine. No product for you.

[zotz]

"I call BS on this."

Call away, I am nt buying.

"To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;"

These rights are given by the government. They give authors and inventors exclusive right to their respective writings and discoveries. Exclusive as in monopoly.

They are given with a purpose as well - to promote the progress of science and useful arts.

all the best,

drew

http://www.youtube.com/profile?user=zotzbro

Re:No minimum price? Fine. No product for you.

[zotz]

"Choose which you prefer... Free Markets, or locks and, or policemen. If you decide to have locks or policemen, your free markets are gone for works or goods protected by either."

Want to try again? Copyrights and patents are given to authors and inventors exclusively. Exclusive as in monopoly. The government gives them. Monopolies and free markets don't really mix well together.

all the best,

drew

http://www.youtube.com/profile?user=zotzbro

Re:No minimum price? Fine. No product for you.

[Gospodin]

These rights are given by the government. They give authors and inventors exclusive right to their respective writings and discoveries. Exclusive as in monopoly.

When I own a car, I have exclusive rights to use it and to decide who else uses it. So I fail to see the distinction here.

They are given with a purpose as well - to promote the progress of science and useful arts.

Property rights are given with a purpose, too.

Both of you respondents seem to be missing something, which is that I quite agree that something is very wrong with copyright and patent law, certainly as it exists today in the US. I was merely pointing out that the mere idea of these laws isn't somehow opposed to a free market. Just because something is bad doesn't it's bad in every way.

Re:No minimum price? Fine. No product for you.

[zotz]

"Both of you respondents seem to be missing something, which is that I quite agree that something is very wrong with copyright and patent law, certainly as it exists today in the US..."

Well, I am not actually missing that. I do agree that something is very wrong with copyright and patent law, certainly as it exists today in the US.

"I was merely pointing out that the mere idea of these laws isn't somehow opposed to a free market."

Perhaps what you are missing is that while I like the free market, and while I disagree with your above statement, I think that copyrights and patents done right can possibly serve the public good despite preventing a free market in the goods they protect.

"Property rights are given with a purpose, too."

I think that property rights are more recognized than given. Do you disagree?

all the best,

drew

http://www.youtube.com/profile?user=zotzbro

Re:No minimum price? Fine. No product for you.

[jonbryce]

Encoding itunes songs to a different format means burning it to a CD, either a real or virtual one, and then ripping it to a different format. When you rip it, you either have to chose a lossless format, which means it takes up more space, or your song is of a lower quality than the downloaded aac version.

Re:No minimum price? Fine. No product for you.

[SillyNickName4me]

When I own a car, I have exclusive rights to use it and to decide who else uses it. So I fail to see the distinction here.

The distinction is that you cannot stop me from using an identical car.

This is somewhat of a problem with copyright, it is a much more serious problem with patents.

Re:No minimum price? Fine. No product for you.

[Gospodin]

...copyrights and patents done right can possibly serve the public good despite preventing a free market in the goods they protect.

We obviously have different definitions of "free market". To me, the term means a marketplace in which producers and consumers are free to trade goods and services which they own and on whatever terms they wish with others.

By this definition, intellectual property rights are perfectly legitimate. I write a poem. I am free to trade this product with anyone else on whatever terms we can mutually agree upon - which includes licensing the right for the buyer to use but not redistribute the poem without my consent. Once we've established this, then the rest of copyright and patent law is just details.

The real problem, of course, is that copyrights and patents protect intangible goods which can be copied cheaply (often for free), unlike tangible goods. But this doesn't make the property right any less real; it just makes enforcement more difficult.

What's your defintion?

I think that property rights are more recognized than given. Do you disagree?

It's a distinction without a difference. They're given because they are recognized. You may have a Platonic (or Jeffersonian, if you like) "God-given right" to property (I believe in this, in fact), but your de jure right is certainly government granted and you will find it can be revoked very quickly in an imminent domain case.

Re:No minimum price? Fine. No product for you.

[falconwolf]

Well, the irony of free-market capitalism is that free-market capitalism always tends toward strictly-ordered monopoly. (The most profitable company is the one that controls the most aspects of the market, right?)

How so? In a free market anyone with the abilitiy would be able to enter a market thus creating competition therefore there's no monopoly.

Falcon

Re:No minimum price? Fine. No product for you.

[Gospodin]

Exactly: the distinction is only enforcement, not morality, legality, etc. This was my point.

Re:No minimum price? Fine. No product for you.

[tepples]

In a free market anyone with the abilitiy would be able to enter a market thus creating competition therefore there's no monopoly. But does anyone have the ability? Once a monopoly buys most of the land, it can produce with greater efficiency than any newcomer due to economies of scale.

Re:No minimum price? Fine. No product for you.

[tepples]

The thing that really bothers me about the complaints here is that you won't see this happening with necessities and commodities. You mean like medications?

Re:No minimum price? Fine. No product for you.

[tepples]

Would you make the claim that you can either have free markets or the legal right to own land - but not both? In a free market, what happens when one group of people buys all the land?

Re:No minimum price? Fine. No product for you.

[tepples]

When you rip it, you either have to chose a lossless format, which means it takes up more space, or your song is of a lower quality than the downloaded aac version. So Apple sells goods and services of inferior quality. Tough. Write your own songs, record them, and sell them in multiple formats. There's your alleged free market.

Re:No minimum price? Fine. No product for you.

[SillyNickName4me]

Exactly: the distinction is only enforcement, not morality, legality, etc. This was my point.

And that was not what I said, try again.

Re:No minimum price? Fine. No product for you.

[zotz]

"Once we've established this, then the rest of copyright and patent law is just details."

No the rest is not details. In the free market, without government granted monopolies, you could transfer your intellectual creations via contract with non-disclosure agreements and the like. They could be treated almost as trade secrets. But that is not what is being done with books these days, they are being published, or made public. Coke cannot make their secret formula public and still protect it.

When you take what you create and keep it private, it is yours, when you publish it, absent coprights, all bets are off.

So, the problems is that the published, copyrighted work is only your property to trade with in the market as a result of the government granting you monopoly rights to it.

At least with copyrights, the law contemplates two authors creating the exact same work independantly and both getting copyrights to it, patent law may contemplate two inventors inventing the same thing independantly, but gives monopoly rights to only one and no rights to the other.

"It's a distinction without a difference."

Not, quite, though I agree that what is going on with eminent domain is a mess. Still, don't they have to compensate you for their taking in those cases? Your copyrights and patents expire. (And last for different lengths of time as well.)

all the best,

drew

http://www.youtube.com/profile?user=zotzbro

Re:No minimum price? Fine. No product for you.

[bkr1_2k]

I don't recall that step, but I could be mistaken. In either case, you lose quality, but the point is, it's possible to do, thus negating the "iTunes monopoly" talk.

Re:No minimum price? Fine. No product for you.

[Bastard of Subhumani]

Copyrights and patents are given to authors and inventors exclusively. Exclusive as in monopoly. The government gives them.

Which is different from any other property laws in what way, pray tell? I suppose the prohibition of theft can be derived from fundamental trigionometry? Or perhaps it just fell out of the sky?

A free market is one where the seller is free to sell (or to not do), the buyer is free to buy (or to not do) at a price they find mutually acceptable. You seem to be confusing it with a free-for-all.

Re:No minimum price? Fine. No product for you.

[zotz]

As in two people can come up with the same invention without being aware of each other...

According to what I think your theory is, they should both then "own" that invention (get the patent) but the law does not work that way, does it?

In a free market, the buyer and the seller would negotiate the terms of use. The government would not be in the picture there.

Eg. I write a book. You want a copy, we negotiate a contract which says whether you can copy all or parts of it, whether you can let others see it, if you must place them under any contractual terms before letting them see it, etc. this might be how the free market could deal with the problem rather than the current non-free market of government granted monopolies.

The free market may come up with a better solution or it may not, but the current one is not a free market. No more than if the government only allowed one corporation to make jam.

Further, what's up with the requirement for fixing the work? Is that no more than a way for the literate to steal the works of hte illeterate? And why can some writings / designs and the like get sopyright protection and some can't? And if things work the way I think you envision, why can people pollute the public spaces by publishing their copyrighted works without permission?

all the best,

drew

goodbye eBay! (i.e. wont happen)

[Bluedove]

If this preposterous case turns out with manufacturer set floor prices, would this also end auctions across the USA, including eBay?!

Re:goodbye eBay! (i.e. wont happen)

[Hrothgar The Great]

You would have to actually sign a contract with the manufacturer in order for this to affect your eBay sales. So, it would only affect you if you were buying 10,000 of the same item from someone and selling ALL of them on eBay.

Re:goodbye eBay! (i.e. wont happen)

[Anonymous Coward]

"If this preposterous case turns out with manufacturer set floor prices, would this also end auctions across the USA, including eBay?!"

Only of items purchased wholesale and sold as new. This wouldn't affect the sale of used goods.

Re:goodbye eBay! (i.e. wont happen)

[Bluedove]

Only of items purchased wholesale and sold as new. This wouldn't affect the sale of used goods.

I see the point you make, but here's what worries me, posed as a personal example. I recently bought a bunch of stuff in an auction from a company that went belly-up. In the sale, I got a LOT of stuff (pun intended ;) that was brand-new-never-been-opened that originated with 3rd-party suppliers. Would resale of this apply under such a ruling? I am going to be selling this stuff on eBay as BRAND NEW (because it is).

In the end, it doesn't affect me directly as I don't live in the USA, but preventing its sale on eBay would probably affect me in some way.

Re:goodbye eBay! (i.e. wont happen)

[BillX]

If not (e.g. First Sale Rule), could PriceCo simply set up a sister corporation (CostPlace) where each buys 50% of the goods, then sells them back to the other at MSRP in exchange for the reciprocal service? I guess it would be amusing to see aisle after aisle of product marked "Previously Purchased, Unused Condition" or somesuch.

Re:goodbye eBay! (i.e. wont happen)

[maxume]

It's probably pretty easy to work around this in the contract; the operators of PriceCo would be obligated to the owners of PriceCo not to lose money for fun, and the contract could probably specify that the goods could not be dumped to a 'related' corporation, for some useful definition of related, preventing the transfer of money by accounting.

What do you mean "would?"

[LunaticTippy]

The RIAA would have a field day with this.

The RIAA has a monopoly. A monopoly can charge whatever they want. A monopoly sets the prices for everyone.

This legal attempt would make the rest of the market more like the RIAA's market.

Some other monopolies (or near so) are phone, internet, TV, etc.

Re:What do you mean "would?"

[harlows_monkeys]

The RIAA has a monopoly

What makes you think the RIAA has a monopoly?

There are plenty of non-RIAA music providers.

Re:What do you mean "would?"

[Anonymous Coward]

The RIAA is more of a cartel then a monopoly. Tell me that doesn't sound like the RIAA.

Re:What do you mean "would?"

[Ahnteis]

Yes, but they can't afford to bribe the radio stations like the RIAA can. /me types slower so that /. will let him post.

Re:What do you mean "would?"

[that this is not und]

And you are implying that you would NEVER buy a recording of music that you hadn't heard first on the radio??

Re:What do you mean "would?"

[xerxesVII]

For several years now I haven't bought anything I've heard on the radio.

Re:What do you mean "would?"

[SageMusings]

The word "Cabal" springs to mind.

Re:What do you mean "would?"

[LunaticTippy]

They have a monopoly on their signed artists. If you want the latest piece of crap by Vanilla Ice or whoever is popular these days, you've gotta pay the RIAA or don the eyepatch.

I don't like popular music, and I don't respect it, but surely you have to agree that musicians aren't interchangeable.

If you have a cafe that plays music, you have to pay the RIAA. There are a lot of tentacles in a lot of pies. I support independent artists, but still recognize RIAA labels as a monopoly.

Isn't Apple doing this?

[stefanb]

I'm confused: I was under the impression that Apple pretty much dictates the sale price for the iPod and other consumer gear to the dealers? It sounds like such contracts would be massively illegal currently?

Re:Isn't Apple doing this?

[iPaul]

It's not specific to Apple. You find it in a lot of consumer electronics.

Re:Isn't Apple doing this?

[maxume]

They have their own customer facing sales chain. If someone doesn't want to sign a contract when making wholesale purchases from them, they can go ahead and tell em to eff off. (the essence of it being that the stores 'need' the iPod more than Apple 'needs' the stores)

Re:Isn't Apple doing this?

[Frogbert]

Apple sells the iPods to the stores at pretty much the price you pay for it. There is very little profit in selling them, with the exception of all the indirect profit from people buying other stuff while they are there. They could drop the prices as much as they wanted but they would be losing money then.

Re:Isn't Apple doing this?

[Anonymous Coward]

Not quite.

Apple and other manufacturers and distributors use various carrots and sticks to enforce the MSRP, such as providing rebates and advertising subsidies for retailers who comply.

Re:Isn't Apple doing this?

[mp3phish]

No, apple sells their product at such a high cost compared to MSRP that no retailer can afford to discount them. Try 8% margin on ipods that cost 150$. That barely covers the credit card swipe and the time it takes someone to stock it on the shelf and scan it at the register. Much less pay invoices, track shipments, pay the light bill, and hire supervisors/managers to oversee all that.

Move it to the internet sales, and its the same story. internet retailers survive off 5-10%. 8% isn't really that high a margin. Even if someone wanted to discount it to sell for cost and make up the money on upsells, WOO HOO, they sell it for 12$ off. Not much there in the way of discounting now is there?

Sure, the larger retailers can sometimes cut a slightly better margin deal with apple if they agree to purchase pallets at a time, and they do. But that is their competative advantage, and there is no reason for them to sell below MSRP (or a dollar below) when all their competitors are barely breaking even. It is much better for the Best Buy's of the world to bundle a free product like iTunes card or accessory discount with the full priced iPod.

Re:Isn't Apple doing this?

[lcohiomatty86]

if a store doesn't comply with apples pricing than apple will probably not sell their products to that store anymore. companies do have a right to decide who their customers are, as long as its not based solely on race/sex/religion/etc.

Re:Isn't Apple doing this?

[Anonymous Coward]

My brother sells iPods in his shop (large electronic/electrical retail chain in Australia) and he told me there is so little markup on the iPods that they can't be discounted - less than $10 on a $380 nano. Retailers make their money on the peripherals - spare charger, lanyard headphones, skins etc.

Similarly, he also told me there's not much markup in PS2s and the money he makes is in games. The difference is that he has to carry a shitload worth of games to have a good coverage, whereas he can carry what appears to be a large range of iPod accessories for a lot less.

Re:Isn't Apple doing this?

[Anonymous Coward]

I think that is incorrect. Apple's approach to price-fixing, a Minimum Advertised Price scheme, is described well in a Slate article, "Gadgets for Sale ... or Not: Why you can't get iPods at a discount," by Sean Cooper. Link: http://www.slate.com/id/2156030/

Re:Isn't Apple doing this?

[mp3phish]

Having dealt directly with apple in the resellers market for several years, I can tell you for sure the slate article is very slanted (probably not intentionally, but due to a lack of understanding of the situation IMO). Firstly, the record labels were not enforcing MAP pricing illegally, they were enforcing minimum RETAIL pricing illegally. There is a major difference. In order for MAP pricing to be legal, you cannot coerce the reseller into selling for a minimum price, only advertising below it. There is nothing stopping someone in a MAP agreement from lowering their price at the register, or even having a lower price on the shelf label, they just can't advertise it. Stores where the sales process is more hand holding (apple customers/computer sales) in MAP agreements give discounts like this regularly.

In fact, most stores aren't even in MAP agreements with Apple. I could see if maybe the large retail chains were, but I would be surprised if they were. And even if they were, there is nothing stopping them for selling the product for whatever they want, without the threat of pulling advertising funding.

You are trying to make it like Apple will pull all funding and be uncooperative if someone sold below their dream price. They wouldn't. If they are paying for their marketing (and with MAP agreements typically they are) then they are the ones who determine what will and will not go into that marketing. There is nothing "wrong" or "creepy" about it in my opinion.

Just a Presumption

[ardyer]

IANAL, but businesses are already allowed to set minimum prices, there is just a presumption that it violates anti-trust laws. However, this presumption can be rebutted. All this case would do is remove the presumption that it violates the anti-trust laws.

Re:Just a Presumption

[russotto]

Nope, read the article (yeah, Slashdot, I know). Currently minimum sales prices are _per se_ illegal. What you've described would be _prima facie_ illegal.

Re:Just a Presumption

[ardyer]

Not to be argumentative, but what I described was per se ;) It mean presumed, but rebuttable http://en.wikipedia.org/wiki/Illegal_per_se, while prima facie means the minimum required elements are present, but not determinative http://en.wikipedia.org/wiki/Prima_facie

Re:Just a Presumption

[russotto]

In the section on antitrust, the Wikipedia article is somewhat confusingly contrasting "illegal per se" with "presumed but rebuttable". At the very top, though, it pretty clearly states that "The term illegal per se means that the act is inherently illegal. Thus, an act is illegal without extrinsic proof of any surrounding circumstances such as scienter or other defenses."

  If you want "presumed but rebuttable", it's "prima facie". Were the courts to decide that minimum prices were "prima facie" illegal, then companies could set a minimum price but if they were sued and the plaintiff showed they were setting a minimum price, they would have the burden of proving that the minimum price was not anticompetitive. With the current "per se" situation, once the plaintiff has demonstrated the defendant is setting the minimum price, he prevails.

Benefit

[Anonymous Coward]

It it'll get my wife to stop impulse-buying stupid shit, then I'm all for it!

You hear that giant sucking sound?

[Anonymous Coward]

That's the sound of everyone going overseas for their consumer goods.

"Call" online?

[tepples]

Right now, many dealers show "prices too low to list" There is a difference between contractual bans on advertising goods at prices below a price floor (your scenario) and contractual bans on actually selling goods at prices below a price floor (the scenario of The Article).

or "call" Except the "call" price is incompatible with online retailers that use the shopping cart user interface model. To me, "call our sales department for pricing" appears to mean "If you have to ask, you can't afford it. If you can afford it, we'll make you listen to our sales pitch, which we hope will cushion the sticker shock."

Re:"Call" online?

[lderezinski]

Typically I have found that they make you "call" in so that they can upsell you on an add-on product ... extra battery, etc. So in the end the "low low price" is not so low.

Would this kill all sales?

[Katmando911]

Oh no! It's the end of Black Friday.

What About Apple, Bose etc.

[spiedrazer]

So how have Apple and Bose etc. been able to circumvent the apparent existing laws restricting minimum price levels. You almost never find thier products at anything other than the manufacturers suggested retail, except on closed out items etc.

What loophole or other back side contractual agreement have they been making with their retailers to keep them from discounting products?

Re:What About Apple, Bose etc.

[MBCook]

I think that Apple and such do this one of two ways. First is supply control. If you decide to sell Apple stuff to low, Apple can always "lower" your supply. You'd learn.

More likely though is profit margin. Everyone wants to sell iPods. The things just sell and sell. Well if Apple sells them to you so you only make $20 or so on each one, you're unlikely to try to discount them $15 to get more sales. This essentially forces a price floor.

As for this case, what I heard about it (on NPR, just a blurb, haven't read summary yet) was that a company found someone online selling their product at below the invoice. This would be like my Apple example above, only someone was online selling brand new iPods for $50 under retail prices and still making money, and in this example this is below the price even Apple could afford to sell it at. I don't know how the other store managed to do this, but this is what they are trying to prevent. The ability to set a price floor at whatever you want and artificially hold prices up is just a nice benefit of this ruling, should it be made.

That is, if you're a manufacturer.

Re:What About Apple, Bose etc.

[mp3phish]

Apple circumvents it by giving extremely low margin possibilities to their retailers. Mom and pop make at most 8% regularly and maybe seasonally they get a slightly better incentive to stock up on a thousand ipods for a few extra percent margin.

Bose doesn't circumvent it, but instead applies a (perfectly legal) MAP (minimum advertised price) contract to its resellers. This way you still follow the law (retailers can sell for whatever price they want) but they can't advertise any price below MAP. This is why you see stuff like "add to cart to see price" because they are contractually obligated to only show you the discounted price once you have "decided to buy it" per se.

Lots of brands do this, seinnheiser, bose, and lots of AV and other companies have done this type of thing for a long time.

Pair this MAP with extremely low margin opportunity, and you see why nobody sells below MSRP (because the image of bose is that you pay MSRP and nothing less). Most stores make probably 10% max on a bose system if sold at MSRP so there is not any room for them to move any lower.

Now, at the end of the quarter, if you make your sales projections and all sorts of other fancy stuff, you can get a quarterly rebate on your revenue (kindof like car dealerships get) but that is only for higher volume shops. And you can't built that into your price because you don't know for sure your sales will be up.

Hope that explains a little bit for you.

Re:What About Apple, Bose etc.

[Anonymous Coward]

Imo, your post was the clearest and most well written on the topic. Alas, no mod points today.

Try to look at the upside....

[mark-t]

Maybe I'm grasping at straws here, but wouldn't this mean that microsoft wouldn't be able to offer "discounted versions" of its OS to computer manufacturers while simultaneously charging several hundred for the retail version?

Re:Try to look at the upside....

[TheAwfulTruth]

Microsoft is selling their own product, so no, that would not apply. In fact it would allow Microsoft to specifically FORBID stores to sell their software at below net cost.

Something that is probably enforced currently through the age old practises used by every other manufacterer as outlined by many of the other posts here...

Though as some others have pointed out, there are two sides to the story, and a lot of retaiors actoully LIKE it this way. They don't ALL have to compete at a razor-thin cut-throat margin levels with the biggest retialer in their sector. Not doing it can lead to there NOT being any mom and pop stures ebcause they could nto possible compete with ten cent per package margin stores like wallmart.

Blame the Victim

[The Monster]

these are exactly the types of questions that capitalism can't solve by itself

Hogwash. If a manufacturer places rules on retailers that they don't like, they're likely to find those retailers stocking competitors' products instead. All it takes is one player who sees the value of not actively alienating his distribution channels. With a free capital market, such a player can be assembled with little difficulty. But of course, we don't have a free capital market. Everything is regulated by SEC, and every time a large company goes out of business, someone decides There Ought To Be A Law to be sure it doesn't happen again. So they pile on more regulations that act as a barrier to new entrants, stifling competition.

The apologists for the Nanny State routinely trot out antitrust as an example of where the free market doesn't work, but in reality it's the industries with the most regulation by government that are the most monopolized. Take telecommunications. For most of the history of telephones, it was illegal to compete for customers. That monopoly was enforced by local governments. But I guess as long as you control the government schools that teach the history of 'Robber Barons', people will believe the propaganda.

Re:Blame the Victim

[psykocrime]

That monopoly was enforced by local governments. But I guess as long as you control the government schools that teach the history of 'Robber Barons', people will believe the propaganda.

Well said, friend. Don't believe the propaganda...

Re:Blame the Victim

[Duhavid]

All it would take is one gas station selling gas at a lower price...

And I think I have the counter example to your telephone system
story. The computer industry. Used to be pretty open.
Lots of players. Now, there are many fewer, and larger
corporations involved. Almost like it was natural for them
to do this.

The telephone system example is not a very good one, in my
opinion. According to wikipedia, AT&T had competitors in
the very early days and ( I presume ) no regulations aside
those any company might have. Then they bought out competitors
until they became regarded as a monopoly. Then came the
regulations and government interference.

On the SEC, I take it you disagree with the assessment that
rules and regulations bring additional investor confidence,
increasing investment and growth for everyone? What happened
in the depression? People put their money in their mattresses.
Why? Lack of confidence in financial systems.

And on the government schools, it almost sounds like a conspiracy.
They control the schools so they can control the curriculum with
the intent of making good little socialists out of everyone?
They are doing a remarkably bad job of it, considering how many
conservatives there are.

Re:Blame the Victim

[fabu10u$]

in reality it's the industries with the most regulation by government that are the most monopolized.

Ahem. In reality it's the industries that form natural monopolies that end up with the most regulation by government. (Now, the government doesn't necessarily remove the regulation when technological changes enable competition, but that's another story...)

Re:Blame the Victim

[Anonymous Coward]

You've got the theory down; straight out of Econ 101. Unfortunately, like Physics 101 (also known as Physics without Friction) the real world rarely works like the undergraduate survey textbooks say it should.

Re:Blame the Victim

[ClassMyAss]

Everything is regulated by SEC, and every time a large company goes out of business, someone decides There Ought To Be A Law to be sure it doesn't happen again. So they pile on more regulations that act as a barrier to new entrants, stifling competition.

Umm...first of all, the last "There Ought To Be A Law" moments that I remember involved a bunch of weasely executives falsifying all sorts of numbers so that they could cheat their investors and employees out of millions and millions of dollars. You can't seriously mean that the crap that Enron pulled should be legal, can you? You think it's perfectly cool to mislead the public into thinking that your company is doing great, then sell of all your stake in it just in time for the truth to come out? Because a stock market without the SEC would see this type of stuff all the time. Trading would become a game that you'd need to be a fool to play unless you were one of the slimy bastards on the inside. Certainly you can imagine what this would do to the market, if everyone but the insiders was afraid to play...our economy would literally implode as everyone ran for the exits.

The apologists for the Nanny State routinely trot out antitrust as an example of where the free market doesn't work, but in reality it's the industries with the most regulation by government that are the most monopolized. Take telecommunications. For most of the history of telephones, it was illegal to compete for customers. That monopoly was enforced by local governments. But I guess as long as you control the government schools that teach the history of 'Robber Barons', people will believe the propaganda.

I think you have your history backwards - perhaps whichever non-government school that left out the part about the "Robber Barons" when teaching you history also forgot to mention that bit about how the telephone industry only became so highly regulated because it was already actively abusing its monopoly status. To my knowledge all the stuff about not competing for customers was merely a restriction on Ma Bell to keep them at less than 85% market dominance, as per the anti-trust settlements at the time. Even the most hardcore of free-market types realize that leaving monopolies alone is downright stupid - no theory of economics can reasonably make the claim that a monopoly is good for anyone but the monopolist.

In fact, the subject of this article is most dangerous in the context of monopolies and near-monopolies. I remember when I was little getting a few bucks in the mail from Nintendo because it had come out that they were pulling this kind of price fixing crap with all the retailers, and they got caught. So don't pretend that this is just paranoia - if this becomes legal, companies will use it to screw over customers, especially in situations where the item in question is not a commodity but rather a highly branded item in an industry with very little substantial competition like a Nintendo (back when there was no real competition, that is - now the field is too crowded to mess around too much with the customer) or an iPod (since the Zune sucks, Apple can do just about whatever it wants).

Re:Blame the Victim

[Courageous]

All it takes is one player who sees the value of not actively alienating his distribution channels.

Or a few players realizing that competing with each other was harder than colluding together to achieve a common price structure with minimum fat profit margins...

C//

Re:Blame the Victim

[Geof]

With a free capital market, such a player can be assembled with little difficulty.

You're telling me the SEC is the main barrier to setting up a new business in an existing market? Incumbency, first mover advantage, economies of scale, brand, negotiating power... these are all relatively minor obstacles? It's classic to set one conception of the free market on one side and the government (which is hardly a blameless regardless of your perspective) on the other as if there's a simple binary choice between them. It fits neatly into an ideology, but in reality the market doesn't work so smoothly. Take this article about prices for prescription generics:

Walgreens charges $117 for a bottle of the same pills for which Costco charges $12.

Why on earth, I asked . . ., would anyone in his right mind fill his generic prescription at Walgreen's instead of Costco?

His answer: if a retiree is used to filling his prescriptions at Walgreens, that's where he fills his prescriptions -- and he assumes that the price of a generic drug (or, perhaps, any drug) is pretty much the same at any pharmacy. Talk about information asymmetry; talk about price discrimination.

Sure, in a theoretical perfect free market there wouldn't be information asymmentry. But there is - and there always will be (because companies know and use this fact, because gathering information is expensive, because individuals and smaller organizations suffer from greater coordination and collective action problems than big organizations, because they have fewer resources, because information is both a precondition for the market and a product sold in that market). So assuming you can "assemble" your "player" with little difficulty, how do you intend to compete with Walgreens? Because apparently they can still compete with a price 10 times yours for an identical product.

As for the telecoms, when governments allowed competition they also (at least where I live) forced the owner of the wires to allow for competition on those wires. Otherwise we wouldn't have competition there either. I say the market is more free because they regulated, not less.

Re:Blame the Victim

[psykocrime]

Or a few players realizing that competing with each other was harder than colluding together to achieve a common price structure with minimum fat profit margins...

The power of collusion is limited by greed though. Somebody will always break the agreement when they get greedy. Look at OPEC nations, where one or more of them is always cheating and exceeding their quotas. And that's a product where the number of possible players is pretty much strictly limited.... in a market for widgets, a new producer (or 2, or 5 or 23 or 42) can show up anytime to wreck the game.

Lower barriers to entry by getting rid of State intervention (gazillion page govt. regulation manuals, patents, etc., etc.) and you get even more market activity and competition.

Re:Blame the Victim

[dytin]

You can't seriously mean that the crap that Enron pulled should be legal, can you?

It already was illegal, there's no need for a new law to make it even more illegal.

companies will use it to screw over customers ... like a Nintendo (back when there was no real competition, that is - now the field is too crowded to mess around too much with the customer)

And there, you touched on the point that shows so clearly how free markets work so well. Nintendo may have had a near monopoly 20 years ago, but guess what? New players came into the marketplace, and now Nintendo has to play nice with the consumer, or else we'll take our business elsewhere.

Re:Blame the Victim

[Copid]

It already was illegal, there's no need for a new law to make it even more illegal.

The point of the law was not to make it more illegal. The point was to make it harder to get away with it in the first place, reducing the chances that the government will have to clean up the mess at all. The costs of an Enron-like failure are tremendous, and throwing a few executives in prison and confiscating a few multi-million dollar homes don't come anywhere near repairing the damage any more than throwing an arsonist in prison rebuilds a torched apartment building.

Re:Blame the Victim

[packeteer]

Nintendo didn'y really have a monopoly. They had an extremely innovative product that had HUGE market share. Think of the iPod, it has huge market share but it does NOT have a monopoly. Many other companies release MP3 players and they make a profit off it. This is driving innovation in the market, without the competition Apple faces they would not need to make anything better.

Splitting hairs about something in the past i know but what really happened is more complicated than some text book economics example.

Re:Blame the Victim

[Anonymous Coward]

From Wiki:

"The first American schools opened during the colonial era. As the colonies began to develop, many began to institute mandatory education schemes."

You may note that colonial times were long before the robber baron times. The earliest schools began in the mid 1600's in America, and if I recall correctly one of the main reasons for an emphasis on education was to have educated voters, capable of deciding on the government that they would select to rule them.

Re:Blame the Victim

[Anonymous Coward]

They don't much care whether they turn out socialists or fascists, just so long as they keep churning out statists. The career politicians never have an actual ideology other than control, so it doesn't really matter how they turn out as long as they're statists of some sort.

Re:Blame the Victim

[Anonymous Coward]

You can't seriously mean that the crap that Enron pulled should be legal, can you?

Err, it was already illegal. Most of the time when someone says "There Ought To Be A Law", there already is one that's being enforced poorly.

Re:Blame the Victim

[Anonymous Coward]

Monopolies are great! now shush....

Bill G.

Re:Blame the Victim

[xelah]

Hogwash. If a manufacturer places rules on retailers that they don't like, they're likely to find those retailers stocking competitors' products instead. All it takes is one player who sees the value of not actively alienating his distribution channels.

Errmm....retail price maintenance BENEFITS retailers, that's what it's for. The manufacturer specifies the minimum (higher than competitive market) price retailers can sell at in their contracts and uses its monopoly/market power to enforce them, and by doing so liberates the retailers from having to compete against each other on the basis of price. If the retailers were to do this themselves (by talking to each other as a cartel and agreeing on the price) it would be illegal. The manufacturer might do this either to capture some of the retailers' monopoly profits (because they can charge the retailer more without the retailer refusing to stock their products) or to encourage retailers to stock their products.

Re:Blame the Victim

[jedidiah]

The whole Enron thing is not about making it illegal so the cops can do their
usual "just clean up the mess after the murder" routine. The idea is to PREVENT
it from happening again since the stakes are remarkably higher than something
like a single violent crime. The Congress and the SEC are trying to prevent the
economy from suffering another COLLAPSE leading to decades of depression that
would only lead to more rampant statism.

If you are trying to avoid fascism or communism or whatever the very last
thing you want to do is to let people think they can manage to pull off
frauds of this sort. Strong law enforcement that keeps the graft and corruption
somewhat under control is the only reason we're not like most of the other
banana republics in this hemisphere.

Most people can't be trusted to play nicely by themselves. That's why governments
exist to begin with.

Yeah, SOX sucks. Maybe eventually you twits will stop being fixated on this cult-of-Gates
profit at any price, bend over for the stockholders, screw the custormers, employees or
anyone else sort of mentality.

When the students and alumni of Wharton lynch likes of Gates when they get out of line,
then mebbe all of the draconian SEC crap can be abated somewhat without dire consequences
ensuing.

I pick on Gates because he started out his business career by blackmailing his first
customer and then stabbing him in the back. He's the perfect example of why you need
an SEC and DoJ.

Re:Blame the Victim

[Courageous]

a new producer (or 2, or 5 or 23 or 42) can show up anytime to wreck the game.

When the new producer shows up, those in collusion drop their price below the new arrival's loss point. This happens once or twice, and new producers become afraid to even try to enter the business.

C//

Re:Blame the Victim

[JesseMcDonald]

They control the schools so they can control the curriculum with the intent of making good little socialists out of everyone? They are doing a remarkably bad job of it, considering how many conservatives there are.

Conservatism is a form of socialism (pages 65+).

Re:Blame the Victim

[jafac]

Ironic that the pro-free-market, pro-business, pro-monopoly forces, NEVER bring up corporate bankruptcy as a HUGE form of government subsidy.

Look at the ill effects that came from the Enron fallout. And yet, this company STILL exists, is STILL in business, and while a few scapegoats have been whipped, and while tons of workers were booted out on the streets - Enron is still able to influence the political process (California Governor), and pervert the justice system, and operate its business. In a few years, they'll be permitted to operate in the US again, and it will be business as usual.

Re:Blame the Victim

[Anonymous Coward]

SOX compliance costs at least $6 billion in direct costs and possibly up to $1 trillion in indirect costs per year. I'd rather take an Enron or two every now and then...

Re:Blame the Victim

[Anonymous Coward]

I think you have your history backwards - perhaps whichever non-government school that left out the part about the "Robber Barons" when teaching you history also forgot to mention that bit about how the telephone industry only became so highly regulated because it was already actively abusing its monopoly status.

UNNATURAL MONOPOLY: CRITICAL MOMENTS IN THE DEVELOPMENT OF THE BELL SYSTEM MONOPOLY

Regulation played a crucial role in [AT&T 1907 President's Theodore Newton] Vail's plans. Astute enough to realize that the kind of system he proposed--universal integrated monopoly--would stand little chance of gaining public approval without some form of public control, he embraced state regulation. In doing so, he broke with the company's long-standing opposition to what [AT&T] management had traditionally regarded as an unwarranted intrusion on its prerogatives.

But after years of unfettered competition, during which the firm's financial strengths had been sapped and its efforts to build an integrated system had been dangerously undermined, regulation became a much-preferred alternative. Thus, Vail obviously saw government regulation as the way to eliminate competitors: the one-way ticket, not only to universal service, but also to monopoly profits.

Re:Blame the Victim

[Anonymous Coward]

Until the 1840s most US schools were privately owned and operated. Free public education at the elementary level was available for all American children only in 1870, and it wasn't until 1918 that all states had passed laws requiring children to attend at least elementary school.

The arguments of 19th century public school activists like Horace Mann and Henry Barnard were the belief that common schooling could create good citizens, unite society and prevent crime and poverty. On the other hand, many Catholics opposed common schooling, and it wasn't until the 1925 Supreme Court ruling in Pierce v. Society of Sisters that states could not compel children to attend public schools, but that children could attend private schools instead.

Meanwhile, the "Robber Baron Era", driven mainly by government subsidies, protective tariffs and government-enforced cartels, happened mostly after the advent of free public education (1860-1920).

Re:Blame the Victim

[Copid]

SOX compliance costs at least $6 billion in direct costs and possibly up to $1 trillion in indirect costs per year. I'd rather take an Enron or two every now and then...

You're missing the big picture here. We can quibble over whether SOX could be designed better to impose lower costs on the market players (it almost certainly could), but the point is this: The cost to investors is not just the money lost when a huge company like Enron goes bust and all of its investors are soaked. The bigger indirect cost is to the markets in general: Should I invest in a company that may be defrauding me? How do I know who is a fraud and who isn't? That uncertainty is enough to bring down entire markets.

The whole point of government intervention is to maintain faith in publicly traded companies to keep those capital markets working. If the players in those markets aren't forced to provide accurate information to investors, the whole thing comes tumbling down. When that much money changes hands every day, it's guaranteed that there are going to be a lot of unethical players who are willing to cheat to make money. The only way you can keep the system from deteriorating into uselessness is to regulate it, even if those regulations are a pain to deal with.

Re:Blame the Victim

[SillyNickName4me]

Ipods are a fashion article, and changing them all the time, incorporating new technologies on a regular basis makes that Apple can sell overprised mp3 players to the same people over and over. No competition needed to drive this one, and no intentional weak spots needed for creating a replacement market.

Price Fixing in the dive industry

[MikeHunt69]

Manufacturers may not be able to legally set the minimum price, but in the SCUBA diving industry it happens a lot. The manufacturer refuses to sell you stock if you do not agree with their pricing structure and there is a minimum initial purchase. A lot will also not sell you stock if you are already selling a competitors product or if you are running an internet business.

If course, many of the internet dive equipment suppliers get around this by doing deals with legit shops and cutting them in on the deal.. or even waiting for a dive shop to go under (because they are trying to compete with discounts of over 20% when bought over the net) and buy all their outstanding stock at knock down prices.

Re:Isn't Apple doing this? & Bose?

[spiedrazer]

I agree (see below).

How have Apple & Bose & others been able to dictate their MRP's to retailers for years. You can't find an iPod or Bose system discounted anywhere except for close outs etc.

What is their loophole, or do the retailers just not fight them because the demand is so high they will sell X products at any price?

I'm OK with it

[LunaticTippy]

If online retailers can provide the same thing for 24% less then we should have very few brick and mortar retailers.

Grocery stores would still exist, as would convenience stores. Clothing shops might do OK since people like to try things on. There are always impulse/emergency items, in many categories. I can see the need for a handful of electronic/computer retailers in a large city.

Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?

The way I've shopped in the last 10 years is: Online comparison/research. Online purchase unless shipping is more expensive than local, I want an easy return, I need to touch/smell/hear/taste the item first, or I'm in a big hurry.

I always assumed that eventually everyone would adopt this model of shopping and we'd see a massive collapse of brick-and-mortar retailers. Retailers that are smart will be able to adapt. Lots of opportunities, like partnering with an online retailer, offering amenities that aren't possible online, etc.

Re:I'm OK with it

[seanadams.com]

Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?

I'm not talking about propping up anyone. The situation is kind of counter-intuitive. Right now we have laws which were originally designed to force competition to exist (between dealers who have similar cost structures) where it naturally might otherwise be controlled through agreements between manufacturers and their dealers. Now the situation is different because we have two channels with vastly different cost structure, and we should maybe let the free market do it's thing. You seem to be in favor of a free market but also in favor of the anti price fixing laws. You can't have it both ways.

Re:I'm OK with it

[pizpot]

"Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?"

1. A semi-trailer with 10000 boxes costs less pollution to ship than 10000 separate courrier shipments. There is no contest.

Re:I'm OK with it

[Anonymous Coward]

Until you have 10 000 people driving 10 000 cars down to the store to buy these 10 000 boxes to take them home. There's your contest, and here's your second-prize trophy. Thanks for playing.

Re:I'm OK with it

[seanadams.com]

1. A semi-trailer with 10000 boxes costs less pollution to ship than 10000 separate courrier shipments. There is no contest.

You're kidding, right? If everyone bought everything from Amazon there would be FAR less pollution. Nobody would drive around in their individual car shopping. A UPS truck carrying a whole neighborhood's stuff along one route is far more efficient, I'd guess on the order of 100x.

Re:I'm OK with it

[pizpot]

"Until you have 10 000 people driving 10 000 cars down to the store to buy these 10 000 boxes to take them home. There's your contest, and here's your second-prize trophy. Thanks for playing."

Sorry, I live in a mall.

Re:I'm OK with it

[etymxris]

I'm in favor of free market but also in favor of anti-price fixing laws. The motivation is the same as for anti-trust laws. The market does not stay healthy and competitive on its own. Inefficiencies build up when monopolies form or manufacturers start dictating market prices. There's a difference between a free market and a laissez faire market, for the same reason that personal freedoms (liberties) cannot be secured in an anarchy.

Re:I'm OK with it

[maxume]

Of course, a driver with a route is more efficient that several hundred people all driving to the store. In a fit of logic, rather than making a separate trip for each box, they lump things together.

Re:I'm OK with it

[that this is not und]

You're right. Our legs would just naturally drop off after we all quit using them. We'd sit in our pod-cells waiting for 'Brown' to make the next delivery.

Uh-huh.

Re:I'm OK with it

[maxume]

*than* several, damnit.

Re:I'm OK with it

[tverbeek]

The general collapse of brick-and-mortar stores would entail the end of small, locally-owned businesses. In the price-driven online market, large vendors like amazon.com will always have an advantage over momandpop.com. This means that the primary remaining opportunties for middle-class citizens to own businesses will be as microminority investors in megacorps in which they have about as much voice as they do with their bank. So instead of a nation of small businesses, we'd have a nation of employees, who will never be able to rise above that station because the market is all sewn up by large dot-coms. I guess if you don't mind a return to the economic/power system of the Dark Ages, there's no reason whatsover to protect small brick-and-mortar businesses.

Re:I'm OK with it

[soft_guy]

Give me a break. Pretty much all the businesses in the USA are big box chains. The only "locally owned small businesses" I see are (some) restaurants - depending on where you live you might not even have a non-chain restaurant.

Re:I'm OK with it

[Anonymous Coward]

Unless it's small stuff, people are going to drive to buy it. Even making the conscious decision to buy stuff locally and ride my bike there, I know I'm limited by the size and weight of what I carry. I'm hardly going to do the family grocery shop on my bike though.

People drive. This is what happens right now, all over the world. Are you blinded by ideology, or just online wankery?

Re:I'm OK with it

[tidewaterblues]

Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?

The bricks-and-mortar business model can sustain many more low and medium-end jobs for the people who would never be heired by an Amazon.com or a Newegg in a million years. It is all well and good to want to close Walmart because it is no longer relevent, but you will need to find an answer about what to do with their workforce first. Additionally, ordering online drastically increases the quantities of good shipped over long distances, which would have a negative impact on America's gas supply, roads, and rail system at this juncture. The infrastructure that we have is robust, but it is not good enough or efficient enough to replace the hundreds of millions of people who shop at thousands of stored every single day.

Re:I'm OK with it

[illiterate_light]

You must live in a depressing place. Jesus.

Re:I'm OK with it

[Anonymous Coward]

"Clothing shops might do OK since people like to try things on."

Wow isnt that like the worst example. I think I baught a shirt from thinkgeek 7 years ago.. Do you do all your clothes shopping at cafe express?

"here are always impulse/emergency items, in many categories. I can see the need for a handful of electronic/computer retailers in a large city."

Dont you ever advocate less computer stores. I will never buy computer equipment from anything with more than one location (chains) intown. The small chinese/asain dealers are so much better in vareity of products, low prices, and professional service. Its incomparable. I surely hope you meant a few stores as in a few asain 1500sq/ft shops not a few bestbuys and I dunno, sears? I have no idea who sells the overpriced pos hp machines that i see tossing their catalogue away. And im not waiting a week for tiger direct to haul some shit across the country + 30 dollar shipping.

Re:I'm OK with it

[Joe The Dragon]

Where I like there are a lot of non-chain restaurants and other stores.

Re:I'm OK with it

[Lord Ender]

The general collapse of brick-and-mortar stores would entail the end of small, locally-owned businesses.

Except that you can find IT on ebay.

Re:I'm OK with it

[Brandybuck]

Pretty much all the businesses in the USA are big box chains.

Where the fsck do you live? Get out of the big-box-anchor malls, and out into the real America!

I live in the Bay Area Sprawl, yet within two miles of me are numerous small independent non-chain stores in a huge variety of market segments. Vacumns, luggage, books, computers, groceries, video rentals, furniture, hardware, etc.

Re:I'm OK with it

[mapkinase]

Right, that would give them the market of idiots who go to bookshops to listen to music and drink coffee. They will never get back the market of people who care about the stuff that really matters.

Re:I'm OK with it

[jackbird]

Acme/FreshDirect/Peapod, if you're in the Eastern USA. Order online, they bring it by in a truck.

Re:I'm OK with it

[LunaticTippy]

The jobs point is hopeless. Jobs have been lost since the dawn of time because of technological and political changes. I've lost 2 jobs because of this. I don't like it, but you can't stop it. Trying to stop it is expensive and counterproductive. Maybe these people could get jobs delivering for UPS and the post office, or 1st level customer service and tech support.

I strongly disagree about your second point. I think it is more efficient for people to order online in most cases than to go to the store. You avoid the extra trip in a car, the resources to chill/heat/light/staff the store. The mailman comes by anyway, he just needs a bigger truck. The goods are shipped over long distances already, impact on roads, gas, rail would be nothing at all.

Re:I'm OK with it

[LunaticTippy]

In my experience, small businesses are nimble enough to survive. It is the huge corporate stores I see dying. I cheer every time a best buy, compusa, k-mart, etc. bites the dust. Amazon's competition is barnes and noble, borders, etc. who already killed off the weak small bookstores. I'd wet my pants with delight if barnes and noble went under thanks to amazon. It broke my heart to watch the megacorps drive independant record stores, bookstores, coffeshops, retail stores, groceries, etc. out of business. If the internet can return the favor, I say why not?

My neighborhood is full of thriving small businesses that I cheerfully support. They all have something to offer that doesn't translate well to an online-only model. There's even a growing independent computer shop that seems to live on fixing non-technical people's machines. I bought a power supply there last month for a few bucks more than I'd pay online with shipping. I was grateful to have my machine running again the same day.

I don't see any reason to prop up stupid ugly identical chain retail stores. Let the internet kill them.

Re:I'm OK with it

[jafac]

Can you give me a good reason we should prop up an obsolete business model besides nostalgia or personal preference?

Not everyone is on line.
There will NEVER be a time, where everyone is on line. Internet service has come down quite a bit, but it is a luxury service. Owning a computer is a luxury. There will always be a significant chunk at the bottom end of the economic spectrum who will have either no, or limited internet access. That's just the way it is.

Also, look at the demographics of WHO is on line, and you'll see; the vast, overwhelming majority are white, upper-middle class. We tend to think of the internet, and blogging as the great equalizer, the technological tool of power-to-the-people, and in many ways, it pits the middle and upper middle against the super rich upper upper class, and gives them a leg up. But it's not helping the bottom quintile much, as far as power or influence in politics.

Re:I'm OK with it

[LunaticTippy]

Well, obviously brick-and-mortar won't die back where there are people who don't have internet. Where I live anyone can get a library card and use those computers for free. The hundreds of computers are always in use, often by the down-and-out or minorities. There are charities that give poor people computers. I worked for one that intercepted dumpstered computers and set them up and gave basic training. Dial-up is cheap, under $5/month if you shop around. It really made me feel good to see some poor family get a computer. First it was the 12-year old learning how to IM his friends, then other kids would come in, and finally the adults, often not even speaking English. I've actually seen it make a difference in their job-hunting, price research, etc. It might be different in rural areas or the deep south, but those areas are underserved by the current system anyway.

I think the poor would be better helped by giving them garbage computers than propping up an inefficient retail model.

You're right that so far the bottom rung of our society has been largely left out. Fortunately, in our society there is plenty of waste that can be put to good use.

Until you consider Patents and other G. Monopolies

[twitter]

I would simply stop stocking any product that forced me to sell at price higher than the market could bear.

This is one of those areas where government regulation protects you. Another area of regulation will make sure you are screwed even worse if this regulation is removed.

Let's imagine they have their way. You can stop selling stuff that's over priced, but you would still be stuck with it. Right now, you can reduce the price to recover part of the money you wasted on something you thought would sell better. This happens all the time. Not being able to recover that money would make more business go bankrupt and then everyone is stuck with the losses.

Really though, this is about what you do with what you own and we should not undo a century of sensible policy. Once you buy something you own it and can do what you want, right down to giving it away. Why give up that right? So McSoft can make more money? No one but monopoly providers will benefit from this.

Finally, the insane state of US patent law means that you may not have a competing product to buy and sell. What can you do then?

Since 1911, my ass

[overshoot]

I'm not that old. Manufacturer-set minimum prices were more the rule than the exception until the 1980s (as I roughly recall.)

That's where the "membership stores" like Costco really got going: they could, through a legal fiction, sell at below the set price. When the law changed, they lost (at least some of) their advantages, and quite a few (anyone remember FedCo?) went Tango Uniform. Costco (or, as it was here, Price Club) was one of the survivors.

Well, if the Court votes price fixing back in then I guess a lot of Wally Worlds will turn into Sam's Clubs.

Won't Get Fooled Again

There's nothing in the streets
Looks any different to me
And the slogans are replaced, by-the-bye
...
Meet the new boss
Same as the old boss

This already happens to us indirectly

[Mr. Stinky]

As a retailer of the some of the biggest brands in the snowboard industry, I can say that this already happens to us. We sign agreements to keep our prices at suggested retail through the peak of the season. If you sell "off-price" you jeopardize your account in the next season. Our accounts and credit lines are reviewed yearly. These indirect means of "persuasion" are actually good because it keeps a level playing field for all authorized dealers. Like with most consumer electronics, if you do not buy your product from an authorized dealer, your product warranty is void. -=DG

Would the U.S. Government really do this?

[FMota91]

I can't see how this could possibly be a good thing...

I'm starting to think that the U.S. Government has the companys' best interests in mind?!?!

Re:Would the U.S. Government really do this?

[LordKazan]

STARTING?!

Re:Would the U.S. Government really do this?

[OhHellWithIt]

Why? Just because the U.S. Federal Trade Commission (FTC) filed an amicus curiae (sp?) brief supporting the plaintiff?

<sigh> Somehow, I'm not surprised. The Bush administration always seems to come down on the side of large corporations vs. the little guy.

FWIW, I found TFA just as biased as my preceding remark. Most cases that reach the the Supreme Court are a lot more complicated than they seem at first blush. Skimming FTC's brief, I found some good points being offered. On the whole, though, I think "vertical minimum resale price maintenance (RPM)" is not a good thing.

okay what is the counter argument?

[CPE1704TKS]

I can understand why I do not want price-floors, but can someone explain what the counter argument is? Why has this made it all the way to the Supreme Court if it is so obviously flawed?

Re:okay what is the counter argument?

[Scratch-O-Matic]

Don't forget that "all the way to the Supreme Court" = "lost every case so far."

Re:okay what is the counter argument?

[soft_guy]

Uh, I believe the counter argument is that it benefits large corporations.

Doesn't this already exist as MAP?

[djaxl]

Under MAP, the price is allowed to be anything, as long as it is not advertised (MAP stands for Minimum Advertised Price). MAP appears to be legal, if the penalty is "you can no longer carry our products." If the penalty is "we won't pay you co-op advertising dollars" (see second link), it might be illegal.

Jan 2004 commentary on legal uncertainty of MAP:
http://www.fredlaw.com/articles/marketing/mark_040 1_qtj.html

May 2000 FTC "analysis to aid public comment" on MAP policies of "the five largest distributors of prerecorded music," Sony, Universal, BMG, WEA, and EMI:
http://www.ftc.gov/os/2000/05/mapanalysis.htm

SCOTUSblog comments, link to oral arguments

[SpaceLifeForm]

Link

Sort of.

[Chmcginn]

Under current law:

a.)Manufacturer telling retailer "You must sign a contract to sell at this price, and if you sell below that afterwards, we sue you" is illegal.

b.)Manufacturer telling retailer, "You can't advertise at cheaper than this price, or we won't sell to you anymore" is legal. According to the ACSBlog people, the net effect of the case in point would be to make both legal.

Put you tinfoil hats on

[P3NIS_CLEAVER]

This will give branded stores (Old Navy) a huge advantage over stores that carry other manufacturers merchandise (Sears). The branded stores will have no problem at all clearing out old inventory, and Sears will get stuck with a bunch of unwanted stuff (not that they already are).

Re:Put you tinfoil hats on

[damsa]

A lot of stores have house brands, Sears has Kenmore, Craftsman etc......

Announcing...

[kent_eh]

Announcing the grand opening of www.everythingalwaysonsale.ca

That's right!
Just because your government won't let you shop around for the best deal, doesn't mean that you can't save money.
Stop buying from those overpriced American stores, and get started cross-border shopping!

Our friendly agents are standing by to serve you, eh.

Re:Announcing...

[smchris]

But how do you got it across the border? Yes, there is an answer: organized crime. Like cigarette smuggling in Europe.

It would probably be a nightmare for a few cities like Detroit and Buffalo.

Re:Announcing...

[KudyardRipling]

Watch big business pressure their security thugs (once known as the US government) to slap hefty duties on those border-crossers engaging in such 'subterfuge' despite NAFTA. Combine this with mandatory (RFID equipped) passport use and data mining. We will see Americans being refused entry into Canada because of their border-shopping activities. File a VAT refund and *they* will come for you.

Dour is the tone in which reality speaks: NAFTA is for business to make money, not to give people convienences. Humans excercising liberty cost money. {{As the black crown vic pulls up to the door...}}

USGOVT.SYS corrupted, Reboot?

{{ *PWRRRT!* (gun w/ silencer sound) THud! Hee,hee this fat one will make a whole lot of soap and one huge lampshade! drag,drag,drag...}}

For The Other Side Of The Argument...

[hoeferbe]

TFA is not a news article, it is a guest editorial by a friend ("amicus") of the defendants. So, it is very slanted as to why minimum resale price agreements should continue to be in violation of antitrust laws. Knowing there is always two sides to a story, I sought out that other side and found this from the Ayn Rand Institute:

Legalize "Price-Fixing"

Please note that by posting this, I am not saying I support the Ayn Rand Institute's side; I mearly think it is important to hear both sides of the debate. In this case, I think the Institute does a poor job of convincing the public that their position in in our best interest.

Re:For The Other Side Of The Argument...

[Anonymous Coward]

The argument here assumes that the market is efficient, and that there is competition. i.e., it assumes that consumers have a choice whether or not to buy the product. This makes sense for things like the ipod, which nobody *needs*, but it doesn't make sense for products of monopolies, for example, Vista and MS Office. Realistically, you must have a copy of both of those in most businesses. Therefore, the market is inefficient. Now, it'd still be okay in that case, since greed woul destroy microsoft, but that's an example.

Re:For The Other Side Of The Argument...

[dlenmn]

They do have an interesting point -- the current system is asymmetric. A large, vertically intergrated retailer -- who sells products that they make -- can set their own "minimum price" that all their stores must follow. However, under the current interpretation of the law, a company that does its sales through independent retailers can't set such a price. Seems sort of silly to favor one group over the other.

Re:For The Other Side Of The Argument...

[cooldev]

They do have an interesting point -- the current system is asymmetric. A large, vertically intergrated retailer -- who sells products that they make -- can set their own "minimum price" that all their stores must follow. However, under the current interpretation of the law, a company that does its sales through independent retailers can't set such a price. Seems sort of silly to favor one group over the other.

Actually, I think this makes sense. If you want control over the price of a product that you manufacture then form your own distribution channel that doesn't rely on others taking risk stocking your product. Alternatively, if you want to take advantage of a broad distribution mechanism controlled by a 3rd party, simply set your wholesale price to something reasonable for both your own interests and those of the distributors. Who cares what price the distributor charges after that?

If the distributor "outsmarted" the manufacturer by understanding the market would bear a price significantly higher than the wholesale price, then the manufacturer learned a lesson and can refine their business practices for the next iteration. That's how business works. If the manufacturer can't sell a product and dumps it at a low price, potentially damaging the brand image for products (like *cough*handbags/purses*cough) that are sold at artificially hyper-inflated prices, then too bad. That's how business works.

It sounds like this handbag company wants the best of both worlds. Maybe they should have tried scalping Playstation 3's on ebay instead. ("Hey, if I sell for a profit, great! If I can't sell for above what I paid, I'll just take it back to the store!")

The only way I think this could possibly be reasonable is that if there were no concept of a wholesale price and the manufacturer relied on the distributor to set the price, and would only get paid a certain percentage of whatever the distributor decided to sell the product for. Then the distributor starts selling cars for five bucks. But this isn't how business works.

Re:For The Other Side Of The Argument...

[joaobranco]

They do have an interesting point -- the current system is asymmetric. A large, vertically intergrated retailer -- who sells products that they make -- can set their own "minimum price" that all their stores must follow. However, under the current interpretation of the law, a company that does its sales through independent retailers can't set such a price. Seems sort of silly to favor one group over the other.

They dont have that point, since it is perfectly legal for someone to buy on a vertically integrated chain and sell it afterwards, at the price it chooses. The chain has no control on the subsequent price, just as a non-integrated chain has no control on its retailers price. They have the choice of price when they sell, thats all.

Re:For The Other Side Of The Argument...

[ignavus]

You know, if the government stays out of the market ... there goes copyright law. Copyright law is massive government intervention - a government-created monopoly. If we drop the anti-trust ... we also drop the copyright protection.

Or are you only in favour of dropping consumer protection laws?

Ayn Rand - the Business Lobby's friend.

Re:For The Other Side Of The Argument...

[dlenmn]

Who cares what price the distributor charges after that?

Obviously the manufacturer. Heck, you answer your own question. Low price could be taken as a sign of low quality -- especially for fashionable items like handbags.

Truth be told, I don't think allowing minimum retail prices would really change anything that much, because manufacturers will adjust prices so that supply equals demand or they will fail (which is what you were saying). To state it another way, nothing would really change because allowing "price-fixing" would simply allow manufactureres to make the same pricing decisions that retailers can already make. So I don't think the manufacturer would really benefit from setting their own minimum price, but why not let them if it's not going to hurt anyone? (And it won't hurt anyone because -- as mentioned earlier -- price will still adjust so that supply equals demand)

Re:For The Other Side Of The Argument...

[dlenmn]

The chain has no control on the subsequent price, just as a non-integrated chain has no control on its retailers price.

Indeed, there is no asymmetry after the first retailer sells it. I never claimed there was. I only claimed asymmetry in the transfer between the manufacture and first sale by the retailer.

Re:For The Other Side Of The Argument...

[cooldev]

dlenmn, one of the things you overlook is the risk that the distributor is taking. I'm not an expert in this line of business, but I imagine that there are at least two risk factors:

1) If the distributor actually buys the product at the wholesale cost and then resells at the price he thinks he can make, what happens if he can't even sell at the wholesale cost? Does he keep the inventory available forever or can he send it back to the manufacturer for a refund? If the latter, then the "price-fixing" isn't quite as bad. If the former, then the distributor is taking on a very significant amount of risk by stocking the product and potentially getting screwed by the manufacturer's bad pricing scheme.

2) Shelf Cost. For lack of a better word (since I'm not a retail expert), it seems that there's a certain cost for placing items from a manufacturer on display (or in online advertisements, etc.) for consumers. Afterall, that's what a distribution channel is. It's not free, so it's a risk that the distributor is taking regardless of whether the manufacturer refunds the cost of unsold products.

As an aside, this also keep distributors from trying alternative business models. In the grocery industry, for example, it is common to be a "loss leader" on certain products in order to attract customers who are likely to buy other (profitable) items. I'm all for promoting legit alternative business practices, and this goes against that.

Re:For The Other Side Of The Argument...

[Anonymous Coward]

The Ayn Rand Institute's junior fellow makes one fatal mistake: he assumes new businesses can easily enter a market. Hyper-inflated products with a significant barrier to entry, such as hardware of any significant complexity and other markets, can remain hyper-inflated simply because no one else can enter that market. No one would buy it, sure. But then the retailers, as you said, are left with unsold merchandise they cannot legally unload at below market price. And, they can't give away the iPod to sell the iPod accessories (or what have you).

Re:For The Other Side Of The Argument...

[hymie!]

So long as the government stays out of the market, no group of companies can force a customer to pay more for a product than it is worth--nor can a group of companies that arbitrarily jack up their prices prevent worthy competitors from winning over their customers.

Somebody hasn't been to a gas station lately.

Re:For The Other Side Of The Argument...

[dlenmn]

Does he keep the inventory available forever or can he send it back to the manufacturer for a refund?

I think that's the norm in some retail sectors (book selling for example?) but if there's a minimum resale price, then there's a contract. If I were I retailer who wanted to try something I thought might not sell, I wouldn't do it unless I had some type of refund language built in to the contract.

As for the loss leader "problem" you could, for example, bundle a product (sold at the minimum retail price) with a $15 gift certificate good for other purchases in the store and get the same effect. Or you could bundle it with a free toothbrush. Or perhaps you could give a product with a minimum retail price away for free to someone who buys enough of something else (buy a fridge, get a free microwave!)

I just don't see what all the fuss is about -- a minimum retail price wouldn't really change anything.

Re:For The Other Side Of The Argument...

[can'tthinkofagoodnic]

"For example, in the case under review by the Supreme Court, it is currently considered illegal 'price-fixing' for a handbag manufacturer to contract with retailers to set a minimum sale price on handbags. But, at the moment, it is perfectly legal for a manufacturer with its own retail outlets, such as The Gap, to set a minimum sale price on its retail products. Why is one illegal and one not? Ultimately, because government judges and bureaucrats have said so.

Any time an article uses the word bureaucrat, you can generally discount its merit...anyway...

The reason one is illegal and one is not is because the manufacturer with its own retail outlets doesn't sell the items to the retail outlets, unlike a wholesaler. I'm sure there are some internal dollars that change hands, but all of the pricing is done at the point of sale. Not so with wholesalers--they make money selling to distributers, and if they want a higher price they can raise their wholesale price. The only reason they would set their prices at the point of sale is to favor one store over another (i.e. you want to sell your stuff at Wal-Mart but you want it to cost the same elsewhere so it doesn't look "cheap").

Re:For The Other Side Of The Argument...

[joaobranco]

I believe I haven't been very clear.

The thing is: once a sale is made to outside parties, they are in the same boat (you agree with that). The "border" where the sale occurs may be usually different (it is usually to the retailers in one case, usually to the general public in the other) but it need not be so, like I wrote, and neither can prevent it. Therefore the situation is the same.

Incidently nothing prevents a small manufacturer to enter agreements to distributors regarding minimum price - they just lack the power to force such agreements to be made.

Would Walmart balance it out?

[Anonymous Coward]

I'm sure if a manufacturer tried to go up against Walmart, they would lose, so even if this ruling were to swing the business interests way, wouldn't Walmart force them to set the prices to what Walmart wants?

oh yeah, make a big stink over this

[Anonymous Coward]

you don't think raising minimum wage did more damage to the middle class than this? you're just an idiot if you don't see it.

Re:Isn't Apple doing this? & Bose?

[silverhalide]

Apple and Bose maintain tight control over their distribution. As such, they control directly the price the retailer pays for the goods. Other companies use third party distributors which introduce more padding into the pricing, and as such more flexibility. If you violate Apple's pricing policies, well, no more iPods for you to sell, and you can't get them anywhere else for less than the retail price. With other companies, you could simply call up another distributor and continue selling the goods for whatever price you wanted (even if it's below retail).

The practice of selling things too cheap will lessen as more and more companies take control of their distribution, cut out distributors, and enforce their pricing policies.

What could actually make this fair..

[jcr]

Is if any manufacturer who set a limit on pricing were also obligated to take back any stock the retailer couldn't sell.

-jcr

Re:What could actually make this fair..

[aaza]

Not only that they must take it back, but the refund to the retailer should be the price limit set by the manufacturer (not what the retailer initially paid)...

Re:Isn't Apple doing this? & Bose?

[larry bagina]

the "loophole" is that Apple/Bose/etc will stop supplying retailers that don't follow MRP guidelines.

Re:Isn't Apple doing this? & Bose?

[Omnifarious]

Well, I've never bought an iPod or a Bose product. I've bought a laptop from Apple, but I think I will stop doing that now. Now I know why prices for Bose and Apple products don't drop like they do for everything else.

In my opinion, instead of making Apple's practices even more legal, it should shift to trying to figure out a way to make them illegal while doing as little as possible to reduce any other freedom Apple has.

I didn't realize that competition among retailers was one of the big reasons you see price drops on consumer electronics stuff. But now that it's been pointed out it makes perfect sense. The product competes with itself to drive its own price down.

This will happen.

[Anonymous Coward]

Seriously, recent Supreme Court rulings show that some of these people are out of their fucking minds. Buy everything for cheap while you can!

Re:Until you consider Patents and other G. Monopol

[pizpot]

"Not being able to recover that money would make more business go bankrupt and then everyone is stuck with the losses."

Oh boy, this sounds like a big business plan to get more of the pie. I guess the computer simulation is finished running, and has proven that by fixing prices, big bussiness will get more pie. Why else would the courts be thinking this?

Libertarians

[guinsu]

I hope the slashdot libertarian crowd is coming out of the woodwork in support of this one. I mean individuals should be able to enter into any sort of contract they want right? And its not the free hands fault when every vendor forces this upon the merchants, thereby driving up costs to all consumers.

Re:Libertarians

[j_f_chamblee]

As a semi-libertarian (I'm a distributist), I admire the sentiment behind preserving our right to enter contracts freely. However, since we are talking about the Supreme Court, who may collectively do whatever the hell they choose, what difference would "coming out of the woodwork" make?

Internet "shopping around" is bad

[cdrguru]

It is bad because it drives out retailers that might offer better service and support. It drives down prices to the point where only the superbig high-volume retailers can exist.

As a side effect, it makes it possible for the "New York Photo Shop Scam" to exist where they advertise an item at an incredibly low price (grey market, of course) but then you are required to purchase something else to get the price. You find this all the time doing price searches for photo and electronics gear. Good thing? I don't think so, but that is what Internet price searches thrive on - low prices.

It is difficult to filter results with price searches by anything except low price - you see the same item listed for two prices both from web sites that you know nothing about. Maybe you can go to the trouble of figuring out that one of them is charging 3x or 4x real shipping costs to make up for it, but by then you have to go back through the whole process again to find the next lowest price.

Or, they charge you "sales tax" when you have no way of knowing they aren't paying tax.

Yes, this could be a new business model, but the model comes down to destruction of the environment. You start with looking for low prices and end up getting a series of sub-prime sellers each one trying to make up on shipping and phony sales tax what they are losing on item margins. It creates an environment of distrust and suspicion. It is also just a race to the bottom with the consumer hoping someone can afford a couple of ethics when they reach it. It is absolutely WalMart wins, Mom & Pop lose.

It used to be you would know when someone offered you a product on the street for 10% of the retail price that it was not legitimate. Today, there is virtually no protection for the consumer. The Internet retailer doesn't have a BBB rating or a writeup in a local newspaper - they have low, low, low prices and Froogle delivers hits.

Re:Internet "shopping around" is bad

[Anonymous Coward]

It is bad because it drives out retailers that might offer better service and support. It drives down prices to the point where only the superbig high-volume retailers can exist.

It used to be you would know when someone offered you a product on the street for 10% of the retail price that it was not legitimate. Today, there is virtually no protection for the consumer. The Internet retailer doesn't have a BBB rating or a writeup in a local newspaper - they have low, low, low prices and Froogle delivers hits.

http://www.resellerratings.com/

Just because you're a moron who can't check where you're buying from doesn't mean I should have to pay more. Hell consider this an idiot tax, maybe after you get gouged enough you'll learn some common sense (doubtful).

Re:Internet "shopping around" is bad

[whoever57]

It is difficult to filter results with price searches by anything except low price - you see the same item listed for two prices both from web sites that you know nothing about. Maybe you can go to the trouble of figuring out that one of them is charging 3x or 4x real shipping costs to make up for it, but by then you have to go back through the whole process again to find the next lowest price.

Apparently you never used Pricegrabber or one of its clones. Put in your zip code and it tells you the total price, including shipping and any sales taxes. There is also a reputation rating system.

Re:Internet "shopping around" is bad

[davidgay]

As a side effect, it makes it possible for the "New York Photo Shop Scam" to exist where they advertise an item at an incredibly low price (grey market, of course) but then you are required to purchase something else to get the price. You find this all the time doing price searches for photo and electronics gear. Good thing? I don't think so, but that is what Internet price searches thrive on - low prices.

You obviously didn't try to buy photo stuff before the 90s. The "New York Photo Shop Scam" significantly predates the web - it thrived on very-small-font greyscale-ads in photo magazines. Or try to buy a camera in various over-touristy parts of the world known for their "cheap" camera prices (e.g., Hong Kong).

David Gay

You've just hit a fallacy

[Rix]

Don't worry, "free" market thinking is full of them. A "free" market cannot remain "free" without intervention, otherwise various groups will collude and cajole the market under their control.

Free markets are a fiction economists have cooked up. They don't, and can't, exist in the real world.

Re:You've just hit a fallacy

[tehdaemon]

No, there is no fallacy. You just have no clue what the term 'free market' means.

A free market is in no wise incomaptible with laws agianst bringing a handgun to 'bargain' for lower prices - laws which of course would be government intervention.

About the only thing that you did get right is the fact that totally free markets do not exist. I wouldn't say that they can't, but it is rather unlikey. Just as world peace - an unlikely event - doesn't mean we should advocate total war, the fact that free makets are unlikely doesn't mean we should actively try to destroy them with stupid laws. Free markets are the best means of achieving wealth, both personal and collectively - isolated exceptions granted of course. We should try to get there - even if we know we won't quite make it.

T

Re:You've just hit a fallacy

[seanadams.com]

Touché. However, I still think this particular situation is unduly restrictive of business.

Corpratism

[Anonymous Coward]

Since the beginning of the twentieth century there have been 2 major competing economic theories: Capitalism and Socialism.
I submit to you that there is now a third: Corporatism. Perhaps first predicted jokingly in Snow Crash, corporatism is giant companies running government functions for the benefit of those who control said companies. That is exactly what this is, it's not free market really free market capitalism, because this like a monopoly artificial price floors are an area that can cause market failure. Thus government intervention is fully justified.

While I am normally against government interference in the market, it can serve a purpose if limited to certain areas that benefit the market as a whole. But seeing the current U.S. government bowing more and more too the power of large companies, I believe that the economy as a whole will suffer (even more than it already does) due to the power of wealthy industries and business men. Perhaps it is time for new rules concerning how money can affect and election. The problem is that it will take general public awareness of the problem as well as the will and belief that something can be done about it. Sadly the U.S. population has demonstrated little of these qualities in recent history.

Re:Corpratism

[funwithBSD]

Snow Crash?

You mean Rollerball.

Re:Corpratism

[Anonymous Coward]

The economy suffers now? It's the biggest it's ever been and still growing. I'd hate to see what you'd call a recession.

Re:Until you consider Patents and other G. Monopol

[Zeinfeld]

Once upon a time there was this guy called Adam Smith who observed that whenever people engaged in the same trade meet they almost invariably engage in a conspiracy against the general public.

That same Adam Smith is the same Adam Smith who is the origin of pretty much everything that has historically been considered a free market.

In Smith's day state monopolies were a common means of raising revenue. Smith demonstrated that such restraints on trade have hidden costs that are much greater than were imagined at the time. The cost of the tax is much greater than the amount paid raised in revenue.

In libertopia they do things differently of course, the only evil that can ever exist in libertopia is the result of people consipiring together through the government. The fact that a large corporation has a similar coercive power to government is inconvenient ideologically and is thus ignored.

Nothing is going to happen here. At worst the SCOTUS redefine the interpretation of the anti-trust acts. But that might well be the best outcome long term for consumers since if Congress revisits price maintenance agreements making them explicitly illegal they wil probably act on advertised price maintenance as well.

I don't see an argument being made that prohibiting retail price maintenace is unconstitutional. Even though many members of SCOTUS are notorious partisan hacks I don't see that as being very likely.

Re:Until you consider Patents and other G. Monopol

[vux984]

Really though, this is about what you do with what you own and we should not undo a century of sensible policy. Once you buy something you own it and can do what you want, right down to giving it away. Why give up that right? So McSoft can make more money? No one but monopoly providers will benefit from this.

Large online clearinghouses benefit from this.

Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this? Retail cannot lower their prices to the same level online companies can -- they have prime real-estate leases vs a warehouse in some grungy commercial district. They deal in hundreds of books per week in stead of per hour, etc, etc.

The proposed legislation prevents amazon.com from lowering the price of the books to less than the retailers can survive.

I don't know if that is a good idea, but I do think *something* needs to be done to protect retail. Retail is not an obsolete business model - online sales would suffer too if we couldn't kick the tires at retail. The issue here isn't that retail is 'obsolete', its that retail has to figure out how to make money from customrs who just come in to browse and try things on.

Would you pay 'cover' to get into a retail store? Would you pay a sales person even if you didn't buy something. ie... the bookstore or shoestore could lower their prices and compete with amazon if you paid $20 dollars at the door just to get into the store. There'd be no incentive to buy online as the price in the store would be the same. You could still avoid going into the store, and just buy online directly, and save money, but you lose out on the chance to browse etc.

Essentially, retail and online provide the same final product. retail costs more because of the extra service of bringing the inventory close to you, and having staff available to work with you with it. Retail needs to figure out how to get paid for that component because whats going on right now is that people use the retail outlet to decide what to buy, and then buy it online.

Or put another way online retailers are basically letting retail to all work, and bear all the costs, of making the sale, while swiping the actual transaction because their prices are cheaper. Right now retail bundles the cost of making the sale into the product, and are losing out to online competition who don't have that cost.

Retail needs to unbundle that cost, so they can offer the same product for the same price as online, while somehow charging directly for the service of letting you play with it, try it on, decide what to buy, etc.

Its sort of a bizarre model, but I can't see a better solution. regulated minimum pricing doesn't strike me as a solution.

As online shopping grows other markets will be hit by this, like sports equipment (runners (Nike/Addidas/Reebok), weights, skis, etc), electronics, designer clothing, etc. In fact pretty much anything where you can look at the product (at retail) to gauge its fit/quality/comfort/whatever and then order online and expect to receive an identical product.

Wal-Mart alone would lobby

[nurb432]

or just outright buy the legislation they want.

or... force the retailers into letting them ( and only them ) sell at a lower MSRP then other chains. ( and make up some excuse to keep everyone out of jail )

Re:Until you consider Patents and other G. Monopol

[DogDude]

So McSoft can make more money? No one but monopoly providers will benefit from this.

You couldn't be more wrong. The little guys would benefit from this. Right now, the stupid masses (Slashdotters included) tend to shop only based on price. Price and price alone. If you can get your widget for $0.01 cheaper online from Omni Mega Corp, you will. You wouldn't care if they were cheaper because they used children for labor. If this thing went through (it won't), people wouldn't be able to pay so much attention to price, and would shop based on convenience, service, and quality. I think it would make the country a much, much, much better place, but it'll never happen.

Why would Microsoft care? All of their stuff is already priced the same everywhere, anyway. Can you prove you're not a rabid anti-MS troll?

Never gonna happen

[Anonymous Coward]

This will never happen -- Wal-Mart will stop it. The only reason Wa,-mart exists as it does is because it can sell below MSRP. It's certainly a catch-22. This law would destroy Wal-Mart (which I would appreciate), but the law itself is bad, *sigh*.

Re:Isn't Apple doing this? & Bose?

[Anonymous Coward]

I looked into being an Apple reseller. Basically, they didn't even want to talk to me unless I was already selling $100,000 worth of Apple products a year.

I'm primarily a tech support shop. There's no way I can sell $100,000 worth of equipment with NO MARKUP, just to get their attention.

On the other hand, plenty of distributors and manufacturers in the PC world are prepared to offer me a 10-30 percent discount off MSRP and refrain from collecting sales tax (with state reseller certificate of course) for even a single transaction.

No point in trying to compete with the company store, in my opinion.

transportation costs

[zogger]

The big gamble for online retailing is sudden increases in shipping costs*. Any planetary wildcard, say a sudden huge war centered around the straits of hormuz... could double petroleum prices within days. Then perhaps individual delivery of individual online purchased items might actually cost more than bulk purchases going to the local stores at the mall where the consumers might drive once, but stop at several stores and make several purchases. You just don't know and have zero guarantees there. Delivery of (relatively cheap) items that are still currently profitable for the online retailer and affordable and desirable by the consumer might all of a sudden cost more just for the shipping than the entire purchase price, which would collapse the online guy in favor of back to the brick and mortar guy.

I don't retail, but if I did I think I might like to always have both business presences, "just in case", and to cater to people's preferences.

*that and whenever joe government gets real serious about collecting online taxes, which will probably happen sometime.

Re:transportation costs

[nine-times]

And how do you think the brick-and-morter stores get their inventory? If it gets expensive to ship things, prices will hop on everything that isn't produced locally, no matter what kind of store is selling it.

I cry HORSESHIT! I bought it, I sell at any price!

[Anonymous Coward]

Im sorry but this CAN'T and WON'T work. I didn't RTFA but if I buy something you better be DAMN SURE I can and will sell it for WHATEVER the hell I want. Some sucker comes along gonna pay me 100x what it cost ... DEAL ... your shit product sits around on my shelf for 3 years i'll sell it for a nickel just to get rid of it!!!

You CANT dictate the price ... unless your gonna give me exclusive rights to sell it and not flood the market with the crap.

or ... you give me the crap for free and promise to take back whatever doesn't sell!!!

As long as im paying you for the merchandise up front then you have NO SAY in what i sell it for. You got your money already.

Oh wow!

[fury88]

Communism at it's finest!

http://www.resellerratings.com/

[corsec67]

http://www.resellerratings.com/

Just because you don't know how to do a "is this a good site" search doesn't mean that there aren't tools out there to do just that.

Look at CompUSA

[Black-Man]

Online sales basically forced them out. Boo f'n hoo.

Re:Look at CompUSA

[div_2n]

No, CompUSA is forcing themselves out. They aren't merely being underpriced, but they also _overprice_ stuff quite badly in my experience. I wish I could recall specifics, but there was an item they carried in store that they sold higher than the manufacturer sold through their own web store. Manufacturers don't usually under cut their retailers. They usually sell for the MSRP and let retailers offer discounts. But in this instance, buying the item from the manufacturer plus shipping was cheaper than getting it from CompUSA by about $5. And that is leaving the cost of the gas to drive to the nearest CompUSA out of it.

Also, and this is just a pet peeve of mine and may not be an experience shared by others, but it can be stupidly hard to find something in their store. I once looked for a wireless bridge their website and workers insisted was in stock. I gave up and let one of their workers look and messed around on some computer. I decided I was going to stay until they found it. Thirty minutes later, they found it stuck on a top shelf behind a graphics card. Now that makes sense.

Re:Look at CompUSA

[petermgreen]

some posibilities

a minimum wage worker is in a hurry and can't figure out where its supposed to go so they hide it somewhere.

a customer has looked at something and puts it back in the wrong place (less likely if its a top shelf but could possiblly lead to the first one when the minimum wage floor staff are tidying up).

All the stock database (which the website and workers both use as a data source) knows is what stock has come in, what has gone out through legitimate channels and what has been reported as missing. It can't know where stuff physcially is in the store or whether stuff has been slipped out without paying for it. Eventually if they really can't find something they may mark it as missing but they are only going to do that once they are pretty sure it actually has gone.

More for canada

[FuzzyDaddy]

Looks like I'll be buying computer equipment from Canada as well as my drugs.

Re:Until you consider Patents and other G. Monopol

[tkrotchko]

"Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this?"

Offer better services ranging from knowledgeable clerks to coffee bars to author signings to small concerts certain nights of the week.

Or maybe the local bookstore's days are at an end. It hardly seems worthy of laws or court actions. Times change. We all adapt or end.

Re:Agendatarians

[Anonymous Coward]

I hope the agendatarian crowd will shut their collective pieholes on this one.

Even where such an oligarchy existed, each member of the oligarchy would have an incentive to allow merchants to set prices. And these vendors will still have to compete with each other on price even if they, not the merchant, sets the price. You can't charge more than the market will bear. If you try, you lose, not the consumers.

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

Large online clearinghouses benefit from this.

Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this? Retail cannot lower their prices to the same level online companies can -- they have prime real-estate leases vs a warehouse in some grungy commercial district. They deal in hundreds of books per week in stead of per hour, etc, etc.

The proposed legislation prevents amazon.com from lowering the price of the books to less than the retailers can survive.

So I would think no change, especially since neither involved are big corporations.

I don't know if that is a good idea, but I do think *something* needs to be done to protect retail. Retail is not an obsolete business model - online sales would suffer too if we couldn't kick the tires at retail. The issue here isn't that retail is 'obsolete', its that retail has to figure out how to make money from customrs who just come in to browse and try things on.

Would you pay 'cover' to get into a retail store? Would you pay a sales person even if you didn't buy something. ie... the bookstore or shoestore could lower their prices and compete with amazon if you paid $20 dollars at the door just to get into the store. There'd be no incentive to buy online as the price in the store would be the same. You could still avoid going into the store, and just buy online directly, and save money, but you lose out on the chance to browse etc.

Essentially, retail and online provide the same final product. retail costs more because of the extra service of bringing the inventory close to you, and having staff available to work with you with it. Retail needs to figure out how to get paid for that component because whats going on right now is that people use the retail outlet to decide what to buy, and then buy it online.

Or put another way online retailers are basically letting retail to all work, and bear all the costs, of making the sale, while swiping the actual transaction because their prices are cheaper. Right now retail bundles the cost of making the sale into the product, and are losing out to online competition who don't have that cost.

Retail needs to unbundle that cost, so they can offer the same product for the same price as online, while somehow charging directly for the service of letting you play with it, try it on, decide what to buy, etc.

Its sort of a bizarre model, but I can't see a better solution. regulated minimum pricing doesn't strike me as a solution.

As online shopping grows other markets will be hit by this, like sports equipment (runners (Nike/Addidas/Reebok), weights, skis, etc), electronics, designer clothing, etc. In fact pretty much anything where you can look at the product (at retail) to gauge its fit/quality/comfort/whatever and then order online and expect to receive an identical product. I'd like to point out that WAL-MART and well, every other retail chain benefit, from selling their products at a lower price during sales, and this would affect every product across the board.

Since it doesn't involve a big corporation, it will likely stay as is... If not... well, we CAN'T vote the Justices out, or even vote for them.

Impact on manufacturer income??

[amigabill]

After a retailer/distributor buys an item, the manufacturer already has whatever money he wanted in his bank account. At that point, what difference does the retailers price for consumers have on the manufacturer's bank account? If consumers don't want this item anymore, manufacturer would be crazy to continue making it, so it shouldn't even impact new sales. I don't get it. How does pissing off the retailers and the consumers benefit the manufacturer's bank account?

There's a term for that

[Estanislao Mart�nez]

You'd see a vastly improved rebate industry ramp up, and more importantly, you'd see retailers "bundling" things that they would then instantly take back for a substantial credit/refund. Anyone who's worked retail (especially IT supporting retail!) knows how creative someone can get while competing with someone else two doors down in the strip mall.

I think the term for that is inefficient pricing.

Re:Until you consider Patents and other G. Monopol

[sydb]

I don't think it's quite as biased against bricks and mortar as you suggest.

If I browse in a bookstore and find something interesting I am very likely to buy it right there and then, because I'm excited by it. I'm not thinking about how I could order it online for less because I want to read it now. I don't want to wait a few days while Amazon packs it and sends it to me, and maybe it's not in stock at Amazon and I'll have to wait a week or more.

If I am going out on the town tonight and I need new shoes I don't have the luxury of waiting while some online store delivers them to me.

Maybe there are people who plan all their purchases days or weeks in advance, but for a large number of people most small to medium purchases are done on impulse or at short notice.

For goods like cars or high-end stereo equipment which require research, trial and considerable investment, I can see more of a problem. If I can't test-drive a car, there's no way I'm going to buy it. I think I would be willing to pay 0.5 - 1% of purchase price to test-drive a car for a couple of hours, or listen to an amplifier and speaker combination to decide that I'm happy with it.

Also, Borders has found a way to make money from browsers, by having Starbucks in their stores, and caffeine-addled shoppers are more likely to spend.

The manufacturers have a big interest in making sure retail outlets survive - because people are more likely to buy something they can touch and test. Maybe manufacturers can subsidise retail stores to make them more competitive.

Finally, the advantage of purchasing online isn't just about price. I have access to a much wider choice of products from the comfort of my keyboard, I can do research on specifications and customer experiences, and I can make my purchase more quickly (and more economically) than if I have to drive to various stores to inspect there offerings. Maybe retailers can do some work here to level the playing field - like providing internet access so I can check if this wireless card works in the latest Ubuntu, or whatever. That last item is one of the biggies for me, I've walked out of stores where I might have a purchase because it's not possible to get all the information about a product from the shop floor, and shop assistants are rarely knowledgeable about their products or my needs.

Re:Until you consider Patents and other G. Monopol

[UbuntuDupe]

Would you pay 'cover' to get into a retail store? Would you pay a sales person even if you didn't buy something. ie... the bookstore or shoestore could lower their prices and compete with amazon if you paid $20 dollars at the door just to get into the store. There'd be no incentive to buy online as the price in the store would be the same. You could still avoid going into the store, and just buy online directly, and save money, but you lose out on the chance to browse etc.

Actually, that's not a bad idea. Imagine a store that, for $20 (or $40, or $100, or whatever, I don't know the amount to make this profitable, so that's a guess), you could go in and browse a bunch of merchandise, have *genuinely neutral salespeople* (since you already paid them, right?) make suggestions, and then when you're ready to buy, they would have computers set up so you can go find the best price online and buy it. Of course, they'd allow for the possibility that some people are impatient, and so if you *really* wanted to, you could buy their current stock at a large markup, but the idea would be you're just going there to get informed.

You could also possibly set it up as a non-profit co-op where you buy a club membership that gives you the right to enter, and then it would be exempt from taxation of profits. Or a mutual where you agree to work some hours in a department you're knowledgeable about. Sort of like a brick-and-mortar Slashdot.

Is anyone out there trying this?

This is a good thing

[froschmann]

This will be a good thing.

Think about computers. If you want to make sure your retailers have a skilled in-store staff, setting a minimum price is the only way to protect the ones that do. If I can shop around for prices on the computer, I'll get all my information from the store with the high price / skilled staff, and then go to the dumbass store for the cheap prices.

How do you protect the skilled-staff store? Set a minimum price. That way you can make sure that the margin is good enough to support a nice retail establishment.

Re:I cry HORSESHIT! I bought it, I sell at any pri

[froschmann]

Well, if I make you sign a contract before selling you (the retailer) my products, either you abide by the contract or I'll sue your ass. That's how a legal system works.

The market will move

[Cyphertube]

If this happens, then it will be a simple matter of resellers and such moving their product internationally, and then selling it from either Canada or Mexico, both members of NAFTA.

Yeah, it'll really hurt mom and pops, but many companies are now auctioning off their excess on eBay, and this would just encourage a new infrastructure, which will inevitably move more capital out of the U.S.

Allowing MPA to exist seems contrary to anti-trust

[MadRat]

How can one say that you cannot regulate price but on the other hand you can make it so nobody can advertise a price we don't want you to sell at? To me it sounds like the same transgression. We should just have a compromise and say if you want to monopolize the price of your products then you lose your right to trademark the look and feel of your products along with any patent protections that product would normally enjoy.

Re:Until you consider Patents and other G. Monopol

[CanadaIsCold]

Plenty of businesses survive on convenience fees. It doesn't always have to be cheaper for you to buy it sometimes there is a benefit to driving a block and buying something immediately instead of waiting for it to be delivered.

This argument while very well written can be viewed as a support of RIAA and MPAA policy as well.

The argument boils down to: It is hard for businesses to change there business model therefore the government should protect them.

I feel bad for anyone that can't make money in and industry they have been working in for years however they should change or quit.

Giving manufacturers power of Retail pricing gives a huge amount of power to limited competition products. These Manufacturers already have several methods within their playbook for raising the price of items at retail.

To fully see the impact that implementing this policy would cause imagine if the PS3 never sold a single unit. If BestBuy bought a warehouse full of PS3's for launch and then no one bought a single unit at the Manufacturers set price then in the current system Best Buy would reduce the price of PS3's until they could empty the warehouse. If this rule was revoked Best Buy would have to build another warehouse to buy stock of other items so because they could not reduce the price of items below the Manufacturers agreed price. In the long term Sony would get hurt but in the short term Best Buy would get destroyed. Inventory problems can significantly impact a company, think GM's current problems.

In the current system Manufacturers control price quite well. Why do you think video games cost roughly the same at Walmart and Best Buy. Why would we provide them with more power? There is plenty of cost to this decision what is the benefit?

Re:Public contracts.

[bberens]

Interesting story about Toyotas... A long long time ago this guy, I forget his name now so feel free to look it up, got into a contract with Toyota to be the only person capable of importing Toyotas for sale in the southeastern US. This guy now orders ONLY bare bones Toyotas and does all the upgrades states side to improve his margins. At the same time, you cannot purchase a bare bones Toyota in the southeastern US because this one person completely controls the market. The contract is 'forever'. Free market indeed...

Re:Until you consider Patents and other G. Monopol

[k_187]

You mean like this? http://en.wikipedia.org/wiki/Catalog_showroom Those have worked out really well. ;)

Re:Until you consider Patents and other G. Monopol

[Maniakes]

He also said that attempts to prevent this were doomes, and he went on to say that in the absence of active government support these conspiracies are doomed due to chiselling and competition from those outside of the cartel.

People of the same trade seldom meet together, even for merriment and
diversion, but the conversation ends in a conspiracy against the
public, or in some contrivance to raise prices. It is impossible,
indeed, to prevent such meetings, by any law which either could be
executed, or would be consistent with liberty and justice. But though
the law cannot hinder people of the same trade from sometimes
assembling together, it ought to do nothing to facilitate such
assemblies, much less to render them necessary.

A regulation which obliges all those of the same trade in a particular
town to enter their names and places of abode in a public register,
facilitates such assemblies. It connects individuals who might never
otherwise be known to one another, and gives every man of the trade a
direction where to find every other man of it.

A regulation which enables those of the same trade to tax themselves,
in order to provide for their poor, their sick, their widows and
orphans, by giving them a common interest to manage, renders such
assemblies necessary.

An incorporation not only renders them necessary, but makes the act of
the majority binding upon the whole. In a free trade, an effectual
combination cannot be established but by the unanimous consent of
every single trader, and it cannot last longer than every single
trader continues of the same mind. The majority of a corporation can
enact a bye-law, with proper penalties, which will limit the
competition more effectually and more durably than any voluntary
combination whatever.

It's pretty clear from context that when Smith says "corporation" here, he means what'd we'd call a guild or an industry association. An organization which everyone in the industry was compelled to join and which had the power to regulate the business activities of everyone engaging in the trade. More like the AMA than, say, Microsoft or Google. Smith was not arguing for government antitrust regulation, but rather for governments to avoid mandating or encouraging industry self-regulation.

More Bush Economics

[asayuu]

This is so wrong and it is excatly why anti-trust were put in place this would lead to a similar situation in retail stores, as we currently have in the petrol market. In short it would suck and I can not see how the how the supreme court could let this pass.

Re:Until you consider Patents and other G. Monopol

[Mr. Slippery]

The fact that a large corporation has a similar coercive power to government is inconvenient ideologically and is thus ignored.

I always like to point out that corporations are chartered by the government; discussion of reducing government power to interfere in the marketplace should start with the revokation of most corporate charters (along with government-issued copyrights, patents, and land and resource deeds).

This gets interesting reactions from people who identify as "libertarian capitalists".

Re:Allowing MPA to exist seems contrary to anti-tr

[joto]

Huh?

And if you want to drive on the left side of the road, you are free to do so as long as you also accept that farm animals are not treated humanly? Your compromise makes about as much sense...

Could this mean

[Anon. Libertarian]

the end of Wal-Mart?

Could this also mean the fucktarded poor could finally be killed off?

The poor should be killed off. After all dog eat dog/survival of the fittest. If you're poor fucking piss on you.

Gas Tax, Sales Tax

[arete]

Step 1: Lower the physical sales taxes to be as low or lower than the online one. What, you don't pay Sales Tax online? Maybe the retail Sales Tax needs to go away. (As taxes go, it's both strongly regressive and strongly reduces trade...)

Step 2: To get that revenue back, increase oil taxes. In the US, our oil prices are still to _LOW_ to get us to make the appropriate and serious steps to reduce costs. Shipping and delivering stuff over the road and then by local truck uses a disproportionate amount of oil, 'causing a disproportionate amount of emissions. (Anybody remember trains? Boats?) Air freight is substantially _worse_ for the environment than the trucks. These taxes mean shipping one-box-at-a-time will be tend to be a bit more expensive.

Around here, lots of discount stores compete price-favorably with online retailers. I mean, the absolute cheapest price for a single item is usually online, but that's comparing a hundred local discount vendors to 10,000 online; it's just statistics. The cheapest price on, say, 10 items bought together is often local for me. (I live around Chicago, which I realize is both a major metro area with good competition AND doesn't have the same kind of localized inflation as certain other places.) Heck TigerDirect IS local to me. Online retailer or no, it's cheaper from them if I go pick it up.

On the other hand, of course, the boutique stores don't price compete favorably with anyone.

Re:Gas Tax, Sales Tax

[Joe The Dragon]

local store let you return stuff easer then online stores and the Tiger Direct store that is part of the warehouse will exchange parts with out a needing to fill out a RMA before hand.

Re:Gas Tax, Sales Tax

[ml10422]

Taxing oil does encourage less and more efficient use. BUT, the tax also becomes an income source for the government, so politicians also have a motive to not discourage use of oil too much. You'll end up with these two conflicting motiviations reaching a status quo of a half-hearted attempt to discourage people from using oil.

Re:Until you consider Patents and other G. Monopol

[SageMusings]

It's called COSTCO. You pay a fee to wander in the store and buy things.

Re:Until you consider Patents and other G. Monopol

[rizzo420]

if the local bookstores days are at an end, so are the local butcher, the local grocer, the local record shop, the local clothing boutique, the local computer shop, local hardware store, etc, etc, etc. pretty soon, all we'll have is walmart, target, barnes and noble, borders, best buy, macy's, jc penny, circuit city, compusa, and home depot.

i can see the argument for either side of the debate. forcing retailers to use manufacturer's retail pricing will level the playing field between the local retailers, the big box retailers, and the online retailers. it does so at the cost of the consumer, but the consumer can talk with their wallet and only buy the less expensive manufacturer's goods, forcing the higher end manufacturers to lower their price requirements. i'm all for supporting the local retailer, and many times, i'll pay more money to have a knowledgeable staff, but only for certain items. the biggest cost to the local retailer in many cases is rent, which the online retailer avoids.

Both sides, you say?

[Anonymous Coward]

Would you also give us links to the Flat Earth society if this was a thread on cartography? Rather than presenting "both sides", would it not be better to present "all the facts" and let us interpret them in whatever way is most sensible? Not that we'd do that, mind you, this being Slashdot and all, but still...

As for the Ayn Rand Institute, I wonder how much they'd charge people for the privilege of kicking them in the balls? I mean, they seem to think that everything should have a price tag attached to it, so...

We already have minimum advertised prices

[CmdrPorno]

Manufacturers already have minimum advertised prices, and retailers have to jump over all sorts of hoops to get around them. Also, even if a manufacturer can't demand certain minimum sale prices, they can still construct incentive systems that richly reward retailers who don't sell below their target minimum sale price.

Re:Until you consider Patents and other G. Monopol

[paitre]

[quote]Would you pay 'cover' to get into a retail store? Would you pay a sales person even if you didn't buy something. ie... the bookstore or shoestore could lower their prices and compete with amazon if you paid $20 dollars at the door just to get into the store. There'd be no incentive to buy online as the price in the store would be the same. You could still avoid going into the store, and just buy online directly, and save money, but you lose out on the chance to browse etc.[/quote]

Welcome to Sam's Club and BJs. Granted, they're annual fees, but this could easily become the future of all retail provided the court rules against the established rule.

Good or bad, it would certainly be an opening for a budding entrepeneur...although it would KILL all the ebay reseller stores that buy overstock and resell it.

Re:Until you consider Patents and other G. Monopol

[UbuntuDupe]

That's similar, but what I suggested differs in that:

1) It wouldn't actually sell anything except at a markup *higher* than retail.
2) Its profitability isn't based on how much inventory it sells (except insofar as they e.g. charged you for net access to buy while you're there).
3) It doesn't have a large on-site warehouse.
4) It has actual merchandise in the showroom (the purpose is so you can directly experience the item).

Good for who?

[Leuf]

It isn't good for the customers and I wouldn't really call it good for you either. Convenient when times are good perhaps. You don't have to worry about the guy down the street undercutting you and getting into a price war with him that hurts your bottom line. But if the biggest brand names in the industry aren't moving off the shelves during the season then maybe there's some other factors going on. Like the weather hasn't been favorable, or something else. And the guy down the street is in the same predicament, but you both have to get creative to get around this agreement.

Re:Until you consider Patents and other G. Monopol

[NormalVisual]

I've walked out of stores where I might have a purchase because it's not possible to get all the information about a product from the shop floor, and shop assistants are rarely knowledgeable about their products or my needs.

That's a big one for me too - I don't feel like paying a premium when I'm the one that has to do all the legwork of researching an item because no one at the B&M can tell me anything about it.

The states will love this.

[Anonymous Coward]

I wonder how much of this is being pushed by the states. After all, higher prices with no sales allowed will drive up sales tax revenues.

Wolves guarding the Sheeple

[The Monster]

You can't seriously mean that the crap that Enron pulled should be legal, can you? You think it's perfectly cool to mislead the public into thinking that your company is doing great, then sell of all your stake in it just in time for the truth to come out?

Fraud and force are the two things that justify the retaliatory use of force by government. And Enron executives were convicted for their illegal acts. Just like every other high-profile crime that is used as an excuse to give the government more power to somehow prevent the next one. But there's always a next one, isn't there?

There are plenty of slashdotters who have had to implement SOX requirements. They impose more costs on new entrants. Who is in the better position to fill out all the forms and satisfy the regulators, AT&T or the ClassMyAss Telephone company?

And once you've empowered your new agency to regulate Big Bad Business, who do you think goes to work there? High-minded reformers, or people who have actual experience in those very businesses? Look at your state agencies that regulate utilities, and find out how many of their staff members used to work for the utilities. The federal agency that was created to regulate the Evil Railroads was heavily dominated by railroad people, until it morphed into the Surface Transportation Board that also regulates trucking. Now it has a lot of people from trucking companies too.

Re:Wolves guarding the Sheeple

[nosferatu1001]

As SOX is well known for hitting small businesses (who's controls are much simpler...) harder than the huge monolithic companies that we have around.

IAAA (I am an [IT] auditor) and i think that the intention of S404 et al is great, the implementation is not so good. getting companies to understand they have to be more responsible for governing themselves IS a good thing.

If you want completely insane, see some of the requirements the PCI DDS v1.1 brings - for example, every system must have every patch applied within 1 month of release - even if the patch is not relevant, for example you are not using feature X that it fixes. Great fun implementing that at a client.....

Re:Until you consider Patents and other G. Monopol

[Jah-Wren Ryel]

I think I would be willing to pay 0.5 - 1% of purchase price to test-drive a car for a couple of hours, or listen to an amplifier and speaker combination to decide that I'm happy with it.

Few people, if any, purchase cars sight unseen on the internet now (ebay's automotive section is more of a big classified ads, just like their real estate section), I don't see that changing in the near future either. For other big-ticket items like home entertainment equipment, the majority of retail sales are at big-box stores which do have return policies, but do not "try out" policies. Because you really can't get much of a feel for a tv or receiver or speakers inside the store, these stores like best buy and circuit city really don't add any value over purchasing online. If anything, their minimum-wage, brain-washed-to-push-push-push-extended-warranties staff are a net negative compared to online purchasing.

All in, all I believe that the types of purchases for which a brick & mortar store does not add value ought to, and have been, migrating to online purchases. While the ones where B&M stores can add value are staying at the B&M retail stores.

End Sale Prices and replacing them with rebates

[Joe The Dragon]

would suck they should ban rebates and just drop the price by the rebate amount.

Re:Until you consider Patents and other G. Monopol

[kocsonya]

> Price and price alone. If you can get your widget for $0.01 cheaper online from Omni Mega Corp, you will.

No, I won't. I go back to the same retailer even if it is a little bit more expensive. Now if Omni Mega Corp offers it significantly cheaper, that's different. Most people do not buy stuff based on price alone, for if they did noone would buy brandname products - the no-name shop product is quite often contains exactly the same stuff as the brandname, just in cheaper and less flashy packaging (think about washing powder, sugar, everyday stuff). There is a brand loyalty, which is worth a lot. There are also all sorts of other features of products that are important. If the price would be the only factor, you could never sell eggs from free-range chichen at ~AU $4-$5 a dozen when you can get the cage egg for maybe $3.50 from the exact same shelf.

As per child labour, you have no idea if any object you buy had child labour in it or not. You can claim that you guarantee that your shoes are made with no child labour. Fine, I believe you. How about your supplier of the shoelace? Does he guaratee that too? Does he guarantee that the cotton plantation where the cotton was picked from which somewhere they made the string that yet somewhere else has been turned into a shoelace is all ethical wages, proper working conditions, fair wages and all that? No. "Child labour free" is not an ethical statement but an advertising / marketing pitch that makes the product's value higher to a certain segment of the customer base.

Convenience, service and quality are all things that you can express in financial terms.
Covenience is a simple decision: I can buy X in the supermarket for $1 but it takes me 10 minutes to drive there, park, buy the thing, come home. Alternatively, I can walk to the corner store in 2 minutes but I have to pay $1.20. Is it worth it to go to the supermarket? I.e. is $0.20 worth 8 minutes of my time, plus the petrol and tear&wear of my car? Obviously $0.20 is not. On the other hand, $20 is, that's why shopping for the week is done in the supermarket and not in the corner store.

Service is an other thing that you can measure in terms of $-s. Is it worth to me $X to be smiled at and being helped instead of getting a grumpy look and one-sillable answers if I ask something? There is always a value of X for which the answer is yes. You can also put financial value on the personal contact, the fact that the shopkeeper knows you (if you are a regular) and sometimes gives you things cheaper, finds you hard-to-get items and so on.

Quality is yet an other purely financial thing: you take into account the cost of repair, replacement and time wasted with a low quality but cheap product. If I can buy a shoe which last 3 years of constant usage for $150 but can buy the 'made in china' brand one for $30 that last maybe 8 months, then it's $150 versus $30 * 36/8 = $135. If I go with the Chinese, then I have a new (and maybe different looking) shoe in every 8 months and not an old one plus I save $15. On the other hand, with the expensive shoe I'm done with shoe shopping for 3 years, with the chinese I'll have to come quite a few times. These should also be factored in.

So no, people do not go for the cheapest all the time. The ones who only look at the pricetag and nothing else are either poor (when you're scraping the barrel, you can't afford convenience) or they put very little value on these factors, which tells you a lot about their personality (e.g. they don't value courtesy so probably they wouldn't provide any). However, I don't think that most of the people are like that. I don't know about the USA, but I don't think that "price and price alone" would be true for say most of Europe.

I know better than you do

[Rix]

You don't seem to have a coherent point in there.

A "free" market is one without external controls, governmental or otherwise. It's can be useful in a thought experiment, but has no more bearing on the real world than frictionless surfaces.

Free markets are not very good at achieving wealth for anyone except whoever wrestles control of it. Even full on Soviet style command economies can do better. The best method we've tried, and what every developed nation uses, is a regulated market.

Re:I know better than you do

[tehdaemon]

A "free" market is one without external controls, governmental or otherwise.

It is not that simple - there is more to it than that. From the Wikipedia entry Free Market (my emphasis added)

A free market is a market where the price of an item is arranged by the mutual consent of sellers and buyers, with the supply and demand of that item not being regulated by a government (see supply and demand); the opposite is a controlled market, where supply and price are set by a government.[1] However, while a free market necessitates that government does not regulate supply, demand, and prices, it also requires the traders themselves do not coerce or defraud each other, so that all trades are morally voluntary.[2]

In a free market, the only real negotiating point between buyers and sellers is price. If an acceptable price is offered, it is accpeted, regardless of the source, and with no strings attached. It is assumed that both the buyer and the seller are completely aware of the condition of the thing being sold. Government involvment extends to enforcing property rights, and nothing else.

The point I was trying to make (and I admit I did a poor job of it) is that simply saying 'A "free" market is one without external controls, governmental or otherwise.' is too vague to be of any real use. Laws agianst fraud, theft etc, by this simple definition, could be considered 'governmental controls' when in fact they are a practical necessity for a free market to exist. This is why there is a more precise definition for 'free market', economists realized a long time ago that it wasn't that simple.

Free markets are not very good at achieving wealth for anyone except whoever wrestles control of it.

The only way to take control of a free market is by force, usually government force. However, if force is used, then trades are not 'morally voluntary', price is no longer the sole negotiating point, and the free market no longer exists. With this understanding, we can rephrase your statement as. 'Wealth is almost always stolen, usually by government force. Free markets usually have the most wealth and are plundered first.'

Command economies never even come close - saying they can is like trying to get out of jail by quantum tunneling your way through the door. Sucess is only theoretical. As for the regulated market being the best, well, this only works if by 'regulated' you mean no theft, fraud or coersion allowed. Economic history, especially that of the last century or so, clearly shows that the best performing economies, both in total wealth and in average (mean, mode, doesn't matter) personal wealth, are those economies who come closest to the free market ideal. If your ideal is that there be total equality of wealth among all people, a free market is a poor choice. However, as the only way to achieve this is to eliminate property - which means soon there won't be anything at all - it is a poor argument against a free market.

Everyone uses a regulated market because no government has been able to avoid being used by greedy or power-hungry people for their own benefit. This has nothing to do with the productive potential of the economic system.

T

Perhaps, but that's beside the point

[Rix]

When regulating an economy, you shouldn't concern yourself with how lax or restrictive you are to business. You should consider the costs and outcomes of an action, and act accordingly.

In this case, are we better off allowing manufacturers to set retail prices? I would say no; it inflates cost and adds no value..

Re:Forced Contract

[Anonymous Coward]

Ok yeah true ... IF you can get me to sing a contract.

But what about the next person in the chain? Manufacture-->Supply-->Retail-->Reseller?

That reseller didn't sign a contract. Theres NO WAY you can force him to sell it at your price.

Even though he'de be stupid to undercut the major chains / mandated price and take a loss ... but thats his choice!!!

Re:Until you consider Patents and other G. Monopol

[XO]

Sane people recognise the value of services rendered, and are willing to pay for it.

At least, those few that still have any money left to pay for things after our country has been assraped for the last 6 years.

Re:Until you consider Patents and other G. Monopol

[timeOday]

He went on to say that in the absence of active government support these conspiracies are doomed due to chiselling and competition from those outside of the cartel... More like the AMA than, say, Microsoft or Google. Smith was not arguing for government antitrust regulation, but rather for governments to avoid mandating or encouraging industry self-regulation.

Fair enough, since you mentioned the doctor's union which so effectively restricts supply to raise prices for medical services, what shall we do? Perhaps you're right that the AMA would have no power if not for government regulation, but I'm not in favor of totally deregulating medicine. Like if some hack surgeon kills me, I should go somewhere else next time?

Re:Until you consider Patents and other G. Monopol

[RexRhino]

Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this? Retail cannot lower their prices to the same level online companies can -- they have prime real-estate leases vs a warehouse in some grungy commercial district. They deal in hundreds of books per week in stead of per hour, etc, etc. Local bookstores aren't suffering from online competition... local bookstores are suffering because they suck. For real, there was a whole slew of local buisnesses that used to exist soley because they were the local bookstore. They had horrible service, tiny selection, and you had to pay a lot of money. These are the buisnesses that are now dying. Good riddance.

There are plenty of local bookstores that are doing great buisness - They do this by providing friendly service, by specializing in a specific product (all sci-fi books, all cookbooks), or hosting community events, musicians, and providing service outside of just selling books, or by selling used books (ebay and Amazon cannot compete on price with your local USED bookstore... I would never dream of buying a bunch of paperback novels off of ebay or amazon, when I can go to a used bookstore and buy them for $3.00 a piece).

Re:Until you consider Patents and other G. Monopol

[timeOday]

Customers walk in, browse, leave and order the book from amazon.com for 10-20% less.

Really? Prove it. I think more customers do product research online, then buy locally for impulse satisfaction. Amazon is better than any bookstore for browsing because you can see others' ratings and read their reviews.

I'm not saying online doesn't cut into retailers, but I think it's because online is often better. I haven't seen any evidence that online is leeching from retailers rather than simply competing with them, as you claim.

I do think retailers have a legitimate beef with sales tax though.

States

[Sloppy]

Can someone explain why the states can't correct this?

Re:Until you consider Patents and other G. Monopol

[vux984]

The manufacturers have a big interest in making sure retail outlets survive - because people are more likely to buy something they can touch and test.

Exactly. Hell, *even* the online retailers want retail to survive despite the fact they are cutting retails throat. They thrive on the fact that their customers 'sell themselves' their product at retail before going online to find the best prices; if retail actually died, they'd need to find some other way to let their customers 'preview' their content, and they might even have to pay for it, instead of just "freeloading" off of retail outlets.

Maybe manufacturers can subsidise retail stores to make them more competitive.

Interesting concept. I definately think the nature of retail is set to change for certain types of goods.

Except that consumers disagree.

[Kadin2048]

if the local bookstores days are at an end, so are the local butcher, the local grocer, the local record shop, the local clothing boutique, the local computer shop, local hardware store, etc, etc, etc. pretty soon, all we'll have is walmart, target, barnes and noble, borders, best buy, macy's, jc penny, circuit city, compusa, and home depot.

What's your point?

People vote with their wallets every day, and they've pretty clearly indicated that they don't value these type of establishments, in most cases, enough to pay their premiums. The "value added" in other words, of the local butcher, just isn't enough to most people, to cover the increase in cost versus prepackaged meat from the megamart.

I'm sorry that you don't like the way it's worked out -- and if it helps, I agree with you, and I refuse to shop at Walmart (or Target, or Home Depot) when there's an alternative -- but I think it's fundamentally wrong to try and keep obsolete businesses alive at a direct cost to consumers who have clearly voted with their feet and their wallets and said they're not interested. That's at best regressive, and at worst tyrannical.

Re:Except that consumers disagree.

[thetrick]

Not all the big box stores have driven the little guy out of business. If the little guy can provide better service and quality products, even at a higher price, consumers will still buy from them. Where I am from people value the local butcher, as the cuts of meat are better than the megamart packs, with it being the same price or cheaper. And the local lumber company is thriving as well too, even with Lowes and Home Depot in the area. A knowledgeable staff and quality product selection is worth its weight in gold. Now if a small business doesn't provide one of these features, then yes, they will probably not stay in business in todays market.

Re:Except that consumers disagree.

[Anonymous Coward]

I have known several butcher shops to very well because they they provide a human interface, have great customer service and a better product than the massive chains.

At this local butcher shop you get to talk to the butcher himself. You can ask him questions and he will answer you immediately with more information than you may want. He is also very friendly and helpful. If you want a special cut of meat than you can get it without extra charge.

Most importantly, it is a better product than any big store. The biggest reason that I like it is because I can get a 1/4, 1/2 or whole cow. Good luck finding that at Walmart.

Re:Except that consumers disagree.

[Anonymous Coward]

Try finding kosher meat at your big box store. There is still a market for the small store.

Re:Until you consider Patents and other G. Monopol

[TheGavster]

I call myself a libertarian, and I think that retailers should most definately be able to set their own price. They bought goods from a manufacturer, and have the LIBERTY to do as the please with them. There's no need to make a stab at libertarianism when the real enemy is a common one (the erosion of property rights).

Re:Until you consider Patents and other G. Monopol

[vux984]

I'm all for supporting the local retailer, and many times, i'll pay more money to have a knowledgeable staff.

Right now, people can have both. They can go to the boutique to speak to knowledgeable staff, try the product, etc. Then they go home and google the best price. Trouble is, the boutique doesn't get compensated in this transaction, despite having rendered the superior service.

This has always been an issue, as the boutiques already compete with the walmart's, costco's, and the bestbuy's who'll under cut them, hell, who have a policy of undercutting them, but competing with online venders is worse. The online vendors have even lower costs than the bigboxes so the price difference is more pronounced, and you can access the online venders from home so after picking what you want, finding it online is fairly trivial and it gets shipped to your door. You don't have to drive around any more or hope the local BB has it in stock, etc.

One other group.

[Kadin2048]

The ones who only look at the pricetag and nothing else are either poor (when you're scraping the barrel, you can't afford convenience) or they put very little value on these factors, which tells you a lot about their personality (e.g. they don't value courtesy so probably they wouldn't provide any).

Or, they're idiots. There are a lot of just downright thoughtless people in this country (and, I suspect, the world generally) who don't and never will think more than a few days ahead, about anything. You need to account for them, too.

Re:Until you consider Patents and other G. Monopol

[TheGavster]

Actually, the opposite of that. A catalog showroom is the same as browsing Amazon. The inverse would be a store that has lots of things to look at but nothing for sale. You would try out the merchandise in the showroom, then go buy it wherever you found it online. Thus, the store would have immense overhead relative to sales volume, and would need some sort of subsidy either through online retailers advertised in-store as sources of the products, or by a fee to enter the showroom (such as Sam's Club or Costco).

Re:Until you consider Patents and other G. Monopol

[MobyDisk]

Or maybe the local bookstore's days are at an end. Hardly! I've seen a surge in bookstores over the past 10 years. Not that long ago, bookstores were quaint corner shops and places in the mall. Now places like Borders and Barnes and Noble they are anchor stores, cool hang-outs, and good place to buy small gifts, get coffee, listen to music, etc. Yet prices have remained stable. To me, this is an industry that reinvented itself.

Re: Online vs. Brick

[TaoPhoenix]

Watch out gang.

Didn't Net 1.0 end ... because people abandoned shopping on random net sites in favor of desiring that local tangible buying experience? Let's separate out the Top Ten Most Vulnerable Industries from the overall practice.

Amazon has done well enough to be cited as the Internet Gorilla that terrifies the Brick stores. The Twin B's (B&N/Borders) have a chunk of money between them - let them get really wild and find *something* that kicks over the buy decision to prevent the behavior in the article.

Also, aren't shipping costs factored into Amazon? What exactly is the money saved?

I'd suggest Super-JIT as one idea. In the next management meeting over, the movie execs are nervous too. The tech is being worked out to deliver *any* book from an automated machine in under an hour. So these groups need to get together to offer an Evening of Media.

A. Stay at home, put something on the DVD player, order a book online, visit the convenience store for the Mike&Ikes.

B. Go to the entertainment complex, where at least one screen is determined by vote, and can be anything in the pantheon. "Look! Hunt For Red October! The Sean Connery fans showed up." Wander over to the in-house full service mini-restaurant for dinner. That day, the book version is on discount (tied to the movie.) Stop by the Net Terminal. Check Rotten Tomatoes. Wander over to the production side. With your movie ticket, you get your own DVD copy, or soundtrack, discount on the pair.

I'd choose B.

Re:Until you consider Patents and other G. Monopol

[CodeBuster]

I always like to point out that corporations are chartered by the government; discussion of reducing government power to interfere in the marketplace should start with the revokation of most corporate charters (along with government-issued copyrights, patents, and land and resource deeds).

What utter nonsense. Have you ever wondered why the third world is poor compared to the first world? Is it because their share of inherently intelligent people is less? Certainly not. Is it because they are not able to grow their own crops or produce their own goods and services? No. The primary reason that the third world is not the first world is because the governments of the third world fail miserably at defining and protecting private property rights. You are suggesting that we should remove from our legal framework the very structures that permit us to define and adjudicate those property rights most efficiently. The corporation is responsible for the economic growth of the last three hundred years and if not for that then you and I would probably still be subsistence vegetable farming serfs working for some fuedal overlord or dictator. Do you really want to live in a society where the family members of the dictator are the only ones who get access to profitable businesses and where the rule of the strong is the rule of the day?

The government does not "interfere" in the marketplace by allowing certain legal constructs to exist that facilitate its role in adjudicating private property disputes through the civil judicial system. That is a completely necessary and proper function of government. This is a common argument offered by liberals against the libertarians and it is completely falacious. However, certain people here on Slashdot continue in their attempts to set up this straw man, misrepresenting the libertarian position on government interference in the marketplace, when in fact there is no contradiction between the government acting in its proper judicial role and libertarian philosophy against direct government intervention in the marketplace in the abscense of specific civil dispute.

Re:Until you consider Patents and other G. Monopol

[Brandybuck]

This gets interesting reactions from people who identify as "libertarian capitalists".

I'm a libertarian capitalist, and I fully agree with you. I suspect most other libertarian capitalists would as well, if they ever stopped to consider it.

However, the reality of today is that many businesses must incorporate in order to compete in the market. In our zeal for "social justice", let's make sure we attack the laws of incorporation, and not businesses themselves.

MS doesn't require that anymore

[davidwr]

Microsoft no longer requires a hardware purchase for the "OEM single pack" product.

XP OEM used to run for just under $100, so the guy is probably saving less than $20.

Mandatory Supply-side Capitalism

[Doc Ruby]

The US already destroyed capitalist freedom by making profits mandatory when outlawing "dumping".

What will manufacturer-mandated pricing of retail sale do to the US economy when manufacturing is dominated by China? Chinese manufacturers, organized by their Communist Party, will have broad and tight control over the essence of American economy from production through consumption. They could organize whatever economic warfare they require to beat America's economy to a pulp.

What the hell has happened to this country?

Re:Mandatory Supply-side Capitalism

[Anonymous Coward]

What will manufacturer-mandated pricing of retail sale do to the US economy when manufacturing is dominated by China?
.
Nothing - the government will control this then, as they do now through tariffs

Re:Mandatory Supply-side Capitalism

[Doc Ruby]

So the US government will control all the US economy at the retail pricing point? That sounds almost as bad, and probably the same, as letting the Chinese control it.

Besides, the people who are getting these rules set up will continue to set the government policy, including those tariffs. So it's the same thing, just even more points of control.

Re:Mandatory Supply-side Capitalism

[Teancum]

China is hardly the only country in the world that could dominate maufacturing, even though they do seem to represent a huge quantity of the U.S. marketplace in terms of gross sales of consumer and industrial goods.

The fact is that there are dozens of other countries who are just as willing to take over from China, if China tries to leverage their current position in the U.S. Economy beyond just being good businessmen and offering cheap stuff. Certainly the Philippines and Indonesia are countries with large enough population bases to be able to undercut China if they can get their economic base under control and duplicate the same economic environment that currently exists in China. India is another country that could easily blow China away economically if they got their act together as well.

Or better yet, Mexico could completely dominate the U.S. market in ways that China could ever dream. Add to that some of the larger South American countries like Brazil, Argentina, and Chile which all have nautural resources and large populations to also take on China significantly on nearly the same products.

And in none of these countries I've mentioned here include those who already have very well established industrial bases like Japan or EU countries. So the fear of China is IMHO unfounded. You also seem to think China is a monolithic entity, when it is hardly such a case. And private investment and ownership do occur in China, where these businesses are as controlled by the Chinese government as any of the firms on Wall Street are controlled by the U.S. Government.

I'm not saying here that some concerns about the U.S. economy placing so much reliance upon China as a trading partner doesn't deserve some thought and review, but it isn't the end of the world if the current level of trade between China and America is left to continue either.

Re:Mandatory Supply-side Capitalism

[Doc Ruby]

You're right about the multiplicity of the threat of foreign control of manufacturing for US retail. China is emblematic, because it is by far the most monolithic of those countries you mentioned. Indonesia and the Phillipines are not nearly as coordinated, nor was Japan under its famed MITI. India is probably even less coordinated, but, as you point out, is bigger and more industrialized (they invented the trick, after all).

I'm not against China specifically for any "Chinese" reason. I just don't want foreigners controlling my economy. Especially since my government sold my people on allowing so much manufacturing to flee to countries like China on the premise that we'd have more control of their politics, which we wanted to reform (human rights, anticompetitive behavior). I knew they were lying then, so I watch it. China is the most specific case, and the most direct threat (in every endeavor). But I'm against the US squandering our power in every sphere, especially economic and moral. Calling it "China" is an easy way to communicate the threat in public, because many people are already wary of their threat. Anyone wary of those other foreign competitors increasing control over us is also wary of China.

The foreign investment in China that's abandoned investment in the US, especially by US investors, is one main reason China is such a threat, while our domestic defenses are dismantled by the same actions. The idea that it's "Wall Street", which feeds on American strength and weakness whenever it can, merely underscores the threat. Especially to American workers, who "Wall Street" has mainly fought at every opportunity, and then robbed when it lost battles to keep the profits from reaching workers savings.

All this foreign trade, especially with ambitious global enemies (more than mere competitive rivals) like China, has needed "some thought and review" by government and the media since before it began to be uncontrolled. Now it's getting too late to put the horse back in the barn. And the power already lost to foreign competition is further consolidated throughout our complex economy by rules like this one now being consider by the Court, which protected us in many ways from upstream since antitrust and labor unions were avant garde.

Re:Mandatory Supply-side Capitalism

[Teancum]

Keep in mind that there is a political objective to allowing all of these countries to gain access into the U.S. marketplace. I don't claim to agree with this philosophy (indeed, I think it is a very weak and silly concept), but it has been a major part of U.S. foreign policy since the 1960's, and some could argue since the 1930's:

To put it simply, if we open our markets and bring in commerce from other countries, those same countries won't go to war with us out of fear that they will be killing their best customers. Or another way to restate it, countries that are not engaged heavily in commerce between themselves are much more likely to go to war against each other.

I can give two huge examples that this concept goes completely out the window:

1) Japan - In 1941, the USA was Japan's largest trading partner (yes... pre WWII). While certainly they weren't "Japan, Inc." as was talked about in the 1980s, they did provide huge amounts of both investment capital into the USA, and a fairly large (in terms of dollars) amount of goods went to Japan. In fact, the Japanese Zero fighter was designed by none other than Howard Hughes, who certainly didn't worry about ITAR restrictions to send it there (although this is an argument for having ITAR restrictions on aviation). You can read about what Japan did on December 7th, 1941 in history books to see what they actually did to foster this trade relationship.

2) Cuba - This former territory of the USA went through some political upheavals and saw the rise of Fidel Castro, and a strong Cuban-Russian alliance that even to this day is still somewhat strong. Due to some attitudes about Communism and this political and military alliance with Russia, the U.S. government imposed about as hard of an embargo against trade with Cuba as exists with any country.... in spite of the fact that Cuba is only 90 miles (at one point) from U.S. soil. Instead of heavy ferry traffic between Cuba and Florida (and possibly a construction of a floating interstate highway between Florida and Cuba.... who knows?), you have Coast Guard cutters and even U.S. Navy ships that interdict traffic between the two hunks of land, and mainly rescue folks who try to cross that gap in an attempt to immigrate into the USA, following the pattern that Mexico has established in Arizona and California. Huge saber rattling has taken place on both sides of the Straights of Florida, but on a realistic level there has never been any real intention of going to war between Cuba and the USA since the 1890's.

Now it could be argued that Japan has learned its lesson from WWII, and has gone aggressively on the economic front to engage with America on that level instead of through open warfare. And the military relationship between Japan and the USA is certainly solid enough that Japan even sent soldiers (admittedly medics and other non-combat personnel) to Iraq in 2002. But in this case you can't make a clear case that the trade relationship is the cause of the peaceful relationship between Japan and the USA, or if it is a side-effect of coordial relationship.

I will say that I do agree that some caution with China in particular is warrented, as there is a systematic attempt on the part of the Chinese government to modernize their economy and build up their military capability so they are not 2nd to the USA. And this has been stated explicitly. They desire the capability of being able to defeat the U.S. Army in open unit on unit combat in the battlefield. This is something that Russia tried and failed to achieve, and no other country, including India, really has this as a major goal. If they are capable of home-built manned obital spaceflight, they certain have the capability of doing much more that may not be pleasant for Americans to acknowledge.

And as you pointed out, in China and many developing nations they don't have to abide by the same environmental and labor conditions that we take for granted in the USA. They don't have to pay $7/hr as a sort of minimum wage, OSH

Re:Mandatory Supply-side Capitalism

[Doc Ruby]

I agree with everything you said. What makes it all make sense is that the theory of global mutual ownership to raise the costs of bombing foreign countries is mainly the way to disrupt the system that Americans have built to protect ourselves from corporate abuse of most of us, and the rest of the world that follows our lead. In other words, it's a trick. Not because of the theory itself, but because of how it's executed. By now, almost 2 decades after the collapse of the Soviet Union, with Most Favored Nation trading status for China, America is supposed to be selling vast amounts of stuff to most of the Chinese market. We're not. We're supposed to be able to threaten the Chinese market share in the US to extract concessions from China, specifically in human rights upgrading their labor and environmental requirements to improve people's lives and reduce their price-competitive edge. We're not. In other words, we've totally blown the "mutual ownership security" that convinced us to both invest in China and become dependent on their debt purchases.

These problems aren't going to get fixed. We're giving away the ability to fix them every day. Like a drunk who will go sober tomorrow, after one last drink, we're not only emptying out wallets, but we're losing our judgement while sinking the hook deeper into our guts. The only hope is some fast footwork like we pulled on Japan in the late 1980s, when we leveraged our own crash into taking them down harder, because they were so dependent on our market throughput. But the new generation of American financiers isn't nearly as skilled as the 1980s mechanics, and the Chinese aren't the Japanese. Our falls will more likely ratchet us deeper into their debt, while they use their leverage in supplying both our debt and our retail markets into stealing away our strategic supplies, like oil and immigrant brains.

That's why we should have looked at these problems a long time ago. And why some of us did, like me, and knew it would go this way. Including many others, namely the National Association of Manufacturers and lots of international banks, and placed their bets against us.

Re:Mandatory Supply-side Capitalism

[Anonymous Coward]

I'm not against China specifically for any "Chinese" reason. I just don't want foreigners controlling my economy.

You do realize that even now we import far more from countries like Canada, Mexico, and Germany than we do from China, don't you? Your paranoid ramblings sound like an uniformed witch-hunt.

Re:Mandatory Supply-side Capitalism

[Doc Ruby]

Canada, Mexico and Germany aren't threats to America's economic and national security the way China is. They don't control our economy, nor are they positioned to. China is undeniably not only a rival, but a declared enemy, especially militarily. Do the words "Taiwan" and "Greater China" ring a bell?

Thank you for strutting your geopolitical denial in perfect terms displaying your cheap-labor global fascism.

Hu Jintao, is that you?

Your logical fallacy is showing.

[Kadin2048]

Now the situation is different because we have two channels with vastly different cost structure, and we should maybe let the free market do it's thing. You seem to be in favor of a free market but also in favor of the anti price fixing laws. You can't have it both ways.

http://en.wikipedia.org/wiki/False_dilemma

There's nothing inherently wrong or even hypocritical about wanting to prohibit price fixing, but also being unwilling to prop up obsolete business models.

Thankfully, there is a grey area between hardcore free-marketism, and hand-everything-to-the-central-bureaucracy socialism. Many intelligent people have realized over the years that a totally unrestrained free market often produce outcomes (monopolies, environmental damage, grinding people up into Soylent Green, etc.) which are not best for the consumer. Therefore, the market is regulated in such a way as to discourage outcomes that are considered undesirable.

Re:Your logical fallacy is showing.

[timothy]

Late for class, two quick snarky rebuttals:

- If you want to live surrounded by serious pollution, free(ish) market countries have nothing on the former Soviet republics. (And the affected people couldn't just sue, either.) The (now) Czech Republic has some especially egregious examples. And, those countries certainly had more soylent-greenism in the large sense (grinding people up, figuratively, officially). At the risk of relying on a tautology, free-market societies don't lead to a lot of soylent green, except from volunteer soylents. That sort of thing usually happens under color of official right.

- Monopolies of the type usually used to justify government interventionism (that is, ones which corner a market, then raise prices) have real trouble staying in business. The government's got a few of its own type of monopoly going though, demonstrating that with enough government attention and special-favoritism, monopolies really can be maintained, for a while.

(Good article tangentially related to this topic: http://www.jstor.org/view/00221821/di974456/97p020 3a/0)

timothy

Re:Your logical fallacy is showing.

[LunaticTippy]

You must be late for class a lot.

America had really bad environmental problems and robber baron abuse that led to our current laws. You might be interested in reading up on burning rivers, The Jungle, treatment of miners and railroad workers, etc. Our system was broken in a spectacular way, a very free-market way. We have monopoly laws because of numerous entrenched successful monopolies. Read up on company towns, Standard Oil, etc. It wasn't some paranoid fantasy about things that could happen.

I don't know why you're talking about the Soviets and complaining about government monopolies. We're talking about private business.

Re:Until you consider Patents and other G. Monopol

[dodobh]

Or they could have competent, well-educated, knowledgable staff? My favourite bookstore offers 20% off on all purchases, _and_ they have great staff. I can ask for a book (or even ask for information on a specific topic) and I'll get a range of options. Oh, and if they don't have the book in stock, they get it ih a week or two.

There are bookstores with bigger stocks, and more diverse collections in hand, but these guys get 90% of my book buying money. And word of mouth marketing.

arrgghh

[Silvah]

This is the most poorly worded story I've read on slashdot in a long time.

This bill does nothing more than reduce restrictions on voluntary contracts between consenting parties.

It boggles my mind that an obviously liberal-biased story summary like this will automatically get hordes and hordes of people to scream about how this will destroy consumer rights or shows that government is in the pocket of big business.

Why will the laws of capitalism, governing the idea that the suppliers that give the best offer (i.e. allow their customers to have sales) will have the best business, cease to function if this law is removed?

Re:Until you consider Patents and other G. Monopol

[WarlockD]

I live in the DFW area, you know how many Borders and Barns and Nobel's there are in just a 10 mile block? God help a 30.

Its simple, they shut down stores. CompUSA realized this when you can get stuff online. I will easily make a 15 mile trek to Fry's because of good advertisements and because it's a unique experience. I will spend a weekend, driving to Ikea, 31 miles away, because its an intresting store.

If you want quantity over quality, the internet will win out evey time. Except for food. I have yet to find an online retailer promise that.

Re:Until you consider Patents and other G. Monopol

[dAzED1]

Local bookstores for example are starting to massively suffer from online competition. Customers walk in, browse, leave and order the book from amazon.com for 10-20% less. How do you combat this? Retail cannot lower their prices to the same level online companies can -- they have prime real-estate leases vs a warehouse in some grungy commercial district. They deal in hundreds of books per week in stead of per hour, etc, etc. And the problem is? I personally would really, really like to see fewer buildings across the landscape. Not only is it inefficient to have several dozen bookstores in a single city, when you take into consideration this and all the other redundant markets, you come up with a hell of a lot of wasted real estate. I for one would rather see trees there, not stores.

MSRP?

[Mattwolf7]

Isn't that the point that it's an MSRP: Manufacturers SUGGESTED Retail Price. I guess we need a new acronym MMRP? Manufacturers Mandated Retail Price?

YRO

[NitsujTPU]

I'm missing something here. Which part of this is online?

long term, affects discounted luxury goods most.

[artifex2004]

If you have a vendor that sets a price floor, in an open market for a commodity you will have other vendors who will pop up and make the same item, with "no" floor. That first vendor will find himself priced out of the market in the long term. So pretty much, the only market where a floor can survive when imposed internally is a luxury market, where goods are highly differentiated.

Of course, if luxury item vendors enact price floors, that creates a black market for cheaper knockoffs...

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

It is clearly a slipperly slope, and I cant see how it benefits ANY consumer.

1- You prefer Mom & Pop stores. These stores "in theory" have better trained staff, possibly a more unique selection, and offer "value added services" to make up for the fact they cannot survive on lower markups. Even then, they get screwed. I run a "mom & pop" store -- I would say at least 25% of my customers come in and directly state that they only want to look at the item and will then purchase it online. (Absurdly rude if you ask me, even if that's what you're intending -- you don't outright say that. I freely admit I have gone locally to view and then bought online too.)

Since I can't compete on price or volume, I offer free training, get to know my customers so they feel welcome and I can give them good recommendations, and try to carry more unique items from much smaller manufacturers that cannot or do not want to increase to the volumes necessary to supply big box stores.

If all retailers were forced to sell at the same price -- don't you think the massive more amounts of money that the larger stores would be able to get by sellling more units would allow them to seriously up the quality of their stores so they can offer even more things that a smaller retailer can't? It's already happening -- chains selling the same products I am (and purchasing by the crate rather than 1/16th crate) have started to offer the same added services.

2- You prefer to shop by price and provide your own knowledge and service. Fine. But what happens when you can no longer find cheaper prices online? Go locally? What if they're all gone? Then you end up with a store that can charge whatever they want because they're the only option.

That being said, it happens anyways as other posters mentioned. Through incentive programs, special promotions, and basically just not renewing your dealership license, the manufacturer always gets what they want. I've had to sign a great number of agreements that restrict what I can or cannot due in order to carry several lines. If I don't sign them, they just won't sell to me -- and they're items my customers want.

To those that say well, just buy from other manufacturers -- what happens when there is no one else?

Recently a Super WalMart opened in my town. Despite my disagreement with many if not all of WalMarts practices -- I find myself shopping there. Why? There is no longer any place else to purchase the majority of the things they carry. My downtown business area is now vacant except for 2 banks and a 3 realators. I can drive another 30 minutes to a Target -- but is Target really all that much different than WalMart?

Even if given a choice to shop elsewhere, it becomes very hard to justify paying $3 more on a $3 item to buy it from a smaller store when it's a no-service-needed item. People do shop with their wallets, and I will freely admit I do it as well -- it's often a necessary exercise.

But then what happens? Once a Super WalMart has been in town for awhile and driven out any competition, the prices slowly climb up. Now the prices are the same if not higher than the smaller stores -- but there are no smaller stores. So you're stuck. Google for pricing charts on what WalMart does once they've killed the competition -- the prices skyrocket.

bulk

[zogger]

The regular stores get their merchandise in bulk,most of the time from tractor-trailers, not one package at a time from fedex, so as such, they can weather sudden price increases better. Yes, it would effect them as well, but not nearly as much as the convenience-courier carriers like fedex or UPS. The package courier outfits stay in business mostly from cheap fuel prices, a sudden doubling or whatever would ripple through the entire manufacturing/distribution industry, but the single-serving styled delivery systems would suffer the most. There were a lot of articles about it in the weeks following hurricane katrina actually pointing this out, and that was a *mild* price increase compared to what would happen should the straits of hormuz be closed for weeks or months. The airlines (people shipping basically) also took a rather severe hit then as well right after katrina. Moving stuff is expensive, sudden increases are hard to deal with, past business history shows us that. I remember a lot of that back during the sudden OPEC oil embargo as well, very very fast transportation cost increases really nail the companies that rely on excess shipping for their business models. If it is a slow gradual change, it is easier to handle, it's the sudden huge spikes that are a bear.

    Like a lot of the dot com era "home delivery for everything" stores couldn't turn a profit even way back when gasoline and diesel were closer to a buck a gallon than not, even those cheap prices made it hard on a lot of types of merchandise. Take three items at a similar weight. Moving a 50 buck thing might cost 5 dollars, which is a big chunk of the total price, whereas a 500 dollar item it isn't so bad, and a 5 dollar item would be a waste, a loss, not happening.

Some stuff is OK and could get through the increases somewhat with online delivery, other items would probably be severely affected, notably lower priced and lower margin items. And that is also why we still have so many brick and mortar stores, it is still a main consumer choice and handy and economical to go get a variety of things with one shopping trip, or even just a side trip off the daily commute. The gas is already being "spent" irregardless when it just a short stop off the commute run.

Re:bulk

[nine-times]

The regular stores get their merchandise in bulk,most of the time from tractor-trailers, not one package at a time from fedex, so as such, they can weather sudden price increases better.

FedEx and UPS are also transporting merchandise in bulk. When you send a package from NY to LA, do you think there's a FedEx guy who puts your pacakage in his own pickup truck and drives across the country? Of course not. FedEx isn't delivering "one package at a time". So when you're sending a package from NY to LA, they gather all the local packages in NY that are going to LA and they load them into the same sorts of big trucks and airplanes that would be used if they were shipping to stores. Even when they have local routes, they're fairly optimized for time and milage-- when you get your FedEx package, your house is on the way to the FedEx guy's next stop anyway.

If brick-and-morter stores diminished, it might even mean that FedEx could increase their efficiency, since there would be an even greater bulk to ship and the bulk would be more reliable. They's always be delivering all sorts of things all over the place, so fewer trucks would move half-full, and more stops would be "on the way" to somewhere.

What a terrible summary!

[Yumi Saotome]

This is a much better summary.

The issue is whether mandatory price floors should automatically be considered anticompetitive price fixing. Even if the case ruled in favor for Leegin, one could still sue under the Sherman Act if they can establish that the price floor has an anti-competitive effect.

Many Slashdotters complain about how old laws adversely affect society when they don't keep up with the times. I think this is one of those cases, as current economic theory states that price floors aren't automatically bad (the US, for example, keeps price floors on agricultural products to prevent another mass deflation of prices as seen in the Great Depression).

warranty smorranty

[transporter_ii]

You know, I can't think but of one or two times in my life I have used a manufactures warranty. I do consider it in my purchases from time to time, but if I had the choice between a snowboard with a warranty or the same board at half price and no warranty, I know exactly which one I would get.

I always think how much better the economy would run if manufactures just lowered the price on everything and stopped offering warranties all together. If something breaks, just buy a new one at a fair price and not have to waste time and money trying to ship something back. And at the cost of postage, sometimes it is more expensive to ship the item then what it is actually worth. Which by the way, is the reason many people don't use a warranty. So they are paying a premium on an item, just to not use something they paid for, because it isn't cost effective when you actually need it.

Transporter_ii

what you don't get is...

[Sfing_ter]

many of the web e-tailers will open storefronts in canada and mexico, and that is where you will get your "deals" from; back in the day ('97), companies in Arizona could not drop ship from warehouses outside AZ to California or else they would have to charge sales tax, so if i am an online seller and they tell me I can't cut my markup to move product IN THE UNITED STATES, i can easily get a storefront going in either of the 2 places, mayhaps on an indian reservation, take that yello-hair!@!!!!

Nonsense

[kitzilla]

There is absolutely no way SCOTUS would go so far as to inhibit discount. There's no way at all -- it would be far to disruptive to commerce, and this is a conservative court.

Commission Sales

[Anonymous Coward]

I work for a famous speaker manufacturer that is closing its retail stores. As of Thursday this week I will be out of a job and they will have one store, down from 30. They are owned by Creative Labs. I don't want to blame financial hardship as that is extremely unlikely, but who wants to sell flat panels at 10 points (%) profit or whatever. The largest retailers get wide discounts off their orders. And still make nothing.
Mom and pop? Give me a break. Even with their discounts, Best Buy and Circuit City run at extremely low margins. No mom and pop can compete.
Due to Olevia and their peers often flooding the market with less than 0 profit on their panels to "make a name" even the largest manufacturers cut prices.
I am extremely knowledgable with over 8 yrs. experience and less motivated by $$ than my less well off fellow experts. They left the industry long ago.
Screw you and Ebay. You have no warranty. You think 1080p or HDMI will change the fact that you don't have a good TV. I stopped caring. I use component video on my 720p TV's and you can't touch my picture quality. ( I own HDMI cables and have HDMI inputs on both our TV's! )
Long ago I should have moved on to a real Sales job. Fine. Who will take my place?
I use Parasound/WireWorld/Kimber/Marantz/Tara Labs. I shop at boutiques with premium prices. Bose? Bang & Olufsen? NOT high end.
There is no right to discount below a certain price, but what is that price? Cost?
OEM panel manufacturers should also be liable. You can't do it.
I AM AGAINST THIS PRICE FIXING. (Bose has been successfully pricefixing their product for years. But illegal pricefixing applies to a whole category anyway, posssibly.)
It will not change the fact that you have a Sony Home-Theater-In-A-Box (HTIB) and a Polaroid TV. My friend was helping me pick out a bike and came into my store. He questioned Marantz as a brand name he didn't know and I asked about Huffy. He got the point.
This change in law will only lessen the discrepency in price between crap and quality. It also represents the perpetual attack on democracy by capitalism. There's no right answer, just try to learn something from it.

Steve
ex-hifi guy

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

There's a massive difference between ordering a book online and ordering perishables. People don't care if they haven't seen the exact physical copy of the book they end up with. People do care about receiving random-quality food.

captcha: grapes

Re:Until you consider Patents and other G. Monopol

[Wordsmith]

Almost, but nope. The only way the distributors can force the retailers into anything is through agreements - ones the retailers enter into through their own volition. The conversation (and contract) goes something like this:

Big distributor: You soooo want my product. But if I'm going to enter into a deal with you to sell it, you're only allowed to sell if for $99.
Retailer: I wanna sell it for $95. It'll do better in my store that way.
Big distributor: And yet, here I am, requiring $99.

At this point, the retailer gets to chose whether the deal's worthwhile - if the product's a valuable enough product to accept the price requirement.

People will quite accurately point out that for small retailers, this is a pretty one-sided negotiation - and that it's virtually never going to be practical to say "no" - even if saying "yes" all the time is bad for business in the long run. People might also point out that a big retailer (say, Wal-Mart) has a considerable advantage over a distributor that just wants its product sold.

A real libertarian should be for all of this, though - it's all voluntary agreements, by informed parties.

If it impacts Internet business...

[r_newman]

... then this will be bad for the US economy, but potentially very good for the EU economy. Economies of scale in the US may well be wiped out, and US businesses will also potentially have problems disposing of old stock - for example to clear their warehouse shelves for newer products.

Personally, I stand to benefit from this as I live in the EU, but it would be a shame to see big business and political influence win out over innovation and entrepreneurship yet again.

Why is it up to SCOTUS?

[91degrees]

I thought legislation was enacted by Congress.

Is there a new law that contradicts the Sherman Act? Is the Sherman act in some way unconstitutional? Did SCOTUS severely misinterpret their previous reading of the law? Is there another reason that SCOTUS is permitted to overrule Congress?

Re:Why is it up to SCOTUS?

[Anonymous Coward]

I didn't even realise that he was still alive.

http://en.wikipedia.org/wiki/Duns_Scotus

Let me get this straight...

[SharpFang]

So say I've developed a new solar battery which produces 90% as much energy as the old ones, but requires 10% of the resources of the old ones to make. By quality, it is the worst product on market, by a small margin. By cost, it is the cheapest, by far. Installing 100 of my batteries could be cheaper than installing 50 ones by the competitors, and produces more energy total. Still, I'm not allowed to reduce the unit price below the fixed level set by the competitors, leaving me out in the cold, with a product nobody wants to buy, because they can get better ones for the same price?

AMD would never have grown to be a serious Intel competitor.

Re:Until you consider Patents and other G. Monopol

[professionalfurryele]

Until the entity which undertakes to fix prices is as powerful as a goverment...

At the end of the day government is the biggest gang of the lot, and in the West, it tends to be the least efficient, least capable gang. However, it is also the gang that is supposed to represent the people, and do so without prejudice against an individual based on their wealth. Now it fails at this task, but not the same degree that corporate entities do. When corporations become little governments unto themselves then it is preferable that the peoples gang give them a smack down, than become obselete.

Smith was right in how he identified the problem, but wrong in how he derived the solution. Or alternatively, he was right in his solution, and since corporations like Walmart or Microsoft are essentially the new guilds we should disband them because they exist by corporate charter handed to them by government. You claim that these are different, but illegal and coercive means are used by both these companies in a manner which is similar to how the guilds used to operate. The difference is that while failure to pay a guild due might result in your legs needing a splint, failure to pay a corporate monopoly will leave you without a legal leg to stand on.

Now if you were to remove the legal recourse of the likes of Microsoft then I agree the problem would go away. Remove any barrier to reverse engineering protocols and Microsoft is dead in the water in under 10 years. Properly enforce union regulations, remove farming subsidies, slash copyright and patent protections and most monopolies are in dead water. If that is what you are suggesting then I agree with you, but since government is a for sale entity, that is not going to happen, and our next best option are populist anti-trust laws.

banning on-line shops?

[hany]

So the solution is banning all on-line shops?

Re:Until you consider Patents and other G. Monopol

[jimicus]

However, when the barrier to entry for a given market is unusually high, I'd expect that a cartel situation could continue more or less indefinitely - or at least until such time as the barrier drops.

The record industry - that one that /. so loves to hate - is a classic example here. It's been operated by a cartel for years, and while the barrier to "getting music properly recorded so it doesn't sound appalling" has plummeted, the barrier to "getting music mass marketed so it actually gets some people buying it and gets people interested in going to see the artists perform live" is still very high. It's looking like the Internet can erode that substantially though, so perhaps within 5 years the cartel will fall apart.

Wrong Wrong Wrong

[Shivetya]

the local butcher shop just moved, same with the local "specialty" grocer, the wonderful little curio place, and that local coffee shop.

When the economy is good, and it is and has been for some time, these little things pop up. We have a local butcher here in metro Atlanta, notice I did not say Atlanta because this is in one of the counties surrounding it, away from any real city. Why is it here? Because people feel good about themselves and for many its an indulgence that makes sense. Same with that corner bookstore near me, sure I could get stuff cheaper but the place is very nice, sells good coffee and treats, and is next to other cool places.

What too many people fail to realize is that many mom&pop places exist and new ones start everyday. Just now most are moving where the money is. Strip malls near large residential areas. Mom&Pop stores can compete, they just have to find the niche. If they enter the wrong market they are going to struggle and possibly fail. You cannot blame Amazon if someone opens a local bookstore that is nothing more than shelves of books and they fail. Same for opening a little grocery when Kroger is a few miles down the street. Make a good business decision at the start and you have a better chance to succeed.

Re:Wrong Wrong Wrong

[happyemoticon]

I notice this all the time. Where I live, which isn't affluent but has a lot of trendy young people, there are tons of small shops. There's several small commercial districts within walking distance, and the only chain stores that can get a foothold are the coffee shop and huge grocery stores. Go 15 minutes in any direction, though - towards the upper-middle class planned communities and tract housing, rural areas, or the light-urban lower-middle class - and you're back in McWorld.

Re:Until you consider Patents and other G. Monopol

[jimicus]

the bookstore or shoestore could lower their prices and compete with amazon if you paid $20 dollars at the door just to get into the store. There'd be no incentive to buy online as the price in the store would be the same.

Yes there would. I wouldn't be charged $20 just for the privilege of browsing Amazon's website.

Windows Vista cautionary tales...

[argent]

Microsoft has been able to use their agreements with vendors to force people to buy the new and unproven Windows Vista instead of XP... you can't get a retail copy of XP in many markets, Dell doesn't sell XP, and HP didn't until customer pushback forced them to restore it as an option.

Manufacturers routinely use any kind of contractual agreements they can to force distributors and retailers to limit consumer choice. Rather than cutting back, we need more limits on what monopolists can force people to put up with.

And what effect would it have ...

[RockDoctor]

... if SCOTUS were to prevent companies from setting particular prices in the US. People within the US would just buy from outside the US at the best price they could get.

[slap]
Hello SCOTUS, are you awake?
Which part of "GLOBAL marketplace" are you having difficulty understanding?
[slap]
Awake yet?

Re:Until you consider Patents and other G. Monopol

[OneSmartFellow]

Retail is not an obsolete business model

Retail is rapidly becoming an obsolete business model. The scenario you describes simple proves my point.

Basically there are going to be two classes of retail space.

One will simply be a 'showroom' where manufacturers deign to allow consumers to actually handle their merchandise before buying it. This type of retail space will be suitable for high value, large sized items where there is little immediate need. We can already see this happening with the likes of Comet and Currys (in the UK) where half of the items on display are not in stock.

The other type will be for commonly needed items like lightbulbs, toilette paper, and milk; where the need is essentially immediate, the unit price is low, and the package size is relatively small.

SCROTUS

[Anonymous Coward]

Anyone else keep reading that headline as "SCROTUS Case May End Sale Prices?"

Re:Allowing MPA to exist seems contrary to anti-tr

[MadRat]

Huh?

And if you want to drive on the left side of the road, you are free to do so as long as you also accept that farm animals are not treated humanly? Your compromise makes about as much sense...

You ignore the fact that they are unable to attain monopoly positions without core protections of their product and business model. Remove them if they want to violate their end of the bargain.

Transcript of the oral arguments

[grimwell]

Transcript of Leegin Creative Leather Products, Inc. v. PSKS, Inc.

Audio of the hearing should be available at the same link in next week or two.

The other side of the coin

[TheBigBezona]

Several years ago I was retail manager of a small computer retail shop. While manufacturers couldn't dictate a minimum sale price, many do dictate a minimum advertised price (MAP). I could sell an item for whatever I wanted, I just couldn't advertise it below a certain amount.

In our case, we sold both Macs and PC's - Apple had a MAP policy, none of the PC manufacturers we dealt with did.

The end result was that Macs were the only systems we could be competitive with. Our wholesale cost was always reasonably below the MAP, so we could sell the systems at the same price as the big retailers, and make a profit.

Contrast this with the PC's, where most manufacturers wouldn't even let us buy certain systems (generally the consumer targeted systems) without buying millions of dollars in inventory at a time, which wasn't feasible for a small shop. The systems we could get, usually bare bones "business" models, were very expensive on the wholesale level in small quantities.

In the end, we couldn't compete at all on the PC side since our cost for the systems was usually higher than what a big store could sell them at retail. And, since they weren't the "consumer" models, they had less bundled software, etc.

It really comes down to philosophy. Do you have a pure open market, where large retailers can give themselves a competitive advantage by buying quantity, or do you have some level of controls in place to allow smaller retailers to be price competitive.

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

Prices of books are stable? I've got over a 100 computer books that were about $15 and lots of $3 paperbacks. What does a book cost today?

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

> Right now, the stupid masses (Slashdotters included)...

At least we don't fuck dogs like you, DogFucker.

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

If you went into the small shop, all the stuff that was in it was paid for by the shop keeper. Bigger stores would tend to use 30 to 90 day credit for the stuff they bought. The stuff in the Super Walmart doesn't belong to Walmart, it belongs to the companies that made it and they won't get paid until it goes through a checkout. There is no way a small company could have arranged the same deal.

Re:Until you consider Patents and other G. Monopol

[k_187]

Well, as I recall, Service merchandise was exactly like that. There was a showroom with the actual items, and the then you had to order. They had a warehouse on site, but most of the stuff, you just placed your order there and it was delivered to you.

Re:Until you consider Patents and other G. Monopol

[AaronLawrence]

these stores like best buy and circuit city really don't add any value over purchasing online

Good point there. I do still browse retail stores (and buy from them if I feel they've helped me) but the actual value is minimal. On the net there will often be more details, good reviews (for some things, fantastic reviews, e.g. dpreview.net for cameras), and user comments.
The only thing retail does it physically let you handle things, which is sometimes useful (e.g. to check usability) but often minor. You often can't actually use the product properly.

So is there really value in retail?

Only for certain things, like books, because books have always naturally had a browsing model. But wait - we can do this on the net too! But publishers fiercely resist that ...

Separation of Powers . . .

[Dausha]

SCOTUS holding is based on its interpretation of the Sherman AT Act. So, Congress has the actual authority here, and SCOTUS fills in the blanks where it thinks necessary. If SCOTUS overturns "the venerable Dr. Miles rule," then Congress need only amend Sherman to re-enable that rule. Heck, even with Dr. Miles in place, Congress could legislate it out of existence.

What is wrong here is that people forget that SCOTUS is not the only branch capable of legislation. Oh, wait, SCOTUS isn't supposed to legislate; it is supposed to interpret. SCOTUS is also not the only branch obliged to protect your Constitutional rights---there are some issues which should not even be subject to judicial review, but that other branches have authority. For example, SCOTUS can't bind us to international treaties: only the President can negotiate and the Senate confirm treaties. This is a reason why SCOTUS applying foreign law is unconstitutional. SCOTUS can't write legislation. However, Congress has allowed SCOTUS to do the equivalent; which protects Congress from the social/political backlash---they can just blame a life-tenured body.

The truth is, Congress needs to grow balls. If SCOTUS reverses Dr. Miles, Congress needs to legislate it.

Re:CNN HQ Stormed By Elite GNAA Operatives, Classi

[Anonymous Coward]

CNN HQ Stormed By Elite GNAA Operatives, Classified 9/11 Information Broadcast
CNN HQ Stormed By Elite GNAA Operatives, Classified 9/11 Information Broadcast
pagga (GNAP) - Manchester, Afghanistan

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About CNN:

Trolled

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Welcome to NJ

[Anonymous Coward]

I don't know what quaint little midwestern town you're from, but I can assure you that we've already made the transition here in the Garden State.

Re:Welcome to NJ

[rizzo420]

i'm from the biggest city in the most urban state in the country. we're trying to stop the transition at least here in the city. let the suburbs have their big boxes.

Re:Until you consider Patents and other G. Monopol

[Zeinfeld]

It's pretty clear from context that when Smith says "corporation" here, he means what'd we'd call a guild or an industry association. An organization which everyone in the industry was compelled to join and which had the power to regulate the business activities of everyone engaging in the trade. More like the AMA than, say, Microsoft or Google. Smith was not arguing for government antitrust regulation, but rather for governments to avoid mandating or encouraging industry self-regulation.

No it isn't.

Corporations existed before Smith. There is no reason why Smith would distinguish between a guild and a company in this case, the economic effect would be precisely the same.

Companies that are illegally engaged in price fixing are almost certainly also running a cartel. Otherwise it is pretty well impossible to keep the price fixing going.

Pretending that the only evil in the world comes from government is a childish notion.

Re:Until you consider Patents and other G. Monopol

[DogDude]

You're completely right.

However, I don't think that most of the people are like that. I don't know about the USA, but I don't think that "price and price alone" would be true for say most of Europe.

In the US, I would have to say that most people can only think as far as price. Heck, we've got a Wal-Mart on every corner. If that alone doesn't say that this is a country full of stupid, stupid people, I don't know what does (OK, well, our fucked up government is more proof that the US is a country full of just plain dumb people). The US is all about bigger and cheaper, in all aspects of life, whether it's retail, housing, cars, food, etc.

Re:Until you consider Patents and other G. Monopol

[IamTheRealMike]

Smith lived in a time when it was unimaginable to have a business so complex it'd take billions of dollars (or pounds sterling) and many years to reach a competitive state - he predated the railways. I guess the closest equivalent would have been the canal companies, but they were just getting started at the time IIRC

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

"Offer better services ranging from knowledgeable clerks to coffee bars to author signings to small concerts certain nights of the week."

Except that there are independent bookstores all over the country that do these things are still closing. People have no problem with going to a bookstore, asking the knowledgeable clerk a question, attending the small concert, then going home to place their order with Amazon. Then when the independent bookstore closes, everyone mourns its loss even though they haven't shopped there in years.

People vote with their dollars, but they usually don't understand the implications of their votes.

Re:Until you consider Patents and other G. Monopol

[PMuse]

. . . I do think *something* needs to be done to protect retail. Retail is not an obsolete business model - online sales would suffer too if we couldn't kick the tires at retail.

In all seriousness, why save retail?

Is it just that, at brick-and-mortar retail, the customer gains more information about what he's buying? Asking a non-trivial question of a Best Buy employee will poke a hole in that balloon.

Is it that mass delivery of goods to local caches (i.e., brick and mortar stores) is more efficient than individual delivery of goods to homes? If so, retail has an advantage that should allow it to survive without being 'saved'.

Is it that online stores have lousier return policies? Then let's fix them.

Before I stand up to save retail, I want to know why. What purpose does retail serve that isn't embodied as an economic advantage that's already accounted for?

YAH, they're going to hurt retailers, sure

[Anonymous Coward]

Ford credit would never do something like prevent me from reselling my car, to keep me from having a way out in case I couldn't keep up with the payments for some reason.

God fuck the USA.

Best Buy and Circuit City

[Lavi Dave]

Basically, making rebates mandatory then, eh?

*Imagining*?

[weston]

Stop imagining conspiracies of collusion between cutthroat competitors.

http://www.usatoday.com/life/music/news/2002-09-30 -cd-settlement_x.htm
http://www.engadget.com/2007/03/21/sony-others-nam ed-in-video-tape-price-fixing-scheme/
http://news.com.com/Samsung+to+pay+300+million+for +price+fixing/2100-1004_3-5894862.html
http://illinoisissuesblog.blogspot.com/2007/03/pri ce-fixing.html
http://www.sfgate.com/cgi-bin/article.cgi?file=/ch ronicle/archive/2002/05/10/MN24643.DTL
http://www.reviewjournal.com/lvrj_home/2002/May-08 -Wed-2002/business/18699104.html
http://www.powells.com/biblio?PID=28734&cgi=produc t&isbn=0767903277

What's more, you don't have to spend long in today's business culture before it becomes *obvious* that there's enough of a critical mass of actors who believe in getting ahead by amassing control over channels and perception (rather than producing/adding value) that the emergence of price-fixing behavior is practically inevitable.

Re:*Imagining*?

[Brandybuck]

Businesses will, of course, attempt collusion. It's only natural. It's something we as individuals do all the time, so why should we behave any differently when we go to work? And just as a tiny minority of us individuals may commit crimes, a tiny minority of businessmen may as well. But that's not the point.

My thesis is that collusion is not a successful business strategy. In a normal business climate it will always fail. Even in abnormal business climates, collusions are incredibly fragile. All it takes is one member to bail and they evaporate.

In the case of music price fixing, in your first link, it was not every distributor, only some of the larger ones. But beyond that, it isn't a normal business climate. They had exclusive music deals only because the government gave them guarantees of exclusivity, via the mechanism of copyright monopolies. In fact, I'm having a hard time thinking of any partially successful monopoly, cartel or collusion that did not have government as a willing accomplice. Copyrights, patents, trade barriers, entry restrictions, etc., are not elements of a free market.

There are plenty of unsuccessful collusions, however. Your links are all examples. If they were successful they wouldn't have been caught, tried and punished. So yes, you are correct that businesses will attempt to price fix. But the cases of successful price fixing are few and far between, and require the application of government power to function.

Re:long term, affects discounted luxury goods most

[Tony]

If you have a vendor that sets a price floor, in an open market for a commodity you will have other vendors who will pop up and make the same item, with "no" floor.

The key phrase is, "in an open market." Most markets are not "open." Usually, the existing big-boys of a market are able to lock out smaller competitors using a variety of means: exclusionary contracts with distribution channels, retailers, and suppliers of raw materials; undercutting the new, smaller competitor until that new competitor cannot survive, then raising the price back up again once the small company is out of business; buying out the smaller competitor; and a host of other activities designed to do nothing but maintain control over the market.

When you have only a few companies controlling a market, their affect (not "impact," which is a stupid word unless you are talking about an impulse exchange of energy) is much greater than governmental regulatory controls.

It's all fine and good to talk about capitalism in the abstract. But, like other economic theories, reality doesn't look much like the abstract theory.

Thank you america

[Coraon]

Thank you america for taking yourself out of the global market. Sweet this is awesome, go ahead americans make your web stores useless, make e-bay stores in the US a thing of the past. I live in Canada, I'll still buy from Canadian sites as will you and very shortly... "All your internet purchace captial will belong to us." I personaly hope your looking forward to your Canadian economic overlords, I know I am a fan of soon being one.

I CAN have it both ways!

[LunaticTippy]

Others more articulate than I have already addressed your points, and I'd like to basically agree with them.

I can have it both ways, I do have it both ways, and I want to keep having it both ways! I like a free market, with controls to prevent obvious abuses such as price-fixing, monopoly abuse, false advertising, fraud, product safety, etc. Kind of like the system I enjoy now, although I'd make certain changes given the chance.

There are plenty of things a local business can offer that an online-only one cannot. Things like same-day service, personal interaction, security of having an actual store to bring your broken crap back to, free handjob with purchase, the possibilities are endless. I think the entrepreneurial spirit can find a way to keep local businesses rolling. If you want to have a crap store with nothing to justify your high prices (compUSA I'm looking at you) you DESERVE to go out of business.

Re:Until you consider Patents and other G. Monopol

[Kiaser Zohsay]

I don't know if that is a good idea, but I do think *something* needs to be done to protect retail. If *you* think retail needs to be protected, then *you* should support the retailers you visit by paying the extra 10-20% instead of going to Amazon, and encourage your friends to do so as well. If enough people vote with their dollars by choosing to support retail in this way, retailers will be fine and there won't be any need for regulation.

There is a name for this process of voting with your dollars. It is called "capitalism".

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

Do what the adult book stores do, if you want to enter Barnes & Nobel it will cost you a $5 browsing fee. If you purchase anything the $5 goes towards the purchase.

The book stores have all the power since people like to pet things before they buy them

Re:Until you consider Patents and other G. Monopol

[bitslinger_42]

Maybe there are people who plan all their purchases days or weeks in advance, but for a large number of people most small to medium purchases are done on impulse or at short notice.

I am one of those people. I hate shopping in bricks-n-mortar stores. These days, I only buy either perishable items (fruit, meat, eggs, milk, etc.) or emergency items (band-aids, toilet flanges, etc.) Nearly everything else I buy, I order online after spending hours at best, and sometimes weeks, researching what product to get. I get more useful information that way, and can select from a much broader selection of products.

Take, for example, my quest for a digital camera. If I went to the local shop, I could select from a dozen or so models. I could hold it in my hands, maybe look through the lens. Then I'd have to chose from whatever models are available from the local vendor community, which is 2 small shops, and the Big Box stores. I'd know how heavy it was, but that's about it. By comparison, online I can read reviews by people who have the various cameras, view images shot by them, go to sites like http://dpreview.com/ and see detailed analysis of the capabilities of the sensor, lens, software, outputs along with direct comparisons of static images for color reproduction, noise at the various ISO levels, resolution of detail, clarity, etc., plus all the data I'd get from the camera shop. Once I selected a camera, I would then be able to find the best price from all of the vendors everywhere in the world, even taking into account shipping costs, support after the purchase, and customer-based reviews of vendor reliability.

I use this model a bunch. Buying tools? Go online. Choosing a printer for my computer? Go online. Deciding which wine to serve to my sweetie this weekend? Go online. The prices are better, the information richer and more reliable, and I don't have to interact in meat-space with sweaty-palmed, pushy, clueless sales people. In cases like buying DVDs, resources like IMDB have enough input that they reduce the impact of one moron's opinion, so I know that I will probably like a move that got more than 7 stars. The opinion of the guy at Best Buy is spotty, at best. If there was an online grocer that serviced my area in the middle of nowhere, I would use them, too.

Of course, the strengths of the online world may help reduce/eliminate the effects of either potential SCOTUS decision. If the manufacturers restrict stuff too much in the states, I'll buy from Hong Kong, or Japan, or whatever.

Re:Until you consider Patents and other G. Monopol

[jadavis]

The fact that a large corporation has a similar coercive power

I disagree. There's nothing similar between:
(a) The power to refuse to enter into a contract with you.
(b) The power to seize property, imprison, and kill you.

Most of the things corporations do that enrage people is due to their influence in the government. When government has more power, that creates a larger market for lobbyists to influence the direction that power is focused.

Big corporations like big government because they can use it to squash upstart small businesses.

I don't see an argument being made that prohibiting retail price maintenace is unconstitutional.

What about it is Constitutional? If it's "to regulate Commerce with foreign Nations, and among the several States," I'll agree. If it's a transaction that happens entirely within one state the federal government has no Constitutional authority to regulate it.

Re:Until you consider Patents and other G. Monopol

[UbuntuDupe]

Well, still there are two significant differences (IMHO, improvements) that my idea makes:

1) It empowers (hate that word) the consumer (hate that word) to see as many options as they can handle. At Service Merchandise, it was like, "Oh, this catalog has a toaster with a clock on it. Hm, should I get it?" In my idea, the goal would be, "Hm, a toaster with a clock, what a neat idea. Let me google 'toaster with clock' and find the best toaster/clock hybrid out there."

2) S/M made money on inventory volume, my idea does not. S/M's goal is to get you to buy as much stuff as possible, whereas in my idea, you're just renting access to the store, so they wouldn't be afraid to say, "Nah, you don't really need this."

I guess those 2 differences fall under the same concept, that my idea is for a place where you "find yourself" (for lack of a better term). You're there to figure out what you need and where to get it, without the impersonality of browsing the internet (which bothers people to varying degrees), rather than to hear self-serving statements about why you should buy it.

That's why it lends itself so well to mutualization: each person can give good advice in different areas, and your advice would be worth more than the amount that would have to be charged to users to make it work. You would work 16 hrs a month (for example) in the computer/electronics section as your fee for membership, which allows you to get good advice on e.g. buying ironing equipment.

Re:Until you consider Patents and other G. Monopol

[Mr. Slippery]

Have you ever wondered why the third world is poor compared to the first world? ... The primary reason that the third world is not the first world is because the governments of the third world fail miserably at defining and protecting private property rights.

No, the primary reason is a legacy of colonialism and exploitation from the age of European empires. (The opportunity to form such empires being largely a result of geographic advantages.)

Inf fact, modern third-world governments do a fine job of protecting property rights - of multinational corporations. It's actual citizens who lose out.

Property rights are useful tool for ensuring that primary natural rights are respected and fulfilled. Human beings need homes and tools and toys. We need the ability to make private decisions, and without some private property, we can't do that; if i don't own my guitar, I can't choose what songs to play.

All well and good. But when property becomes destructive of those ends, when property becomes a tool for hoarding the resources of the planet, for concentrating control of capital into the hands of a state-backed owning and ruling class, then we need to realize that ideas that can usefully be applied to guitars, cannot necessarily be usefully applied to large tracts of land, natural resources, or ideas - and certainly not to shares in control of, and profit from, the actions of immortal fictitious citizens created by government fiat.

Mistaking property as a primary right is the fundamental error of most strains of "libertarian capitalism".

The corporation is responsible for the economic growth of the last three hundred years

Growth that has left us with half the planet living on two dollars a day or less; that has the richest handful of human beings controlling more wealth than the combined GDP of a quarter of all the world's nations; has left a large part of the human race feeling that subsistence vegetable farming would be a step up.

This strikes me as a highly suboptimal result.

Especially as the price of WMDs comes down, we cannot safely sustain such a bizarre arrangement.

You are suggesting that we should remove from our legal framework the very structures that permit us to define and adjudicate those property rights most efficiently...The government does not "interfere" in the marketplace by allowing certain legal constructs to exist that facilitate its role in adjudicating private property disputes through the civil judicial system.

Creating modern publicly-traded corporations is not "adjudicating private property disputes"; it is the state giving birth to immortal sociopaths, with all the rights and almost none of the responsibilities of actual human citizens.

Re:Until you consider Patents and other G. Monopol

[jadavis]

discussion of reducing government power to interfere in the marketplace

You seem to be confused between levels of government. A corporation exists according to state law, not federal. There's a BIG difference.

should start with the revokation of most corporate charters

I don't necessarily think that's a bad idea, although state-granted corporate charters are Constitutional. The idea of eliminating corporations is quite a libertarian concept.

This gets interesting reactions from people who identify as "libertarian capitalists".

I suggest reading the real platforms of libertarianism rather than bouncing your ideas off people who are clearly not intellectually prepared.

Re:Until you consider Patents and other G. Monopol

[drinkypoo]

Like if some hack surgeon kills me, I should go somewhere else next time?

Misprescription, drug interactions, and drug allergies collectively are one of (maybe THE) largest killer[s] in America.

Maybe the way they restrict medical practice isn't all that effective?

Re:Until you consider Patents and other G. Monopol

[jadavis]

I think that retailers should most definately be able to set their own price

If you begin a sentence "I think that _______ should ...," then the argument is probably not well thought out. "Should" is very passive and ambiguous, and so is your thinking. Those manufacturers might require that a retailer sell above a given price or the manufacturer has the LIBERTY not to sell to the retailer.

"Should" is so ambiguous. They CAN set their own price and they CHOOSE not to in order to convince a manufacturer to supply them. Where does this "should" fit in? They "shouldn't" choose to obey the manufacturers restrictions, and go without the product? Someone else "should" interfere and prevent the retailer from entering into a contract with the suppliers in which the suppliers set the price?

Re:Until you consider Patents and other G. Monopol

[drinkypoo]

The corporation is responsible for the economic growth of the last three hundred years and if not for that then you and I would probably still be subsistence vegetable farming serfs working for some fuedal overlord or dictator. Do you really want to live in a society where the family members of the dictator are the only ones who get access to profitable businesses and where the rule of the strong is the rule of the day?

I have a counterproposal.

All corporations shall be disbanded and remade as co-ops.

Each co-op shall be divided into a number of shares of equal size which shall be equal to the number of employees. Any employee hired to such a corporation shall have the opportunity to spend any percentage of their wage on their share. They are entitled to profit sharing (if any) based on a percentage of their share. Upon leaving they may trade their share to another employee for any consideration with which they are comfortable, with the exception that no employee may own more than one share.

All co-ops shall be democratic entities with each employee being entitled to vote their share or any owned fraction thereof. Shares (and fractional shares) are tallied to determine the outcome.

We have a constitution that [ostensibly] guarantees us certain protections and standards, and then we give these protections and standards up and effectively become a serf when we go to work. Why should this be the case?

With apologies to Kim Stanley Robinson, and those from whom he derived his ideas.

Re:Until you consider Patents and other G. Monopol

[drinkypoo]

I don't know if that is a good idea, but I do think *something* needs to be done to protect retail. Retail is not an obsolete business model - online sales would suffer too if we couldn't kick the tires at retail.

Certain things have a future in retail - mostly things for which you cannot wait, and things which cannot be purchased sight unseen. Clothing, for example, must be tried on. And food is one of those things you need now. Sometimes you can order it, but sometimes you need some right away.

Retail is going to become a niche market, and good riddance. What a waste of space just so we can all go look at a bunch of crap that we mostly don't need.

Re:Until you consider Patents and other G. Monopol

[vux984]

Is it just that, at brick-and-mortar retail, the customer gains more information about what he's buying?

Yes. Incompetent staff aside, being able to see, and handle the item before buying it is crucial to a buying decision. I won't buy a new mouse for example, until I've felt its weight and buttons, or tried the scroll wheel, etc.

Is it that online stores have lousier return policies? Then let's fix them.

A good return policy won't make shipping charges go away. It will also drive online prices up.

Online sales in several industries are *parasitic* to retail. They benefit from the existence of retail, without which they'd have far fewer customers. If retail were to vanish online would suffer and have to open their own showrooms, expand return policies, and raise prices... becoming retail, and then falling victim to the next generation of online-only price competition.

I'm not saying we should 'save' retail. But retail needs to figure out how to compete with online parasites who use them as free showrooms, and then undercut them on price due to lower costs.

Re:Until you consider Patents and other G. Monopol

[Anonymous Coward]

Wrong.

Re:Until you consider Patents and other G. Monopol

[drinkypoo]

Prescription drug deaths skyrocket 68 percent over five years as Americans swallow more pills - "Poisoning from prescription drugs has risen to become the second-largest cause of unintentional deaths in the United States, according to the federal Centers for Disease Control and Prevention."

More Drug-Related Deaths Blamed on Poor Handwriting by American Doctors - "sloppy handwriting -- interpreted incorrectly by a nurse or pharmacist -- contributes to the deaths of more than 7,000 Americans annually. Another number that makes all the difference: Less than a third of all American doctors write 80 percent of the nation's overall prescription volume."

I normally try not to respond to cowards, but I didn't want people to believe your five-years-outdated story, which was inaccurate at the time of release.

Re:long term, affects discounted luxury goods most

[Anonymous Coward]

The word is "effect," numbnuts.

Re:Until you consider Patents and other G. Monopol

[bluephone]

You hit the nail on the head. When I want a specific book and am willing to wait, I'll order it from Amazon. Amazon makes $20. But, when I'm just in a reading mood, I'll head to my local B&N, browse the magazine rack, pick up 3 or 4, peruse the books, pick up 3 or 4, pay for them ("That'll be $112.47 sir"), and sit in the cafe section for three hours munching and drinking. B&N made $150 while Amazon made $20. Sure, Amazon made a larger % of profit, but B&N made more total money from me, because I love the atmosphere.

Why do I bother with Slashdot anymore...

[TonyXL]

... when they post false-alarmist crap stories like this. Anyone who just views the snippet will now think that "conservatives are anti-sale".

Mfgers cannot "force" retailers to do anything! They can set a condition like a price floor, and a retailer can either carry the product or not carry the product.

If Slashdot leaned right (instead of left as the posting of this story implies) I would expect to see the headline, "SCOTUS Case Legalizes Killing Of Black Kids" for the 1973 Roe v. Wade decision.

Partly agreed.

[Kadin2048]

I agree that socialist/quasi-communist economies did some spectacular environmental damage, and otherwise demonstrated a callousness for human life that's pretty remarkable. (Not least of which was taking old positive-void-coefficient bomb-factory reactors and using them in nuclear power plants, as a large uninhabited area in the Ukraine can attest to.)

However, you get the same problems on the other end of the extreme, if you have totally unrestrained free markets. It's just that we don't have quite as many examples of them, in the recent First World anyway, because there aren't that many totally unrestrained free markets. Down in poorer countries, though, there have been well-documented environmental and human abuses by corporations trying to maximize profit in the absence of regulation -- in particular, things like the Bhopal disaster, and the ongoing environmental problems in S.E. Asian ship breakers. Historically, we had periods in the U.S. when there was great loss of life due to private-sector negligence (Triangle Shirtwaist Factory, Love Canal, etc.), and which have spurred varying degrees of regulation.

Moreover, if both the private sector and the public can be dangerous to the public when they're unrestrained by themselves, it's when they work together against the public interest that they're really worst -- and this situation is fairly common in the third world, where the populace is simply another resource to be exploited by corporations, together with the full complicity and aid of the government.

So I'm not really sure that it's worth pointing fingers as to which is "worst." Unrestrained free markets tend to lead to companies who are so powerful, that the acquire the power to manipulate and influence government, and entrench their positions. When you say that "monopolies of the type usually used to justify government interventionism ... have trouble staying in business," you ignore that companies that big usually can afford legislation that protects their monopoly. Unless you have a government that's somehow un-corruptable (an impossibility, if it involves human beings at any level at all), it's just not safe to allow corporations to get that big, because they will always just buy protection when their business starts to collapse under its own weight.

But overall, I think you can find ample historical examples both for the evils of an overly powerful central government, and overly-powerful industry. Neither situation is really one that I'd prefer to live under. As usual, it's somewhere in the middle that you avoid most of the worst problems.

I think that proves my point...

[Kadin2048]

Not all the big box stores have driven the little guy out of business. If the little guy can provide better service and quality products, even at a higher price, consumers will still buy from them. Where I am from people value the local butcher, as the cuts of meat are better than the megamart packs, with it being the same price or cheaper. And the local lumber company is thriving as well too, even with Lowes and Home Depot in the area. A knowledgeable staff and quality product selection is worth its weight in gold. Now if a small business doesn't provide one of these features, then yes, they will probably not stay in business in todays market.

I'm with you; but this just furthers my point, that artificial protection isn't necessary to keep big boxes from running everyone else over. Stores that provide service that is in some way superior to the big-box ones, will remain in business. Stores that don't, will go under. That's the way it ought to work.

There are lots of ways that you can compete with Wal-Mart or Target, besides price; there's selection, atmosphere, quality of service ... any number of factors. The key is just finding something that people will pay for. If they'll pay for it, then viola, you've got your business model. If they won't, then keep looking -- but don't think that just because you're a Mom&Pop, that you somehow deserve to have your failing business model propped up through protective regulation. That doesn't help anyone in the long run.

Saying that Walmart is going to destroy all other business is a little, to me, like saying that McDonalds is going to run all the other restaurants out of business. A new McDonalds in town might cause the local greasy spoon or hot-dog stand to go under, but it's not going to affect higher end restaurants that offer something that McD's doesn't.

The people who really need to fear WalMart and Target are the ones who have nothing to offer the consumer except what WalMart and Target do better.

Re:Until you consider Patents and other G. Monopol

[CodeBuster]

No, the primary reason is a legacy of colonialism and exploitation from the age of European empires.

It is true that colonialism was, on the whole, more harmful than beneficial to those formal colonies which are now independent nations. However, it is also true to say that not everything about colonialism was necessarily a bad thing. The railroads, port facilities, and other colonial improvements made by the British throughout their former empire, notably in India, were reverted to the ownership of the newly independent nations and that windfall of improved infrastructure did partly compensate for the less desirable effects of colonialism in that the new nations began with something of a head start with regard to roads, ports, government buildings, railroads and the like.

However, even when the negative effects are accounted for, and most nations are now 50 years out from their colonial pasts, it does not fully explain why these now independent nations have failed to seize the day and produce for their citizens 50 years of economic growth and progress that was, in theory at least, possible once the colonialism ended.

In fact, modern third-world governments do a fine job of protecting property rights - of multinational corporations. It's actual citizens who lose out.

I would compare this with the dictator offering a good friend or family member, or indeed a foreigner with money to spend, special privileges that fall outside of the laws of that country or not covered by those laws because of the power of the dictator. This is not the same thing as an impartial and independent judiciary enforcing the private property rights of multinational corporations within the framework of the rule of laws. It should not therefore be used as an argument against the efficacy of protecting property rights in per se since it it in fact nothing more than the will of the dictator dressed up in words like "protecting the legitimate property rights", "freedom", and "democracy".

Then property becomes a tool for hoarding the resources of the planet, for concentrating control of capital into the hands of a state-backed owning and ruling class, then we need to realize that ideas that can usefully be applied to guitars, cannot necessarily be usefully applied to large tracts of land, natural resources, or ideas - and certainly not to shares in control of, and profit from, the actions of immortal fictitious citizens created by government fiat.

I suppose that this simply comes down to a basic disagreement on the means to best achieve the same goals. We both of us agree that we would like to own some land with a dwelling and perhaps a car and other personal possessions and amenities of our choosing, but we disagree on the best means to achieve those goals. If you believe that everyone should have an equal share of a smaller total pie then by all means vote for government control of markets and capital and we will all be equal in our misery. On the other hand if you believe in yourself and the rights of yourself in others to invest your capital in business and to work to increase that capital without the government swooping in and confiscating the fruits of your labor at whim then you should not be against the sort of concentration of capital that tends to occur in the later rather than the former system. If private property works for your guitar then why should it not work equally well for say generation of electricity or steel or other more "vital" industries, what Lenin called, the "Commanding Heights" of the economy? The answer is that it does and should not therefore be restricted. In fact, the only industry where the government should maintain complete monopsony control is in the defense industry. The history of the twentieth century proved these assertions conclusively with the collapse of communism and the abandonment by China of any pretense of Marxist economic policies.

Mistaking property

Re:Until you consider Patents and other G. Monopol

[psydeshow]

You write as if the price of overhead was written in stone.

Yes, revolution in the marketplace, thousands of storefronts vacant... until the market adjusts, rents get cheaper, and capable employees decide they would rather help people than machines. Do you really think it's cheaper to deliver a small box of crap to each and every door than it is to deliver a truckload of crap to a retail store?

I like the novelty of your idea for "retail cover charges" but I think you've overstated the advantages enjoyed by online sellers.

Re:Until you consider Patents and other G. Monopol

[Pfhorrest]

A real libertarian should be for all of this, though - it's all voluntary agreements, by informed parties.

If a mugger points a gun at me and says "your money or your life", and I choose to give him my money instead of my life, that is in some sense a voluntary act. I could have just decided to live (brieflly) with the consequences of doing otherwise; but being robbed seems like a better deal than being killed, so I'd choose that instead. But we still call that coercion, and choices made thus are, in a very important sense, not voluntary. I don't want to choose between losing my money and losing my life.

The economic case is not so extreme, but similar qualitatively similar. It's still a case of someone with disproportionate power over another presenting the other with either a bad deal or a worse deal. In an ideal market, nobody has this sort of disproportionate power - if you don't like the deal you get from one person, you take a better offer from another. But real markets are far from ideal, and monopoly or monopsony status is the economic equivalent of the mugger's gun - you either take the bad deal you're offered, or you take the worse deal that's your only alternative. And such dilemmas can hardly be called free or voluntary choices.

This is why even Adam Smith, the father of capitalism, said that a well-regulated market was necessary. He was talking more particularly about regulations limiting violent coercion, but it seems to me that an extension of that to economic coercion is perfectly logical as well. A free market is great, yes. But a market with monopolists or monopsonists is little more free than a market where the mob makes sure nobody buys pizza except from Fat Tony.

Re:Until you consider Patents and other G. Monopol

[penguinoid]

Almost, but nope. The only way the distributors can force the retailers into anything is through agreements - ones the retailers enter into through their own volition.

That's a nice business you have there. It would be a shame if anything were to happen to it... If you give us some money, we could "protect" it for you.

A real libertarian should be for all of this, though - it's all voluntary agreements, by informed parties.

What about agreements that have some coercion (legal or otherwise) in them?

Doomed to Fail

[Plekto]

This has probably been pointed out somewhere in the last 5-6 pages of posts, but the problem with enacting a law like this is that it won't work at all.

Well, it will inside the U.S., for U.S. retailers. But some company over in China... You guessed it - they won't care or be able to even be sued if they dump their stuff on us.

Oh, wait - they already DO that - so all this would do is really drive more consumers away from U.S. products. Why not just get it over, pull the trigger, with and impose tariffs to put the consumer out of their misery while you're at it?

This is as shortsighted as the miserable fees they are going to charge internet radio. All it will do is drive the companies offshore and thereby suck money OUT of the U.S. economy.

Re:Until you consider Patents and other G. Monopol

[mvdwege]

regulations limiting violent coercion, but it seems to me that an extension of that to economic coercion is perfectly logical as well

I'd say not just logical, but inevitable.

The biggest mistake the 'libertarians' make is that they think that economic power in the marketplace is a different kind of power from that which the State wields. However, when both exercises of power can mean life or death for the other party, I'd say that disctinction is theoretical at best.

When the choice is 'work for subsistence wages or starve', we historically get the company town. That the company does not require the guns of the police and the army to enforce the law in such a town does not make them any less the reigning power over people's lives.

Mart

BS - ever hear of diamonds ?

[vinn01]

" suppliers today *could* collude to aggressively ... But they don't, because it would drive business into the arms of suppliers who don't."

BS - ever hear of diamonds?

There are always ways to corner a market - if the government allows it.

See an ABA approved lawyer

[vinn01]

If some AMA approved hack kills you, your family should visit an ABA approved lawyer.

I know which monopoly is winning today.

Re:Maybe Barnes and Noble can add an Amazon kiosk

[alakazam]

How about this -- I go to B&N and look around for a book. If I want it *right now* I can pay the B&N price, but if I want to save some money and don't mind waiting, I can carry the book to a kiosk in the store, run the bar code under a scanner, and an order form for amazon.com will pop up. I swipe my credit card and it's shipped to me.

How does the bookstore make out? They get the 4% affiliate commission from amazon.com -- and while I don't know if they usually make more than 4% from the sale of a physical book (I would suspect they do), it's still better than the kick in the butt they get now. Plus, they'd soon figure out how many books they need to keep in stock -- fewer, I believe, since a certain percentage of certain types of customers will want to order.

  Jay

No, the cat does not "got my tongue."

[Impy the Impiuos Imp]

Of course, no competition will arise if Sanyo drives way up the cost of its TVs. :rollseyes

"But Sanyo can drive them back down."

Yes, exactly.

As for video games, they are already in that boat as each brand is its own natural monopoly. They deserve every penny they can suck out of game players.

my dead stock is just fine where it is

[poadshaw]

I like it there... I'm used to it by now.

iTunes music and iPods

[falconwolf]

if iTunes is the only service that provides the song, then the only way to buy it is through iTunes and thus, the only way to put it on a player is if the player is an iPod.

This is a common misconception I run into frequently. iPods aren't the oly way to play music from iTunes. You can play them on your PC, or you can burn them to disk. And iTunes can play as well as and the songs, on a cd to the iTunes music library. Sure there's one step more that's needed but a person can play a song bought from iTunes on another mpg3 player. Heck, though I neither have an iPod or iTunes installed on my PC, I wouldn't find it too hard to burn cds to play songs n something other than an iPod. In order to do what I'd really like to do I'd have to put much more effort into taking my music with me. I prefer my music analogue instead of digital, on top of that I prefer to get my music off of vinyl. So to take it with me I first have to play it on a turntable, capture the output and digitize it, then create flac, mpg3, or whatever files. Or I could plug the turntable into my tapedeck and record the vinyl onto tape, preferably a reel-to-reel!

Falcon

I could lose my house because of this law...

[Markmarkmark]

Having actual lived (and suffered) under this rule as a smaller manufacturer operating on a national level for decades. It has a real and, in some cases, severe financial impact on my life.

This rule caused us lots of harm and prevented the growth of our small, self-funded entreprenuerial business. As a manufacturer, having local resellers is a less expensive alternative to hiring our own sales force. The distribution channel is essentially a way to outsource sales, which if you are a small start-up is often a key enabler to getting your business off the ground. Resellers are crucial to us because they call on customers, demonstrate our products, answer questions, do local support and even run local ads. That's why they are worth the ~30% margin I build in to our business model to pay them. Dealers also assume credit cost/risk and aggregate a bunch of onesy/twosy orders into volume purchases that our small company can handle. To me that 30% is a necessary cost of making and selling my product just as much as parts and assembly. If the dealer didn't make that investment on my behalf, then I would have to raise that much more money and pay to do that work myself. That's the beauty of a distribution channel. I don't have to fund that pre-sales and distribution expense upfront out of my pocket. My reseller partners essentially go into business with me, do the work and get paid for their work by adding that cost downstream of me. It's a wonderful enabling option for me as an entreprenuer - except it doesn't work because of this law. It makes it so that I can't ensure that my reseller will actually be repaid for their investment and work to build our mutual business.

The problem is that as soon as my product starts to get any momentum, an internet or mail-order 'box house' buys a little inventory from a distributor and marks the product up only 15%. Prospects still learn about the product from the local sales calls, ads or shows our 'real' dealers invest their money to do, and prospects still phone the 'real' dealers for pre-sales questions and demos but then many of the prospects buy from the box house because it's cheaper. But it's only cheaper because those box houses 'cheat' by not doing the market development and support work that we need them to do (and built into the margin to pay for). In that case I'd rather lower my product's selling price and split the difference directly with the consumer. The problem is that then I don't have anyone doing local demos, sales, support etc. Some products need those things to succeed and those products (like mine) are harmed by this law.

When I design, cost-estimate and raise capital to build a product, I always have a projected ASP (Average Selling Price). This is what we think a typical consumer will typically pay for the product. We use this to figure out if the product will be a good competitive alternative in the market and if enough customers will actually buy the product. We balance the bill of materials, advertising, cost of sales and customer acquisition costs. In our ASP there is an average expected reseller margin which is there to pay the resellers to do the work we need them to do to make the product successful. Those box houses are essentially 'leeching' the value of the pre-sales work and investment I asked my 'real' reseller partners to make. It sucks that I make this product by my own hand and the "sweat of my brow" so to speak, but then this law limits how I bring my product to the marketplace, how I implement my distribution partnerships, and how I grow my business.

In my view the law is a government intrusion into my right to enter into certain kinds of mutually agreed contracts with my distribution partners. It also quite literally limits what products I can consider creating and offering to consumers. I have to stay away from products that I feel need a lot of face-to-face explanation, demonstration and support to succeed. There's no way I can justify raising the capital from my investors to fund local sales offices and this law make

shipping in or out or both

[zogger]

You aren't getting what I am saying at all, and you are also arguing AGAINST past real data, which is silly. I'll repeat, and you can go do your economic homework before replying again. Go back and revisit the economic news in the weeks following katrina, and see which businesses suffered more than others. Fedex, UPS, and the airlines were at the top of the list. Heck, in my state they had to emergency cut back on school bus transport because of it, both from cost and the availability issue. Go look it up if you don't believe me about the fast price increases of fuel and what happens. And yes, fedex and UPS DO make individual small deliveries, it costs a lot of fuel to do that. And just doing more of the same won't get any more efficient until they have trucks that consistently beat fuel cost increases by getting better mileage, and they haven't doubled their mileage in one week ever, yet fuel can double easily in a very short time frame. I have seen it many times, once I paid ten dollarts a gallon for two gallons max sale during the opec embargo, just to get home and park. That was over the rtegular price of between a quarter and 50 cents a gallon. Stuff happens.
And yes, fedex and UPS ship a lot of packages to themselves bulk, as you pointed out and I am not denying that at all, but their ultimate model is to get a package or a few packages to a LOT of delivery points, not just one or two. Once the fedex economic chain hits the small delivery trucks it is one stop at a time, they burn a LOT more fuel than the fuel used for folks to go to the mall and hit several stores at once. I get individual deliveries all the time, they aren't dropping off their entire truckload at one stop, they have to drive around a lot of miles to deliver all those packages to the ultimate consumer, whereas a brick and mortar store gets all their deliveries in bulk, and the customer who drives in pays the tab on their own, they aren't seeing it as much as a direct cost to point to on their check-out tally. It's there, granted, some fuel is used, but it is miniscule compared to the individual package deliverers. They are selling speed and efficiency over lowest cost, it's a premium service compared to gross bulk deliveries to huge stores where ther customers drive in and carry away a trunkfull of stuff.. They are a service business that depends on cheap fuel to make a profit. And because the online guys depend on them, they either have to eat it, the sudden fuel surcharge spike, or drop privces, or some combo thereof, which starts to eat into whatever benefit they have over not having a storefront. It's a fine line there. Past several years rents have been wicked high, and fuel just in the middle, but if rents drop (like they probably will as the slow motion real estate bubble collapses), and fuel costs increase, that split the online guys enjoy for their profit will keep shrinking.

Really, go back and check the financials from right after Katrina, you'll see a ton of discussion by economists about sudden fuel cost spikes and who gets harmed the most from it the quickest. Independent truck drivers are another group, as are taxicabs. Some independents just *parked*, completely stopped hauling at all, because they have contracts that pay them such and such a mile, but if their fuel goes up real fast in a one week time frame they would have to operate at a net *loss*, so they just parked until the prices dropped back down a little. Fedex had to throw an emergency fuel surchage on their shipments for awhile then as well, which meant a sudden fast rise in prices for the online merchants, more so than at the brick and mortar places because they can spread their costs out a lot easier with the way they do business (no deliveries need to be factored into cost of business, online has both the cost to them, and the cost away from them). Brick and mortar pays one way for deliveries-in. Online pays both ways, in and out. See it now? Both businesses get hit with the fuel cost increase, but the online guys get hit twice with the same increase

Re:shipping in or out or both

[nine-times]

Really, go back and check the financials from right after Katrina, you'll see a ton of discussion by economists about sudden fuel cost spikes and who gets harmed the most from it the quickest. Independent truck drivers are another group...

Exactly. FedEx (and the like) as well as *truckers*. Big companies who do their own shipping weren't hardest hit because they have other profits to eat the cost of a temporary spike is costs, but shipping became more expensive all around.

Re:Until you consider Patents and other G. Monopol

[Mr. Slippery]

A corporation exists according to state law, not federal. There's a BIG difference.

Corporations are chartered by states, but certainly "exist according to" federal law, with a variety of recognitions, tax laws not least, in federal statutes.

But the fact that it's a state government and not the feds is irrelevant to the fact that the creation of corporations is an intervention into the marketplace.

mod parent up

[Anonymous Coward]

mod parent up

Re:Until you consider Patents and other G. Monopol

[TheoMurpse]

Really though, this is about what you do with what you own and we should not undo a century of sensible policy. Once you buy something you own it and can do what you want, right down to giving it away. Why give up that right?

Funny enough, that argument worked exactly the same way 160 years ago regarding slaves. Not that I'm anti-consumer here, I just thought it was an amazing coicidence how well your argument works for things we as a society view as heinous nowadays.

Re:Until you consider Patents and other G. Monopol

[jadavis]

Corporations are chartered by states, but certainly "exist according to" federal law, with a variety of recognitions, tax laws not least, in federal statutes.

I'm getting into details here; don't take this as disagreement necessarily, but some thoughts I'd like to add.

The way I see corporation is that the government is "reaching in" to tax them much in the same way they reach in to tax private citizens (which is explicitly Unconstitutional, except for the 16th Amendment that allows it). It's not so much that the federal government taxes corporations, except that states proclaim corporations have income as an entity separate from the income of the investors, and are therefore subject to the 16th Amendment.

I think a lot of the other recognition is case law, based on federal courts trying to interpret what a corporation means in the context of the state in which it exists. Perhaps some is English Common Law even; I don't know.

Most likely, you're right -- I'm sure there are many laws on the books that are too specific about corporate law (which should be state based). More to the point, the federal government would be within it's scope to regulate interstate corporate activity, but we both know it reaches in much more than that, which is what causes inconsistency.

But the fact that it's a state government and not the feds is irrelevant to the fact that the creation of corporations is an intervention into the marketplace.

I don't think that the federal versus state distinction is irrelevant, but I agree that corporations are an interference in the marketplace.

Wikipedia is not a reference source

[Rix]

Do not cite it.

You don't know very much about economic history. Unregulated markets have been demonstrated as a complete failure, more so than even command economies.

Re:Until you consider Patents and other G. Monopol

[Wordsmith]

In my other post, I wasn't arguing the merits of that economic system - just saying a true libertarian wouldn't have a problem with it. True libertarianism more or less demands laissez faire - not because it results in a more just marketplace, but because libertarians question the right of the government to (through a much more tangible form of coercion that involves guns and jails) interfere in informed agreements.

Although I wasn't getting at it before, I do happen to be of that particular brand of libertarianism myself. I see a big difference between tremendous market pressure and coercion. The retailer doesn't have any particular right to demand that the distributor will even exist, to speak nothing of offering products under reasonable terms. If the retailer is so dependent on being able to sell the distributor's products under his own terms, what happens when the distributor goes belly up and the retailer can't even get the products in the first place? What if the distributor stops making/distributing that product in favor of others in another type of market?

It's not that I think the economy will take care of itself - I think it might, but it's more likely monopolies and such will develop to the detriment of many. I just don't see where there's any particular violation of anyone's rights going on that should compel the government to get involved. No one has a basic right to expect his business plan to work - and we can't go around protecting rights people don't have in the first place.

Slashdot is not a peer reviewed journal

[tehdaemon]

Do not hold it to that standard.

I stole that piece from wikipedia to save time and effort, not because it is an authority. Refute the statement, not the source.

My knowledge of economic history comes from, among other places, sources such as this, taught by this guy

Every command economy discussed in this lecture (Soviet Union, China, India, etc) was a complete failure. They have all to some extent abandonded them, and their economic success is in direct porportion to how close to a free market they went. (China more, India less, Soviet union - depends on what part. None as far as the US which has also deregulated a lot in the same time-frame.)

Could you point out any references to your claim that unregulated markets are all failures? And were any of these unregulated markets also free markets? (need I repeat that they are not always the same thing?)

T

Re:Slashdot is not a peer reviewed journal

[Rix]

Wikipedia is not a good source for settling disagreements. It's frankly awful at handling any controversial topic, as my experience with it's editing process leads me to believe it uses a "survival of the most persistent" model.

I wasn't arguing that command economies were particularly successfully, just that they were more successful than unregulated economies. Pre New Deal America is one example, which caused the Great Depression.

Unregulated markets are not free markets, because free markets do not exist.

Power and Freedom

[Pfhorrest]

I understood that you weren't arguing the merits of the libertarian system, I was just taking off on that tangent to point out that the concern for (to coin a term) voluntariety of interactions really ought to consider all power differences between the involved parties, not just the threat of physical violence. And I agree with you as far as government intervention in setting prices or compelling people to produce or buy or sell any particular product at any particular price; I dislike central planning and micromanagement like that. And I'm actually quite libertarian myself in most respects. But I think that broader, more general regulations that don't specify the actions of particular entities, but rather make the same demands of all individuals, which effect a smoothing out of market irregularities - in both the cases of people who wield disproportionately high and disproportionately low bargaining power - are a good idea.

I'm basically in favor of a generally free market plus a partial redistribution of wealth in the form of a flat tax which goes to fund a universal tax credit (i.e. everyone is taxed X% of their income, and then everyone gets $Y back - the result being a system where the greater the income disparity, the more progressive the taxation becomes, automatically, without changing the value of X; and with Y of course being dependent on X and people's incomes. In a fair, highly competitive market, there would be little if any redistribution going on). I'd eliminate most of the rest of the tax code, replacing penalty taxes with straight forward fines (to cover the cost of externalities, e.g. environmental pollution), getting rid of all tax shelters, exceptions, etc etc, and generally get rid of as much other regulation as possible.

I like to think of the justification for this by way of analogy. We in the liberal (in the classical sense, as in libertarian) modern world generally hold that not only is threatening violence against another bad, but that systems to prevent and counteract violence (i.e. some sort of police) are good, and further that threatening danger to the public but no individual in particular (e.g. shooting off fireworks in crowded urban streets) is bad, and systems to prevent even accidental danger to the general public (e.g. fire departments and other emergency management systems) are good. Thus, by analogy, not only is harming another's property bad, and systems to protect private property good, but damage to public welfare (including both the natural environment and human economic goods) is bad, and systems to promote the public welfare are good. In short, mandating public charity is analogous to mandating that we pay for fire departments, flood control, even the military - things that protect the public good, even if you as an individual are unconcerned about the danger to you yourself of fire, flood, invasion, or impoverishment.

And, back to the main point, that sort of mutual protection is necessary for the functioning of a free society. If all were under constant threat of assault unless they could secure the help of bigger, stronger men, then all would be subject to the whims of the strong, and as such, none would be free but the strong - the choice, for those unable to defend themselves, would be between death at the hands of the constant threat surrounding them, and subservience to those who have the power to stand up to those threats. This of course would create incentive for the powerful to keep the masses powerless [e.g. ignorant and unarmed] and dependent upon them. This threat of assault is why we collectively band together as a society and form things like militaries to protect us from such threats - and we today consider a society unfree if it is subservient to it's military forces.

Likewise, everyone constantly faces the threat of economic impoverishment, leading ultimately to death by starvation or exposure. Some people are capable of standing up to this threat on their own. Others are for various reasons not so capable. The situation is precise

freetrade and competition

[falconwolf]

But does anyone have the ability? Once a monopoly buys most of the land, it can produce with greater efficiency than any newcomer due to economies of scale.

How can anyone buy even half of the land? Bill Gates, the richest person in the world, doesn't have enough money to buy half of the land in the US never mind the rest of the world. If anything, someone trying to buy up land will only raise the price of land as others will start buying land as well. Forget about $5,000 or $10,000 an acre, land could rise to $1,000,000 or more. Also there's already many people holding, owning, a lot of land. In Florida for instance, many think Disney owns a lot of land and they do but Coka Cola owns more. Sugar farmers around Lake Okeechobee own a lot land as do some Indian tribes. Others own large ranchs. In I believe OK Ted Turner owns tens if not hundreds of thousands of acres where he has a ranch.

If someone tried to buy up a lot of land many land owners would see their net wealth increase, the only who wouldn't see a benefit would be the landless. Which unfortunately there are too many.

Falcon

The RIAA controls over 90 percent of recordings

[tepples]

How can anyone buy even half of the land? By buying 1/500 of the land, acquiring eight companies that have each bought 1/1000, and forming a trade association with the other 99 companies that have done the same. Within the field of recorded music, the four major record label holding companies (Sony-BMG, EMI, Warner Music Group, and Vivendi) have done just that: merge with formerly independent labels and form the Recording Industry Association of America and foreign counterparts. This means that well over 90 percent of musical recordings are RIAA-controlled. Many of these record labels are affiliated with music publishers; for example, Warner Music Group controls both Warner Bros. Records and Warner/Chappell Music. These music publishers have their own trade associations such as National Music Publishers' Association. So yes, there is a cartel that controls rights in copyrighted works.

If someone tried to buy up a lot of land many land owners would see their net wealth increase, the only who wouldn't see a benefit would be the landless. And in the case of music, the vast majority of people are "landless". Or can you show me a way to tell whether my claim to "land" doesn't infringe someone else's claim to "land", given music cryptomnesia cases such as Bright Tunes Music v. Harrisongs Music and given the current patent minefield situation?

Re:The RIAA controls over 90 percent of recordings

[falconwolf]

And in the case of music, the vast majority of people are "landless". Or can you show me a way to tell whether my claim to "land" doesn't infringe someone else's claim to "land", given music cryptomnesia cases such as Bright Tunes Music v. Harrisongs Music and given the current patent minefield situation?

First, I don't know about Bright Tunes Music v. Harrisongs Music so I won't remark on it. Secondly just because the RIAA "controls" most of the music sold does not mean no one else can't produce music too. Otherwise Creative Commons, internet archives.org, Links to Tens of Thousands of Legal Music Downloads and others websites would never exist allowing legal music downloads, at least not in their current form. Also it does not prevent others from making their own music. I might even create music myself, I have a flute by David Nighteagle I'd like to learn to play, unfortunately I haven't found someone who could teach me and I no longer learn well on my own.

Falcon

My sweet lord...

[tepples]

First, I don't know about Bright Tunes Music v. Harrisongs Music so I won't remark on it. See Wikipedia:My Sweet Lord#Legal controversy and Wikipedia:Cryptomnesia#Validity for an overview, and check out especially the latter article's references.

Secondly just because the RIAA "controls" most of the music sold does not mean no one else can't produce music too. Which demonstrates the limitations of the analogies between copyright and exclusive rights in land.

Otherwise Creative Commons, internet archives.org, Links to Tens of Thousands of Legal Music Downloads and others websites would never exist allowing legal music downloads, at least not in their current form. But how can the musicians on those sites be absolutely sure that they didn't subconsciously copy substantial portions of a work that they had heard ten years earlier on commercial radio?

Re:My sweet lord...

[falconwolf]

First, I don't know about Bright Tunes Music v. Harrisongs Music so I won't remark on it.

See Wikipedia: My Sweet Lord#Legal controversy and Wikipedia: Cryptomnesia#Validity for an overview, and check out especially the latter article's references.

Thanks, I didn't know of this, or at least don't recall it. I loved both "He's so Fine" and "My Sweet Lord".

Otherwise Creative Commons, internet archives.org, Links to Tens of Thousands of Legal Music Downloads and others websites would never exist allowing legal music downloads, at least not in their current form.

But how can the musicians on those sites be absolutely sure that they didn't subconsciously copy substantial portions of a work that they had heard ten years earlier on commercial radio?

Maybe a person won't know if they subconsciously copied a song but if they file for a copyright they may find it was already copyrighted. Even if they don't the copyright will still offer some protection. Of course this would work a lot better if the text was digitized allowing quick text searchs.

Falcon

Re:Until you consider Patents and other G. Monopol

[ralatalo]

Yes...a few... In theory BJs, Cosco, etc... you pay a membership to save money... there is also REI which is a sporting goods Co-Op... as well as a few other whole sale clubs.

Stop the free market mantra, pleassse!

[wilec]

I read enough of this topic to see the Free Market mantra coming up over and over and over. I am fed up with hearing about "free market" this and that. Listen close now! THERE IS NO SUCH THING AS A FREE MARKET! The markets are anything but free! Global corporations have bought the legislation to ensure such. This has always been the case to some extent, there has never been a truly free market anywhere on as a grand scale as a nation. I doubt that there has ever been one larger than a individual Quaker community or metropolitan sized street market/bazaar. Today the manipulation of markets for the gain of the privileged few are happening very effectively all over the world. Anywhere national or state level legislation doesn't work out they just bribe or coerce local officials. Wonder why so many in the third world hate us in the first? They see us in the light of these "business leaders" and our rah-rah support of these "free market heroes" and their propaganda.

As for free markets I am not even sure we want really free markets, as they are probably just too volatile to support a stable society the size we have today. What annoys me is all these business and political types running around shouting the free market mantra and holding up a free market as some sort of holy rule that we cannot muck with, when such does not even exist. I wish I had all the answers, I would be most pleased to share them. I can share this much, DO NOT believe the propaganda that we have a free market economy in the USA! The professed aspirations of such aside it is not and never has been such and getting less and less free with every legislative session. In addition regardless of any executive or legislative changes the SCOTUS of today is unlikely to shift back to anything like balanced in less than a decade at best, so get used to the rule of the corporate oligarchy. About the only possible way out would be if the judicial branch, SCOTUS in particular felt their own power or personal safety was seriously threatened by these interests, then they might wake up and see the damage being done to the working people of this nation. Of course in such a case by the time they have gain such insight they might actually find themselves neutered anyway. The big difference between today and recent history, in the USA anyway, is that the balance of power, political influence and wealth distribution between those that produce via their physical labor, creative ability's or information juggling/processing skills and the parasites that exist upon such has gotten wildly out of hand, again, not that is has ever been fair. sheezz!

Wabi-sabi
Matthew