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Digitised download cults create pocket monopolies

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Open ... and Shut Would-be monopolists have a new tool to claim control over the unsuspecting masses: sloth.

In the offline world, big vendors must go to extensive ends to ring-fence consumers into concentrating their spend with those vendors. Think vertical integration, price fixing and other monopolistic means. But in a heavily digitised world, Apple, Google, Amazon, and others are creating de facto completely legal monopolies by making it brain-dead easy to use their products.

Is this a problem?

Google, for one, says "no". The company's plausible defense against claims that it unfairly monopolises search comes down to one sentence: consumers are always "one click away" from using a different search engine. As Wharton professor Eric Clemons argues, however, this argument isn't as airtight as Google would have us think, because Google does all sorts of things through partnerships and other means to undermine the substance of truly being "one click away" from an alternative.

Still, Google's real hold on consumers is more about friction than malevolent boardroom strategy. Google works well and its competitors are not any better, as even Microsoft chief executive Steve Ballmer suggests. It's not broken. Why fix it?

The same is largely true of Apple. While fanbois fawn over Apple's sleek hardware, it's Apple's easy iTunes experience that has consumers buying iHardware in droves and, according to some US judges and antitrust authorities, this may breach US antitrust law.

Again, however, it's really not so much a matter of evil scheming by greedy execs so much as delivery of a seamless shopping experience that makes discovering and consuming media painless. Google, too, has been trying to replicate this experience with Android, and Amazon most recently gets pretty close with its Kindle Fire experience.

The big concern in all this is that content creators and brands are losing their hold on consumers. Apple's restrictive App Store policies drove The Financial Times into the arms of a go-it-alone HTML5 strategy because Apple refused to share subscriber data with the content producer (the FT).

In other words, the FT bolted because it was denied the ability to interact directly with its buyer, which is the new reality in digital distribution. As I've argued before, this is also a problem for the users because it makes switching between rival app stores difficult; Apple (or Google, Amazon, etc) now owns the relationship with the buyer, not the developer.

The shop, in other words, is replacing the brand. Why? Because digital makes delivery of content, both physical and virtual, easy and we, as consumers, love ease.

The place where this trend will be felt most poignantly, because it has such a dramatic impact on old-world physical goods, is Amazon. Amazon is becoming more important than the logos on the things we buy through it, because it is Amazon that gives them to us without hassle. Sloth is leading us into a happy, all-consuming embrace with Amazon.

Jason Calacanis describes this as the "Cult of Amazon Prime", with some serious side effects to easy distribution:

If you're part of the cult, brands like Netflix, UPS, USPS, Paypal, Walmart, iTunes, Barnes & Noble, iPad, HTC, Target, Targus, Logitech, Best Buy, Dell, Belkin, Random House, Harper Collins are all becoming meaningless.

These are brands that will, in the near future, be largely if not completely replaced by the Amazon brand. The list of areas where Amazon doesn't compete keeps dwindling.

Has Amazon done anything wrong? No. What it has done is make the shopping experience easy, and the delivery experience even easier. Our desire to be entertained/clothed/whatever right now is being satiated by Amazon, Apple, Google, and others, leading us into monopolies that replace brand loyalty to the distributors of goods, rather than the producers of them.

Is this a bad thing? I'm not sure. But it's clear that in an increasingly digitised world, the delivery mechanism is the big key to creating value and maximising financial returns. ®

Matt Asay is senior vice president of business development at Nodeable, offering systems management for managing and analyzing cloud-based data. He was formerly SVP of biz dev at HTML5 start-up Strobe and chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears three times a week on The Register.

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