1. Post #1
    Antdawg's Avatar
    July 2010
    5,125 Posts
    I'm raising this debate because I've been thinking of Steam's hold on the PC digital distribution market. Although Steam doesn't actually completely control the entire specific market, no other service rivals Steam's market share, with competing services such as Direct2Drive and Gamersgate (as well as many others) only holding a smaller portion of the market. Steam effectively fits the definition of a monopoly.

    Is Steam's monopoly a good, neutral or bad thing for the consumer? Arguments for being good would include providing ease of use for users with only a single service, neutral being that the developer or publisher happens to set the price of Steam titles, not Valve (therefore price wouldn't be debatable in this issue). Arguments for being bad would be consumers investing completely into only one service, one which may go down in time or one that is subject to much change from only one party. I'm sure we can think of more, can we?

    This debate doesn't have to be just about Steam, but about monopolies in the market in general. Can a monopoly ever be of benefit to a consumer, even though it reduces much choice for such consumer?

    I should specify that we should be debating monopolies in the private sector, not public. Apologies for not mentioning it earlier.

  2. Post #2
    Gold Member
    Paravin's Avatar
    November 2007
    9,167 Posts
    A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.

  3. Post #3
    Gold Member
    jlj1's Avatar
    May 2008
    3,632 Posts
    I think a monopoly is never preferred, but how back it is depends on the company. I'd rather use Steam if it was managed by Valve and prefer not to use steam if Ubisoft or EA ran it

  4. Post #4
    Gold Member
    Sir Whoopsalot's Avatar
    August 2010
    22,759 Posts
    Ever heard of the monopoly on water? That one's specifically put in place to protect the consumer.

  5. Post #5
    Go Shuya! You can do it Shuya!
    redback3's Avatar
    December 2005
    5,662 Posts
    It really all depends on the company, if they are a monopoly then can charge as much as they damn well please and will have no fear of competition (yet), but some people have a heart, such as steam.

  6. Post #6
    Gold Member

    March 2005
    4,352 Posts
    Sure they can benefit consumers.

    Organisations like the postal service benefit the consumers.

  7. Post #7
    Icegrim Necrokult Warrior
    Beaverlake's Avatar
    December 2007
    1,097 Posts
    If it is a company owned by the state it can be, for example Swedens Systembolaget.
    Government Monopolies = Good (If used correctly)
    Private Monopolies = Bad (Usually)

  8. Post #8
    Gold Member
    Lonestriper's Avatar
    September 2008
    5,678 Posts
    Where a monopoly is not profit-driven it is usually harmless, however the second profits come into the equation the danger is there of exploitation

  9. Post #9
    Dragon Dildoes
    Dennab
    April 2009
    4,432 Posts
    A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.
    I gonna get rated dumb for this, but they exploited it when they changed $ to €.

  10. Post #10

    May 2011
    209 Posts
    In many ways things become monopoly's because they offer a greater service/ product but overtime can evolve into a inferior/ more costly option.

  11. Post #11
    Gold Member
    Callius's Avatar
    May 2008
    3,571 Posts
    Yes natural monopolies where efficiency can only be reached by having one company produce however they have to be tightly regulated as they're prone to slacking due to no competition or exploiting customers.

    If they're in the rpivate sector then I'd say no, unless there is tons of regulation to force them to benefit the consumer they will tend towards monopolistic behaviour and exploit the customer for extra profit.

  12. Post #12
    Gold Member
    VistaPOWA's Avatar
    October 2008
    8,370 Posts
    I gonna get rated dumb for this, but they exploited it when they changed $ to €.
    The publishers determine the prices in each region, not Steam.

    Blame the publishers for not converting.

  13. Post #13
    Gold Member
    Silikone's Avatar
    September 2006
    1,359 Posts
    If monopolies start messing around with their customers, some of them might seek an alternative, and that will give the other company a chance to catch up.

  14. Post #14
    Gold Member
    VistaPOWA's Avatar
    October 2008
    8,370 Posts
    If monopolies start messing around with their customers, some of them might seek an alternative, and that will give the other company a chance to catch up.
    Many times the customers don't have an alternative (e.g. in the USA, there are many places where there is only one ISP available)

  15. Post #15
    Gold Member
    s0beit's Avatar
    August 2010
    2,628 Posts
    If it is a company owned by the state it can be, for example Swedens Systembolaget.
    Government Monopolies = Good (If used correctly)
    Private Monopolies = Bad (Usually)
    I would say that is absolutely the opposite of the truth.

    Public monopolies are always bad, and they're the only real form of monopoly that exists.

    A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.
    Did you ever consider for even a moment that the reason they've gained a large percentage of the market share is because they're good at what they do? What do you people think, that companies rip the money from your pockets?

    Edited:

    Many times the customers don't have an alternative (e.g. in the USA, there are many places where there is only one ISP available)
    If their service is so horrible (or if it isn't, doesn't matter really), companies will try to obtain customers there. If there's 50% customer satisfaction that means they can pull 50% of their customers away.

  16. Post #16
    Gold Member
    markg06's Avatar
    September 2006
    10,987 Posts
    Natural monopolies are fine but tend to be inefficient since managers and what not presumably realise they don't have to worry too much about profits since the government'll back them up.

  17. Post #17
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    A monopoly by the state in the best interests of the people would be such a situation.

  18. Post #18
    Clunj's Avatar
    July 2010
    2,794 Posts
    I gonna get rated dumb for this, but they exploited it when they changed $ to €.
    It's not an exploit if international law stipulates the rates and exchanges you must put on your products, as well as the individual publishers requirements.

  19. Post #19
    Gold Member
    Madman_Andre's Avatar
    November 2007
    7,239 Posts
    A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.
    Basically this. The top guys at Steam realize they're sitting on a golden goose at the moment and are trying their best not to quote "fuck it up."

  20. Post #20

  21. Post #21
    We're made of star-stuff
    LarparNar's Avatar
    February 2009
    10,173 Posts
    I'm pretty sure publishers choose what they want their games to cost, not Valve.

    It's like the Apple App Store.

  22. Post #22
    Master Cheese Tactician
    The Decoy's Avatar
    August 2011
    969 Posts
    In a monopoly the company can charge whatever ridiculous price they want because there is no competition. So monopoly is bad and is at no benefit to the consumer.

  23. Post #23
    Gold Member
    sltungle's Avatar
    December 2007
    6,701 Posts
    So long as the company that has the monopoly doesn't get greedy I don't see why not.

    If I had a monopoly over an industry and I could very much afford to make it by on a small profit margin (and all of the employees were well paid and happy) then I'd sure as hell do so. Inflating prices doesn't benefit anyone. In technology all it does it prevents the consumers from getting their hands on the most up to date technology available, thus stagnating the progress of technology, and in things like food/water it's... well, cruel to inflate prices because people NEED to eat and drink.

    Of course, unfortunately, most of the people who run large companies seem to be or at least become enormous douchebags.

  24. Post #24
    Gold Member
    Callius's Avatar
    May 2008
    3,571 Posts
    In a monopoly the company can charge whatever ridiculous price they want because there is no competition. So monopoly is bad and is at no benefit to the consumer.
    Not always if a monopoly's market doesn't have extra barriers to entry then the monopoly may cut pricing to make it unworthwhile for another company to set up in their market due to low profits.

    Valve/Steam are generally a good company because they were lucky in that they were made from ex-microsoft high ups, meaning they had the capital to start the business by themselves and so aren't a public trading company and so don't have to please shareholders with ever rising profits (I imagine they have these anyway though)

  25. Post #25
    Gold Member
    Sir Whoopsalot's Avatar
    August 2010
    22,759 Posts
    In a monopoly the company can charge whatever ridiculous price they want because there is no competition. So monopoly is bad and is at no benefit to the consumer.
    Mind if I ask where you get your tap water from then?

  26. Post #26
    Gold Member
    Callius's Avatar
    May 2008
    3,571 Posts
    So long as the company that has the monopoly doesn't get greedy I don't see why not.

    If I had a monopoly over an industry and I could very much afford to make it by on a small profit margin (and all of the employees were well paid and happy) then I'd sure as hell do so. Inflating prices doesn't benefit anyone. In technology all it does it prevents the consumers from getting their hands on the most up to date technology available, thus stagnating the progress of technology, and in things like food/water it's... well, cruel to inflate prices because people NEED to eat and drink.

    Of course, unfortunately, most of the people who run large companies seem to be or at least become enormous douchebags.
    It takes a person like that to get a business like that, you've got to be greedy enough to want more money and to put up with the enormous amount of effort you have to put in to run the whole company.

    Edited:

    Whats your point? The only real monopoly-esque thing I can see is that the workers got replaced by less skilled workers, striked and failed.

    A good example of a bad monopoly is Standard Oil http://en.wikipedia.org/wiki/Standard_Oil

    Edited:

    If their service is so horrible (or if it isn't, doesn't matter really), companies will try to obtain customers there. If there's 50% customer satisfaction that means they can pull 50% of their customers away.
    Barriers to entry. Sunk costs, infrastructure, advertising etc a new ISP doesn't have any of these. How do you set up an ISP when the owner of the fibre cables is your competator and won't rent/sell them to you?

  27. Post #27
    Gold Member
    RAG Frag's Avatar
    July 2005
    1,255 Posts
    Did you ever consider for even a moment that the reason they've gained a large percentage of the market share is because they're good at what they do? What do you people think, that companies rip the money from your pockets?

    If there's 50% customer satisfaction that means they can pull 50% of their customers away.
    Why do you look at it as if the only factor is fair competition, if companies merge or they are the first to a new market they can easily lock out other competition.

  28. Post #28
    Gold Member
    Killerjc's Avatar
    August 2008
    4,592 Posts
    Steam, or digital providers in general, are a bad example for monopolies, because of how simplistic it is to create another business. Yes, steam is pretty much the only one out there, but it can never fully get rid of the competition, because a new internet business requires far less resources than a physical one. They also have to not fuck over the consumer, or else the consumer will shift their loyalties to the other, smaller, resellers, and steam will be left to die.

    ps: I don't know if someone had said this earlier in this thread because I haven't read most of the replies.

    Edited:

    I gonna get rated dumb for this, but they exploited it when they changed $ to .
    No, steam doesn't set prices for things. I don't know how many times people have to say this, but resellers do not choose prices, the publisher does.

  29. Post #29
    I would say that is absolutely the opposite of the truth.

    Public monopolies are always bad, and they're the only real form of monopoly that exists.
    woah woah what

    Did you ever consider for even a moment that the reason they've gained a large percentage of the market share is because they're good at what they do? What do you people think, that companies rip the money from your pockets?
    that's a hilariously shortsighted and/or naive way of thinking

    having a monopoly doesn't necessarily mean you got there by being a good business. look at DeBeers or United Fruit for fuck's sake

    If their service is so horrible (or if it isn't, doesn't matter really), companies will try to obtain customers there. If there's 50% customer satisfaction that means they can pull 50% of their customers away.
    I don't think you understand how this works

    Although a lot of this isn't strictly a monopoly, this image is somewhat relevant:


  30. Post #30
    A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.
    True, and if they did, you'd see a mass of alternatives popping up.

  31. Post #31
    True, and if they did, you'd see a mass of alternatives popping up.
    There are a lot of alternatives anyway, see Onlive, Origin, D2D, etc

  32. Post #32
    There are a lot of alternatives anyway, see Onlive, Origin, D2D, etc
    I mean, cheaper alternatives, rather

  33. Post #33
    I mean, cheaper alternatives, rather
    they exist too

  34. Post #34
    Gold Member
    Jookia's Avatar
    July 2007
    6,768 Posts
    Monopolies affect other companies creating products, and means that the company with the monopoly would have to fill in that demand. In short, there'd either have to be a healthy non-monopolistic, competitive ecosystem, or one company with unlimited resources.

  35. Post #35
    imasillypiggy's Avatar
    December 2009
    8,851 Posts
    A monopoly is almost never beneficial for the customer. In case of Steam we're lucky that the company leading this monopoly doesn't exploit its position.
    Well I wouldn't call it a monopoly. There is other download sites like origins but the reason steam is the most popular isn't because its the only one out there but because it treats its customers the best. Oh and it was the first.

  36. Post #36
    Gold Member
    sgman91's Avatar
    July 2006
    4,162 Posts
    There are examples of private monopolies being positive for the consumer as well. A good example would be Standard Oil which drastically lowered prices of oil and kerosene to the consumer.

  37. Post #37
    "We should allow child labor overseas ...the sweatshop is what is saving the 9 year old worker"
    Pepin's Avatar
    April 2007
    6,864 Posts
    People are terrible confused, the issue with government monopolies is the lack of a profit incentive. They are not acceptable because of that, they are bad because of that. It creates a huge amount of inefficiency and activity that no sensible businessman would partake in. I can go into detail if needed, the best example of this is the continental railroad.

    But, there is this common theory of a large firm lowering the price to eliminate all its competition and then jacking up the prices and enjoying the profits with no competition. Even accepting the first premise, this really defies common sense, and the only reason why I believe it has become accept is because it has been repeated. The logic behind it is just irrational.

    The meddling Rudd has once again revealed his economic illiteracy by accusing supermarkets of predatory pricing. What is being asserted is that these companies will lower their prices until their competitors are driven out of business, at which point the supermarkets will charge monopoly prices for their goods. Yet those who make this charge are never able to provide evidence to support it — and that includes Rudd. And there's a good reason for that — there is no evidence.

    Everyone knows that when a company lowers the prices of its products demand will increase. If a company engages in predatory pricing then it will have to increase output to meet the additional demand. This means its costs of production will rise. The greater the demand, therefore, the great will be the company's additional costs. And the bigger the firm the greater will be its costs because of its larger investments in capital goods. In addition, as price is just one aspect of competition it would have to lower prices to a point that would overcome other competitive forces, adding even more to its losses. With respect to prices, it has been pointed out that there is no way to distinguish between a 'predatory' price and a competitive one. As one economist stated:

    . . .to attack as predation a policy that delivers goods to buyers at a low price may be to attack an honestly competitive price of a promotional sort. A policy to deprives buyers of the opportunity to purchase at lower prices today in the belief that protecting firms from the low prices of rivals today keeps more firms around "tomorrow", and that this assures buyers of lower prices to tomorrow, is wrongheaded. (Harold Demsetz, The Economics of the Business Firm, Cambridge University Press, 1997, p. 165).

    Another thing that is always overlooked is that any firm engaging in predatory prices endangers its other markets. It cannot raise prices in those markets to offset its price-cutting strategy because it would lose market share. Moreover, it might very well find that its lower prices will attract customers way from its other branches thereby raising even further the cost of its predatory-pricing strategy. This leads to the conclusion that localised price-cutting strategies are not sustainable.

    It's also argued that the "predatory" company uses its monopoly to builds up an arsenal of spare cash to fund its price-cutting war. But if the company is a "monopoly" then why does it need a predatory policy? Assuming that the company is big enough to accumulate large reserves then these reserves could only have come from profits. Meaning that if it is that efficient it has no need to engage in predatory pricing. In any case, this raises several points.

    As the company cannot know how long its competitors can hold out it cannot possibly know how long its reserves will last. (This uncertainty forms a serious obstacle to any policy of predatory pricing). As Demsetz explained:

    Pricing below cost to deter entry imposes great losses on the incumbent firm than on the would-be entrant, since the former loses much on its large market share while the latter loses practically. (Ibid. P. 165)

    Any company considering embarking on a course of price cutting knows that potential competitors need only wait for the company to raise its prices before they enter the market, which they can do at a discount by purchasing the bankrupted rivals' facilities*. This would put a severe damper on any temptation to raise prices above the level at which it had operated before implementing a predatory policy.

    Those who make allegations of "predatory" behaviour implicitly assume that once a firm becomes a huge concern its efficiency makes it invulnerable to competition. But if this is so, why does it need to be predatory? Every firm started small, and no firm — regardless of size — is immune to market forces. This is a fact that even recent economic history can attest to. One only has to think of IBM or David Jones, for instance, to see the truth of this. As Professor Coase pointed out, companies will continue to expand until the costs of doing so exceeds the benefits. Sabotaging this process will keep living standards lower than they would otherwise be.

    Supermarkets provide ample evidence of this fact: they introduced superior management and distribution techniques and technologies which cut costs and prices and offered an unprecedented and ever-growing range of goods and services, generating more employment (indirect as well as direct) and creating external economies from which we have all benefited.

    www.brookesnews.com/081509supermarkets.html
    I can recommend some more in depth articles and lectures, I tried to pick a shorter article as this is a long post, but this whole notion has been debunked unless it can be confirmed that business trying to attain monopoly has an unlimited amount of money and can suffer the loses. But again, even assuming that a natural monopoly could be attained, the moment its consumers were unsatisfied, competitors would pop up.

    Natural monopolies are fine but tend to be inefficient since managers and what not presumably realise they don't have to worry too much about profits since the government'll back them up.
    Government backing up a business is not at all a natural monopoly.

    In a monopoly the company can charge whatever ridiculous price they want because there is no competition. So monopoly is bad and is at no benefit to the consumer.
    Isn't it common sense to assume that competition will arise when a firm charges prices the customers are not willing to pay. Or are we living in the fictitious world?

    Barriers to entry
    If it is a natural monopoly, sure, nobody can compete because the business currently providing that product does it far too well. Surely not a negative. If the business is not providing such a service, then what barrier is there to entry? Customers are not satisfied with the monopoly and a new business is offering a better product. What are they going to choose?

    Sunk costs
    This is self affirming in that you for some reason assume nobody can compete. Assume otherwise.

    infrastructure
    That's a disadvantage as it has to be paid for and maintained. In a world of reality where competition is possible, the monopolistic power that loses ground would be a large disadvantage with all the infrastructure it owns in that as its share of the market shrink, the maintenance bill remains the same, forcing the monopoly to sell part of its infrastructure, or to make less of a profit.

    advertising
    Advertising isn't something you have exclusive access to. Do you mean brand recognition or something? Or industry ties?

    All government monopolies are run terribly when compared to private businesses. There are examples that could be cited, such as the rail roads the government made back in the day, or how some people who have challenged the post office have actually been able to make a profit which the post office has not. But I can't have a discussion with a reaction.

    that's a hilariously shortsighted and/or naive way of thinking

    having a monopoly doesn't necessarily mean you got there by being a good business. look at DeBeers or United Fruit for fuck's sake
    Yes, it is naive to think that people buy a product because they like it, and that they would refuse to purchase it if they didn't. I'm not sure what you're referencing, but I'm assuming it is something you assume has no value, and it's a rather bad point to make because as far as economics go, value is purely subjective.

    I don't think you understand how this works

    Although a lot of this isn't strictly a monopoly, this image is somewhat relevant:
    You aren't adding anything of value to this discussion.

  38. Post #38
    imasillypiggy's Avatar
    December 2009
    8,851 Posts
    People are terrible confused, the issue with government monopolies is the lack of a profit incentive.
    You understand that governments can give funding to different sectors of groups depending on how good they do so yes there is an incentive.

  39. Post #39
    Gold Member
    s0beit's Avatar
    August 2010
    2,628 Posts
    Barriers to entry.
    Strictly a government problem

    Sunk costs
    What? If you mean prices for cost are lower for a larger company, and that's reflected in their price and the new company can't make a cheaper product.... good?

    infrastructure, advertising etc
    People invest money to make money, this isn't really a barrier.

    a new ISP doesn't have any of these. How do you set up an ISP when the owner of the fibre cables is your competator and won't rent/sell them to you?
    You build them yourself or find a new way to deliver access, unless of course there's some barrier stoping you at the governmental level.

    A good example of a bad monopoly is Standard Oil http://en.wikipedia.org/wiki/Standard_Oil
    Price of Kerosene went down from 30 cents/barrel to 6, horrible people. They were also never a monopoly. The Supreme Court broke up the Standard Oil holding company not because of being an actual monopoly, that's on public record and their share of the market had declined greatly for some years prior, but because they intended to be a monopoly. Which is quite silly seeing as they never were one.

    Public monopolies are bad, did I fucking stutter?

    that's a hilariously shortsighted and/or naive way of thinking

    having a monopoly doesn't necessarily mean you got there by being a good business. look at DeBeers or United Fruit for fuck's sake
    DeBeers is a de facto government monopoly because South Africa, the major center of world diamond production, nationalized all of the diamond mines. Anyone who finds a diamond mine on his property discovers that the mine immediately becomes government property. The South African government then licenses mine operators who lease the mines from the government and, it so happened, that the only licensees turned out to be DeBeers itself.

    Then later, Wikipedia admits:
    In 2000, the De Beers model changed,[19] due to factors such as the decision by producers in Russia, Canada and Australia, to distribute diamonds outside of the De Beers channel, thus effectively ending the monopoly.[6][18]
    While governments and regulators the world over were being bought off, the market crushed the monopoly.

    I don't think I even need to talk about United Fruit, I mean, come on. You can't come up with a subject a little more intellectually challenging?

    I don't think you understand how this works

    Although a lot of this isn't strictly a monopoly, this image is somewhat relevant:

    I don't think you understand how this works, you're supposed to make a point. Your image is fucking stupid. If you think that image is a legitimate argument, I could say something like:

    You're using a computer built by the market
    You're using a keyboard built by the market
    You're using a mouse built by the market
    You're using facepunch which was created thanks to the market

    Therefore you must agree with me you simple rube!

    Get the fuck over yourself.

    Edited:

    You understand that governments can give funding to different sectors of groups depending on how good they do so yes there is an incentive.
    That isn't how government monopolies work, though. It depends what type of government monopoly you're talking about.

    I haven't seen any true nationalized monopoly get paid more because they've done good, or because they've produced anything of value in particular. It's all a political game playing on people's emotions and more often than not, sectors doing poorly are paid more. Look at Social Security, Education, Military.

    If you're talking about companies paid by the government, incentive is not all that matters. In fact this goes for both examples, what matters is a form of pricing. The price of the product produced is completely arbitrary, there's only one consumer. Waste is inevitable.

  40. Post #40
    imasillypiggy's Avatar
    December 2009
    8,851 Posts
    Look at Social Security,
    Actually social security is doing good with low abuse rates. Still sectors have to give results if they wish for funding meaning they still have to do good if they don't want that money going somewhere else.