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Etsy sellers are furious over new mandatory ad fees

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Re: Etsy sellers are furious over new mandatory ad fees

#141

Post by QuesnayJr »

barry-cotter wrote: post #108
QuesnayJr wrote: post #98

Earlier quoted context omitted.

It's not crazy. Being "a market" for a certain good is a natural monopoly -- there are economies of scale so that one market will inevitably drive out the others. I don't know if Etsy has reached that point, but it could someday.

There’s extremely limited evidence that natural monopolies even exist. The economic definition is when the efficient number of sellers in a market is one. That may be the case for airframes, see the endless subsidies for Boeing and Airbus to avoid that happening. But even a market like microchips where a fab costs tens of billions of dollars supports multiple sellers.

Etsy is an example of a two-sided market (https://en.wikipedia.org/wiki/Two-sided_market) which can be natural monopolies.

Re: Etsy sellers are furious over new mandatory ad fees

#142

Post by AdrianB1 »

skinnymuch wrote: post #122
sneak wrote: post #94

Earlier quoted context omitted.

> I'm one of those sellers who is being forced into Etsy's new ad program. How are you being forced?

They mean forced if they want to continue using Etsy, right? Or did I misunderstand the intent of your comment.

That means there is choice, which does not qualify as "forced".

Re: Etsy sellers are furious over new mandatory ad fees

#143

Post by ryan_j_naughton »

QuesnayJr wrote: post #141
barry-cotter wrote: post #108

Earlier quoted context omitted.

There’s extremely limited evidence that natural monopolies even exist. The economic definition is when the efficient number of sellers in a market is one. That may be the case for airframes, see the endless subsidies for Boeing and Airbus to avoid that happening. But even a market like microchips where a fab costs tens of billions of dollars supports multiple sellers.

Etsy is an example of a two-sided market ( https://en.wikipedia.org/wiki/Two-sided_market ) which can be natural monopolies.

Most of the time when two sided markets gain market power through a dominant position, they still aren't a monopoly. They are an oligopoly employing game theoric positions that are worse than perfect competition but far from a natural monopoly.

For example, even with Amazon there is Target and Walmart selling online and doing much more similar delivery times these days.

The network effect of a two sided market definitely is a barrier to entry, but there is so much capital out there that other large firms or firms with access to insane amounts of capital will also build a 2 sided market and create a network effect. It's why there is Shopify, eBay, Etsy, etc. All more like an oligopoly than a monopoly.

In contrast, true natural monopolies need barriers to entry that are so high that it just doesn't make sense or isn't even possible for another company to do it even if they have insane capital. The electricity grid prior to "deregulation" and the forcing of a more competitive market was a prime example and the grid being governed/run by an independent service operator.

Re: Etsy sellers are furious over new mandatory ad fees

#144

Post by sithlord »

chx wrote: post #35

Huh! > If you’ve made more than 10,000 USD (approximately 7,800 GBP) in sales on Etsy in a 12-month period you’ll benefit most from offsite advertising. So, you’ll be required to participate for the lifetime of your shop and you’ll get a discounted advertising fee. If you make a living off your Etsy shop then surely you will have more than 10K sales a year. Even if not in the USA, I am originally from Hungary and the…

I would hazard a guess that 90%+ etsy sellers are hobbiest getting nowhere close to 10k/year

Re: Etsy sellers are furious over new mandatory ad fees

#145

Post by geofft »

csomar wrote: post #91
MicahKV wrote: post #43

I'm one of those sellers who is being forced into Etsy's new ad program. It is frustrating and obnoxious, but I can't say it is surprising given the policy changes they've been rolling out the past few months. It seems to me that online marketplaces like Etsy find their early success by bringing buyers and sellers together and just letting them do their thing, but as the marketplace becomes more established it's rela…

> I feel like we need some form of regulation That's crazy. Etsy is not the market, it is a market. If you don't like it, you move somewhere else. We already have too much regulation that for some fields it's impossible to start a business without jumping through many hoops. Last thing we need is to start regulating on a per-business basis. This is really a case of giving up your store brand/independence for convenie…

Here's an alternative to regulation: use some of the tax money gained from Etsy and other companies to subsidize the creation of a competitor. One of the known inefficiencies in the free market is how long it takes to set up a viable competitor and how expensive it is, so if the government puts its finger on the scale here, you get closer to the ideals behind the free market.

Re: Etsy sellers are furious over new mandatory ad fees

#146

Post by mcv »

Fnoord wrote: post #105
csomar wrote: post #91

Earlier quoted context omitted.

> I feel like we need some form of regulation That's crazy. Etsy is not the market, it is a market. If you don't like it, you move somewhere else. We already have too much regulation that for some fields it's impossible to start a business without jumping through many hoops. Last thing we need is to start regulating on a per-business basis. This is really a case of giving up your store brand/independence for convenie…

> That's crazy. Etsy is not the market, it is a market. If you don't like it, you move somewhere else. Easier said than done due to network effect. That's what they went for. Its also how Amazon and Facebook got so big. Heck, its even why Microsoft Windows got big. Become the cheapest, get volume, then abuse your market domination.

And we keep subjecting ourselves to that.

It seems to me that the most logical response is for merchants on Etsy to get together and launch their own platform, collectively owned by the merchants. It puts them in control and not at the mercy of some company wielding power over them, while they keep the advantage of having a single platform with a lot of merchants.

In fact, I've also been thinking taxi drivers should do something like that to fight back against Uber. Cut out these artificial middlemen and deal directly with your customer through collective tools that give you the same advantage as the big companies.

Re: Etsy sellers are furious over new mandatory ad fees

#147

Post by Fnoord »

mcv wrote: post #146
Fnoord wrote: post #105

Earlier quoted context omitted.

> That's crazy. Etsy is not the market, it is a market. If you don't like it, you move somewhere else. Easier said than done due to network effect. That's what they went for. Its also how Amazon and Facebook got so big. Heck, its even why Microsoft Windows got big. Become the cheapest, get volume, then abuse your market domination.

And we keep subjecting ourselves to that. It seems to me that the most logical response is for merchants on Etsy to get together and launch their own platform, collectively owned by the merchants. It puts them in control and not at the mercy of some company wielding power over them, while they keep the advantage of having a single platform with a lot of merchants. In fact, I've also been thinking taxi drivers should…

Cutting out middlemen is what the Internet has allowed in multiple ways. Its one of the reasons brick and mortar stores are in decline. Yet we also see an increase in middlemen, in the form of dropshipping.

We're also subjecting ourselves to scammers on market platforms and "crowdfunding". I fell for one on Kickstarter, which is also available on IndieGoGo. IndieGoGo acted (by disabling it), Kickstarter has not. In fact, Kickstarter remove any personal information shared by backers about the scammers. Who's side are they on, I wonder? Not the backer's side, it seems.

I assumed these middlemen platforms (Etsy, Kickstarter, etc) are there to please both parties equally. I suppose the keyword in both these stories is service. If they don't provide good enough service, people will eventually work against the network effect to create something better.

Re: Etsy sellers are furious over new mandatory ad fees

#148

Post by barry-cotter »

pintxo wrote: post #139
barry-cotter wrote: post #108

Earlier quoted context omitted.

There’s extremely limited evidence that natural monopolies even exist. The economic definition is when the efficient number of sellers in a market is one. That may be the case for airframes, see the endless subsidies for Boeing and Airbus to avoid that happening. But even a market like microchips where a fab costs tens of billions of dollars supports multiple sellers.

Extremely limited evidence? How about water or electricity grids? Railroads? (City) Streets?

There are examples of enduring competition of all of those bar city streets within a single city, never mind nationally. Even streets aren’t a natural monopoly. If they were you wouldn’t have patchwork metro areas divided up between different municipalities. The benefits of consolidated ownership would be so great that the Bay area would have unified like New York’s boroughs did to form the city of New York. Private towns and streets work fine. For very large examples see Davis in California or Gurgaon in India. The below quoted text is about utilities like water or electricity grids. The US does not have one freight railroad operator even now. If rail was a natural monopoly that would be unavoidable. NYC’s subway system was built by five or six companies. Local monopolies occur in lots of places but they can’t charge profit maximizing prices because of the threat of entry from other firms. The powerlessness of that threat is a necessary part of the definition of natural monopoly. If it doesn’t hold; if the threat of potential entrance of competitors holds down prices you don’t have a natural monopoly.

> The Myth of Natural Monopoly

> In his 1986 book, Direct Utility Competition: The Natural Monopoly Myth, he concludes that in those cities where there is direct competition in the electric utility industries:

> Direct rivalry between two competing firms has existed for very long periods of time — for over 80 years in some cities; The rival electric utilities compete vigorously through prices and services; Customers have gained substantial benefits from the competition, compared to cities were there are electric utility monopolies; Contrary to natural-monopoly theory, costs are actually lower where there are two firms operating; Contrary to natural-monopoly theory, there is no more excess capacity under competition than under monopoly in the electric utility industry; The theory of natural monopoly fails on every count: competition exists, price wars are not "serious," there is better consumer service and lower prices with competition, competition persists for very long periods of time, and consumers themselves prefer competition to regulated monopoly; and Any consumer satisfaction problems caused by dual power lines are considered by consumers to be less significant than the benefits from competition.

https://mises.org/library/myth-natural-monopoly

Re: Etsy sellers are furious over new mandatory ad fees

#149

Post by barry-cotter »

ryan_j_naughton wrote: post #143
QuesnayJr wrote: post #141

Earlier quoted context omitted.

Etsy is an example of a two-sided market ( https://en.wikipedia.org/wiki/Two-sided_market ) which can be natural monopolies.

Most of the time when two sided markets gain market power through a dominant position, they still aren't a monopoly. They are an oligopoly employing game theoric positions that are worse than perfect competition but far from a natural monopoly. For example, even with Amazon there is Target and Walmart selling online and doing much more similar delivery times these days. The network effect of a two sided market defini…

Exactly! If the threat of competition holds prices below the profit maximizing levels for a monopolist you may have a local monopoly but it’s not a natural monopoly.

Re: Etsy sellers are furious over new mandatory ad fees

#150

Post by SllX »

MicahKV wrote: post #97
csomar wrote: post #91

Earlier quoted context omitted.

> I feel like we need some form of regulation That's crazy. Etsy is not the market, it is a market. If you don't like it, you move somewhere else. We already have too much regulation that for some fields it's impossible to start a business without jumping through many hoops. Last thing we need is to start regulating on a per-business basis. This is really a case of giving up your store brand/independence for convenie…

> If you don't like it, you move somewhere else. Yes, and if you don't like existing regulations you can just move to another country with different laws. No big deal, right? I do operate my own site in addition to selling on multiple marketplaces, but even with my efforts to diversify I am dependent, in part, on the sales I get from Etsy. I would be in a lot of financial pain if I lost that revenue stream, so "just…

Whenever you think about creating a new “regulation”, by which I assume you mean a new law, try to think of what the phrasing for that law would be and then think about the enforcement mechanism, the implications of the law as written, and the possible, even probable complications from the enforcement mechanism.

If you come up with something that isn’t going to unfairly penalize startups and small businesses, you might even have something there, but if you find the exercise difficult, there’s a decent chance all of Congress or your State’s legislature or your country’s Parliament and all of their aides are also going to have trouble coming up with a well written law, let alone one that will survive the political process, and the most likely result is something that entrenches existing businesses, ultimately reducing your possible future choices. Actually the most likely result is a law not even passing, and if it does, getting distorted along the way into something that will likely reduce your possible future choices.

It’s not that lawmakers should never pass laws, a new law should be judicious and necessary, something that can’t be handled by the Courts from the existing body of law, and something that ought to be handled by law rather than some other civic institution. There’s a lot of ideas for laws out there that doesn’t meet any of this criteria, but we still hold onto this idea that “regulations” are magic and will almost always have their intended effects rather than almost never.

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