The Creative Monopoly • Hacker News Board

Re: The Creative Monopoly

#21

Post by HSO » Thu, Apr 26, 2012, 9:31 AM UTC

Wired's fake McLuhan interview from many moons ago:

What's your take on media juggernauts like Microsoft? Should it be allowed to stranglehold electronic media?

We fear that the owners of the monopoly will crush us, but this never happens. In a flash, the monopolist's products appear out of date, and competition in that particular industry becomes irrelevant because the whole basis of moneymaking has shifted to a new area. As the pace of technological change speeds up, shifts in economic power increasingly seem like magical flipflops produced by luck. The old logic of monopoly - centralized stranglehold - no longer works. The attention of consumers can shift instantly and make the most profound investments obsolete in just a few years, soon to be sped up even further. We will see economic empires crash within hours, and new ones arise just as quickly. _The task of the economic manager now is to try to hold monopolies in place just long enough for economic transactions to occur._ The capitalist understands that to improve competition, he must encourage monopolies.

  http://www.wired.com/wired/archive/4.01/channeling_pr.html

Re: The Creative Monopoly

#22

Post by meric » Thu, Apr 26, 2012, 11:57 AM UTC

derekorgan wrote: post #3

knowtheory wrote: post #2

What an awful way to phrase a simple concept. Rather than compete in someone else's market, create your own market. Manufacture, or identify a need that has not been met, and, having been first mover, use that to build an insurmountable lead over any possible competitors. Whether it's mint toothpaste, or portable digital music players, this has been done for generations. "Creative Monopoly" is a bizarre term for it.

I agree it is a strange term. I do think however the article is well written and quite insightful based of course on Peter Thiel's ideas. Inovation always wins, those that focus on just competing will lose. A country has to foster inovation. the countries that innovate in education could be the big winners. To be fare to the US, some of there big colleges do that, but it does seem at the grass roots of the system it…

Product differentiation is in every first year university marketing textbook. As much as those textbooks try to use as many words as possible to describe a simple concept, their description of product differentiation is likely to be much shorter than the one in this article.

MBA's might not be good hires in a $100,000 startup, but they know more than we think.

Re: The Creative Monopoly

#23

Post by meric » Thu, Apr 26, 2012, 12:05 PM UTC

robatsu wrote: post #6

Years ago, I worked briefly for The Southern Company, which is the largest publicly held electric utility in the U.S (Georgia Power, Alabama Power, and a bunch of other ones). While there was certainly a lot of expertise in electric generation and transmission there, it rapidly became apparent to me that their true core competency was maintaining and exploiting their legal monopoly. It wasn't a pretty sight.

Sometimes governments resort to measures like legal monopolies to ensure infrastructure gets built.

Imagine a cash-strapped government 50 years ago in an undeveloped country wanting to build electricity infrastructure. The country's economic growth is stagnating because of a lack of infrastructure and there are few foreign investments because the country's economic growth is stagnating. If a foreign company DID choose to invest in electricity, and the investment was profitable, other foreign companies will jump in to compete; but if the investment was unprofitable, the company would just have lost a large chunk of cash. Therefore it was always more profitable to simply wait for another company to make the investment, and then see if electricity will be a profitable business in the country before making investment itself.

These catch-22's mean the government has little choice but to allow the first foreign company a local monopoly, at least for a limited time.

I'm just theorising all this out of thin air, though.

Re: The Creative Monopoly

#24

Post by hxa7241 » Thu, Apr 26, 2012, 12:45 PM UTC

This is bizarre. Not for wrongness -- but because it is baffling that what is right about it should not be obvious and taken for granted.

Business is always, and has always been, about avoiding competition. One can start by recalling Adam Smith's comment on any gathering of industrialists inevitably leading to conspiracy against the public. Then simply look at what any business does or tries to do, legal or otherwise -- what is a patent, for example?

Competition between business is supposed to be good for the public, not the competitors themselves -- hence business always wanting to avoid it. Competition is, broadly, destructive. It is only worth it because of other effects (spurring effort, creativity), and when it is limited and substantially supported by other cooperative systems.

Re: The Creative Monopoly

#25

Post by robatsu » Fri, Apr 27, 2012, 2:16 AM UTC

meric wrote: post #23

robatsu wrote: post #6

Years ago, I worked briefly for The Southern Company, which is the largest publicly held electric utility in the U.S (Georgia Power, Alabama Power, and a bunch of other ones). While there was certainly a lot of expertise in electric generation and transmission there, it rapidly became apparent to me that their true core competency was maintaining and exploiting their legal monopoly. It wasn't a pretty sight.

Sometimes governments resort to measures like legal monopolies to ensure infrastructure gets built. Imagine a cash-strapped government 50 years ago in an undeveloped country wanting to build electricity infrastructure. The country's economic growth is stagnating because of a lack of infrastructure and there are few foreign investments because the country's economic growth is stagnating. If a foreign company DID choos…

In the U.S., this legal electric company monopolies were more or less granted w/the proviso of providing universal access, sort of the same goal.

The past 20 years, the electric companies are trying to wiggling out from under this, turns out they really don't want to sell electricity to residential users, in a lot of cases their big customers are subsidizing residential users. That is why, despite the hype to the contrary, residential electric rates usually go up under deregulation.

The typical electric company strategy the past 20 years is to try "surrender" their monopoly in unprofitable areas w/a lot of happy talk about competition/choice/consumer benefits and attempt to keep their monopoly in the profitable areas (wholesale transmission, generation/cogeneration for large consumers).