Crony Capitalism vs Main Street Capitalism, Duopolies of Economics and the future of Yellow Pages Advertising.


Our American economy, politics, and consumer spending market have all become a duopoly.

A true duopoly is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market.

The most commonly cited duopoly is that between Visa and MasterCard, who between them control a large proportion of the electronic payment processing market. In 2000 they were the defendants in a US Department of Justice antitrust lawsuit.[1][2] An appeal was upheld in 2004.[3]

Examples where two companies control a large proportion of a market are:

What is most common in all these examples is the fear of competition by the capitalists at the top of these companies.  Regular Americans are not afraid of competition. Competition creates better jobs, better, economics, and better political policy. Competition creates innovation. Google is essentially afraid of it’s competition from Microsoft, Yahoo, and the next greatest internet fad or brand. It is what keeps Google on it’s toes and innovating.

What has contributed to making the above companies successful is creating a duopoly. Duopolies can be very profitable for category leaders. The only thing better for a large company is a monopoly. Take a moment and think of the yellow page advertising industry. For many years the local phone company was the only game in town for local advertisers to reach out to local consumers, essentially a monopoly. In 1984 the AT&T Telephone company was broken up. This essentially created healthy competition in an industry that really did not have competition. It was good for consumers since very few options existed at the time other than printed yellow page phone books, thus creating a duopoly.

Fast forward to the Telecom Act of 1996: It opened up competition and gave consumers more choice. Over the next few years  we saw an increased amount of competition among incumbant and CLEC phone companies in the yellow page advertising industry. No longer did the “phone companies” have a duopoly on the yellow page market. GTE Yellow Pages competed with Southwestern Bell Yellow Pages in the Dallas area market. Then all of a sudden we  saw a few independent phone books pop-up (mostly due to employees of the phone companies leaving and starting yellow page publishing companies with investors who saw the huge profit margins in yellow page advertising sales) over the next few years.

So what really happened to the yellow pages? The birth of the INTERNET. Google. Yahoo. MSN. etc., but most of all……” a huge change in the manner in which consumers find information.” Consider this, the internet has only been around for “Local Search” online since about 1999-2000, that is  just about four years post telecom deregulation.  I can tell you that from 2002-2009 the industry has done very little to compete with Google. While losing business to other forms of advertising media (such as Google and direct mail growth.)

The Yellow Page Duopoly in Media is Over

I witnessed the following questionable practices by executives of major yellow page publishers in order to create new revenues:

  • Dave Bethea at Idearc

and last but not least, what I witnessed first hand:

  • Sporting and Concert Tickets to friends and family vs Clients

Competition is good for all businesses (and in politics.) Competition creates innovation. Competition always offers a better value to consumers in the long run. Competition is bad for Crony Capitalists. Competition could have been good for the yellow pages, but since the Industry apparently disregards the feelings of its end-users by inundating homeowners with yellow page waste, It will eventually become a smaller factor in Local Search. Local search online will continue to outpace printed yellow pages. This is a FACT. The problem for Yellow Pages publishers is that they are not Google. They are not Yahoo. They are not MSN. They are FAR from innovative. They don’t ask the right questions. They do not care about the opinions of those that sale to clients. I was told this first hand.

I would love to conduct a poll among yellow page advertising sales reps about the usage of yellow pages. The company never asked for the information the entire time I was an employee? Why you ask? They don’t want me or 80% of the other 6,000 employees to let them know that we do not use the phone book. This is a fact. I have discussed this very subject with folks in the office while at Idearc Media in Dallas Tx.

Now there is the possibility that I am wrong. Considering that the Dallas-Fort Worth Metroplex has always been the #1 Market for Yellow Pages in the country, I have a feeling that I am correct on my opinions. After almost 10 years at Verizon/Idearc I have come to realize that my employers did not value my opinion or the opinion of sales. Chalk it up to crony capitalism!

Google is currently still a Monopoly in local Search

By the way, be sure to check out the national CMR agency TMP., the largest client for yellow pages companies in the country, on what is happening with phone book usage, advertising rates, and the true value of print yellow pages. You can follow them on Twitter at http://twitter.com/TMPDM. They are doing a great job of distributing “syndicated” research on the trends of Local Search Marketing. Don’t ever rely on the statistics from the industry. Don’t ever trust a “sales rep” who is not accountable for achieving your results.

So what is the real future?

Cheers,

Mike Stewart

POST SCRIPT:

Great video (very long…….) on Duopoly, Capitalism, and Politics…….

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4 Responses to Crony Capitalism vs Main Street Capitalism, Duopolies of Economics and the future of Yellow Pages Advertising.

  1. Joe says:

    What about like a Dex or Yellow Book?

    • What about them? John, I am not on a witch hunt as you said in your previous post. As I said before, I put 9 years (and 3 months) into the company. Are you drinking the kool-aid?

      Yellow Book and Dex are both good companies. So is Idearc, as well as AT&T. I don’t have problems with the companies, just the business model, sales tactics, crony executives, and overall direction the yellow page industry has taken.

      I still have many friends that earn a living in Yellow Page sales.

      The reason the company has no intention of discussing the value of the new Guarantee is because if you read the Ts & Cs you will find that the Guarantee is no more than lip service (or a poor attempt at copying another companies ideas ….. ***cough***Service Magic ***cough***)

      Cheers,
      Mike

      • Joe says:

        Always up for some kool-aid.

        Read your post and was just asking about the aforementioned duopolies. (Those are other major publishers of yellow pages)

        I didn’t suggest anything about witch hunts. Not sure about what post you are referring to and am thinking you have me confused with someone else.

        I do appreciate your reply though.

      • Well, as I state in my blog, I will keep your information private as I too was once an employee of Idearc and know about being suppressed and told not to discuss things related to the company and the industry. So let’s assume we drink the kool-aid for a second……

        Idearc (+ the Verizon Yellow Pages brand name) and AT&T Yellow Pages have a duopoly on the Metroplex. Now the independent publisher’s spoiled the party due to the fact that all Yellow Pages are essentially the same. Idearc responds later by trying to differentiate itself from the other publishers, all the while Google has a monopoly on search, as identified in the graphs above (yet some will say Duopoly if you include Yahoo & a MSN merger in the future.)

        What is the difference? Assuming what is true: most large metropolitan areas have a BELL and a GTE and other CLEC style phone service, it is apparent that the YP industry should have a Duopoly. The impact of Local Search on printed Yellow Pages was bound to happen. I just don’t believe in the kool-aid of the Yellow Page companies making the right choices to change this. After a successful 9 years and 3 months at GTE/VERIZON/IDEARC, I can state this for a fact: They are not making changes that will help Idearc Media pay the remaining debt going forward since print yellow pages sales is dropping at an astounding rate. They didn’t deserve the debt. I blame that on Ivan at Verizon.

        Google = Monopoly $$$$$$$$$$$$$$ (might become duopoly) $$$$$
        RH Donnelly/Ma’ Bell of old = Monopoly $$$$$$$$
        GTE / SW Bell Yellow Pages or Bell Atlantic Yellow Pages = former duopoly ($$$$)

        the future of yellow pages:
        Idearc = new competition with no positive foreseeable future $

        The difference to advertisers:
        Transparency in Pricing
        Pay for what you get
        Deceptive practices end
        Saturation distribution ends
        Dishonest sales ends
        Crony Executives end
        Small business owners benefit

        I see it as a win win if you are me and the many others who are educating themselves on search marketing beyond Idearc Media’s “rate card” and limited product offering. But hey….. I did have the meeting scheduled to suggest a few ideas on the business plan. Glad I missed it. Meanwhile the guy I was going to meet with, Dave Bethea, is busy hiring his next door neighbor to displace folks he doesn’t like at Idearc. Good thing he wasn’t the reason I left the company. I am sure I would have had my head cut off and been the one left without a job.

        The former vice president of sales- GONE, the former RVP of Texas Sales- GONE, my former District Manager- GONE, a multitude of co-workers (including one being fired for his hair being too long — where is a union when you actually do need one?? — yet some state it was because he was a good friend of said RVP) and then the week before I left the company a manager who had been with the company for a long time. How does Idearc go about the process of determining who is let go? Pretty simple…. .Out with the old and in with the new. Just make sure you happen to be on the good side of the company executives……. might help to be a drinker as it is a social atmosphere at the DFW company headquarters!

        Wonder when the next executive trip is? If a rep has to swindle his clients into advertising that doesn’t work in order to help an Executive who is making a negative impact on sales (SUPERVIEW… ask your rep about it folks) take a nice trip to Cancun or the Bahamas…. Shouldn’t the Executive be responsible for the company stock? Was Idearc completely honest about sales and credit during the hyper-inflated days post Birth in 2007?

        If you want to have a discussion…. let’s have one.

        Unless someone convinces me otherwise, this is how I see things. I welcome the discussion and offer complete confidentiality.

        Mike

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