Our American economy, politics, and consumer spending market have all become a duopoly.
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. An appeal was upheld in 2004.
Examples where two companies control a large proportion of a market are:
- Moody’s vs S&P in Ratings market
- Pepsi vs Coca-Cola in soft drink market
- Gillette vs Wilkinson Sword/Schick in razor blade market
- Airbus vs Boeing in commercial large jet aircraft market
- Marvel Comics vs DC Comics in comic books
- Intel vs AMD in the consumer desktop computer microprocessor market
- The local cable company vs the local telephone company in residential broadband Internet access
- Analogue mobile phone service (1983-2008) assigned bandwidth for just two carriers (A/B); in much of North America these effectively were “Alternate” and “Bell” (or the incumbent regional telephone landline monopoly in the area).
- The Home Depot vs Lowes in the American retail home improvement market.
- Kodak vs Fujifilm in motion picture film stock market
- Kodak vs Fujifilm in the color 135 film market
- K-Kauppa vs S-Group in the Finnish supermarket market (jointly they control 75% of supermarket market)
- Foodstuffs vs Progressive Enterprises in the New Zealand supermarket market (jointly they control 90% of supermarket market)
- Woolworths and Coles in the Australian supermarket market (share 79% of the supermarket market)
- Nvidia vs the ATI subsidiary of Advanced Micro Devices in the mainstream graphics card market.
- LexisNexis vs Westlaw in legal research; the two companies together have been jokingly referred to as Wexis
- Dish Network vs DirecTV in the U.S. satellite provider market.
- Televisa vs TV Azteca in the Mexican Multimedia market. (jointly they control 95% of the multimedia market)
- FedEx vs UPS in the express small package delivery industry.
- MillerCoors vs. Anheuser-Busch in the United States Domestic beer market.
- Canon vs Nikon in high end imaging optics, film and digital cameras (especially in DSLRs)
- Kleenex and Puffs in facial tissues.
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:
- Accounting Control Fraud (revenue reporting)
- Sales Fraud
- Collections without Customer Service
- Complaints Ignored
- CEO Pay Increases while company profits significantly decreased
- Lavish lifestyles (Tickets to sporting events, concerts, private planes, company purchased homes, relocation packages, lavish offices etc)
- Credit manipulation
- Lack of Innovation
- Lack of Strategy
- Scams about pay per click costs due to lack of disclosure by sales
- Fear of competition
- Hiring investment “trading” friends and neighbors of Executives from Yellow Book (he edited the link with his employment details folks!)
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?
Great video (very long…….) on Duopoly, Capitalism, and Politics…….