The Rigged Retail Playing Field

Take a look at the chart of America’s monopolies and it is not difficult to understand the the issues facing local businesses – the playing field is rigged.

Emily Stewart writes, “From cellphone providers to beer to cat food, consumers have a lot fewer choices when it comes to buying — even if they don’t know it.” Emily Stewart and America’s monopolies

Stewart shows that the big companies have gotten bigger over the past fifteen years.

In the capitalist system that is what they are supposed to do.  However, local businesses have failed to see, no less understand, the threat the growing monopolies pose to their survival and success.There are 28 million local businesses in America.  The 2019 Department of Labor Statistics confirms what everyone instinctively already knows – local businesses are under threat.  The cause is clear – shoppers have shifted their buying to online and local businesses have not responded.  Amazon has 50% of e-commerce and grows stronger daily.  Jeff Bezos, the founder of Amazon, ominously warned all local businesses, “Your margin is my opportunity.” Retail Business Failures

The bigger companies become the tighter control they place on wages, working conditions, and advancement.  Small local businesses NEED employees and focus on increased wages and advancement in order to grow their businesses.

The financial advantage goes to the bigger company.  The problem is then reflected in weak personal income growth because entrepreneurs are being pushed out of the game. The New Times review of the impact of monopolies

Stewart writes, “In more traditional sectors, such as hardware stores, tobacco, and railroads, concentration is on the rise. And in technology-related fields, including smartphones, social media, and cellphones, in just in the past five or so years, it’s even higher.”

Think of monopolies as movie studios that buy up scripts to keep them off the market.  The bigger a company becomes the more it needs to grow.  Growth comes from gobbling up competitors.

The #1 fact about monopolies is that as they take dominance in market share they use that power to drive up prices.The New York Times and how monopolies drive up prices.  Competitors drive down prices because their battle ground is efficiency and innovation.  Monopolies drive up prices because there is no battleground.  Steward writes, “The fewer options there are, the fewer places consumers have to shop for goods and services, and the less pressure for competitors to keep prices down.”

The big three monopolies are Amazon, Google and Facebook.

Let’s focus on Amazon which is earning an estimated $187 billion per year.   Jeff Bezos is brilliant and his team the best.  These top of the food chain capitalists have rigged the game. Amazon is smart and their focus is growing market share at the expense of every other business in the world.

Amazon’s retail strategy is to enter a business and use its technology and processes to make selling and delivery of products better, faster, and cheaper – AT FIRST.  Amazon uses lower prices to drive out competitors .  Once Amazon has market dominance it increases prices. This behavior is what monopolies do.

Consumers don’t care about monopolies and their impact on local businesses but they should.  Monopolies take money out of local communities.Money Stays in LocalThey have been convinced that convenience is important than choice.  A belief that will come back to haunt them as local communities become ghost towns where stacks of Amazon boxes on front porches.  Keep in mind that local communities need revenue to support schools, infrastructure, parks, trash pick, and all the other things that make local communities thrive and a place to live.

FACT: Amazon and the other monopolies take the financial lifeblood away from local communities.

How Amazon is destroying media companies

Amazon is destroying media companies.  The destruction goes from the biggest television companies, movie companies to the local newspaper in tiny communities.

How and why are they doing it?

The Amazon Battle Plan for destroying media companies:

1. Cut off their revenue streams

2. Use its 105 million list of Prime Members to offer advertisers better response rates

3.  Give advertisers access to the 55% of all online shopping searches that begin on Amazon.com

4. Sell products like Alexa, smart homes, and security system at incredibly Low Prices in order to take control over the future of shopping – i.e. voice-based search and AI driven “suggestions” for home and entertainment

Amazon can afford to invest in destroying media companies because it is the most successful company in the world, run by Jeff Bezos, the richest person in the world.  We all know Amazon as the online e-commerce site that controls over 50% of everything that is bought and sold online.  It may seem a bit like a “tinfoil hat” conspiracy to think about Amazon as the big bad media company.

Why would Amazon want to destroy media companies? 

Amazon’s Hidden Strategy:  Amazon wants to destroy media companies because it has a hidden strategy a to become the largest global media/commenications company.

Guess what?  It already is.  Amazon is the world’s biggest communication’s company:  “Amazon has movies, TV stations, cable streaming, music, and direct communication with over 105 US households and will soon bypass ALL of cable television.  Not one cable channel but ALL of them together. Staggering concept.   But wait!  They also own the Washington Post and they just bought MSG Cable Network.”

Amazon isn’t some big bad company that is taking over media through deception or fraud – Amazon is taking media and communications because its executive leadership is smarter than the executives running most media companies.  The major exception would be Disney, whose leadership is outstanding.

What makes Amazon’s executives so smart is they are focused on reality and facts.  When Bezos runs a meeting everyone is handed a 3-6 page type analysis of the problem to be discussed.

Everything STOPS.  Everyone in the meeting spends the next 30 minutes reading.  The meeting is then run with everyone, literally and figuratively, on the same page.  Most media companies aren’t run that way.

Fox Business News reports that Amazon has become so powerful it is “Stealing Market Share From Facebook and Google and is a threat to all traditional media companies.”  Fox News continues, It wasn’t that long ago that all the talk in the digital advertising market was centered on the duopoly of Facebook (NASDAQ: FB) and Google, a division of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).  In late 2017, Digital Content Next reported the pair would account for about 63% of online advertising in the U.S. last year, with Google nabbing 42% and Facebook garnering 21%. Even more telling, Brian Wieser of Pivotal Research Group estimated that the two companies accounted for 90% of the growth in the U.S. digital ads industry in 2017.”

So here is how those focused Amazon executives are destroying media companies – they RECOGNIZE and RESPOND in REAL-TIME to TRENDS & FACTS.

Before we detail out how Amazon is destroying media and communications companies it is important to look at its PRIMARY ADVANTAGE.  Amazon uses its e-commerce division to attract shoppers.

  • Amazon has over 105 million Prime Members105 million Prime Members, 55% of all product searches, and its growing grocery and fast food stores to offer shoppers AMAZING DEALS.  Amazon doesn’t care about losing money – they want to grow their LIST of shoppers.
  • Shoppers have changed.  Instead of looking at ads, 90% of shoppers begin the buying process by using their smart phones to search.  Guess what, 55% of all product searches begin on Amazon.
  • Data. Amazon has better data than Google, Facebook, and ALL other media and communications companies. Googgle and Facebook’s data is about views and clicks – Amazon’s data is about PURCHASE.  Advertisers want to know about who’s buying what.  Local and national media companies don’t have the data.
  • Voice-Based Search.  Amazon, with its 35 million Alexa voice assistants, already controls this communications channel.  Amazon is so far ahead of the voice trend in terms of advertising revenues that media companies don’t stand a chance.
  • Smart Home.  From speakers to thermostats Amazon is communicating with consumers.  Advertisers want targeted ads – Amazon is so targeted they know what music you listen to, how cool you keep your home, and when you are home.
  • Cloud computing.   Amazon is streaming EVERYTHING – music, movies, books, and podcasts. Ditto on Better Data.

THE CONSEQUENCES OF AMAZON DESTROYING MEDIA COMPANIES:

As more media companies go out of business because of Amazon – Amazon gains greater control of what news Americans receive.  With or without political bias, Amazon will homogenize the news.  American democracy is based on many different points of view.  If Amazon wins – there will be the Amazon point of view.

Internet Trends & Analysis

Each year Mary Meeker reports on Internet Trends and often predicts what can be expected in the coming years.  This year is no exception.

1. U.S. adults spent 5.9 hours per day on digital media in 2017, up from 5.6 hours the year before. Some 3.3 of those hours were spent on mobile.

ANALYSIS: The more time people spend online the more power the tech giants gain. Recent articles (The Tech Giants Covert Actions) show the main focus of the tech giants is 24/7 surveillance, censorship, and manipulation. The tech giants engage in these three things to drive revenues. They want to know everything people in order to sell targeted advertising. They censor companies and ideas because they seek to promote products, businesses and ideas that support their global revenue agendas. They manipulate in order convince shoppers to spend more time and money on the products they promote and to view the advertisers who pay them to appear on their platforms.

2. Voice-controlled products like Amazon Echo are taking off. The Echo’s installed base in the U.S. grew from 20 million in the third quarter of 2017 to more than 30 million in the fourth quarter.

ANALYSIS: Voice-controlled products all share one common feature – they limited their response to queries to those companies that are paying the most to the tech giant offering them. Voice-controlled products are NOT benign. The tech giants goal is to make people more passive and therefore susceptible to their surveillance, censorship, and manipulation

3. Tech companies are becoming a larger part of U.S. business. In April, they accounted for 25 percent of U.S. market capitalization. They are also responsible for a growing share of corporate R&D and capital spending.

ANALYSIS: The tech giants are already monopolies. Like all monopolies they cannot help but want to grow.

4. E-commerce sales growth is continuing to accelerate. It grew 16 percent in the U.S. in 2017, up from 14 percent in 2016. Amazon is taking a bigger share of those sales at 28 percent last year. Conversely, physical retail sales are continuing to decline.

ANALYSIS: Just think of the growth of online sales as a loss of local business sales. Ditto for Amazon’s share.

5. Big tech is competing on more fronts. Google is expanding from an ads platform to a commerce platform via Google Home Ordering. Amazon is moving into advertising.

ANALYSIS: Refer to the innate philosophy of all monopolies. These five points are interwoven. The bigger tech giants become the more capital they have to expand into new services and products which leads to people spending more time online. The more they expand the greater their surveillance, censorship, and manipulation. The cherry on top is voice-controlled products whose sole function is to support the revenue goals of the tech giants selling them.

 

Google and Facebook will destroy local media

Google and Facebook are in the process of destroying local media. Local media has accelerated its own demise with fifteen years of failed leadership, and failure to recognize the need for radical change. Leadership would stop competing and aligning with Google and Facebook.  Instead, they would counter attack by leverage the power of local.

In an April 27th, 2017 report Business Insider details that Google and Facebook captured a combined 77% of digital advertising in 2016, an increase from 72% in 2015.  The New York Times reports that  Google & Facebook control digital advertising and they accounted for an astounding 99% of revenue growth from digital advertising in 2016 US.

It is essential to understand the dire nature of this media duopoly of digital advertising by Google and Facebook.  First and foremost these two companies have brilliantly positioned themselves to take advantage of consumer trends and most importantly the shift to mobile.

Ineffective ads:  Readers, watchers and listeners block out the endless stream of blah, blah, blah advertisements.  Secondly, eWeek’s analysis suggests that a minimum of 30% of all digital ads are fraudulent.  The amount of money lost to fraudulent traffic surpasses $5 Billion or one-third of the total $14.6 Billion in ad spend.

Real-Time Daily’s article, “Viewability + Fraud = You’re Wasting A Lot Of Money”, argues ad fraud via bots combined with viewability the fraud is catastrophic.  The article reports that less than 50% of digital ads are even seen.

Low response rates, fraud & viewability are toxic for logical media and hint that Google and Facebook are fully aware they are charging advertisers money in a less than honest manner.

Google and Facebook have control over the revenue streams of local media companies and the industry rife with fraud and waste.  And yet, local media’s survival has less to do Google and Facebook than the self-inflicted damage found in the cultures, systems, management, and leadership of local media companies.  They are trapped in a spiral of failure, not only by their traditional way of doing business but more importantly by a failure to deliver results.  Advertising as it is currently delivered does not work.  Most importantly it does not work for the six million local businesses.

There are real solutions and new revenue streams to be found if local media companies would learn to partner with innovative companies and to recognize they are their own worst enemies.

 

 

 

The Google monopoly will destroy Local Media


Ryan Cooper of The Week states it clearly Google is dangerous monopoly, “Google is a monopoly — and it’s crushing the internet.”  Cooper supports what I have been pointing out for the past two years.   The publication, Editor and Publisher, warns that it is  Time for publishers to wake up.   Even the staid New York Times reports that Google and Facebooks control digital advertising is destroying local media.  At the time of the article their share was 85% it has now grown to 92% of all digital advertising.  Google is destroying local media by capturing its revenue base.  It is NOT going to get better unless local media is willing to fight back in unconventional ways.

Monopolies are great companies that become so large that they become predatory.  Google is just that – a predatory monopoly.

Where I differ from other thinkers is where to point the blame.  Google is destroying the revenue base of local media companies.  In this Google is wrong but logical.  It is the actions of local media companies that is illogical.  They have tried appeasement with Google.  They have failed to optimize their advantages of local and responsive.  They refuse to address the absolutely ineffective results they deliver to advertisers.

Their failures are best summarized by a failure of leadership.  Leaders see reality and take decisive action. Sammy Papert, an enlightened expert on all things media, wrote in this month’s Wormhole about this failure of leadership.

Three Papert quotes from his leadership article:
1.     “And, let’s be 100% clear – there’s often a huge chasm between someone who is higher up in the organizational structure and a leader!”
2.     “There’s a frightful dearth of leadership and it’s worrisome.”
3.     “In my experience, about 50% of bosses aren’t in the right role.  HALF!”

The consequences of the failure of leadership is the continued downward spiral of local media.  The unintended consequences of this failure is a direct threat to democracy and free speech.  Most people have no idea how the globalist at Google distort the news and search results all with minor tweaks to algorithms.