Thought experiment (I don't actually want to go down this road): can you out-market Amazon in this scenario? If you have a $400 committed spend for a $500 rent discount, can you find people who would buy things from Amazon anyway and offer to make purchases on their behalf at a 1% discount (which is, on paper, obviously rational for them), such that you're now getting back $396 of the $400? Now you're spending a mere $4 for the $500 rent discount.
And in turn, why would market rent for your area be N instead of N-$500 (or N plus discount matching), if that discount is generally available? If everyone gets the $500 Amazon discount, then everybody has the switching cost problem, and so landlords would want to match what the market is actually willing to pay, not what it looks like they're paying on paper. This is basically the same scenario as early termination fees - when cell phone companies decided to increase the switching cost, other cell phone companies said they'd eat that increase in switching cost just to unlock locked-in customers that they couldn't reach.
And ultimately all of these mechanisms are annoying and fiddly mental overhead, but could purchasers band together and join an organization that negotiates on their behalf, organizes boycotts, etc. for a relatively small fee?
A more wild and outlandish thought experiment: would you become infinitely indebted for infinite reward? Imagining some cyberpunk wasteland where every commodity, pastime, medication, and media content is wildly expensive but offset by huge subsidies from complicated conglomeration of other corporations and government entities. Every action you take in your life adds wild positives and negatives to a fantastically complex and intractable balance sheet of funny money, credits, discounts, loopholes, taxes, rebates, free services, restrictions, obligations.
Watch Spider-Man 87 for $1,340,233 but receive free Chex-mix for life, $3000 off each gas purchase at qualifying locations, in-home massages, the ability to use highway 37 from 11:30-3:30 without charge from Nov 23rd 2043 to Oct 18 2067, increased inspections from police, tutoring for your next born child, and 34 trees are planted in your name in Nigeria.
This obviously grows necessarily from an economy focused on increasing GDP and maximizing the effectiveness of financial instruments :)
Haruki Murakami's novel 'Dance Dance Dance' has a character who is in a similar situation. He's a movie star who because of circumstances related to his divorce has acquired a stunning amount of debt. So most of his income goes into covering this debt. He is very bad with numbers and money, this character, and so he cannot ever figure out how much he owes and how long will the situation last.
However his movie studio rents him a high-class apartment, gets him cool cars to drive, covers various bills from shops and restaurants and whatnot as 'the entertainment expenses', can send him on the high-profile vacations, etc. They can even get him the expensive escorts, because absolutely anything can be worded to fall under the umbrella of the 'enterntainment expenses'. So in short, he can 'have' anything as long as he does not actually own it.
In the end this character kills himself, due largely to the inability to exert agency over his life. And that if you read the book in the face-value 'no-mystical' mode, otherwise the outcome is rather worse.
So to answer your question, going into the infinite debt for infinite reward does not really sound attractive.
> Every action you take in your life adds wild positives and negatives to a fantastically complex and intractable balance sheet of funny money, credits, discounts, loopholes, taxes, rebates, free services, restrictions, obligations.
> Every action you take in your life adds wild positives and negatives to a fantastically complex and intractable balance sheet of funny money, credits, discounts, loopholes, taxes, rebates, free services, restrictions, obligations.
Are they fungible? Do secondary markets exist? The whole promise of money is that you can just add and subtract the value of all those things to get a number in a reasonable range. With money you can meaningfully compare "a pound of gold" and "two pounds of silver," and you can settle a debt you owe Alice via a debt Bob owes you instead of keeping both imbalances forever.
Maybe this is me being broken by working in finance (even if just SRE for finance), but your example doesn't seem too far off from the problem of valuing ETFs or options or currencies or cattle futures (in theory, if you buy one and forget to sell it in time, some cows show up at your office...).
In the future which is rapidly closing in, everything is a "license." You own nothing. Nothing is transferrable or resellable by you. Things will feel like you own them, but you will not. Despite all the marketing and advertising telling you that you are "buying" something, you will actually only be able to secure a license to possess and use it. These licenses will restrict how you use the thing, and circumventing them will result in federal charges of violating the DMCA. These licenses will also not obligate the seller to anything whatsoever and be voidable at any time with no notice for any or no reason. This is already the case with most peoples 'ownership' of most media, and it is already spreading into other products. Farmers have had to fight John Deere for the right to repair their own tractors (they won temporary special exemptions which can only exist for 3 years at a time and have to be re-fought-for every 3 years) but still can't prevent their own tractors from reporting soil data back to John Deere which the company then sells to Monsanto and other companies.
None of the things you 'buy' will be fungible because they will all be discrete licenses locked to you personally and have no actual 'value.'
If something like what is described in the article ever became true, then I really hope someone invents something like APR for credit cards for these kinds of arrangements.
But the cost of the rent is "arbitary" - if amazon owned the apartment, they could set the rent high, and give you a "discouunt". If they get large enough, they can force the high price to become the norm, and so force you to buy the committed spend. This gives them more leverage elsewhere as well (e.g., suppliers).
I was referencing the example from the article, which argues that a $400 committed spend on a $500 discount is a bad thing. If you think the article makes no sense, then my discussion of it will of course make no sense either.
Not quite. The fundamental concept of collective bargaining is similar, but unions are for employees to band together and negotiate with their employers, not for consumers to band together and negotiate with their vendors. (In US law at least, unions are very tightly regulated, managers can't unionize, etc. A group of people negotiating what their Prime membership means would absolutely not be called a "union.")
No. And I would expect anti monopoly laws legislation to outlaw this in any halfway civilised country (altho I wouldn't hold out much hope for America).
"The toaster oven will only accept certain co-branded bread and other marked-up food products: any attempts to cook other food will throw an error message; “Unauthorized Bread.”"
Assuming it was in the form of: You pay the total value in rent, and each month $500 is added to your amazon balance (I'm assuming that's how such a plan would feasibly work in practice)... then, yeah sure. Of course, the devil is in the details, but taking the deal just at face value, yeah it's profitable why wouldn't you do it?
Even if you bought stuff you didn't need, but you could resell later for a 20% loss after fees, that's still essentially a free $400 a month just for holding onto some merchandise in your closet temporarily. That's probably worth it for most people.
> The thing is, moving apartments has a high switching cost. It’s really something you want to avoid being forced to do, both for economic reasons and for social & personal reasons. Now, Amazon has you trapped: however much you may be inconvenienced or disappointed by being effectively required to purchase Amazon’s stuff rather than other merchants, it’ll be less bad than the monumentally large cost of moving apartments.
Worse: in this scenario, "Amazon" competitors are unable to provide competitive pricing any more because everyone else, like you, waited a few cycles, and now they don't get enough sales volume for that. It is no longer economical for you to leave for another apartment that doesn't mandate this supply monopoly. The only way to break out of the cycle is if 1) a large proportion of people in your situation agree to move at the same time, which is particularly difficult because of individual circumstances as well as political will; and 2) all of you can afford to prop up the more expensive competing suppliers until volume discounts start rippling through the supply chain.
* I say "Amazon" because this is entirely hypothetical, as the author admits, and I think it's rather unfair to use Amazon's name like this, which the author does not.
I don't think Amazon even needs experiments like this to increase its dominance.
Take the apartment complex i live in as an example, last year there was a marked increase in package thefts that the residents started complaining. The management came up with a few solutions that all got shot down, cameras were a straight no from most people because of privacy implications, increasing rounds by the security was also shot down since its a huge complex and it would require a lot more people (which they implied might lead to increase in rents in the coming years).
What did everyone decide on? on-site Amazon lockers. So now the choices are that you either buy from Amazon, or risk having your package stolen. Guess what everyone does now?
The Amazon locker still makes non Amazon packages safer just by reducing the thief's reward. For example, if I forget my bike lock, I feel better leaving my bicycle in a locked bike cage with cheaper bikes that are all well locked with chains than with a bunch of pricy unsecured bikes, since there's less incentive for a theif to cut the cage fencing and take all the bikes.
Interesting thought experiment, but I don't think the economics work out.
Retail has razor thin margins as it is, so I can't imagine companies paying customers enough to make a significant enough dent in their rent.
Also, the practice of buildings selling exclusive customer access to certain companies already has precedent - cable providers. And as you may imagine, profits or savings from such deals are never passed down to renters.
It seems the premise of every rental or subscription service is that you will send them more money, on average, than if you purchased the items a la cart (on average). I'm basically betting against a company with way more time, data, and expertise which seems like a fools agreement.
The flip side of this coin is that I get free stuff subsidized by investors in hopes that eventually they get big enough or kill enough of their competition to get to the above state.
> you will send them more money, on average, than if you purchased the items a la cart (on average)
a properly functioning rental mechanism should produce a maximum utiliztion of the object being rented. The savings to the consumer ought to come from the fact that an object you purchase isn't 100% utilized at all times, but the rental mechanism could make this the case, and therefore, produce a savings for the renter (you don't pay for under-utilization like you would for purchasing).
Yeah, I’m generally gonna choose to shop at other retailers, who charge flat prices and don’t try to optimize for net profit.
Waaaait a minute... you don’t think the wily motherfuckers could be using all their data and resources to boost revenue on the a la carte side, do you?
in the short term, amazon may be willing to make a loss to acquire customers.
But in the longer term, the rental discount has to at least be balanced by the extra profit from the sales quota. If amazon then turn a dial to increase sales quota (or decrease the discount), they then stand to make significant profit on the captive customer (who may no longer have an option to move away at the same low cost).
I think this type of deal is anti-competitive, and should be prohibited under monopoly laws (i.e., using dominance in one market to leverage another market).
I’m really glad my wife and I are on the same page about “smart” speakers, in that we know never to get one of these devices for the other as a gift or otherwise. She is not at all a techie, but finds the technology creepy from a privacy perspective. Knowing that people outside of our circles are uncomfortable with it makes me a little more hopeful for the future.
This "everything as a service" industry is a terrible deal for consumers. It's a great deal for companies though.
Why should I pay a constant fee for things that should have been one time purchases?
Why should I lock myself into a proprietary ecosystem?
Why should a pay a membership fee to Cos. who just want to harvest my data at every turn?
Lawmakers, in the spirit of promoting competition, should seek to lower switching costs, increase price transparency, increase interoperability, reduce network affects, and lower barriers to entry for all fields, tech especially. Generics, in every field, should be encouraged and widely available.
1(see Spotify, Netflix, most terrible VC ideas(Bryd, Line) etc)
2(see Amazon, Apple's walled garden of hardware and software, etc)
3(see Amazon, most membership clubs)
> The elevators, for example, will only take residents from the lobby to the Poor Floors and back if there are zero outstanding requests from the Rich Floors; this effectively forces the lower income residents to either walk thirty flights up to reach their units, or else wait forty minutes at rush hour to use the elevators – a pretty thinly veiled analogy to what happens today with commuting inequality.
But here's the kicker: the people on the Rich Floors have to pay more, effectively subsidizing the rent of the people on the Poor Floors.
Privacy issues aside, all that does is rob me of the opportunity cost of spending that money optimally and it forces me to spend it at a vendor that's not always the cheapest or most convenient.
I reject the premise that something simply being cheaper is an abusive situation.
This is the sort of thinking that leads people to state that (for example) smaller apartments shouldn't exist, because someone will be forced to live in them. A purely theoretical person, of course, no-one they actually know - some sort of downtrodden non-entity.
The entire economy is set up on the basis that negotiation is a thing that people can and will do. If you don't do it, you're setting yourself up to get shafted at every turn; this sort of thing is the least of your issues.
I wouldn't rent a flat like this because it sounds bloody stupid. It makes me think of American sponsored things. 123 North Street brought to you by Coca-Cola(tm) and Amazon(R). Weird unnecessary legalistic nonsense.
this would clearly have an income effect where instead of paying $x on stuff i would normally buy elsewhere i would pay $quota at amazon. Down the road, after plenty of competition has been destroyed, they can raise their prices and quotas to their best needs, not mine. It’s the sort of thing that starts out OK and winds up abusive.
So essentially a loan from Amazon? Why would I believe they can do better than my bank or credit union? Or if they can, why is it tied to mandatory purchasing?
I thought we invented money so we wouldn’t have to trade this for that.
Really enjoyed this blog post! This is the type of critical thinking which I'm missing a lot in recent years. The stuff which we are building in our little tech bubble is increasingly shaping and impacting the entire world in ways which many of us could have never imagined a decade or two ago. It's funny how many things which have been mentioned in this blog post are literally only one corner away from reality! In Singapore there are already lots of Grab only parking bays where a Grab driver can stop for you but not an Uber for instance.
Basically why I haven't watched season 3 of The Expanse: I'm far from being an Amazon boycottist, but I refuse to enter any form of ongoing agreement that would make them a default choice or bring them closer to becoming one. I have never put even remotely as much thought into this as the author, but the central idea has been clear nonetheless: don't give away your wallet-vote in a bulk transaction, nothing good can come from this.
I don’t understand this way of thinking. I despise Amazon in a variety of ways, but I think they do a great job in a variety of other ways. Wouldn’t it be reasonable for me to spend money on the parts I think are good, like Prime Video, and withold money from the parts I think are utterly stupid (anything Alexa-related)?
Assuming Amazon reacts to spending habits of its customers, wouldn’t I be more able to effect change that way (and also enjoy good services) than by a complete boycott that doesn’t tell Amazon why I am diverting money from them or which parts of their services I find deplorable?
I wouldn't mind Prime Video as an alternative to Netflix if it wasn't bundled with the manipulative free delivery subscription. Sure, I could use Video on a secondary account and stubbornly keep my deliveries in the regular tier, but that would be absurd, right?
Some unrelated (to each other) comments. 1. These trapping effects already exist when people won’t quit an otherwise disadvantageous job because of medical benefits. 2. A leasehold is not entirely one-sided in our system. It is designed to confer the full benefits of property ownership to the lessor, for a given amount of time, in return for the lessor’s paying of rent. All the Alexa-like machinations described seem to be modifications of the way rent is paid. 3. The book Surveillance Capitalism, by Shoshana Zuboff, attempts to quantify various forms of forward value extracted from consumers by social media and intelligence gathering platforms.
> I’m sure many of you either have an Alexa-powered device in your house
Yeah, lost me there, pal. I thought I was getting lower rent for not going _over_ some quota - which would work great, since my quota is exactly $0, on principle.
The apartment building I live in already has a business deal with Amazon. Not for appliances, but for an Amazon Hub Apartment Locker. https://www.amazon.com/b?node=17337376011
I get an email with a pickup code to the email address tied to my Amazon account whenever a package arrives that is too big for my mailbox, from any sender. This means that Amazon presumably has a profile about my package receiving habits, including size, frequency, and how long it takes me to pick up a package after it arrives.
My building installed the Hub after I moved in and I was given no choice in the matter.
My alternatives are to break my lease or get all of my packages at a P.O. box. Even if I never purchase a single item from Amazon, all packages sent to me from anyone go into the Hub.
Apartments already have similar deals with cable companies in areas with multiple providers, including the Tv/Internet/Phone fee as mandatory on top of rent
I wish we'd just run out of oil already. At least then I won't have to worry about my senator pimping me out to some faceless suit in a high-rise 4,000 miles away.
Well, some people in my household have various food sensitivites. We have to be very careful about what we buy (different brands of milk, say, are very much not equivalent.) I'm not buying food from a vendor who's known to do brand substitution.
Most of what I buy these days are services not goods. I pay to have the wheels changed on my car twice a year (winter versus summer tyres), insurance, house painting and maintenance, servicing for my car, electricity, water, sewerage, an internet connection.
As for goods, well I buy a new computer about once a decade and a phone perhaps twice as often, fresh bread, fruit, vegetables, meat, butter, biscuits, and tea, every few days or weeks.
No idea if Amazon sells all that but it doesn't seem so from a glance at their web site.
My point was that except for food the goods purchases are rare events and also the food is not a lot so hardly likely to make much of a dent in my rent.
They sell fresh bread, real bread that is worth eating? Fresh fruit?
Actually of course in my particular case it's all theoretical anyway because Amazon has no physical presence here in Norway
And in turn, why would market rent for your area be N instead of N-$500 (or N plus discount matching), if that discount is generally available? If everyone gets the $500 Amazon discount, then everybody has the switching cost problem, and so landlords would want to match what the market is actually willing to pay, not what it looks like they're paying on paper. This is basically the same scenario as early termination fees - when cell phone companies decided to increase the switching cost, other cell phone companies said they'd eat that increase in switching cost just to unlock locked-in customers that they couldn't reach.
And ultimately all of these mechanisms are annoying and fiddly mental overhead, but could purchasers band together and join an organization that negotiates on their behalf, organizes boycotts, etc. for a relatively small fee?