You can’t establish an online monopoly!

Two of the blogs in my feedreader recently wrote articles about how you should try to achieve a status as a monopoly, as this will in turn lead to greater profits. I first saw an article about it over at Dosh Dosh, and then a spin-off article over at NetBusinessBlog. Anyone who has taken business 101 and seen the price and demand model for a monopolist will know that this is not wrong, mainly because you will have complete market control.

While the idea of a monopoly online is good, it’s practically impossible actually establish one. There are certain fundamental requirements that must be in place for a monopoly to arise, and in my humble opinion it’s nearly impossible to reach these online. The most important factor is obviously complete market control, and this is where most websites will fall off the radar immediately.

There is an infinite number of markets on the internet, and one would think that it should be possible to be the sole supplier in one small, obscure market, but in reality it hardly is. No matter what type of product you supply to your customers, there is a 99,99% chance that somewhere out there on the internet will be able to deliever a perfect substitute, should you for some reason not satisfy your customers. And if there isn’t, you can be quite certain that as soon as you’ve paved the way and started making money, someone will step in and want a piece of the cake.

I shouldn’t even have to mention the case of online publishers. No matter how quick you are with news thanks to great contacts, or how extremely well written your content is, thanks to the nature of the internet and free flow of information, someone will always tap into your marketshare by rewording and republishing your information.

In order to establish a true monopoly, you need to be in control of something that is extremely valuable / expensive, so much in fact that it is impossible for someone else to get a foot in to your market (think railways, telephone landlines and similar, and even then you don’t have any guarantees unless you actively work to stop potential competitors from entering your market), and quite frankly that isn’t possible online. Just look at Google, they arguably have the best, most intelligent search engine algorithms of all the search engines, but yet they are nowhere near a monopoly.

Of course, the fact that you’ll never become a monopoly shouldn’t discourage you from working on improving your market position. The articles I referred to in the start give some great tips on how you can approach this matter, but I just thought it was worth pointing out the inaccuracy in claiming that you will actually be able to create a monopoly for yourself on this glourious thing known as the internet. Of course, if anyone disagrees with my claims, I’ll be happy to hear your arguments!