# My Least Libertarian Opinion: Ban Exclusivity Deals*

\* With sufficiently large and entrenched companies.

There's a semi-common meme on Twitter where people share their most X opinion, [where X is a group the poster doesn't identify with](https://x.com/mnolangray/status/1877584046575722661); or sometimes my least X opinion, where X is a group they do identify with.

![Post by Aella on Twitter: Maybe my least libertarian opinion is I think that if payment processors are hosting over a certain volume of transactions, they should not be allowed to refuse transactions that are not illegal.](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/dd0eb79ec08457f94b674a570fd980d803da9536ff171eb4.png)

[Example from Aella](https://x.com/Aella_Girl/status/1899029178856710572)

In that spirit, my least libertarian opinion is that exclusivity deals with sufficiently entrenched companies[^6gfgtg4bfmn] are bad and should be illegal[^0wk9eesqepog].

To make it even less libertarian, I think it should be an unfair playing field and their competitors should be allowed to pay for exclusivity[^fp3yokvx5ck]. If you're a new entrant to a market, an exclusivity deal might be the only way you can break in, and more competition is good[^mfwlx7vvbaj].

Exclusivity Deals With Monopolists Have Asymmetric Costs
--------------------------------------------------------

The problem with exclusivity deals with a company that already has a monopoly is that the cost is much higher for a new entrant than the monopolist.

I hunted down some [stats for market share](https://www.enterpriseappstoday.com/news/audiobook-market-statistics-non-fiction-has-the-largest-share-of-revenue-of-65-in-2022-according-to-market-us.html#Audiobook_Statistics_by_Platform) and  [some royalty rates for the top platforms](https://danieljtortora.com/blog/best-audiobook-platform-for-authors):

| Platform | Market Share | Normal Royalty | Exclusive Royalty |
| --- | --- | --- | --- |
| Audible | 63% | 25% | 40% |
| Apple[^a7vox8d5z69] | 18% | 25%[^a7vox8d5z69] | 40%[^a7vox8d5z69] |
| Google | 10% | 52% | 52% |
| Other | 8%  | Up to 50% | N/A |

Note that [you can get Audible's exclusive rate by being exclusive to ACX](https://blog.reedsy.com/guide/audiobooks/distribution/#audiobook_distribution_through_acx__higher_royalties_on_audible)[^70i8dsgs1j2], an Audible-owned company which also distributes to Apple and Amazon.

Your Choices
------------

So, say you want to sell $10,000 worth of audiobook to a market where customers are 100% loyal to [the platforms they used in 2021](https://www.enterpriseappstoday.com/news/audiobook-market-statistics-non-fiction-has-the-largest-share-of-revenue-of-65-in-2022-according-to-market-us.html#Audiobook_Statistics_by_Platform). Your choices are:

| Strategy | Average Royalty Rate | Market Access | Total Income |
| --- | --- | --- | --- |
| ACX Exclusive | 40% | 81% | $3,240 |
| ACX + Google | 28% | 91% | $2,545 |
| ACX + Everywhere | 30%[^fdendfbmpn8] | 100% | $2,995 |

![](https://39669.cdn.cke-cs.com/rQvD3VnunXZu34m86e5f/images/3a5a3bcda50530b4be5407ebad3d034cf3819e0fef582ef6.jpg)

So the choice for users of this market is:

*   Do the easy thing and publish with the monopolist.
*   Do a ton of work using multiple distributors and make 8% less.

Note that **the non-monopolists are already paying 10% more than the monopolist's exclusive rate!** To break even, the last 19% of the market would need to offer an average royalty rate of 64%. **For a company like Google to offer a worthwhile exclusivity deal, they would need to offer a royalty rate of 324%**[^3lec4udffdv][**.**](https://x.com/DanielleFong/status/1954631613431832899)

This Seems Bad
--------------

The idea behind free-markets is that on a fair playing field[^3omqv8c1xzp], businesses will compete to provide the best deal. Any company that provides a bad deal will be out-competed by someone else. Unfortunately, this depends on sellers being able to compete on costs, and exclusivity deals don't have that property: It costs Audible significantly less to buy exclusivity than it costs their competitors, in ways that their competitors can't compete with, even in theory[^zne8m903qa9].

So, I think we should ban it.

[^6gfgtg4bfmn]: I have a truly marvelous definition of a sufficiently entrenched company which this margin is too narrow to contain. 

[^0wk9eesqepog]: I propose the Abolishing Uncompetitive Distribution Imposing Barriers and Licensing Exclusivity Act. 

[^fp3yokvx5ck]: If you think I'm making this case too strongly, please argue against it. I would be so owned if someone forced me to have completely consistent libertarian beliefs with no cognitive dissonance. 

[^mfwlx7vvbaj]: Citation needed. 

[^a7vox8d5z69]: Apple allegedly pays 70%, but you can't publish with them directly and have to use a publisher like ACX which keeps most of your earnings. 

[^70i8dsgs1j2]: A company owned by Audible. 

[^fdendfbmpn8]: Optimistically assuming 50% royalty rates for the long tail. 

[^3lec4udffdv]: Ok, so this might be too strong, since some people will switch platforms to listen to an audiobook, but I expect you're not going to get enough people to switch to bring this rate below 100%. 

[^3omqv8c1xzp]: Where everyone has their private property protected by the police and contract law. 

[^zne8m903qa9]: You might assume from this that I support a much more general form of anti-monopoly law. I don't want to argue against it here, but I'll just note that I'm not convinced that bigger companies are automatically more efficient, and markets in monopolized physical resources encourage technological advancement.