This article describes the role that new technologies have had in transforming the publishing market. It also makes a more general point about many of our important markets today. Many of them benefit from economies of scale and network effects. Competition is not about price, or even product features, after a firm captures the dominant share of the market. For example, Amazon sells e-books which have zero marginal cost. Every additional e-book that it sells is pure profit. The economy of scale is almost infinite.
Network effects are also very important in many markets. Once a product gains market share, it becomes the dominant platform that attracts others who add value to the product. Apple's mobile devices are a good example, the value added by application developers and hardware providers and others, makes it difficult for competitors to compete in the mobile market.
Facebook provides another example. It has 850,000,000 members in its social network. New businesses have emerged, and will continue to emerge, that attempt to capitalize on the Facebook social network. Its hard to imagine how a new competitor in the social network market will be able to compete with Facebook. Moreover, the growth and development of businesses like Facebook present some issues for the labor markets of the future. Facebook has become a very large company in terms of revenue, but it employs a relatively very small number of people. It purchased a company which has technology that will help them in the mobile market for $1 billion. That company employed 14 people.
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