A monopoly is born

Once upon a time, there was a rural estate on which someone had knocked together an out-house for storage: so it had enough of a roof to keep the rain off the contents, it had walls, floor and well-drained underfloor clear-space, through which the draft ran that kept it dry. It was purely functional and its function wasn't habitation: it was, indeed, well removed from the estate's various habitations and the country round about was pretty sparsely populated.

The speculator who'd bought the lot with our out-house on it, I'll call him B for brevity, made a big gain here: when he'd bought his lot he'd got the nominal IPR on the out-house, as an obvious boring technicality. It wasn't really a house, but someone could live in (a copy of) it while they got settled into the new world, found an economic niche and found out what they could afford and wanted from a house. More important, B had borrowed less (per house-worth of land) than his peers, because he hadn't spent anything on designing a house. For much less than the cost of designing a house, he could patch up the design he'd got to suffice. So B can let out property, with a B-house on each, at rents lower than his competitors' base-lines yet significantly above his own base-line. So while they try to pull rents up, because they can't pay off their debts until the rent is above their base-lines for a while, B can expand his market share pretty much indefinitely (unless someone else pulls the same stunt - I'll come back to that).

Now, most of the immigrants aren't familiar with the culture of their new land. Land-lords and designers in the new land had, from the outset, sent sales staff to lands whence immigrants seemed likely to come: but their audiences didn't understand issues of good design, at least not in matters of the alien tech of the new world. So the winner was always the cheapest, which never makes for high profit margins.

So B could have beaten all the others that way: but someone else could have come up with a similarly cheap house-design and compete with him on equal terms. Instead, B completely undermined the rental system: he parcelled up his land into vast numbers of little lots, each with a B house on it, and began selling them to potential immigrants at a much smaller mark-up than the speculators were hoping to hold out for. He also set about marketing his design to folk who'd got land but no house, and to potential immigrants who were thinking of renting or buying a parcel of land from other land-owners.

This cleared his debts and left him with a large population of new immigrants living in B houses, as I'll call them. The design for these was based on the old out-house, and B had carefully modified it to provide standard household amenities: but, partly because the base design was an out-house, partly to fit onto smaller plots of land, he'd done this rather differently than existing house designs, and artifacts which depended on such standard amenities would need major design changes to be rendered workable in B houses.

In particular, B knows all the details of how to access the amenities of the house he's designed but only tells anyone else `enough' that they can do `everything that matters'. So loads of designers, spotting the huge population of B-home owners, set out to provide artifacts for B-home owners. They're working with a handicap, though: if B decides to compete with them, he can always exploit his secret knowledge in producing his design, which will be to his advantage. More importantly, B can sit back and let all the other designers get on with taking the risks, finding out what sort of product there's a market for at what sort of price. Once they've discovered that, and before they get too well entrenched in their market, B joins in with a product which works better, so he at least gets a major market share. Furthermore, the fact that his design uses his secret ways of accessing the amenities suffices to `prove' that his design isn't a `copy' of theirs.

Few of these artifacts work outside a B home. This is fine by B because it enables his marketing to potential immigrants to point out that all the nice things their friend in a B home has told them about, that are so easy to use, only work in B homes, so you'd better have a B home too. Thus, when someone else comes on the market with a `small-plot' house design, and possibly some land for sale in a deal to go with it - in short, does the same as B - they run into the fact that they need to be B-compatible to get the custom, but don't know B's secrets so don't know how to be B-compatible. B has it sewn up.

Now, of course, it isn't going to take long for someone to catch on to his secrets: it isn't even going to take long for someone to manage to design a house which they can prove they got without `copying' B's design but which works sufficiently nearly the same that appliances which work in a B house will work in this competitor's house. Still no problem: the basic B house was, without doubt, rather restricted. So B sat down and designed a new version of his house. Most artifacts which work with his old house will work with the new, but the new one can do some things a whole lot better. It also occupies a bigger plot of land, of course, which causes folk on small plots, enclosed by neighbours, to sell their land and buy a bigger plot elsewhere: eventually, their old homes will be cleared away and re-parcelled up.

B takes care to revise his own artifact designs when he revises the house design, so folk with the new house will have a much better deal than in their old house, provided they have all new. They can use artifacts from an old house in the new house, but sometimes they won't work. If you've got an old version of an artifact, its suppliers will usually let you `trade up' for the new equivalent at a lower price than buying new - particularly if B supplied it. Of course, when the new B house comes on the market, designers suddently discover that B's changed the secret parts of the design in some subtle ways which mean their designs go wrong in B houses - sometimes, even if they didn't know they'd been using any of these secrets. This does give them a golden opportunity to sell new versions of their artifacts to folk: but, if they were competing with B they're now going to be months behind and unable to exploit the new secrets that B has exploited. So B is able to gain a `first to market' advantage combined with an artifact which works better.

So now there's lots of folk living in B's houses and writing home to say what a lovely new world it is, and how happy they are with their new home, now that they're settled in, but they find non-B homes a bit confusing (and none of it works). B's marketing in the old world is careful to twist this into a perception that B's homes are better than the others, which gets bolstered by some careful work in filling B homes with artifacts which, though perhaps boring to a native, really wow most imigrants.

Since B's now managing to take the immigrants' money off them before they get to the new world and have the opportunity to learn any other lifestyle, B's designs get to be ubiquitous. Most new immigrants are in B houses, at any time, and most of the folk writing home are new immigrants - if only because their friends then follow them - who interact poorly with (the few) folk in non-B homes, so that they only really know the B home and its usual artefacts. So it's easy for B to sell to potential immigrants.

Written by Eddy.
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