This week, thousands of people selling goods on Etsy are on strike to protest the company’s climbing fees. And what seems like a struggle around a small corner of the internet is really one of the most enduring battles around our digital world.
Etsy is one of a zillion internet business that brings together people who have something to sell and those who might be interested in accepting them on offer. For their role of connecting the two parties, these intermediaries collect a fee that can amount to 15 to 30 percent of each sale. (Etsy charges much less.)
Technicians call these markets, and they are everywhere. Most of Amazon’s e-commerce comes from fees the company charges to independent retailers whose cat toys and phone chargers we find and buy on Amazon. Apple’s app store, Airbnb, restaurant delivery apps, and Uber are also markets that connect customers with people offering apps, rental homes, restaurant meals, or airport rides.
The constant of the digital world is that these intermediaries are hated by the people and companies that rely on them. Almost always, at least some app developers, restaurants, dog portrait creators on Etsy, Substack newsletter writers and other vendors in the market believe that the fees are too high, the rules are not fair, that they have been harassed – or all of the above.
It is possible that these conflicts are inevitable. In 2022, running your own business almost always means relying on technology intermediaries who make it possible for you, but also make it harder.
Look, I want to admit that in this dispute over Etsy – such as the anger of Apple developers at the company and the dissatisfaction of Amazon retailers with sales in a huge digital mall – both sides are right.
It is undeniable that Etsy, Amazon and Apple do a lot for people who sell things through them. Without Etsy, people who make portraits of dogs would have to try to set up their own websites or stores and look for customers themselves, and engage in tasks like credit card processing and customer service.
Etsy does it all for them, in exchange for a fee that increases to 6.5 cents for every dollar of sales from what it was 5 cents. Etsy’s retailers have other disagreements with the company, including effectively punishing solo business owners if they can’t respond to potential buyers immediately, and requiring resellers to pay resellers to advertise their products on sites like Google, Pinterest and Facebook who nibble more in their income.
Etsy said some of the company’s approaches could be unpopular right now, but will benefit retailers in the long run.
Sometimes these complaints may seem sad or abstract to us, but put yourself in the shoes of those Etsy retailers, restaurants that sell food through the Grubhub app, or companies that make iPhone apps.
They love being able to find a bunch of customers in one place, but they might resent that Etsy, Grubhub and Apple dictate so much the way they run their business, take a lot of their money and become more powerful than their business.
These disagreements are reflected in the prices we pay, and they are high stakes for millions of people who are trying to make a living doing what they love.
One question that always arises in connection with disputes over markets is how fair is the fee for them to charge people who offer an Uber ride or sell a portrait of a dog. But I also wonder if the imaginative technology industry was not imaginative enough in search of alternative ways to make money.
Almost all markets charge a commission and often other fees when we buy something. Even in the metaverse, obviously, companies will continue to make money by collecting commissions from people who sell virtual reality doodads. Is there another way and would it be better?
A few years ago, an investment analyst at Goldman Sachs suggested that Apple could recoup its costs to support the in-game app economy instead of fighting developers who might be angry at paying up to 30 percent for selling in-game digital weapons to the iPhone. a different way. An analyst, Rod Hall, suggested that developers instead pay for some or all of the Apple technologies that developers use to create iPhone applications and distribute them.
Such an approach would definitely create a whole new set of problems. And it doesn’t address the complaints of iPhone developers or those protesting Etsy vendors who like to have one central place to sell their stuff, but hate the ways those markets have so much power over the way they run their business.
There are no magic balms for the ongoing internet battles around middlemen like Apple and Etsy. But I appreciated Hall’s attempt to re-imagine how markets make money. It seems like we could use more experiments to try to bring peace to one of the most enduring disputes on the internet.
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Before we go…
Ukraine announced that it stopped the attempt of the Russian cyber attack on the electric network of the country. My colleague Kate Conger writes that the discovery of a sophisticated cyber attack raises new concerns that the Russian government could increase the use of digital weapons in Ukraine and potentially in the United States.
Related: Russia’s technology industry is facing a brain drain as thousands of workers flee the country. And Vice writes that Twitch video streamers in Ukraine bring pictures of the war to Russian viewers.
These are the people who earn the most in the United States: According to the latest ProPublic report from the Internal Revenue Service, technology billionaires, including Bill Gates and WhatsApp co-founder Jan Koum, made up 10 of the top 15 earners from 2013 to 2018. And because of the design of the U.S. tax system, technology billionaires tend to pay rates much lower than those of other extremely wealthy people.
Bribery for office work: My colleagues have a fun article about the benefits technology companies give workers – including a Lizzo concert, window seats for everyone, free fried chicken and terrarium classes – to push them back into the office.
A hug for this
This the dog KNOWS that he was naughty because he ate all the treats in the house. (He’ll do it all over again, though.)
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