Saturday, November 21, 2009

Some proof of how XStreetSL's listing fees are anti-competitive

I just stumbled onto Massively's latest article covering the XStreetSL listing tax announcement, and I found a revelation in the comments, courtesy of Imprudence developer Jacek Antonelli: By XStreetSL's own rules, they are engaging in anti-competitive practices. To wit:

  • Anti-Competitive or Abusive Behavior. Examples include, but are not limited to:

    • inflating prices on Xstreet SL compared to in-world or other e-commerce sites,
    • hostile reviews or comments on a competing merchant's items, and
    • item listings which are abusive against another merchant or their products.

    Okay, let's apply these rules when the listing fees kick in, particularly for freebies. You list a freebie, and get hit with a $L99 fee. How do you compensate for that? Assuming it will actually remain a good seller, you adjust the price to, say $L4, which subsequently lowers the fee to L$10. You then decide to note in the listing "this item is free if purchased at my store in-world". Guess what? You just violated XStreetSL's rules and if caught the listing will be de-activated until you either change the XStreetSL price to match the in-world price of $L0(thereby incurring the $L99 tax again) or change the in-world price to match the XStreetSL price(effectively making the freebie "free no more").

    So where is XStreetSL itself violating it's own rules? Look more closely at the above scenario, and extend it out by adding that the merchant has also listed the item on other marketplaces that do not have listing taxes. According to XStreetSL's rules now, the merchant must also bump up the price on the other sites to maintain the XStreetSL listing. So XStreetSL is, in effect, using the listing taxes in combination with it's own rules to extend it's reach beyond it's own marketplace to their competitors. That sounds pretty anti-competitive, yes? Monopolistic, even.

    So now the merchant only has two choices: either grudgingly comply with XStreetSL and make the freebie a non-freebie everywhere, or de-list and remove the freebie item from the XStreetSL marketplace forever in order to preserve the merchants' freedom to price as he/she fits.

    Oh, and lest you think this is all just bitching about "paying the equivalent of a nickel more", take a look at this breakdown of how the listing taxes build up for one merchant and tell me if it's still peanuts.


    Emilly Orr said...

    I'm considering something mentioned in yesterday's blog entry, even, regarding Munchflower Zaius and Nomine.

    Winter Ventura is great with numbers, and she's right; but she's also right in that she has five hundred items. Zaius has over two thousand. That adds up insanely fast.

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