[dworin]

This sounds more like having a distributor than having a landlord.

Imagine you create a craft beer. You can't build a relationship with all of the bars, restaurants, nightclubs, gas stations, convenience stores, and grocery stores that sell beer. So you sell through a distributor, who has all of those relationships. The amount of product you sell is now at the whim of that distributor.

You own the product. The distributor owns the means of getting it to the audience. You can sell some direct, but not as much as the distributor can. So you go to them for volume.

You can increase sales by creating a better product, so consumers demand it (i.e. high quality content). You can provide incentives to the distributor (i.e. paid ads on FB). You can do some of your own marketing to make it appear more valuable. But ultimately, you have to sell to the distributor as much as the end customer.

And if you're in a popular category (content/craft beer), the more people that enter, and the more product they have, the less share of shelf-space (which is like the facebook feed) any one product is going to get.

[morgante]

The differences are two-fold:

(1) There are multiple competing distributors who compete for your business. On the other hand, Facebook holds a monopoly on the time spent on its page and is incredibly dominant.

(2) Distributors don't typically compete with producers, but Facebook does. It also has "owned" content (friend's updates, videos, etc.) which it can serve without giving any traffic to media producers. This gives it a much stronger negotiating advantage.

[saurik]

On #2, the IRL version is a house brand, a strategy that even retailers such as Best Buy utilize.

[morgante]

Yes, many retailers have house brands. But I don't know of any distributors that do.

[saurik]

OK, I see: the original example involved dealing with lots of small chains. I failed to catch that, as that's not how larger chains like Best Buy and Wal-Mart work (you tend to just deal with them directly, and they can demand that by being large), and for my kind of business they are whom I care about ;P.

FWIW, I thereby will argue that Facebook is acting more like a "retailer" than either a landlord or a distributor ;P. You are trying to get space on their shelves so people "browsing" see the things you are selling. You technically can create your own store somewhere, but people don't randomly browse there.

One of my favorite stories of the relationship between a retailer and a supplier is that of Wal-Mart dealing with record labels in the mid-2000s. Wal-Mart, Target, and Best Buy represented over half of all music sales, but from the perspective of those stores music was, at best, a loss-leader for stereo systems.

http://www.rollingstone.com/music/news/wal-mart-wants-10-cds...

> "This wasn't framed as a gentle negotiation," says one label rep. "It's a line in the sand -- you don't do this, then the threat is this." (Wal-Mart denies these claims.) ... "We're in such a competitive world, and you can't reach consumers if you're not in Wal-Mart," admits another label executive.

> While Wal-Mart represents nearly twenty percent of major-label music sales, music represents only about two percent of Wal-Mart's total sales. "If they got out of selling music, it would mean nothing to them," says another label executive. "This keeps me awake at night."

> For the music industry, having such a dominant retailer is like being stuck in a bad marriage. Whereas traditional music retailers took advertising money from the labels to push new releases in Sunday newspaper circulars, Wal-Mart barely advertises locally. It relies on national campaigns, where it promotes its own low-price policy. "Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner," says one former distribution executive. "At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space."

[gaius]

Case study: Guinness.