This week, thousands of people who sell products on Etsy are go on strike to protest the company’s escalating fees. And what appears to be a fight for a small corner of the internet is actually one of the most enduring battles in our digital world.
Etsy is one of the zillions of internet businesses that bring together people with something to sell and those who might be interested in accepting it. For their role of liaison between the two parties, these intermediaries collect fees that can represent 15 to 30% of each sale. (Etsy charges much less.)
Technicians call these markets, and they are everywhere. Most of Amazon’s online sales come from fees the company charges independent merchants whose cat toys and phone chargers we find and buy on Amazon. The Apple App Store, Airbnb, restaurant delivery apps, and Uber are also marketplaces that connect customers with people offering apps, houses to rent, dining out, or a ride to. the airport.
It is a constant in the digital world that these intermediaries are hated by the people and businesses that rely on them. Almost always, at least some app developers, restaurants, Etsy dog portrait makers, Substack newsletter writers, and other marketplace sellers think the fees are too high, the rules aren’t fair, they’re being abused – or all of the above.
It is possible that these conflicts are unavoidable. In 2022, running your own business almost always means relying on technological intermediaries that make your business possible, but can also make it more difficult.
Listen, I want to acknowledge that in this Etsy dispute — as with Apple developers’ fury at the company and Amazon merchants’ dissatisfaction with selling on the vast digital mall — both sides are right.
There’s no denying that Etsy, Amazon, and Apple do a lot of work for people who sell things through them. Without Etsy, people doing dog portraits would have to try setting up their own websites or stores and finding clients on their own, and dealing with things like processing credit cards and providing a customer service.
Etsy does all of this for them, in exchange for a royalty that rises to 6.5 cents on every dollar of sale, up from 5 cents previously. Merchants fighting Etsy also have other disagreements with the company, including that it effectively punishes solo business owners if they can’t immediately respond to potential customers, and that the company requires sellers to pay to advertise their products on sites like Google, Pinterest and Facebook which further eat into their income.
Etsy has mentioned that some of the company’s approaches might be unpopular right now, but will benefit sellers in the long run.
Sometimes these gripes may seem whiny or abstract to us, but put yourself in the shoes of those Etsy sellers, restaurants selling food through the Grubhub app, or companies making iPhone apps.
They love being able to find a bunch of customers in one place, but might be upset that Etsy, Grubhub, and Apple are dictating a lot of how they do business, taking a lot of their money, and becoming more powerful through their work.
These disagreements affect the prices we pay, and these are important issues for the millions of people trying to make a living doing what they love.
A question that is always asked about disputes on marketplaces is what is a fair royalty to charge people offering an Uber ride or selling a dog portrait. But I also wonder if the imaginative tech industry hasn’t been imaginative enough to look for other ways to make money.
Almost all marketplaces charge a commission and often other fees when we buy something. Even in the metaverse, apparently, companies will still make money by collecting a commission from sellers of virtual reality gizmos. Is there another way and would it be better?
A few years ago, an investment analyst at Goldman Sachs suggested that instead of fighting off developers who might be unhappy about paying up to 30% on sales of a digital weapon in an iPhone game, Apple might recoup its costs to sustain the app economy in an otherwise. Analyst Rod Hall has proposed that developers instead pay for some or all of the Apple technologies that developers use to build and distribute iPhone apps.
This approach would certainly create a whole new set of problems. And that doesn’t address the complaint of iPhone developers or those who protest Etsy sellers who love having a central place to sell their wares but hate how those marketplaces have so much power over how they run their businesses.
There are no magic bullets for the internet’s persistent battles against intermediaries like Apple and Etsy. But I appreciated Hall’s attempt to reinvent the way markets generate income. It’s like we could use more experiences to try and bring peace to one of the internet’s most enduring conflicts.
If you do not already receive this newsletter in your inbox, please register here.
Before leaving…
-
Ukraine said it had stopped an attempted Russian cyberattack on the country’s power grid. My colleague Kate Conger writes that the disclosure of the sophisticated cyberattack raises new concerns that the Russian government could be stepping up its use of digital weapons in Ukraine and potentially the United States.
Related: Russia’s tech industry is facing a brain drain as thousands of workers flee the country. And Vice writes that Twitch video streamers in Ukraine are bring images of the war to Russian viewers.
-
Here are the highest paid people in the United States: According to the latest report from ProPublica reports According to data from the Internal Revenue Service, tech billionaires including Bill Gates and WhatsApp co-founder Jan Koum accounted for 10 of the top 15 earners from 2013 to 2018. And because of the design of the system US tax, tech billionaires tend to pay much lower rates than other extremely wealthy people.
-
Bribe for working in the office: My co-workers have a fun article about the perks tech companies are giving workers — including a Lizzo concert, window seats for everyone, free fried chicken, and terrarium-making classes — to bring them back to the office.
Hugs to that
This the dog KNOWS he was mean for eating all the treats in the house. (He will totally do it again, though.)
We want to hear from you. Let us know what you think of this newsletter and what else you would like us to explore. You can reach us at [email protected].
If you do not already receive this newsletter in your inbox, please register here. You can also read old On Tech columns.
Comments are closed.