Jim, I am one of your loyal game buyers over the last 6 years. You have always done right by me. Keep up the good work. No one has your compassion for gaming in the industry. When I go on the web every day the 3 sites I visit first are yours, BGG, and this site. And thanks again for the “candymail”.

Kudos to Jim and Bouldergames for taking a stand against FRED and Mayfair’s price fixing as well as supporting the little guys in game design.  I remember ordering from the original Bouldergames website.  They’re still my #1 online boardgame shop.

I find it interesting that Jim Sandefur accuses certain publishers of bullying behavior – sell the games at this price or we’ll take them away – when he adopts schoolyard thug tactics of his own: Run your retail business exactly as I suggest, or you’re a neutered wimp. Don’t buy games at prices that I object to, or you’re a gullible patsy. People who do things I object to are against the free market.

Maybe the New Hampshire environment has been basting my brain with Libertarian thought, but I think that publishers (and all manufacturers) should run their businesses however they want, as long as they don’t harm others while doing so. Isn’t that what the free market is all about? If the publisher of Caveman is willing to have FRED Distribution sell the game at a fixed price, then so be it. As a potential customer, I’ll find the game worthwhile or I won’t. If enough people don’t feel it’s worth the cost, then the game won’t sell and the publisher will adopt different sales methods in the future (assuming it stays in business). Jim, likewise, is free to sell games in a manner of his choosing, but if that manner doesn’t suit the publisher, then who has final say over what happens? The one supplying the product naturally.

As a customer, cash is my tool to influence behavior on the part of manufacturers. No one is forcing me or you to “pay $60 for a $25 game” – assuming any of us can agree on what a $25 game is, mind you. What’s worth $25 to me might be worth $50 to Gamer A and worthless to Player B.

At the same time, cash is only part of the picture and not even the most important factor in my purchases. I buy certain kinds of food, for example, because I want to support a method of production or get nutrients in natural form rather than supplements; I’ll spend more than someone else for the “same” food, but the food isn’t really the same from my point of view, so I’m okay with paying more. Similarly, I frequent a local game store and pay MSRP because I support his efforts to provide a play space and expand gaming in the community.

Everyone makes his or her own decisions on what something is worth. Ridiculing people for those choices is pointless.

Gamers who want a particular game may have to pay the higher price at the noncompetitive sites as Boulder only orders so many of a game and it sells out fast, as I well know. If a gas station sells gas below a “fixed” price, it will quickly sell out and all those who would like to pay the reduced price will have to go to a station with higher prices. American industy has excelled as a result of competition. If price-fixing were rampant, just think how mauch more you and I would have to pay for things we want. My hat’s off to Jim and others who want a level playing field.

Price fixing is illegal, David.  What Mayfair and the others are doing has been ruled constitutional by the US Supreme Court.  I may not agree with it and I question its effectiveness and potential effect upon the hobby, but its eminently legal, so the distinction is an important one.  Jim is free to criticize this policy, of course, just as others are free to promote it.

Boulder Jim with a passionate, controversial opinion--talk about a dog bites man story!

Larry, there is a lot of “illegal” pricefixing, and you know it. When 4 gas stations at an intersection all sell gas at a high price, that’s the equivalent of price collusion without the “fix”. It is hard for the govt to prosecute pricefixing and they don’t always succeed in their prosecutions. While it is not illegal for a clothing manufacturer to only sell an item to stores if they must sell it below a certain price, it is anticompetitive.Ultimately, the consumers are then the losers.

Thanks for capturing this, Ray. It’s to my shame that I couldn’t convince Jim to come on Boardgame Babylon to talk about these subjects in my series on online game stores.

However, I’m so glad people get to hear his opinions because no one else is expressing this position as passionately and clearly as he is.

There is a legal distinction between “Price Fixing” and “Resale Price Management”. Price Fixing has always been illegal. The Wikipedia articles on the two are pretty interesting reading.

What Mayfair is doing is the latter, which is legal as of a 2007 summer Supreme Court ruling overturning a previous ruling.

Incidentally, the case that Jim describes where a couple of retailers set their prices in advance of the Mayfair start date *IS* price fixing.

I’m mostly with Jim on this one. For all of the arguments Mayfair and Fantasy Flight have put forth about helping brick and mortar shops, Boulder *IS* now probably my closest FLGS. I think I could drive there in about 2.5 hours.

If you read the Supreme Court decision, it is not in fact clear that what Mayfair and FRED are doing is legal. In fact, the way I read it, Mayfair’s practice is probably still illegal, while FRED’s almost certainly is (although I’m not a lawyer). The decision has been widely publicized as allowing price fixing, but this is not at all what it says. Here is the link to the actual opinion, which is surprisingly readable for the lay-person:

http://www.supremecourtus.gov/opinions/06pdf/06-480.pdf

What was changed in the Supreme Court decision is how it that “price fixing” can theoretically be legal. In the past it has been “per se” illegal, that is to say, basically always. Now, judges have to apply the “rule of reason”, which (paraphrasing, and realizing again that I’m not a lawyer) means that a judge has to look at the case and determine if there is consumer harm and/or if the price fixing is actually of benefit to consumers.

Stephen Breyer argues convincingly in his dissent that this change was a Bad Idea, and I’d add a point that he did not make: for niche markets like ours, it essentially makes price fixing legal because even though there may in fact be consumer harm, the costs to litigate are too high to make redress practical. Maybe we can get some of those pro bono lawyers from Winsome who apparently have time on their hands.

Personally, this whole thing is yet to affect me. The games sold at fixed prices I am not going to buy at the given prices, and while I might buy them if they were less, I don’t feel like I’m missing out on anything. On the other hand, Settlers of Catan is still a steal even at the slightly higher price, and I was happy to upgrade to the new printing. The problem for the game producers is that we have lots of choice, and if Mayfair’s prices are too high for the latest questionable Phalanx offering, people just won’t buy.

Here is what I find most troubling though. I have no problem with publishers wanting to support B&M game shops that provide clean, well-lit places to play, and might be an important part of getting their games in front of the public (although it’s debatable whether this is really helpful). As such, while I think it was a mistake for Mayfair to enforce this policy over their entire lineup, I can see the case for Settlers.

Where it is troubling is when this argument is a transparent pretense, or when some sort of incredibly bogus argument about keeping game prices high so that customers will perceive them as more valuable is put forward. To me, this appears to be the case for FRED, and I distrust it. The real reason for FRED’s price fixing almost certainly has to be to either make FunAgain more competitive, or to extract more cash from customers (which, as I say, is still illegal). If carried to its logical conclusion, it will make many niche games unavailable because they can only be bought at unreasonable prices. I don’t shop at FunAgain because they don’t even represent a savings over retail, or over importing games from Europe myself, never mind being competitive with other online vendors. If we don’t have online vendors to bring us products that require online reach to find a viable audience at a reasonable price point, that will kill off a fair number of games that deserve circulation, and we will be worse off both as customers and as a hobby.

That *IS* interesting reading. I can make out a couple of things:

1. If Funagain instigated FRED’s price management, then they are beginning to form a retailer cartel, which is specifically spelled out as dangerously anticompetitive in at least a couple of places in the judgement.

2. The entire argument for allowing price management is that it should be allowed in cases where it encourages competition between brands.

The idea is that Mayfair is supposed to be raising prices so that distributors and retailers can use the extra money to help promote one brand over another.

In fact, they note that price management may hurt the manufacturer because the manufacturer will lose sales to rival brands, and that the retailers are the ones who most likely benefit. (Thus the warning about retailer cartels from point #1).

Mayfair’s setting is almost certainly legal as long as their games can be construed as having brands that compete with their products.

3. Jim’s nightmare scenario of the majority of manufacturers setting prices is also mentioned as distinctly anti-competitive.

All,

Were talking boardgames here.  Not big oil. 

I’m in the Eric Martin camp on this one.  He lays out the case pretty compellingly above.  So no need for me to rehash it.

Ryan B.

I’m in the Eric Martin camp on this one.

Yeah, well, I hate to post again to this thread, but I’m going to anyway.

Maybe the New Hampshire environment has been basting my brain with Libertarian thought, but I think that publishers (and all manufacturers) should run their businesses however they want, as long as they don’t harm others while doing so.

Which is exactly why this sort of arrangement has been illegal for a century, is illegal in other developed economies, and is still illegal in most cases here. Because when producers fix retail prices, there is in general a clear and obvious harm to consumers in terms of decreased marketplace competition and decreased incentive to innovate. Period. When you take the ability to compete on price away from resellers, you are making the market less competitive. As long as it’s just FRED and Mayfair dictating pricing arrangements and not backing it up with marketing or real retail support, we’re not being hurt too much (maybe a Phalanx game doesn’t get published which would have been before). But there is a logical endpoint here where we all will suffer from higher prices on fewer games of lower quality played by fewer players.

Mind you, I don’t think we’re actually going there. The US players are too small, and the internet isn’t going away. I don’t see Z-Man, Fantasy Flight, or Rio Grande going down this route (Jay has said he has no intention of doing so), and as long as the far more competitive European market for games remains open, we’ll get the benefit of that and continue to see innovative games despite the lousy American environment. As boardgamers, you’d think it would be clear the advantages of a competitive market when you look at the stark quality gap between European mass-market games (where the market is competitive) and American mass-market games (where it is not).

At the end of the day though, fundamentally the right thing to do is to do exactly what both Jim and Rick advocate - vote with your dollars.  I personally do in fact take Mayfair and FRED’s anti-competitive pricing policies into account when buying games, and am less likely to make an impulse buy from either vendor. I’ll still pay for quality, but no question Mayfair’s new policy has meant that they’ve lost a few sales from me.

I think it’s worth noting that the Austrian economists (Hayek, Mises, etc.) have a different theoretical perspective on this subject.  Concerning “competition”, Israel M. Kirzner writes, “The mainstream notion of competition sees it as a state of affairs: the notion of competition has nothing to do with the process through which the market achieves its results. For Austrians, on the other hand, it is the market process that is important. And that market process cannot be imagined at all without necessarily departing from that state of complete powerlessness which mainstream economics sees as perfectly competitive. For Austrians the adjective ‘competitive’ captures the essential feature of the market process.

In other words, entrepreneurial actions that are, in the Austrian sense of the term, seen as essentially and emphatically competitive, as critical steps in the market process, are, in the mainstream view, seen as anticompetitive, as monopolistic, as aberrations to be eliminated for the sake of the efficient-market ideal. As a result of this confusion of thought in twentieth-century economics, governments ostensibly intent on maintaining the competitiveness of markets have been seen as having the obligation to outlaw and zealously stamp out the very actions through which ordinary competitive strategies are effected.

… A group of powerful firms may collude to keep prices high; their motives may be to cartelize the industry, to eliminate interfirm competition and thus to force the consumer to pay more. For this reason antitrust policy has of course been directed toward preventing such price collusion. But the Austrian perspective sees matters quite differently. Even where the motive is indeed to paralyze interfirm competition, such collusion is itself a competitive step—since, in the absence of artificial blockage against entry, such collusion can be taken only in the face of the threat of competition from new entrants (who may in fact be able to profit by offering to sell at lower prices). No one knows when a price is ‘too high’; only the competitive process of entry (or of the threat of potential entry) can reveal the lowest level of price that can be sustained. So long as entry is open, the colluding firms may, in seeking to maintain their higher prices, be unwittingly attracting new entrants to reveal the truth that lower prices are sustainable. Or they may, if no such new entry occurs, be demonstrating that the cost structure indeed dictates these higher prices, as being the lowest ones sustainable in a competitive world.

… It is important to remember that no claim is made that freedom of entry entails that competitors refrain from attempts to monopolize markets. They may attempt to do so; and certainly their efforts may possibly place the consumer in a worse position (than he might be under a system reflecting perfect knowledge). The Austrian claim is that since no such perfect knowledge can exist, we must rely on the competitive-entrepreneurial process to reveal how the consumer may be better served. To obstruct this process in the name of competition (!) is to undermine the only way through which the tendency toward social efficiency is possible. By obstructing or preventing entrepreneurial steps taken that do not fit the ‘perfectly competitive’ model of universal utter powerlessness—even if such obstruction or prevention stems from the best of intentions on behalf of consumers—government is necessarily tending, to a greater or lesser extent, to paralyze what is truly the competitive process.”

The problem with all this is that with higher prices fewer units get sold.  If fewer units are sold, then the company will make a smaller print run of there next game.  The smaller print run means a higher cost per unit.  As a result, that next game produced will have an even higher retail price than the last.  Again, fewer units are purchased because of the high price and the cycle starts all over again on that third game to be produced.  Does this look like a good business plan?  As a long-time public accountant, I think not.

With the only real ramifications being price gouging, I cannot fathom how such a relatively small but intellectual clientele can support any fringe price fixing endeavor, no matter how legal it may be.  I have no qualms about a company’s right to do so, but it sure leaves a bad taste in my mouth.

Hopefully with forums such as this, and the sting of not opening our wallets to them, we can prevent or reduce pricing manipulations such as these.