Risk Shift: Where Reality TV and Corporate Amex Cards Meet

For years and years I’ve always warned against the dangers of selling someone else’s product as your mainline or only business.   I recently read about a new twist on this, or maybe it’s the flip side.  Instead of selling someone else’s product, having a single customer who owns the majority of the market for your product may be even worse.  The economic term for a single customer environment is called a monopsony, and in truth I’ve heard the term as it relates to jobs.   If there is only one large employer in a town, they control the wage rates.  So even if there aren’t enough workers, there is no market pressure for the pay rates to rise.  If you hear “We pay $16 an hour and that’s it” even when they are also crying that they are drastically understaffed then your most likely in a situation where there is either deaf senior management, or you are dealing with a monopsonist.  I’ve been in those meetings and there is usually nothing you can do.   The twist I read about was when a large and well known monopsonist, a company whose product I loved, was forcing the great risk shift on their vendors.  They were doing it in the, for me, most abhorrent way possible.  Not only that, unlike the traditional situation where only the life of a worker was affected, in this case, the lives of hundreds, if not thousands of people were affected.