Oligopsonies

An oligopsony is a market in which there are few buyers, in other words, the converse of an oligopoly.. Here are a few examples:

• Barnes & Noble and Borders sell a majority of books in the United States.  If you are a publisher, you have to deal with them. That gives them a lot of power.
• ClearChannel and Viacom own a major portion of radio stations in the United States and dominate most of the top markets. If you are an advertiser or a  recording company, you have to deal with them.
• There are basically five recording companies in the world.  If you're a musician and you want to be heard, you have to deal with the Big Five.
• Five companies own almost all of the channels on your TV set. If you want to sell programming or negotiate ad rates, there isn't much alternative.
• Six companies own the vast majority of the movie theater chains in the United States.  If you want to distribute a film, you've got deal with them.

Oligopsonies often generate oligopolies.  You can't negotiate very well if the company you are talking with is enormous and you are tiny.  But if you are Sony Music and you want to negotiate with Viacom Radio, you'll at least get in the door and you'll talk as equals.

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