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Pricing power in a value chain is determined by relative scarcity. As the cost of creating the wholesale product decreases, the share of the profit pool realized by businesses that own distribution increases. This is true in every industry, but more so if the service is digital.
"The model for successful tech companies, contrary to myth and legend, is that they become distribution-centric rather than product-centric. They become a distribution channel, so they can get to the world. And then they put many new products through that distribution channel..."
"One of the things that’s most frustrating for a startup is that it will sometimes have a better product but get beaten by a company that has a better distribution channel." Andreessen a16z.com/2018/07/20/aft…
"Many entrepreneurs who build great products simply don’t have a good distribution strategy. Even worse is when they insist that they don’t need one, or call a no distribution strategy a ‘viral marketing strategy.'" a16z.com/2014/07/21/a-d…
