Toes on the Line

Hello again. It's been two months since my last post but there is an issue and topic I thought I'd comment on. It is an aspect to the watch market that hasn't been adequately discussed, in my opinion. But first, an explanation for my absence from this blog.

In my last post I mentioned that I paused writing here due to the fact that I was focussed on two long-term projects.

I don't write with a pen but I liked this stock image.

One is continuing apace, it is a book on Rolex. I can't remember exactly when I started writing in earnest, I think at the beginning of summer, or perhaps halfway through. I was waiting to get responses to some archival requests and I also had to do some in-depth background research from other archival materials before I could start pecking away on the keyboard. I did start, though, and I crossed 30,000 words not long ago. For professional and experienced writers, that may not seem like much. For me, it is the most I've written on one subject since my dissertation (I've probably published far more than that word count throughout my career but each paper or chapter was much shorter and typically co-authored).

I've also decided, with 95% confidence, that I will self-publish the book. After hearing John Reardon's Waiting List podcast episode in which he described being turned down by NYC publishing houses for his book on Patek, I decided traditional publishing would largely be a waste of time. If a guy who is, arguably, one of the foremost experts on Patek in the world can't convince a book publisher, I don't like my odds. My tentative plan is to do the book through crowd funding. For funders, it will have a whole lot less risk than your average project. At launch of the crowdfunding, a complete draft of the book will be done. Editing, graphic design and printing would be all that remains. There will likely be two tiers: first tier will be a bit pricier but it will be a bundle of some kind of special edition of the book with Zoom events at launch. I'll do Q+A and also provide some additional details during the Zoom. My plan is to use the proceeds from the first round to pay for editing and graphics. I will also plow those funds into the general print run of the book, which I will then sell. So, by funding the full print run, "early adopters" will help me get the word out about what I've uncovered through archival research on Rolex.

All of this is tentative but that's where I am on things.

Now, on to the "new insights" portion of this post. I've been excited to see VK start a blog on the watch industry. I'm just using his initials because he hasn't tied his full name to his somewhat famous IG handle, which is @nycwatchguy. VK's blog is definitely required reading. He's a top tier collector and he knows of that which he speaks.

In his most recent post he calls for transparency in the "waiting list" game. I completely agree with him on this point. Due to antitrust law in the United States, I also think it is almost completely unlikely that this will ever happen.

As a recap, luxury watch retailers often find that there is a shortage on certain designs. As a result, they maintain a list of people who are interested in buying that design. While we commonly refer to this as a "wait list," it is actually a "priority list," as emphasized by Stephen Foskett of Grail Watch. This is a distinction with a difference. On a wait list, the queue proceeds in order. First person gets a watch, then the next, then the next. In a priority list, those who are further down the list may get bumped up in the line due to some other consideration.

VK is asking for complete transparency on those considerations.

Toes on a line.

This would be good, because it would reduce uncertainty. I am generally in favor of full transparency. It makes markets work better. But, one of the considerations used by watch retailers is quite possibly illegal. They almost certainly have their toes on the line of legality. Which is why they will never explicitly spell out their allocation process.

VK points out that we live in a capitalist society, which is certainly true in the United States. Well, strictly speaking, America is a mixed economy. Government does own certain factors of production (fire stations and military bases, for example) and does also produce services. We haven't privatized the militarity in its entirety (yet). Another key aspect to a capitalist society is laws. Without laws you have anarchy, which isn't capitalism (although some people seem to equate the two). Laws establish rights and the limits to what private enterprise can do. Good laws encourage competition, because competition is socially desirable.

Some of the laws that encourage competition are called antitrust laws.

One type of tying.

They discourage certain abusive practices, like price fixing, that undermine competition and harm society. Not all antitrust laws are equally effective at this, but they are out there. One abusive practice is called tying. The US Department of Justice defines tying as follows: "Tying exists when the seller of a product requires his purchasers to take another product as well." I won't go into all of the case law regarding tying, but it is clear that law does not cast a favorable eye on this practice. If you have a $40,000 watch budget and have to spend $30,000 on three watches you don't want (maybe Oyster Perpetuals) in order to get the one you do want, like a Submariner, then this weakens competition. Without the tying, the collector could have just spent the $30,000 at competitors. The tying softens competition.

In terms of the watch industry, a priority list that bumps buyers higher in line based upon purchase history, for example, is arguably tying. Provided it is never explicitly written down, though, it would be difficult to prove a retailer is actually doing this. Which is exactly why I would not expect retailers to write that one down. They may do it, but they'll do everything they can to avoid self-incrimination.