Apple, which controls over 75 percent of digital music sales, was able to dictate song pricing for years, despite the tremendous protests of the record labels. This implies that:
A) despite the presence of network effects, the music industry is not dominated by any single leader.
B) the presence of multiple new entrants forces leading firms to drop prices of their offerings.
C) firms with strong market dominance can enjoy substantial bargaining power over partners.
D) a dominant market share does not necessarily translate to greater profitability for a firm.
E) there were cross-side network effects between the various music labels.

Question

Quizplus · Accepted Answer

Apple's control over a significant portion of digital music sales and its ability to set song pricing despite protests from record labels illustrate its substantial bargaining power, which is a characteristic of firms with strong market dominance.

Apple, Which Controls Over 75 Percent of Digital Music Sales