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Businesses can invent things, make them, move them, and sell them. But the end result of all of this is a sale to some end user, and whoever touches the product last has a big influence. There are some companies that are perfectly happy to be providers of internal components that the customer never hears about, whether they're competing on cost in a commodity industry or selling something the customer in question can't get anywhere else. (Nvidia and Qualcomm are two good examples of this in hardware: most of their end users don't recognize that they're interacting with these companies' products, but that doesn't hurt pricing power if the products are necessary for whatever the interaction in question happens to be.)

Many corporate struggles and strategic decisions hinge on owning distribution. It's one thing to make a product people like, and another entirely to be the company people like because of that product. One obvious place this shows up is in the food delivery business. Both the platforms and restaurants are engaged in a constantly struggle over quality control, partly because it's hard to tell who's at fault when the fries arrive late, cold, and soggy: was it DoorDash, for delivering slowly, or was it the restaurant, for making the food too early or giving it to the driver too late? They don't perfectly address this (it would be a logistical miracle if a network as fragmented as the one DoorDash serves were able to deliver a consistent performance while working mostly with high-turnover independent contractors. But there are levers available, both on the interface and in terms of the process itself: DoorDash drivers tend to use insulated containers to keep food at a consistent temperature, restaurants will also package food so it travels better or adjust their delivery menu so that the things that travel worst aren't on it. And the post-order DoorDash interface is an extended effort to calm the customer and, in the event of a problem, shift blame: if the food's ready before the dasher arrives, you'll know it; if they took a circuitous route to your door, you'll see it, and if the delivery was dropped off in an odd or inconvenient spot, there will be a photographic record.

That's a case of a more general problem: some companies have multiple avenues for reaching customers, sometimes the same customer, and have to decide how much economic upside and control they'll give up in order to achieve this. For DoorDash, the take rate is 13.0% as of last quarter, but that's just the direct economics. Restaurants also have to ask whether opting in to delivery means shifting customer preferences towards eating at home, i.e. in a one-off choice, it's better to get 87 cents on the dollar than zero cents on the dollar from a customer who otherwise wouldn't buy dinner at all, but over time it's possible that they're opting in to an indefinite margin haircut—and that the more dependent restaurants get on delivery in general and a single provider in particular, the harder it is for them to say no if fees rise. (Or if, equivalently but with better pricing, the platforms increasingly weight their search results by ad revenue rather than measures of customer satisfaction.)

Some companies can navigate a world of multiple sales channels just fine. Apple is both a participant in and perpetrator of this. They sell their products at plenty of third-party retailers in addition to their own stores, and presumably the terms they get from these retailers are good given that 1) people will go to a store specifically to buy an iPhone, and might be persuaded to buy some higher-margin products like cases and headphones alongside this purchase, and 2) they know that many of their customers are loyal enough to find a way to buy Apple products even if their favorite online or physical electronics store isn't carrying them at the moment.

Meanwhile, Apple imposes this exact multichannel dilemma on companies that use the app store. Netflix knows that it's not as if the App Store is the sole reason someone would watch Netflix, and, in fact, that they can watch shows in their phone's browser if they really need their fix. But they concluded that Apple deserves a cut (or, equivalently, could get away with taking one) in exchange for letting people subscribe to Netflix through the payment details they'd saved in Apple. That probably didn't sit right with them, given that Apple's main service in this case was slightly expediting a transaction that would have happened anyway, but for a while they tolerated it. And then, a few years later, Netflix stopped letting new users sign up and pay through the App Store; earlier this year, they sunset the last of the grandfathered-in customers who'd done this.

In the short term, companies want all the distribution they can get; the benefit of amortizing fixed costs can easily exceed the cut a seller takes, especially if the product in question is a digital good with a high fixed and low marginal cost. As they get closer to saturating their market, and as the platforms they use start to compete with them, it begins to make sense to pay less for distribution.

But all of this implicitly assumes that we even know what the main distribution tools are. That isn't always the case. The DOJ fought hard to keep desktop operating systems free from monopolistic influence, and this campaign took so long that by the time they were done, search engines and browsers were the main distribution tools people worried about. And even that can change as new platforms show up, and as older ones get less important than the apps they enable. Owning distribution matters, but understanding where distribution is going is a prerequisite to knowing what's worth owning.

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Read More in The Diff

In The Diff, we’ve covered distribution from a few different angles, including:

• The early days of HBO ($) show how a business can go from distributing other companies’ products to making its own.

• Distributor businesses like uniform provider Cintas ($) can have compounding returns to scale.

• When distribution changes, it creates new winner and losers, especially in media.

• We’ve written more on Netflix’s long-term growth ($).

• The grocery business collects more first-party purchase data per dollar of market cap than just about anyone.

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