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Friday, April 14, 2017

Amazon cuts affiliate income

By reducing affiliate compensation by more than 50 percent. Independent publishers need to be aware that this is eventually going to happen to them too. KU was the original warning. Note that even a relatively small affiliate used to be able to count on making 8.5 percent on its affiliate sales, with a minimum of 6 percent. Now the standard compensation is less than half that. The publishing equivalent would be reducing ebook royalties from 70 percent to 30 percent. Peter Grant has more about this at the Mad Genius Club.


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81 Comments:

Blogger Salt April 14, 2017 4:52 PM  

Ugh!

Anonymous 5343 Kinds of Deplorable April 14, 2017 4:54 PM  

Interesting -- and sounds exceedingly crappy. Would love a clear exposition of what this means for Castalia House and what we can do to help in due course.

Blogger Ken Prescott April 14, 2017 4:58 PM  

And this is how the Information Age will be unionized. Because nobody--on either side of the equation--knows how to practice greed control.

Blogger VD April 14, 2017 4:58 PM  

This means nothing whatsoever for Castalia House... yet. While CH is technically an Amazon affiliate, we've never made much use of it. However, it is a warning that we need to not go exclusive with Amazon, even if that means the Amazon rank of our books is negatively affected.

It also means that we should favor selling through the Castalia store over selling through Amazon. So, those of you who have asked in the past, we now have a definite answer for you.

Also, Infogalactic has just become a GOG affiliate. About which more soon, but in general, if you buy from GOG, it would be very helpful if you do it through Infogalactic. We'll get that set up very soon.

Blogger Salt April 14, 2017 5:00 PM  

Amazon is the Wal-Mart of the internet, without the eyesores waddling about.

Anonymous Mark Auld April 14, 2017 5:03 PM  

Could this be a harbinger of bad mgmt choices that leads to the downward slide of another tech giant?

Blogger swiftfoxmark2 April 14, 2017 5:07 PM  

Probably just another sign of tough economic times and contraction, which is much needed unfortunately.

Blogger Snidely Whiplash April 14, 2017 5:08 PM  

VD wrote:Also, Infogalactic has just become a GOG affiliate. About which more soon, but in general, if you buy from GOG, it would be very helpful if you do it through Infogalactic. We'll get that set up very soon.
That's great news. I'm changing my GOG link to use the infogalactic affiliate number as soon as that's available. I spend probably too much money there.

Blogger Robert What? April 14, 2017 5:10 PM  

I think Bezzos needs the money for his sex change operation.

Blogger YIH April 14, 2017 5:11 PM  

Captain Capitalism isn't exactly happy about it either.
My guess, is with all the whining over YouTube's pay cut, Amazon decided it was a good time to do it too.

Blogger Quadko April 14, 2017 5:22 PM  

@8 Re: GOG "I spend probably too much money there."
Ditto, and happy to have it help a good cause.

For all I love Amazon, I'm still ticked off about them trying to memoryhole the Confederate flag to help their pet Democrats.

Anonymous VFM #6306 April 14, 2017 5:35 PM  

I love how nimble Castalia House is. Living inside the OODA loop is a compound advantage. So few publishers are equipped to do this versus Amazon without losing the business relationship: either they tell Amazon to go pound sand and fade into non-existence, or they take their voluntary beatings with just a few complaints.

The third way is better. It is just good business.

Anonymous Looking Glass April 14, 2017 5:38 PM  

Ever the capitalist, my first impression from that list is "there's a massive amount of room for a solid fashion/accessories YouTube channel/blog there". Also explains how "The Manolo" was able to pop up and make millions.

But there's also likely some sense behind it. The clearing price for books has been coming down with the transition to Digital, and since Amazon has so much of the market place, they'll squeeze where they can.

It's also important to remember that Amazon is a Revenue Monster, but not profitable without their Web Services business. AWS is a profit generating machine.

Blogger Ingemar April 14, 2017 5:38 PM  

This is why I never went all-in with Amazon as business model (at least retail arbitrage). When you're at the mercy of someone else's platform, not only does someone else take as much of a cut of your earnings as they feel they're entitled to, but they can also unilaterally restrict the classes of items you can sell--and this is not limited to obviously dangerous things like weapons.

Blogger JCclimber April 14, 2017 5:40 PM  

Hey, Bezos needs more money to pour into his failing Washington Post fake news outlet, so Amazon needs to squeeze the margins a little more.

Bastards raised the fees they charge for selling some books on their site. Working to see what I can shift to Craigslist and Ebay.

Blogger My Dead Gramps April 14, 2017 5:41 PM  

@4

This is fantastic news. GOG burns a bigger hole in my wallet than steam these days. Will be watching this space.

Blogger newanubis April 14, 2017 5:43 PM  

Or things newly classified as weapons. Words, or thoughts for example.

Blogger Cail Corishev April 14, 2017 5:53 PM  

Glad to hear about the GOG deal. I don't spend a lot there, but it's the only place I buy games. 60%+ off D&D games right now, feeling the temptation....

Blogger Dave April 14, 2017 5:54 PM  

Also, Infogalactic has just become a GOG affiliate.

Good news.


Vox, re Amazon> anything new concerning the SJW hijinks over the release of Corrosion/The Corroding Empire?

Also fake reviews? I don't see Amazon doing much of anything to curb even the most blatant violations of their guidelines.

Anonymous Stryker4570 April 14, 2017 5:59 PM  

It never fails. Any company paying commissions eventually gets to the place where the accounting department comes in and asks "Do you know how much we are paying out in commissions?" Management has a sphincter tightening moment and then cuts the commissions by at least half. This has happened in every sales job my wife and I have ever had. Every. Single. One. I got in on the ground floor sales force with a company that got an entire line of 100+ cleaning products into Home Depot. A month in they realized that we were all headed to $90K in commissions a year plus our $24K base salary and promptly cut commissions 60%. A bunch of people quit right out of the gate. I hung on for a few years and built my accounts up to the original range.(I jammed the stores full of product and negotiated for the best sales spaces.) They cut commissions again and I promptly quit. That's why I work for myself now, and if I can help it will never work for anyone again.

Anonymous VFM #6306 April 14, 2017 6:04 PM  

Infogalactic's GOG site is more current than wikipedia's already. Wikipedia still has broken links for Defender's Quest, a notable independent game.

Blogger Jon D. April 14, 2017 6:14 PM  

It's an evil monopoly. Anti-trust needs to be revised for the internet age.

Blogger David The Good April 14, 2017 6:28 PM  

This is not good for me, as a decent piece of the income from my gardening site comes from AA links. I like something, I link it. I noticed a sudden drop-off, then realized what was going on.

Anonymous Looking Glass April 14, 2017 6:34 PM  

@20 Stryker4570

For all of the stupid within Western Economies, if I had to point at the biggest consistent error, it's got to be the rise of the "MBA". It seems the programs exist to force businesses to make consistent, repeatable errors that undercut their current & future bottom lines. While at the exact same time making the company extremely hard to manage and terrible to work for.

I.e. it's a degree for Rent-Seekers.

Anonymous 5343 Kinds of Deplorable April 14, 2017 6:40 PM  

It also means that we should favor selling through the Castalia store over selling through Amazon.

That's what I was fishing for, though I probably didn't pose the question specifically enough. Good to know.

OpenID randkoch April 14, 2017 6:48 PM  

Reasons to be glad for an administration that isn't particularly best friends with Amazon.com.

Best to maintain alternatives in all things (yes, Castalia and even Infogalactica).

Blogger DeploraBard April 14, 2017 7:08 PM  

Affiliates get a percentage of sales through what is bought from Amazon on their site, correct? Or do they get paid by click for advertising?

Did YouTube cut because advertising revenue is down or to punish certain sites?

Blogger DeploraBard April 14, 2017 7:15 PM  

The bubble for monetizing could be popping as Peter says. Maybe companies are not realizing the profit for paying out per page view or affiliate sales or maybe they are just greedy. Most people just skip the ads because they are annoying. Like advertising on Facebook. Expensive and rarely worth the cost.

Blogger YIH April 14, 2017 7:17 PM  

@27 DeploraBard:
IMHO, lack of ad revenue. In hindsight, I can't be surprised YouTube has 'demonetized'. About two months ago, I stopped seeing (YouTube inserted, often with the 'click here to skip' after 5 sec.) ads. Some 'targeted' by subject (click on a vid about cars, get a car ad) and/or IP (the car ad's a local dealer). Not due to blocking, because those YouTube inserts are pretty much unblockable, but apparently because no fish are biting. Not that surprised, if most are like me, they skip the annoyance ASAP. No ad revenue coming in, no 'monetization' to go out. Obviously YouTube is thinking that if they curtail the ''controversial'' (such as 'red-pilled' and non-SJW friendly) stuff the advertisers will come back. I have my doubts, when it comes to ads, YouTube's between a rock and a hard place, remove the 'click to skip' and many will likely just click 'close tab', but with the 'click to skip' advertisers look at it and say ''5 seconds? That isn't enough to matter''.
IOW, welcome to ''the new normal''.

Blogger DeploraBard April 14, 2017 7:18 PM  

FWIW,
I think Vox has the future model. Build a loyal following of 10k (seems to be the magic number I see frequently) with excellent content and then market directly to them.

Blogger DeploraBard April 14, 2017 7:23 PM  

YIH,
Right. They may censor, but I think companies are just not paying for ads that don't increase sales and make YouTube annoying.

Blogger DeploraBard April 14, 2017 7:25 PM  

This comment has been removed by the author.

Anonymous Jack April 14, 2017 7:47 PM  

One of the most scandalous things about Amazon is the way that it's helped to proliferate the spread of fake products around the world, but especially in the U.S. It used to be that if you wanted to buy a fake Rolex or some knock off sneakers, you had to live in a major city and you had to know where to go. Furthermore, you generally knew what you were buying because of where you were buying it. But on Amazon, imitation products are everywhere, sold as genuine items to people all over the country. And Amazon gets their cut on every one of them.

Blogger Steve April 14, 2017 7:54 PM  

Who is bringing the most to the table? What are the bloggers BATNA's? Most searches will show Amazon's results anyway, and the blogger really have now where else to go so it's not a surprise. Sometimes reps help build a business, sometimes the sales would happen without them .

For any business to rely upon them only is crazy. Use Amazon for some stuff but capture and control as much as possible yourself. My biz sells on Amazon but only a small selection try to make sure as much as possible comes direct.

Anonymous Mathias April 14, 2017 7:58 PM  

@29,

Streaming web services are REALLY sensitive to value loss due to advertising pressure (that is to say, when you run more ads, they crowd out the actual content people are actually coming to see. Furthermore, it's obvious that the people who run this shindig hope to a return to mid-2000's advertising levels, where there were more advertisements than actual content, timewise. It ain't gonna sell, the ease of just going somewhere else is far too great.

To top that off, people are starting to become inured to the tactics that most advertisers use (that is to say, using what is right next to porn to excite people to buying their products) and I believe that many ads will only serve to stoke resentment and envy in the future as the economic situation gets worse for the common person.

Blogger Snidely Whiplash April 14, 2017 8:00 PM  

DeploraBard wrote:Affiliates get a percentage of sales through what is bought from Amazon on their site, correct?An affiliate is assigned a numerical Id that he can append to any Amazon links on his site. If you go to Amazon via one of those links, any purchases made during that session generate an affiliate commission.
So if you click on one of Vox's box up top, and then go on to buy a computer, Vox gets a commission.

Blogger Snidely Whiplash April 14, 2017 8:01 PM  

boox, ... errr books, not box

Blogger Snidely Whiplash April 14, 2017 8:04 PM  

The problem with selling (physical ggods) though Amazon are 1) Amazon takes a BIG cut and 2) absolute bottom feeder price competition.

I looked into it for my wife's business and the margin, at a price that would even begin to compete with the people already there, would have worked out to less than 5%.

Blogger Michael Maier April 14, 2017 8:04 PM  

Ugh... I suppose it's just too much to expect that any company would get big and appreciate those that got them there.

Anonymous A Deplorable Paradigm Is More Than Twenty Cents April 14, 2017 8:08 PM  

Someone correct me, but isn't Amazon doing something very similar to WalMart's strategy?

Blogger Gospace April 14, 2017 8:23 PM  

Salt April 14, 2017 5:00 PM
Amazon is the Wal-Mart of the internet,"


And Wal-Mart is waking up and deciding it wants to be the Wal-Mart of the internet. The difference between Wal-Mart and Amazon right now is that Wal-Mart already makes money, Amazon doesn't. Maybe you won't get 2 day free delivery with your membership in Wal-Mart prime because they won't have membership fees. But probably 90% of Americans drive by a Wal-Mart each day, and you get free 2 day pick-up in the store, which for most products is fast enough and convenient enough. And, as a plus for Wal-Mart, gets you into he store where you pick up a gallon of milk or those batteries you need or a candy bar or two. Except for the milk, high profit margin items.

Blogger Cataline Sergius April 14, 2017 9:17 PM  

Ugh... I suppose it's just too much to expect that any company would get big and appreciate those that got them there.

Ha Ha Ha (*gasp...wheez...gasp*) Ha Ha Ha

(*wipes eyes*) I love this blog so much.

Anonymous a deplorable rubberducky April 14, 2017 9:20 PM  

Yes, this seems very similar to the pattern Charles Fishman laid out in his book, _The Wal-Mart Effect_. Wal-Mart goes around to all its suppliers every year and demands price cuts or else. So getting your product in there is sort of a deal with the devil. You see an initial sales bonanza, but over time they will bleed you out. Many American manufacturers have been driven to offshoring by Wal-Mart - there comes a point where Wal-Mart will even demand it when nothing's left to squeeze out of a US plant.

Blogger Matthew April 14, 2017 9:32 PM  

Usury, the Once and Future Sin.

Anonymous Mathias April 14, 2017 9:34 PM  

@44,

That is excellent sir, may I use it?

Blogger Gospace April 14, 2017 9:46 PM  

Don't know if Wal-Mart does it, but at least one big box home supply store does it. When small manufacturers of decent products try to break in, they are asked/warned- "Can you handle it?" And what they mean is- Can YOU handle it?"

Let's say you're making and selling 500 good quality widgets a week, and you want to go into a major hardware retailer. With over 2000 stores. If each store sells just one of your widgets a week, you've quadrupled production. Can you do that? Probably, with a little lag time, yes. Let's say your widget proves extremely popular, and stores find themselves demand is 5 or more a week. Can you handle the expansion? Probably not, and attempting to expand that fast will likely cause bankruptcy. I saw it happen with one supplier whose products I really liked- and pushed sales of because they were high quality products. Guess I wasn't the only one doing so. They were in the store for 3 months. Orders were slipping by week 3.

If you have a good high quality product line, having your own website might be preferable to going through a middleman. For writers, once you've written a book or short story, reproduction costs are nothing. But for most of you, production costs are simply time. I've purchased a few stories from links here, and from other blogs. And I've so far bought one book and one album direct download from the author's/singer's) website. I would buy more from websites direct if more were available.

Anonymous VFM #6306 April 14, 2017 9:48 PM  

Amazon netted half a billion in profit in 2016. How is that "not making money?"

I know it isn't at Walmart levels, but it certainly isn't under water.

Anonymous Mathias April 14, 2017 9:52 PM  

@47,

You have to look at the breakdown by department/subdivision, the company as a whole may be cash positive, but that doesn't mean that the income is coming from advertisements. In fact, it's entirely possible to show profits with no cash inflow whatsoever if your bookkeeping is "creative" enough...

Blogger Ariadne Umbrella April 14, 2017 10:11 PM  

Walmart has two day shipping. I've used Walmart since this summer, with great satisfaction. When I've placed an Amazon order and a Walmart order of the same item, I pay more and wait longer for Amazon than for Walmart.
We're trying AmPrime for one month. I'm going to cancel. It's not worth it to me, when Walmart is ramping up so much on the items for sale online. I'm not buying major tech appliances or specialty goods, so Walmart is more than good enough for me.

Blogger Mountain Man April 14, 2017 10:13 PM  

To know Amazon’s future (and any other monstrous businesses future - for that matter) - just read Antifragile..
The micro future is Amazon..the macro future - is not.
Amazon is the Montgomery Ward of the 21st century. Montgomery who?

Anonymous Brick Hardslab April 14, 2017 10:16 PM  

I had hopes Baen's reading library would lead to them being the online book source. Oh well.

Blogger Mountain Man April 14, 2017 10:17 PM  

@48

Oh yeah - Enron looked great on paper - till it wasn’t. Not that they’re the same businesses...but one can see the point.
When I see Berkshire Hathaway ( i.e. Buffet) invest in Amazon- Ill know its truly a viable business model. Old Buffet may be a socialist at heart but when it comes to investing the old geezer rarely picks a dud.

Anonymous Mathias April 14, 2017 10:34 PM  

@52,

It's important to remember that Enron was actually assembled from legitimate concerns with the aforementioned funny leverage, that was what gave the entire operation the veneer of legitimacy. My father worked in the energy sector for 30 years, so I'm pretty up on the story as a whole. It's entirely possible for a formerly legitimate business to be captured by fraudsters, or to have the original owner "break bad".

Anonymous dh April 14, 2017 10:40 PM  

I wouldn't be worried about Amazon. Their cloud business is the only game in town. Microsoft, Rackspace, IBM, HP, et all are jokes compared. Even Google is a joke compared.

AWS itself would be a great business. Margins are strong and it's the only game in town for many verticals. Amazon's retail business could dwindle back to books and DVDs and AWS continues to grow and it's still all good.

Anonymous Looking Glass April 14, 2017 10:48 PM  

@50 Mountain Man

https://finance.yahoo.com/quote/AMZN/financials?p=AMZN

Amazon is a little funky in a few ways because of just how much revenue it produces and how much they roll back into investment. However, for the last 3 years, all of their Net Income has come from AWS, their cloud-computing service. Everything else is a net-loss during that period.

One of the reasons Amazon survived is actually because of how little money they make. They roll a lot into investing in the future, which has been decent for the consumer, but it's also a sign of just how little actual Profit there is to be made in the Online Retail business.

Blogger Josh (the gayest thing here) April 14, 2017 10:49 PM  

We should let Amazon, Costco, and Chick Fil A run the entire government.

Blogger Snidely Whiplash April 14, 2017 11:03 PM  

dh wrote:AWS itself would be a great business. Margins are strong and it's the only game in town for many verticals.
AWS IS a great business.It's the only one Amazon has. Prime is a Huge loss leader, but it is funding their investment in better delivery services. Digital media almost breaks even.
Everything else, everything that involves handling a physical object, is either a moneyloser, or is not actually being sold by Amazon, but one of their vendors. And their vendors are being squeezed mercilessly.

Anonymous Mathias April 14, 2017 11:05 PM  

@54,

Amazon is a large conglomerate at this point, so it's a hydra with many heads. It's unlikely all the bits of it will misbehave at once, but I wouldn't be surprised if a major subdivision went belly up when the current tech bubble pops, and becomes a source of scandal as a result. What may be viewed as a smart business decision making in the light of success may at the same time be viewed as criminal malfeasance in the light of failure. If such a thing were to happen, some smart politician may decide to use that as a way to suppress the importation of foreign goods using the event as a bargaining chip... and the fact that they have a de facto monopoly in the cloud business means that everyone who wants to eat their lunch via an antitrust suit will be lining up for the buffet. Especially if they are simply using this rate cut to make their bottom line fat. The more they drive their valuations up, the bigger the prize they become.

Blogger Mountain Man April 14, 2017 11:17 PM  

'it's also a sign of just how little actual Profit there is to be made in the Online Retail business.”

Especially if you have to own, maintain and fill orders from actual warehouse space.
Drop shipping is pretty much the only way to make decent returns from online retailing.. and even that can be dicey.

Anonymous Mathias April 14, 2017 11:28 PM  

@59,

Thusly all the r&d sunk into drone delivery, they believe if they can get that figured out, they will be able to squeeze a positive margin out of it. Not to mention the money sunk into warehouse automation, which amazon is a leader in.

Anonymous dh April 14, 2017 11:53 PM  

If you follow the Amazon physical strategy, however, you'll find that they are only 30-35% fully built out. The scale they are going for to maximize eventual return is a multiple of Walmart scale. If you are near a distribution facility (I'm about 7 miles from one), the service is pretty interesting. The entire delivery and warehouse operation is Amazon sourced, right to the doorstep. I can get 25,000 items delivered same day, often within a few hours, seven days a week. Another 75,000 items I can get next day, and an additional 100,000 a day after that (within 2 days, under Prime).

It's really hard to see where they make money, but I suspect that it's in areas where they have total penetration, and their own contracted/services fleet of deliveries. In this case, myself and neighbors are not shopping price, it's convenience.

And it's true, to a degree. I don't shop anything on price if it's less than $100, it's not even worth the time and effort and risk for me to register with a new website and order something unless the squeeze is >$10, and maybe even more really.

Anonymous dh April 14, 2017 11:55 PM  

@58 - the most likely scenario is that investors eventually force AWS to spin-off into a stand-alone and profitable business publicly traded on the market.

Anonymous Looking Glass April 15, 2017 12:16 AM  

@62 dh

They might, but it'll be a while. Bezos still has pretty firm control and AWS is effectively an extension of their own systems they had to build to run the store. Considering the loss of efficiency that would produce (and given AMZN's market cap, which means no Activist Investors can force someone on the board), it's really unlikely to happen for a while.

Plus, their vertical integration is so tight that I'm not sure it wouldn't cause nasty problems for Amazon to split AWS anytime in the future.

Anonymous Mathias April 15, 2017 12:17 AM  

@62,

That's similar fallout as an anti-trust action (and the two are not mutually exclusive). I think the institutional investors see this and are waiting for a shakeout before going in.

Anonymous Carlos Danger April 15, 2017 1:46 AM  

VD At CH there has been a discussion that it would be realy cool for you to make a set of graphic novels the Covingtion Northwest Republic series.

Blogger Resident Moron™ April 15, 2017 2:57 AM  

@Gospace

You forget that the manufacturer has another lever: price.

There's a reason for the saying that "the price exists to constrain demand". To be exact, to bring it down to your production level.

Then you use the extra cash to fund your expansion and you can drop the price.

As long as you understand economics and have a frank conversation with your retail channel, this is the kind of problem you should pray to have.

It's far better than making 2000 a week with demand for only 500 ....

Blogger NO GOOGLES April 15, 2017 2:58 AM  

This change coupled with the reduction in ad revenue at youtube, the censorship of twitter and facebook means that building our own platforms is more important than ever. Some like Stephan Molyneux and Vox have already done so and will be immune to changes for a while at least.

Looking at the situation, Patreon is probably the most pressing institution to build a parallel version of. So far Patreon has not taken steps to cut off the accounts of wrongthinkers and people generally opposed to globalism, but I doubt Patreon can avoid convergence or overwhelming pressure from globalist forces for long. Too many suppressive persons are bulwarked by Patreon income.

If there was a free speech or alternate version of Patreon (I don't put much stock in Paypal as they have already disallowed purchases of firearm-related products - not much of a leap there to SJW censorship), then at least it would allow more people to make attacking the swamp their full time job. A parallel Patreon would be a much smaller and more manageable task compared to something like a parallel youtube, and even if youtube completely shuts down anti-globalist channels then there are other sites that will allow videos to be posted although they don't allow anywhere near the monetization that youtube does. New Patreon + vid.me or minds.com would work. Plus, it would allow much more than just videomakers or bloggers to be funded free from political censorship.

Unfortunately I do not have anything amounting skills or resources that could help create such a thing, but I thought it might be worth mentioning. So far Patreon has been pretty good for the most part, but if youtube's actions aren't enough to silence the wrongthinkers then it's likely they will move on to the other ways they are funded, of which Patreon seems to be the largest.

Blogger tim April 15, 2017 4:07 AM  

Xctly! Totally off the grid. Ilk and the Posse

Blogger SteelPalm April 15, 2017 5:42 AM  

Great post by Peter Grant. Although it's depressing to think that the brilliant and prolific John C Wright is making $1300 a month on Patreon versus $5600 a month for the half-literate half-savage NK Jemisin.

Of course, $1300 is very impressive for any author, but it's a shame that it is still trumped by virtue-signaling in this case.

Blogger Orville April 15, 2017 9:06 AM  

I think Vox has the future model. Build a loyal following of 10k (seems to be the magic number I see frequently) with excellent content and then market directly to them.

Jeff Walker, who is one of the kings of direct marketing, frequently says that email is king. Nobody can steal or shut down your email list. I like what Steve says about using Amazon for a few products to keep your email list building so that you can direct market the majority of your products.

In terms of fiction books, I'm not sure how workable that is. People are getting conditioned to buying books on Amazon, and conditioned to prices at $4.99 or less. Plus the convenience of instant delivery to your Kindle.

Some of the people I'm studying are proposing that authors crank out four or more books a year to overcome some of these issues as well as to build sales momentum. I'm not sure how feasible that is for some writers.

Blogger Orville April 15, 2017 9:14 AM  

As to Amazon. Bezos is trying hard to get the human costs out of his supply system with drones and robotic distribution centers. I imagine he will make some progress with that. Denninger has written in the past on Amazon's financial "thinness". A significant financial downturn and reduction in sales could blow a large hole in their small margins.

Finally, Bezos is now taking $1 billion a year for the next few years to build out his space business. He will likely give Musk a good run for the money and both together will destroy the old aerospace giants. So bottom line is Bezos has other unrelated enterprises to run and is not tied forever to Amazon being a going venture.

Anonymous RedJack April 15, 2017 9:20 AM  

One of these days, Amazon is going to be forced to make money. Investors will not allow Bezos to treat it like a private company forever. I have seen many a firm get broken up by investment groups. Now, I think Amazon is a ways away from that, but it is a risk for them.

The one I expect to fall first is Uber.

Blogger Orville April 15, 2017 9:34 AM  

@72 Uber is a cash furnace. That is why they are in a mad dash to get working driverless cars. It's the only possible way they stay alive.

http://www.zerohedge.com/news/2017-04-14/cash-burning-machine-uber-opens-its-books-shows-staggering-losses

Blogger Cail Corishev April 15, 2017 10:12 AM  

Whenever I hear about Amazon drones, I think "target practice." It seems like they'd just be begging someone to bring it down and see what he's won.

Blogger Snidely Whiplash April 15, 2017 10:40 AM  

SteelPalm wrote:it's depressing to think that the brilliant and prolific John C Wright is making $1300 a month on Patreon versus $5600 a month for the half-literate half-savage NK Jemisin.
It is. But keep in mind that John also sells books, which is a skill that Jemisin simply has not acquired.

Blogger Were-Puppy April 15, 2017 1:17 PM  

@41 Gospace

I've noticed there is mention of Amazon almost every day on Stuart Varney on Fox Business.

There was some talk about Amazon and Walmart getting into some heated competition recently. This was in regards to what you were referencing, having the things show up at the local walmart same or next day.

Walmart can really play ball when they want to, so it's going to affect Amazon. Amazon cutting to compete with Walmart will have to happen.

Blogger Were-Puppy April 15, 2017 1:21 PM  

@43 a deplorable rubberducky

Yes, this seems very similar to the pattern Charles Fishman laid out in his book, _The Wal-Mart Effect_. Wal-Mart goes around to all its suppliers every year and demands price cuts or else.
---

I've been in the belly of the beast. It's even tougher than that (or it was 10ish years ago). If you want to sell in Walmart, you have to get an office in Bentonville and have a representative there. Walmart ain't going to come to you.

They had a story they told about a bicycle company that they wanted a huge order from. The company couldn't possibly supply it. They then went to one of their competitors and they were all making this bike for Walmart. It's crazy the power Walmart wields in retail.

Fun fact: Hildebeast once sat on the board.

Blogger Were-Puppy April 15, 2017 1:22 PM  

Err - if it isn't clear, the company selling through walmart went to one of his competitors, gave them the scheme and got them to also produce the same bike.

Blogger Were-Puppy April 15, 2017 1:34 PM  

@59 Mountain Man

Especially if you have to own, maintain and fill orders from actual warehouse space.
Drop shipping is pretty much the only way to make decent returns from online retailing.. and even that can be dicey.
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Remember a company back in the first tech bubble, Webvan? They are the poster child of how hard what Amazon and Walmart are doing is.

Blogger Were-Puppy April 15, 2017 1:36 PM  

@60 Mathias

Thusly all the r&d sunk into drone delivery, they believe if they can get that figured out, they will be able to squeeze a positive margin out of it. Not to mention the money sunk into warehouse automation, which amazon is a leader in.
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It's crazy, but did you see this of Bezos driving a mech?
http://www.livescience.com/58332-jeff-bezos-controls-giant-mech-robot.html

Anonymous Mjoll April 15, 2017 2:46 PM  

Actually, I'd like to see graphic novels of Covington's books as well. By the time he wrote the last couple they were pretty good.

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