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Jeff Bezos, the ultimate rentier

Nice article from George Packer, especially if you're a book lover, and even more especially if you've been a book lover all your life:*

In 2009, after a career at publishers large and small, Robinson was laid off by Scribner, amid downsizing. Faced with his own professional extinction, and perhaps the industry’s, he co-founded a new company, OR Books, with a different business model. Robinson did research and found that fifty to sixty per cent of the list price of a book goes to Amazon or to another retailer. When he was starting out, in the eighties, that figure was more like thirty or forty per cent. A small-to-midsize publisher has to spend between ten and fifteen per cent on sales, warehousing, and shipping. This leaves little more than twenty-five per cent of the book’s price for editorial counsel, production costs, publicity, paying the author, and whatever profit might be left over. A shared sensibility for a certain kind of fiction or nonfiction writing unites everyone along the way: authors, agents, editors, designers, marketers, reviewers, readers. “The only point at which Bezos enters that chain is to take all the money and the e-mail address of the buyer,” Robinson said. “There’s an entire community of people, and Bezos stands in the middle of it and collects the money.”

Instead of going through Amazon, OR Books sells directly to customers, using printers in Minnesota and the U.K. It pays about fifteen per cent to the printer and keeps the rest. “After four years, we’re just profitable,” Robinson told me. “It works.”

Well, it works as long as one thing is true:

Net neutrality.

NOTE * Yeah, yeah, I know: Tiny, tiny minority.

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Rangoon78's picture
Submitted by Rangoon78 on

From the above link:
a review of The Everything Store by Brad Stone:

In 1999, when Toys ’R’ Us launched its website in time for Christmas, Amazon bought out its entire stock of the most popular toys (taking advantage of a free shipping promotion), and resold them on its own site. Toys ’R’ Us was fined by the Federal Trade Commission for over-promising. A department within Amazon called Competitive Intelligence noticed that a New Jersey company called Quidsi was having success with a site called Diapers.com: it sold nappies at a loss to entice customers to buy its other baby products. Amazon tried to acquire the company, but Quidsi wasn’t interested. So Amazon started selling its nappies for even less than Quidsi, though it meant losing $1 million a day. When Quidsi still wouldn’t sell, Amazon threatened to start giving away nappies. Quidsi sold to Amazon; nappy prices went back up.

Author Stone has covered Amazon almost since its creation, first for Newsweek, now forBloomberg Businessweek.

…he thinks we should fear it; and he thinks it will ‘expand until either Jeff Bezos exits the scene or no one is left to stand in his way’. In the few months since Stone’s book went to press, Amazon has bought eight million square feet of warehouse space and taken on 70,000 temporary American workers for the Christmas rush; launched Amazon India and a Kindle store in Mexico; unveiled a new tablet; started the largest website for the sale of fine art; begun selling groceries throughout Los Angeles (other markets to be announced); and made an unprecedented deal with the US Postal Service to have customer deliveries on Sundays. London is to get Sunday deliveries too, via Amazon’s own trucks. The company is also preparing to launch its own smartphone (possibly with ‘eye-tracking’ software: no clicks necessary, just blink) and is manufacturing a box that will let users access Amazon content through their televisions. All this in addition to building up its own publishing house, television and film studio, and continuing its dominance over the sale of server space for tech companies.

Another interesting take on Amazon:

Is Amazon A New Monopoly? Transcript - On The Media

BARRY C. LYNN: Going back to 1773, to the Tea Party, which was an action against the British East India Company, we used our anti-monopoly laws to distribute power so that no one had the ability to dictate to us as citizens.

What happened in the late 1970s and 1980s is this really weird coalition of the consumerist far left and the libertarian far right came together and said, let’s get rid of that old model. What we want to do now is make a system that yields more efficiencies, so that it will benefit the consumer in the form of lower prices. So we took the very lessons that the United States was founded upon and that kept us free as a people for 200 years and we threw it out.

[…]

BARRY C. LYNN: In the 19th century, these new technologies, the railroad, the telegraph, allowed a few people to capture control over most industry in the United States. The new railroads, the Internet, Amazon being probably right now commercially the foremost player, one of the ways that you neutralized railways is you prevented them from owning other lines of business, like quarries or oil wells, because if you allow them to own other lines of business, they will favor their own lines of business.

Right now Amazon, we allow them to vertically integrate, we allow them to own publishing operations, to favor what they publish and to disfavor what other people publish. Over time, this leads in one inexorable direction, which is towards complete control over this system by a single group of human beings.

BROOKE GLADSTONE: Isn’t it true that when Amazon underprices, it isn’t cutting into the publisher’s share. The publisher gets a certain amount, regardless of how low Amazon sets the price for the book, right?

BARRY C. LYNN: They get a certain amount, absolutely. The problem is six months from now, twelve months from now. If a reader was accustomed to spending 19.99 and then Amazon accustoms them to pay 9.99 or 8.99, even if the publishers this year are getting 12.99 at wholesale, next year they’re gonna get less because there’s a new price in the marketplace, and their share of that will be some fraction of the new price.

BROOKE GLADSTONE: So what are you arguing here, that Amazon is going to kill the book industry with its low pricing? Why would it do that? That would be suicidal.

BARRY C. LYNN: They actually don’t really care that much about the book industry. Amazon wants to sell televisions, Amazon wants to sell shoes. They can lose money on books forever, throw ‘em out the front door as a form of candy to lure us, the consumers, into their realm, so that they know who we are, know what we like to buy and then sell us all these other things, forevermore.

BROOKE GLADSTONE: So do you think in 40 years the Monopoly board will have an Amazon square?

BARRY C. LYNN: Actually, we probably won’t because most of the Monopoly games will be sold across Amazon, and I assume they won’t allow that to happen.

http://www.onthemedia.org/story/251820-amazon-new-monopoly/transcript/

blues's picture
Submitted by blues on

Damn, I had no idea that Amazon, which this Bezos person wanted to call "Relentless.com", was taking over the earth. Even pushing PayPal (which everybody so loves) aside with its new "Amazon Checkout".

I never bought anything from them. I have about 12 apps on my machine to hide from the astonishing array of gotchas that try to track me on the web (maybe I should share the big list?). I may be on the 'net, but I'm almost off the grid. I only buy from New Egg (and I boot from a live Linux disk to do even that). Why trust these people? Just so Zuckerberg can laugh at me?