• Onwriting
  • Onmoney
  • Onsport
  • Ontrolleybags

Recent thoughts


Amazon: mean or misunderstood?

Authors including Malcom Gladwell and Douglas Preston this week added their names to a letter to the US justice department antitrust unit attacking Amazon over its power in the book market. The group - Authors United - claim that Amazon benefits as monopoly seller of books and a monopsony buyer of books. In layman's terms, the assertion is that Amazon can buy at and sell at whatever price they want.

Pretty sweet position to be in, right?

But what would you think if the company in question makes virtually no profit? Amazon's revenues hit US$88bn last year, but it made actually made a loss of $240m. In other words a gross profit margin of -0.3%. By contrast Apple book just shy of 40% every quarter.

But what are Amazon doing with all the money?

Well, they plough almost all of it back into capital expenditure, primarily aimed at improving their delivery infrastructure: from bigger, more efficient distribution centres to drone delivery. In other words, they are trying to improve the customer experience - providing a better, faster service to attract more people to buy products there.

So are Amazon mean or misunderstood?

Traditional publishers were caught with their collective trousers down by the digital age. The authors and bookstores who benefited from the status quo continue to suffer. Amazon has trampled all over them like an elephant with an itch but technology has sped up the business lifecycle. The 'innovate or die' never rang truer.

Of course, I cannot be truly objective. I am a satisfied customer - I buy my ebooks on Amazon and I sell my own novels there too. But I do agree with Alliance of Independent Authors who suggest that the Authors Guild and others are worried about the competition provided by the new generation of self-publishers.

I have said before that I believe the cream rises to the top in the literary world. Traditional publishers and the authors under their roofs grew lazy. Like taxi drivers blocking roads because of competition from Uber - another tech 'upstart' with questionable business ethics - the customer has spoken and they have already lost.

They just refuse to accept it.


July 17, 2015

madebyeggs || © 2017 Dominic H. King