Amazon

Amazon offers one-hour deliveries with Prime Now

18 December 2014

From Engadget:

Amazon has just launched a new service called Prime Now, which will let Prime members order “tens of thousands” of “daily essentials” for immediate delivery. Once you download the new app (on Android or iOS), you’ll get the option of picking a one- or two-hour delivery between 6AM and midnight, with Uber-like tracking included. The fastest option will run $7.99 per order and two-hour deliveries are free for Prime members.

. . . .

Prime Now will operate exclusively in Manhattan to start, but Amazon has promised that it’ll soon be coming “to a city near you.”


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Link to the rest at Engadget and thanks to Chris for the tip.

Reading in the Age of Amazon

18 December 2014

From The Verge:

Chris Green holds an envelope. At least, it looks like an envelope. In reality, it’s a piece of office copy paper that’s been cut and folded into the shape of a Kindle Voyage, the latest in Amazon’s bestselling line of e-readers. Green, the head industrial designer at Lab126, the secret lab where Kindles are designed, unfolds the paper to show it has been stuffed with everything that makes a Kindle: a CPU, a modem, a battery.

Green is a boyish sort, and he hands me his fragile bundle of electronics with a certain glee, but the most important thing in his hands is actually the paper itself. For Amazon, paper is more than a material for making prototypes. It’s the inspiration for the Kindle of the future: a weightless object that lasts more or less forever and is readable in any light. “Paper is the gold standard,” Green says. “We’re striving to hit that. And we’re taking legitimate steps year over year to get there.”

. . . .

Hundreds of millions of tablets and e-readers have been sold, but today we’re still inclined to think of a book as words on a page. Amazon’s success with Kindle has hinged on recognizing how much more they can be. So where does the company go from here? In a series of rare, on-the-record interviews for Kindle’s 7th anniversary, Amazon executives sketched out their evolving vision for the future of reading. It’s wild — and it’s coming into focus faster than you might have guessed.

. . . .

It’s been a decade since “Fiona” was first imagined, the codename Amazon gave to the first iteration of the Kindle. As recounted in The Everything Store, Brad Stone’s rollicking 2013 history of Amazon, Jeff Bezos commanded his deputies in 2004 to build the world’s best e-reader lest Apple or Google beat them to it. To Steve Kessel, who was put in charge of running the company’s digital business, Bezos reportedly said: “I want you to proceed as if your goal is to put everyone selling physical books out of a job.”

It took three years for Kindle to come to market. The first model wasn’t particularly beautiful: a $400, off-white chunk of plastic with a full QWERTY keyboard. But before the world had ever heard of an app store, Amazon had integrated its bookstore directly into the device. For the first time, you could summon almost any book you could think of within seconds, no matter where you were.

The initial, never-quantified run of devices sold out in five and a half hours, and soon Kindle became synonymous with e-reading. Amazon has never released sales figures for the Kindle, but analysts believe the company has sold more than 80 million of them, and Morgan Stanley estimated the devices would generate revenues of $5 billion this year. (Amazon declined to comment on sales figures.)

. . . .

“When you’re reading, you want to fall down the rabbit hole,” says Green, a native of northern England who came to Amazon after eight years with Bay Area creative consultancy Frog Design. Amazon has actually built a rabbit hole, of sorts: a reading room somewhere at Lab126, stuffed with comfortable chairs, where pinhole cameras study the way people really read. (Because test subjects are in there using prototype devices, I am not allowed inside.)

It’s in this room that Amazon learned people switch hands on a book roughly every two minutes, even though in surveys they claimed not to. (This is why the Voyage has identical page-turn buttons on both left and right.) The Voyage’s page-forward button is much bigger than page-back, because Amazon’s data showed 80 percent of all page flips are forward. As Green describes research like this, it seems likely that Amazon has spent more time studying the physical act of reading than any company before it.

. . . .

From the start, Amazon has defined its hardware mission narrowly: to build devices that disappear in the hand, with uniquely useful features, for a low price. “We would never make a gold thing, because that’s too distracting,” Green says. “There are many companies that create pieces of jewelry. We’re not going to do that, because that’s an added cost that takes away from the actual content.”

. . . .

There’s another dimension to the future of reading, beyond how we read. It’s what we read: who writes it, who publishes it, how it gets distributed. Nowhere are more important decisions being made about those issues than at Amazon’s Seattle headquarters. With physical bookstores in a state of seemingly perpetual decline, Amazon has achieved a dominant position: the company sells 40 percent of all new books in the United States, and two-thirds of ebooks.

On one hand, that represents less than 10 percent of Amazon’s overall sales. But even as the company has pursued its dream of becoming a place to buy anything, books have retained an outsized place in the corporate imagination. “Books are home for us,” says Russ Grandinetti, senior vice president of Kindle content. “It’s where we started. Not only is it a great business that we like, and many customers know us for, but it’s something about which we have a passion. A lot of us on the team are personally passionate about books. Books changed our lives.”

. . . .

The rise of self-publishing, which Amazon has heavily promoted, has led to an explosion of genre fiction. Kindle Singles, which allow authors to sell work of medium lengths, has become a home for projects no traditional publisher would consider. Cable TV, YouTube, and Netflix created avenues for new kinds of visual storytelling, and new ways to make money; the elimination of gatekeepers in the world of books is doing the same for text.

“Technologies change, and then what people make with them changes,” Grandinetti says. He points to the way cable allowed for both Breaking Bad, which told a single story over 62 episodes; and True Detective, a multi-season series that tells a complete story each year. “Nobody would take a chance on those TV shows 10 years ago, because the model didn’t exist. So even though the evolution of these media may taketh away in some places, it giveth in some others. And I think the same may be true in books.”

Link to the rest at The Verge and thanks to Nirmala for the tip.

Amazon Not as Unstoppable as It May Appear

17 December 2014

From The New York Times:

Thanks to its ugly spat with book publishers, Amazon has lately been cast as the abominable boogeyman of American commerce.

As hundreds of authors took up arms against the giant, The New Republic declared in a cover article this fall that “Amazon Must Be Stopped,” insisting that the company’s unbounded retail ambitions would end up “cannibalizing the economy.”

But there’s another theory about Amazon’s future, one for which evidence began to mount this year: Despite fears of Amazon’s growing invincibility, the company’s eventual hegemony over American shopping is not assured. It might not even be likely.

. . . .

Amazon may face a deeper problem. Like many of the local and big-box retailers it has displaced over the last decade and a half, Amazon could itself become increasingly vulnerable to the threat of technological upheaval.

. . . .

The key to its vulnerability is the smartphone, a device whose scope and significance Mr. Bezos has not yet managed to corral.

Phones have already radically altered both how Americans shop and how retail goods move about the economy, but the transformation is just beginning — and it is far from guaranteed that Amazon will emerge victorious from the transition.

Phones are at the heart of the service offered by Postmates, one of several start-ups that are working with retailers and helping to change shopping experiences. “Everything that we’re doing is anti-Amazon,” said Bastian Lehmann, the co-founder of Postmates.

Postmates runs a network of couriers who, like Uber drivers, are dispatched by phones to deliver food, apparel, toothpaste and other goods from local stores in 18 American cities. The company recently announced a plan for retailers to build Postmates’ technology into their own technology systems, a way to give small stores the kind of logistical efficiencies that were previously available only to giants like Amazon.

. . . .

These services all have in common speed and convenience: Because they route purchases from stores, they can often shuttle goods to buyers faster than they are available from Amazon. The prices are even competitive with Amazon, which delivers most of its products, even groceries, from warehouses that are a few hours away.

Link to the rest at The New York Times and thanks to Dave for the tip.

Can Amazon be defeated? Of course it can.

Jeff Bezos, like most successful tech executives, is paranoid about a new startup that will beat Amazon at its own game. That’s one reason that Amazon continues to innovate in its core business (robot warehouses, drone delivery), move into new lines of businesses and keep its margins very low, to defend against the next Bezos.

Amazon hints at e-book price hike on Jan 1st

17 December 2014

From The Bookseller:

Amazon has warned that e-book prices will rise come January following a change in VAT law in an email to self-published authors. On 1st January Amazon will “make a one-time adjustment to convert VAT-exclusive list prices provided to us to VAT-inclusive list prices” resulting in a rise in the list price of thousands of e-books.

From 2015, VAT will be charged at the rate where the customer resides, rather than where the servers are based, meaning e-books bought by UK readers will be charged a rate of 20%, as opposed to the 3% levied by Luxembourg, where Amazon is based. The Kindle Direct Publishing team has contacted authors published on its KDP platform explaining that when the new law comes in on 1st January, Amazon will make a one-off adjustment to the prices of e-books already published, increasing, for example, a £5.00 list price of a book to £6.00 to account for the 20% VAT rate.

The one-off price-change example implies e-book prices will rise when the law comes into effect in January. In the run-up to the change, there continues to be speculation about how retailers and publishers will handle the change, with some tax experts warning that price hikes were inevitable.

. . . .

Amazon has also explained that e-book royalties would be calculated on the list price of a book minus VAT. And following the new law, minimum and maximum list prices for the 35% and 70% royalty plans on KDP will change to also include VAT. However, the retailer assured   authors that titles scheduled to run in the Kindle Countdown Deal in the UK marketplace during or after 1st January would still be eligible to finish that promotion, even if the list price does not fit the new requirements of being priced between £1.99 and £15.99, including the VAT.

. . . .

Other retailers have been less clear about what will happen to prices. A Kobo spokesperson said:  “We will continue to work closely with our publisher partners, both agency and wholesale, to bring our customers the best possible offering.” Nook did not want to make a comment about what would happen to prices.

Authors have expressed concern that the move would either impact their royalties, or, if prices rise, sales. Mark Edwards, author of several books including Because She Loves me (Thomas & Mercer), currently at Number 2 in the Kindle Chart, said he was concerned about the new VAT law’s impact. He said: “My concern as an author is that the amount of royalties we earn is going to decrease unless the price of e-books go up. But if that happens, sales might decrease. My feeling is that prices won’t go up, so authors will lose out on royalties.” He added: “Nobody wants e-book prices to rise because this could harm sales and discourage readers. It’s hard enough to make a living as an author and it’s going to be even harder now that more of the money readers spend on e-books will go to the government and less to the people who write, publish and sell them.”

. . . .

At the time, Richard Asquith, vice-president of global tax at online accounting service Avalara, said he expected retailers to adopt the “Ryanair-style” model of adding VAT at the till. He said: “Companies are getting much better at protecting their margins. If they don’t increase prices on 1st January they will do it soon [after]. Otherwise it’s a huge dent in their business model. It’s inevitable that it will come.”

Link to the rest at The Bookseller

Did Apple Fix E-Book Prices for the Greater Good?

17 December 2014

From The New Yorker:

Had you listened to the lawyers presenting oral arguments to the United States Court of Appeals for the Second Circuit between ten o’clock and eleven o’clock on Monday morning, you might have assumed that someone was suing Amazon. Much of the discussion centered on whether Amazon had a monopoly on e-book sales a couple of years ago. At one point, a judge even suggested outright that Amazon could be described as a monopolist company that engaged in predatory pricing.

But the case before the court that day wasn’t about Amazon—not directly, at least. It originated in 2012, when the Department of Justice sued Apple and five book publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) for allegedly conspiring to raise the prices of e-books in the run-up to the launch of the iPad, in 2010. Amazon, whose Kindle e-reader had a ninety-per-cent market share for e-books before the iPad’s introduction, had been buying them at the wholesale prices set by publishers, then reselling them at retail prices (typically $9.99 per book) that were often at or even below the original wholesale price. Amazon didn’t mind losing money on each sale, as long as the strategy helped sell Kindles and expand the e-book market. But publishers believed that the low retail price of e-books eroded the public’s perception of what books are worth. They also worried that the heavily discounted e-books were hurting hardcover sales, on which they depended for much of their revenue.

. . . .

So why the discussion now of whether Amazon was a monopolist before Apple came along? According to recent case law, price-fixing schemes designated as horizontal (that is, coördinated among competitors) violate antitrust law, no matter the parties’ intentions or the effects on the market. But “vertical” price-fixing (between a retailer and a manufacturer) may not be a violation, depending on such factors as the companies’ motives and the outcomes of their actions.

Last year, a federal judge named Denise Cote found that Apple had, in fact, collaborated in a horizontal price-fixing scheme, not that it had orchestrated a vertical one. Cote noted that Apple executives kept the publishers informed about what other publishers were up to; she also pointed out that Apple made clear to the publishers that it was important for as many of them as possible sign on to the proposed deal. Both of these activities, among others, Cote argued, showed that the company had facilitated horizontal price-fixing.

. . . .

On Monday, comments from the appellate judges in New York—especially Judge Dennis Jacobs—suggested that they might be more receptive than Cote to Apple’s line of reasoning. According to Agence France-Presse, Jacobs said, “What we’re talking about is a new entrant who is breaking the hold of a market by a monopolist who is maintaining its hold by what is arguably predatory pricing.”

. . . .

According to the Associated Press, when one of the judges, Raymond J. Lohier, Jr., asked a lawyer for the Justice Department how Apple and the publishers “could have broken Amazon’s monopoly of the e-book market without violating antitrust laws,” The lawyer noted that Apple could have let the competition among companies play out naturally without pursuing explicit strategies to push prices higher—or it could have sued, or complained to the Justice Department and to federal regulatory authorities. First told me, “My view of this has always been that vigilante justice is not appropriate—it was not even appropriate in the Wild West.”

Link to the rest at The New Yorker

PG suggests that, even if Amazon was abusing its position in the ebook world (not a certain thing by a long shot because it was trying to push prices down, a good thing for consumers), the solution to monopoly power is not to create another monopoly that abuses its power – by price-fixing, which is what the Price-Fix Six did.

Google Shopping to Counter Amazon

16 December 2014

From The Wall Street Journal:

Google Inc. plans to push deeper into online commerce by enhancing its Google Shopping service with features that more directly challenge Amazon.com Inc.

Google has approached retailers about creating a “buy” button for its online shopping site that would be similar to Amazon’s popular “one-click ordering” feature, according to people familiar with the discussions.

Until now, Google Shopping has referred shoppers to merchants’ websites via links in search results. But Google wants to keep users on its own pages longer, rather than send them elsewhere.

Google wouldn’t sell or ship products itself. It aims to streamline shopping for Internet users so they keep searching for products on Google instead of switching to Amazon. The move comes as Amazon has bolstered efforts to snag a slice of Google’s search-advertising business.

. . . .

If Google goes ahead, it would be the search giant’s latest moves to combat Amazon’s increasing sway over online commerce. In the third quarter, 39% of U.S. online shoppers began researching their purchases on Amazon and only 11% started on search engines like Google, according to Forrester Research . That’s a reversal from 2009, when 24% started on search engines and 18% on Amazon.

Link to the rest at The Wall Street Journal (Link may expire)

Amazon Rejected This Author’s Book Because It Had Too Many Hyphens

16 December 2014

From Business Insider:

Graeme Reynolds, a UK-based author of horror novels, says he was unable to sell one of his best-selling books on Amazon’s Kindle library because his manuscript contained too many hyphens.

In a blog post, Reynolds says Amazon’s automated spell-check returned “over 100 words in the 90,000 word novel [that] contained that dreaded little line.”

Amazon’s software rejected Reynolds’ book since 0.11% of all words contained hyphens.

Mind you, Reynolds’ book in question, titled “High Moor 2: Moonstruck,” has been out for about 18 months, and Amazon has done much of the selling. Reynolds says he “spent well over £1,000 on getting that book edited, using the best editors I could find.”

. . . .

Amazon’s letter to Reynolds stated the number of hyphens “significantly impacts the readability of your book” and therefore “we have suppressed the book because of the combined impact to customers.”

Link to the rest at Business Insider and thanks to Dave for the tip.

Jeff Bezos’ Lemonade Stand

15 December 2014

From the New York Times’ Bits blog:

Philip K. Dick’s “The Man in the High Castle” is about what the title character calls the “terribly, terribly disruptive” nature of reality, so it is awesome that the terribly, terribly disruptive Amazon has now filmed this classic science fiction tale. The pilot will appear early next year from Amazon Studios. Any member of the Amazon Prime perks club can watch it free.

Nothing in life is truly free, of course, even from Internet companies that proclaim their generosity. As Amazon loads the benefits on top of Prime — including costly original programming like “High Castle,” older movies, a streaming music service and an e-book lending library — the conventional wisdom is that these customers will return the favor by ordering much more from Amazon. Come for the movie, stay for the vacuum cleaner, diapers and marmalade.

But there is another, more hidden group paying for “High Castle”: people who buy physical books on Amazon. The retailer’s expansion of Prime benefits, as well as its myriad other projects, appears to be fueled in part by fattened margins on all sorts of books beyond the top best sellers.

Say, for instance, “High Castle” is terrific and you wanted to read something else by Mr. Dick. There are quite a few novels to choose from and Amazon has them all. But the deals are often less than compelling.

“Dr. Bloodmoney,” “Confessions of a Crap Artist,” “In Milton Lumky Territory,” “The Penultimate Truth,” “Time Out of Joint,” “A Scanner Darkly” and 15 other Dick novels were all discounted 10 to 17 percent late last week.

. . . .

 These are not the sort of bargains that made Amazon into the biggest bookseller in the world. In 2001, the retailer announced with much fanfare that it would discount by 30 percent books selling for $20 or more.

. . . .

 Sales boomed. “It’s Adam Smith economics that volume will go up when prices go down,” Amazon’s chief executive, Jeff Bezos [said].

. . . .

Although Amazon does not reveal its pricing strategy, that blanket 30 percent discount seems a thing of the past. Customers today also pay sales tax in much of the United States, which equates to a price increase of as much as 9 percent.

Mr. Bezos is apparently now using a different measuring stick than Adam Smith economics. Books are helping pay for the company’s expansion, he suggested in an interview this month.

. . . .

 “It’s like we built this lemonade stand 20 years ago,” he said. “It’s become very profitable over time, but we also decided to use our skills to open a hamburger stand and a hot-dog stand and so on.”

. . . .

 If Amazon seems to have changed its business practices, its message is still the same. It talks the way it did a decade ago, when it was still relentlessly driving down prices. In the confrontation with the publisher Hachette over e-books last summer, the retailer made the crowd-pleasing point that it was on the side of readers against the fat-cat publishers that wanted to line their pockets.

Link to the rest at New York Times and thanks to Jan for the tip.

PG didn’t check Amazon’s prices for all the books mentioned in this article, but, for those he did, the author was citing hardcopy prices, not ebooks.

PG speculates that ebooks are much more profitable than hardcopy books for Amazon. Since most indy authors make a large portion of their money from ebook sales, this sounds like a win-win.

Can Apple Win Its E-book Appeal?

15 December 2014

From Publishers Weekly:

On Monday, December 15, Apple will finally get their crack at overturning its 2013 e-book price-fixing judgment, with oral arguments scheduled before the Second Circuit Court of Appeals. What are the core arguments that will be pressed before the Second Circuit? What is at stake? And, can Apple succeed in overturning the judgment against them? Here is a short primer:

. . . .

Monday’s hearing is the main event: this is Apple’s appeal of Judge Denise Cote’s 2013 liability finding, in which the company was found to have conspired with five major publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) to artificially inflate e-book prices.

The 2012 suit alleged that five of the then Big Six publishers, threatened by Amazon’s $9.99 e-book prices,colluded with Apple to simultaneously move the industry to an “agency” model in which the publishers would take control of consumer e-book pricing in conjunction with the 2010 launch of the iPad and the iBookstore.

The five Publisher Defendants settled the charges against them and avoided trial. They admitted no wrongdoing, butrefunded $166 million to e-book consumers, and submitted to two years of Department of Justice sanctions. Apple, however, fought the charges, and, on July 10, 2013, after a two-week trial, Cote found Apple had violated Section 1 of the Sherman Act.

. . . .

In Apple’s version of events, the company did “nothing more” than “[hear] out” the publishers’ complaints about Amazon and convey its “openness to pricing above $9.99.” Nothing in the evidence, they stress, definitively shows otherwise.

Did Apple exploit the publishers’ desire to blunt Amazon’s pricing? Sure—but at no time, Apple attorneys insist, did Apple knowingly join a conspiracy—it was simply trying to enter the e-book market under “rational” business terms. And its entry into the e-book market ultimately had “pro-competitive” effects, helping to dent Amazon’s 90% share of the e-book market.

“That Apple used the leverage created by market dynamics and the publishers’ well-publicized antipathy toward Amazon to enter the market is quintessential competition,” Apple argued in a July appeal brief, “not conspiracy.”

. . . .

Attorneys for the U.S. Department of Justice counter that Apple did considerably more than “hear out” the publishers—and that Judge Cote got the case exactly right. In the DoJ’s appeal filing, U.S attorneys point out that the evidence against Apple was “overwhelming.” And, despite Apple’s dispute over “isolated pieces of evidence,” the judge “articulated the proper standard, and correctly applied it.”

U.S. attorneys claim they only needed to show there was “sufficient evidence” to enable “a reasonable fact finder to infer that the conspiratorial explanation is more likely than not.” And the volumes of evidence presented in the case, they say, shows that the alleged conspiracy was “more than merely plausible,” but made perfect economic sense: Apple wanted a retail platform for e-books on its new device, the iPad, but did not want to compete with Amazon on price. And the publishers wanted to end Amazon’s low prices, which they believed “devalued” their product.

. . . .

Lawyers say it will be an uphill battle for Apple. Look at it this way: to win, Apple must lead the Second Circuit to a completely opposite finding than the slam-dunk verdict Judge Cote came to, based on the same evidence, and a single, brief oral argument (each side is allotted just 20 minutes).

Apple’s appeal is also somewhat unusual in that it leans surprisingly hard on Cote’s reading of the evidence. Appeals generally hinge on legal and procedural errors. But in this case, Apple claims that Cote so abused her discretion that her conclusions are reviewable for “clear error.”Cleveland State University law professor Christopher Sagers, who has followed the case closely, told PW it is “definitely not impossible” that Apple could win. But, in his opinion, Cote’s reading of the evidence is sound, and some key parts of Apple’s arguments, because they revolve around findings of fact, could be deemed unreviewable.

Link to the rest at Publishers Weekly

PG thinks Apple will lose its appeal.

However, PG also believes that the outcome of the appeal is irrelevant to the ebook world. Apple has failed as a savior of Big Publishing and high prices for ebooks. In a nutshell, Apple can’t compete with Amazon in selling ebooks.

At the time the Price-Fix Six hatched its little plot, Apple was going to introduce the iPad and everyone thought it would dominate the ebook world. Although the iPad started off as the only game in town, it’s not any more. Gartner estimated that Android tablets represented 62% of tablet sales in 2013 while iPad sales were 36% of the tablet market.

Theoretically, Apple could remove Amazon apps from the iTunes store, but doing so would upset iPad owners and accelerate the market decline of the iPad.

So, if the Court of Appeals confirms that Apple illegally fixed prices or decides it didn’t makes no difference to anyone but Apple. Amazon is the king of ebook sales and is likely to continue that role, at least in the near-term future.

Apple, E-Books and the Amazon Juggernaut

15 December 2014

From a law school dean via re/code:

Being sued by the government under the antitrust laws has historically been a rite of passage for great American companies like Standard Oil, U.S. Steel, DuPont, IBM, AT&T, Microsoft, Intel and Google. Apple is the latest to be inducted into this rarified company. In a 2012 lawsuit, the Justice Department alleged that the Cupertino company conspired with seven book publishers to fix e-book prices. After being found liable by the federal district court in Manhattan in July of 2013, Apple is preparing to argue its case in the court of appeals today, Dec. 15.

Apple should be feeling good about its chances. Although the government’s case has superficial appeal, the record suggests that Apple’s actions may have benefited rather than harmed the welfare of e-book customers.

. . . .

First, although the point of a price-fixing conspiracy is generally to increase prices, there is compelling evidence that the shift from a wholesale to an agency model resulted in a decrease in the average prices of e-books. While the prices of premium books that Amazon had previously been selling below cost increased, Apple and B&N’s entry facilitated the vast expansion of the e-book market, including the availability of many new low-cost books. The net effect for consumers was an expansion of choice and variety at lower average prices.

Second, it would be misguided to judge the competitive effects of Apple’s behavior solely based on e-book prices. Amazon was strategically using low, and arguably anticompetitive, e-book prices to entrench the entire Kindle ecosystem. Market entry by new competitive ecosystems like the iPad/iBookstore required disruption of Amazon’s prevailing business model. Consumers undoubtedly benefited immensely from the introduction of the Nook and iPad and their associated online bookstores.

Link to the rest at re/code and thanks to Chris for the tip.

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