Why Is Amazon Blocking Reviews of the No. 1 Best-Selling ‘Justice on Trial?’

From The Federalist:

Amazon is refusing to publish many reviews and ratings of the No. 1 best-selling “Justice on Trial: The Kavanaugh Confirmation and the Future of the Supreme Court,” according to multiple reports from readers who purchased the book directly from Amazon.

The behind-the-scenes dive into the confirmation of Supreme Court Justice Brett Kavanaugh, which was written by Carrie Severino and The Federalist’s Senior Editor Mollie Hemingway, debuted at No. 1 on Amazon’s list of best-selling books.

The Federalist independently confirmed that many reviews by verified purchasers of “Justice on Trial” were not being published by Amazon. Some fake reviews from non-purchasers and reviews from those who clearly had not read the book, however, were published immediately. As of Wednesday evening, the online retailer had allowed only 16 reviews of the top-selling book to be published.

One reviewer whose critique was published by Amazon accused the authors of “stay[ing] away from using the term rape” regarding unsubstantiated accusations of sexual assault made against Kavanaugh during the confirmation process in 2018. A word search of the Kindle version of the book shows that the term was used 41 times by the authors. Another review, from an individual who did not purchase the book from Amazon, wrote that it was the “[w]orst book ever” and rated the book with one star.

. . . .

In a canned statement provided to The Federalist by an Amazon spokesperson, the company said, “Our policy includes a delay before reviews appear on our website while we ensure reviews follow our participation guidelines.” The spokesperson did not explain why troll reviews from commenters whom Amazon hadn’t verified have purchased the book were nonetheless published without delay while reviews from verified purchasers were quarantined and remain hidden.

. . . .

The company also refused to disclose the percentage or number of unpublished reviews written by verified buyers, or what the average rating was for verified purchasers whose reviews were being hidden by Amazon.

In 2018, the Wall Street Journal reported that Amazon employees were being investigated for manipulating product reviews in exchange for cash.

“The going rate for having an Amazon employee delete negative reviews is about $300 per review, according to people familiar with the practice,” the Wall Street Journal noted. “Brokers usually demand a five-review minimum, meaning that sellers typically must pay at least $1,500 for the service, the people said.”

A 2019 expose published by The Hustle dove deep into what it called Amazon’s “massive fake-review economy.”

“Amazon likes to think of its marketplace as a merchant meritocracy where the best products get the best reviews by virtue of quality and honest consumer feedback,” The Hustle wrote. “But the vast size of the platform, coupled with a ferocious competition among sellers to get higher product rankings, has spawned a problem: A proliferation of fake reviews.”

Fake reviews have become such a significant problem that multiple services like Fakespot and ReviewMeta have popped up offering to help potential consumers sort the signal from the noise. Fakespot estimated that up to 30 percent of Amazon reviews are fake or unreliable.

Link to the rest at The Federalist

Amazon Investigates Employees Leaking Data for Bribes

The following is from September, 2018. PG has no idea why he missed it.

From The Wall Street Journal:

Amazon.com Inc. is investigating suspected data leaks and bribes of its employees as it fights to root out fake reviews and other seller scams from its website.

Employees of Amazon, primarily with the aid of intermediaries, are offering internal data and other confidential information that can give an edge to independent merchants selling their products on the site, according to sellers who have been offered and purchased the data, as well as brokers who provide it and people familiar with internal investigations.

The practice, which violates company policy, is particularly pronounced in China, according to some of these people, because the number of sellers there is skyrocketing. As well, Amazon employees in China have relatively small salaries, which might embolden them to take risks.

In exchange for payments ranging from about $80 to more than $2,000, brokers for Amazon employees in Shenzhen are offering internal sales metrics and reviewers’ email addresses, as well as a service to delete negative reviews and restore banned Amazon accounts, the people said.

Amazon is investigating a number of incidents involving employees, including some in the U.S., suspected of accepting these bribes, according to people familiar with the matter. An internal probe began in May after Eric Broussard, Amazon’s vice president who oversees international marketplaces, was tipped off to the practice in China, people familiar with the matter said. Amazon has since shuffled the roles of key executives in China to try to root out the bribery, one of these people said.

Internally, Amazon has worked hard to stop sellers from gaming its systems, but it can sometimes be a Whac-A-Mole situation as swindlers get more creative, according to former Amazon executives and other people familiar with the company’s thinking.

. . . .

Potential internal corruption is the latest challenge Amazon faces in upholding its platform’s integrity, after well-publicized problems with fake product reviews and counterfeit merchandise.

For the past few years, Amazon has recruited independent merchants to sell their products on the company’s marketplace, something that both widens the variety of products offered on the site and reduces prices. More than two million merchants now sell an estimated 550 million products on Amazon, representing more than half of all units sold on the site and contributing an estimated $200 billion in gross merchandise volume last year, according to FactSet estimates.

. . . .

One of the newer ways some sellers are seeking an edge over rivals is getting access to Amazon employees.

Some midlevel Amazon employees in China have the power to delete negative reviews and can access the email addresses of users who have purchased specific items and written reviews of them, said a person who has facilitated illicit transactions between third-party sellers and Amazon employees in southern China.

Brokers are the middlemen between Amazon employees and sellers who want negative reviews deleted or access to internal sales information. Brokers search for Amazon employees on Chinese messaging platform WeChat and send messages asking them if they would like to provide these services in exchange for cash, according to brokers and sellers who say they have been approached by brokers.

The going rate for having an Amazon employee delete negative reviews is about $300 per review, according to people familiar with the practice. Brokers usually demand a five-review minimum, meaning that sellers typically must pay at least $1,500 for the service, the people said.

For less money, sellers can buy from Amazon employees the email addresses of customers who write reviews. This gives sellers the opportunity to reach out to customers who have written negative reviews and try to persuade them to adjust or delete those reviews, sometimes by offering free or discounted products, the sellers and brokers say. Amazon prohibits this practice.

Brokers also offer proprietary sales information, such as the keywords customers typically use to search for items on Amazon’s site, sales volume and other statistics about buyers’ habits, according to the people. Having this information enables Amazon sellers to craft product descriptions and advertisements in a way that boosts their rankings in search results. Amazon doesn’t disclose this type of detailed sales information.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

In PG’s personal shopping on Amazon (and before he saw the OP), he has become less and less likely to purchase products from Chinese sellers because of the poor reputation some have for honesty, accurate product descriptions and substandard customer service.

He realizes this practice is unfair to Chinese sellers who are operating honestly and if PG discovers a reliable method for identifying such sellers, he’ll be happy to purchase from them.

The OP has lead PG to conclude that some of Amazon’s Chinese employees are doing positive harm to both the company’s overall reputation and to honest Chinese sellers. These employees don’t seem to be planning for long-term employment with Amazon. Perhaps some are working for Alibaba, JD.com or other Chinese ecommerce competitors of Amazon. The fact that such thoughts have crossed PG’s mind make it even less likely that he will patronize Chinese businesses online regardless of what name is on the website.

Amazon to Retrain a Third of Its U.S. Workforce

From The Wall Street Journal:

Amazon.com Inc. plans to spend $700 million to retrain a third of its U.S. workforce, as technology threatens to upend the way many of its employees do their jobs.

The company announced Thursday that it will retrain 100,000 workers by 2025 by expanding existing training programs and rolling out new ones meant to help its employees move into more advanced jobs inside the company or find new careers outside of it. The training is voluntary, and most of the programs are free to employees, the company said.

“Technology is changing our society, and it’s certainly changing work,” said Jeff Wilke, chief executive of Amazon’s world-wide consumer business, adding that the initiative is meant to help workers “be prepared for the opportunities of the future.”

For example, hourly workers in fulfillment centers can retrain for IT support roles, such as managing the machines that operate throughout the facilities. Meanwhile, nontechnical corporate workers can spend several years retraining as software engineers without going back to college.

Amazon’s effort to upgrade the skills of its workforce is among the biggest corporate retraining initiatives announced, and breaks down to roughly $7,000 per worker.

. . . .

Amazon, like many corporations, has struggled to find an adequate number of technical employees, and the company is confident that more of its jobs will include a technical component in the future, Mr. Wilke said. The company has more than 20,000 open jobs in the U.S., more than half of them in Seattle.

. . . .

Amazon says it has made a series of moves in recent years to improve workers’ compensation and access to educational opportunities. Last year, the company raised the minimum wage it pays its U.S. employees to $15 an hour. The company had 630,600 full-time and part-time employees world-wide in the quarter ended March 31. It has about 275,000 full-time U.S. employees.

. . . .

Some of the programs offered by Amazon include more advanced training, such as its Machine Learning University, which will be open to thousands of software engineers with computer-science backgrounds to take graduate-level machine-learning skills courses without going back to college. Amazon employees, some of whom are former university professors, will teach the classes.

The training programs could help Amazon workers find jobs in different industries, the company said. The company is expanding a program for fulfillment-center employees called Amazon Career Choice. It pays 95% of an employee’s tuition and fees for certificates and degrees in high-demand fields such as nursing and aircraft mechanics, even though Amazon doesn’t offer employment in those fields.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

PG did a quick check and couldn’t find reports of any similar programs at Barnes & Noble or Penguin Random House.

Amazon Ruined Online Shopping

From The Atlantic:

There’s a Gatorade button attached to my basement fridge. If I push it, two days later a crate of the sports drink shows up at my door, thanks to Amazon. When these “Dash buttons” were first rumored in 2015, they seemed like a joke. Press a button to one-click detergent or energy bars? What even?, my colleague Adrienne LaFrance reasonably inquired.

They weren’t a joke. Soon enough, Amazon was selling the buttons for a modest fee, the value of which would be applied to your first purchase. There were Dash buttons for Tide and Gatorade, Fiji Water and Lärabars, Trojan condoms and Kraft Mac & Cheese.

The whole affair always felt unsettling. When the buttons launched, I called the Dash experience Lovecraftian, the invisible miasma of commerce slipping its vapor all around your home. But last week, a German court went further, ruling the buttons illegal because they fail to give consumers sufficient information about the products they order when pressing them, or the price they will pay after having done so. (You set up a Dash button on Amazon’s app, selecting a product from a list; like other goods on the e-commerce giant’s website, the price can change over time.) Amazon, which is also under general antitrust investigation in Germany, disputes the ruling.

Given that Amazon controls about half of the U.S. online-retail market and takes in about 5 percent of the nation’s total retail spending, it’s encouraging to see pushback against the company’s hold on the market. But Dash buttons are hardly the problem. Amazon made online shopping feel safe and comfortable, at least mechanically, where once the risk of being scammed by bad actors felt huge. But now online shopping is muddy and suspicious in a different way—you never really know what you’re buying, or when it will arrive, or why it costs what it does, or even what options might be available to purchase. The problem isn’t the Dash button, but the way online shopping works in general, especially at the Everything Store.

. . . .

“They sent the wrong tea lights,” my wife announced recently, after tearing open the cardboard box Amazon had just delivered. “It’s the wrong brand, and 50-count instead of 75.” This is not so unusual, actually. Amazon moves a huge volume of goods, and its warehouse workers are poorly treated humans, not just robots. Errors are bound to happen occasionally.

On top of that, Amazon is more than willing to fix its errors. In most cases, you can return an item for a refund or exchange with a few button presses on the website or in the app. And when Amazon messes up, as in the case of our tea lights, the company usually offers free return shipping, and even free UPS pickup, so you don’t even have to leave the house to rectify the error. These are some of the reasons Amazon consistently ranks high in customer-service satisfaction: The company appears to give people what they want, including correcting problems when they arise.

But a customer-service orientation masks how Amazon has changed consumer expectations and standards as they relate to retail purchases. At BuzzFeed Newslast year, Katie Notopoulos wrote about how terrible Amazon’s website is, prompted by its offering her a subscription deal for bassoon straps (a product Notopoulos reported needing to replace once every two decades or so), and a warranty for bottle brushes (which cost $6.99).

. . . .

I recently tried to search for a heat-pump-compatible thermostat on the site. I got a litany of results, all thermostats for sure, but it was difficult to figure out which ones really worked with a heat pump. Eventually I gave up and resolved to visit Home Depot, which I still haven’t done. Another time, I tried to look for a 5-by-8-inch picture-frame mat on Amazon. But every other possible combination of mat came up instead: 8-by-10, 5-by-7, 8-by-8, 5-by-5. A hedge-trimmer battery I purchased came with a charger, but I didn’t realize it from the product description, so I ordered a duplicate charger as well—that charger arrived first, for some reason, and I had opened the packaging so couldn’t return it.

. . . .

Apparel and other items with many options are particularly confusing. Determining if Amazon has the color-and-size combination you’re after for a particular dress or pair of sneakers can be disillusioning—as I write this, for example, Adidas Samba shoes are available for $72.95 in a men’s size 9 without Prime shipping, but for $57.58 in a size 12 with Prime two-day delivery.

. . . .

That brings us to Germany’s Dash-button ban: It’s difficult to know exactly what the product costs when you press the button to order it. Prices on Amazon sway up and down in mysterious ways, driven by computational pricing models that consumers can never see or understand. If configured to do so, pressing the Dash button can send a notification to the account holder’s smartphone, which can be followed to confirm pricing and cancel the order if desired. From the perspective of German law, this isn’t enough; the default behavior is for the purchase to complete, absent sufficient information.

. . . .

The products available to purchase in the first place still feel arbitrary, as do their changing prices, their seemingly inconsistent availability and shipping times, the reliability of their arrival (thanks in part to Amazon Flex, the company’s gig-economy delivery service), and not to mention whether you actually get the product you ordered.

. . . .

But there’s a reason that we used to have shoe stores, hardware stores, grocery stores, bookstores, and all the rest: Those specialized retail spaces allow products, and the people with knowledge about them, to engage in specialized ways of finding, choosing, and purchasing them.

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

PG says there is nothing like a collection of first-world complaints to make you realize that life in modern America is a totally hellish experience. Lovecraftian to the max.

Arbitrary product selection!! Such a thing would never happen at a proper book store.

Prices that change!! Different prices for different shoes!!

Bassoon strap sellers running amok!!

All of these micro-aggressions and micro-annoyances and micro-heat-pump-thermostat-uncertainties make one long for a return to an aboriginal lifestyle.

Or at least a serious book discussion with a knowledgeable Barnes & Noble clerk sporting detailed and colorful satanic tattoos running up and down each arm (presumably to help disguise needle tracks) and multiple lip piercings that produce a unique blurring of fricative consonants when he/she/they/us/we speaks.

At least, the Germans have retained their unique culture in the face of Amazon’s unremitting commercial onslaughts and microaggressions.

No Dash buttons for you, Helga! Es ist zu deinem Besten. Sorge dich nicht, sei glücklich.






New Ways of Selling Books Clash with France’s Old Pricing Rules

From The Economist:

A book is so much more than mere ink and paper. So insist French booksellers, who for nearly four decades have successfully lobbied to keep the forces of the free market at bay. A law passed in 1981 bans the sale of any book at anything other than the price decreed by its publisher. Authorities are cracking down on those trying to flog the latest Thomas Piketty or j.k. Rowling at a discount.

The fixed-price rule is meant to keep customers loyal to their local bookshop and out of the clutches of supermarkets and hypercapitaliste American corporations. But the advent of e-commerce and e-readers has prompted questions worthy of their own tomes. Can you fix the price of a book if it is part of an all-you-can-read subscription service? Are audiobooks books at all? And what of authors who self-publish?

Tweaks have been made to preserve the principle of one book, one price. In 2011 the rule began to apply to digital tomes. Free delivery by online sellers was prohibited on the grounds it implied a subsidy on the delivered books (prompting websites to charge all of €0.01 for postage). But a new challenge to the policy is proving thornier.

Used books are exempt from the pricing rule. Third-party sellers on Amazon are accused of using this as a way to apply forbidden discounts: selling brand-new books as “second-hand” to make them cheaper. So fans of bleak fiction can purchase a copy of the latest Michel Houellebecq novel, “Sérotonine”, for €11.71 ($13.21) on Amazon, roughly half its mandated price. Its seller claims it is in “perfectly new” condition.

Amazon claims its practices are legal. But booksellers are fuming, and their political allies with them.

. . . .

Even with a plethora of subsidies, bookshops are among the least profitable retail businesses. Books are expensive in France—an odd way to encourage people to buy more. For now, constraining the market in the name of l’exception culturelle remains an article of faith for French policymakers. “On the internet you find what you look for,” Mr Riester told his literary allies. “But only in a bookshop do you find what you were not looking for.”

Link to the rest at The Economist

PG suggests that ebooks and the Internet make protectionist laws difficult, if not impossible, to enforce without governments attempting to disable the Internet.

PG has always loved books and bookstores, but acquiring a book through a physical bookstore is becoming a rarer and rarer practice for him (and, from the looks of the physical bookstores he has entered in the past couple of years, for a lot of other readers as well).

Amazon has spoiled PG by feeding his appetite for books on obscure and exotic topics (as perceived by most other readers) and, fortunately, PG’s local library offers an enormous online collection of ebooks through a regional library association, so an unrealistically high online price set by a publisher can also be avoided.

As an example, via Overdrive through his local library, PG is currently reading the ebook version of the English translation of Stalingrad, by Ukranian author (and Jew) Vasily Grossman, a long-suppressed book about the epic siege of that city by the German army during World War II. (PG first mentioned the book here.)

Given the publisher’s price for the printed version of Stalingrad, PG might not have risked adding it to his large collection of abandoned-partway-through-because-it-turned-out-not-to-be-PG’s-cup-of-tea physical books. Also, PG is less entranced by the chest-loading involved in reading thousand-page printed books while lying in bed than he was in former days.

Regarding the OP’s characterization of happy accidents of discovery in price-fixed physical bookstore, PG thinks most readers are far more likely to experience such discoveries online rather than in meatspace.

 

Court Rules Amazon Can Be Held Liable for Third-Party Sales

From The Hill:

A federal appeals court on Wednesday ruled online retail giant Amazon can be held liable for the products sold by third-party sellers on its platform.

The 3rd U.S. Circuit Court of Appeals ruled 2-1 that customers can sue Amazon when they buy defective products from its platform, even if Amazon did not make those products.

The decision could leave Amazon vulnerable to a slew of lawsuits.

The case before the appeals court, though, involved a plaintiff who was in Pennsylvania, and the appeals court carefully noted that it was finding Amazon liable under that state’s strict product liability laws.

Amazon has argued that it does not count as a “seller” because it merely provides the platform, but the appeals court on Wednesday said it disagrees.

“Amazon … plays a large role in the actual sales process,” Circuit Judge Jane Richards Roth, a Reagan appointee, wrote in the opinion. “This includes receiving customer shipping information, processing customer payments, relaying funds and information to third-party vendors, and collecting the fees it charges for providing these services.”

. . . .

The case in question involves a woman named Heather Oberdorf, who bought a leash from Amazon that turned out to be defective. During a walk with her dog in 2015, the leash malfunctioned and hit Oberdorf’s face, leaving her permanently blind in her left eye, according to the filing.

Oberdorf, who was in Pennsylvania at the time of the incident, bought the leash from a seller on Amazon called “The Furry Group,” but neither Oberdorf’s legal team nor Amazon have been able to get in touch with them since 2016.

Amazon is the country’s most valuable retail company and about half of the items sold on its online retail platform are from third-party sellers.

Two federal appeals courts have previously ruled that Amazon cannot be held liable for products from third-party sellers, but the federal appeals court in Philadelphia reversed the latest lower court decision.

Link to the rest at The Hill

The appellate court reversed the decision of the trial court in this matter. Here is the relevant portion of the trial court’s decision which relieved Amazon of any liability under Pennsylvania’s laws:

Like an auctioneer, Amazon is merely a third-party vendor’s “means of marketing,” since third-party vendors—not Amazon—”cho[o]se the products and expose[ ] them for sale by means of” the Marketplace. Because of the enormous number of third-party vendors (and, presumably, the correspondingly enormous number of goods sold by those vendors) Amazon is similarly “not equipped to pass upon the quality of the myriad of products” available on its Marketplace. And because Amazon has “no role in the selection of the goods to be sold,” it also cannot have any “direct impact upon the manufacture of the products” sold by the third-party vendors.

. . . .

The Amazon Marketplace serves as a sort of newspaper classified ad section, connecting potential consumers with eager sellers in an efficient, modern, streamlined manner. Because subjecting it to strict liability would not further the purposes of § 402A, as revealed by Musser and other Pennsylvania cases, it cannot be liable to the Oberdorfs under a strict products liability theory.

. . . .

Section 230 of the Communications Decency Act (“CDA”) states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”Amazon argues that the Oberdorfs’ claims attempt to treat Amazon “as the publisher or speaker” of information provided by The Furry Group—i.e. , “as the publisher or speaker” of the product information provided to Amazon by that third-party vendor—and are therefore barred by § 230.

. . . .

Courts have interpreted § 230 expansively, noting that the immunity provided by that section “does not depend on the form of the asserted cause of action[, but] rather … on whether the cause of action necessarily requires that the defendant be treated as the publisher or speaker of content provided by another.” In Jane Doe No. 1 v. Backpage.com LLC , for example, three victims of sex trafficking sued an online classified ad website, alleging that they were trafficked through ads listed on the website by third parties. The plaintiffs argued that the website was liable for their injuries because it deliberately created a forum to facilitate such ads.Rejecting this argument, the United States Court of Appeals for the First Circuit determined that the plaintiffs were attempting to hold the website liable “as the publisher or speaker” of third-party content (the sex trafficking ads), and held that the claims were therefore barred by § 230.

. . . .

Since the Oberdorfs’ claims for strict products liability, misrepresentation, and breach of warranty have all been disposed of supra , this Court need only consider Amazon’s CDA argument with respect to the Oberdorfs’ negligence and negligent undertaking claims. Although the Complaint frames those claims broadly, it is clear from the Oberdorfs’ papers that they are, in fact, attempting to hold Amazon liable for its role in publishing an advertisement for The Furry Group’s product.In other words, the Oberdorfs are attempting to “treat[ Amazon] as the publisher or speaker of … information provided by” The Furry Group. Therefore, these claims are barred by § 230 of the CDA, and summary judgment will be granted in favor of Amazon on both Counts III of the Oberdorfs’ Complaint.

Here’s a link to the entire trial court decision

Here are some of the relevant portion of the Appellate Court’s decision reversing the trial court’s decision (PG has removed all legal citations to cases and statutes to make reading the opinion easier. The original opinion is packed with them if you’re interested):

Amazon contends that, just as every item offered at an auction house can be traced to a seller who may be amenable to suit, every item on Amazon’s website can be traced to a third-party vendor. However, Amazon fails to account for the fact that under the Agreement, third-party vendors can communicate with the customer only through Amazon. This enables third-party vendors to conceal themselves from the customer, leaving customers injured by defective products with no direct recourse to the third-party vendor. There are numerous cases in which neither Amazon nor the party injured by a defective product, sold by Amazon.com, were able to locate the product’s third-party vendor or manufacturer.

In this case, Amazon’s Vice President of Marketing Business admitted that Amazon generally takes no precautions to ensure that third-party vendors are in good standing under the laws of the country in which their business is registered. In addition, Amazon had no vetting process in place to ensure, for example, that third-party vendors were amenable to legal process. After Oberdorf was injured by the defective leash, neither she nor Amazon was able to locate The Furry Gang. As a result, Amazon now stands as the only member of the marketing chain available to the injured plaintiff for redress.

. . . .

The second factor we consider is whether “imposition of strict liability upon the [actor would] serve as an incentive to safety.”

In Musser, the Pennsylvania Supreme Court “fail[ed] to see how the imposition of strict liability [on the auction house] would be more than a futile gesture in promoting the manufacture and distribution of safer products,” chiefly because the auction house was “not in the business of designing and/or manufacturing any particular product or products.”

Amazon asserts that it does not have a relationship with the designers or manufacturers of products offered by third-party vendors. Therefore, it contends that imposing strict liability would not be an incentive for safer products. Again, we disagree with Amazon.

Although Amazon does not have direct influence over the design and manufacture of third-party products, Amazon exerts substantial control over third-party vendors. Third-party vendors have signed on to Amazon’s Agreement, which grants Amazon “the right in [its] sole discretion to . . . suspend, prohibit, or remov[e], any [product] listing,” “withhold any payments” to third-party vendors, “impose transaction limits,” and “terminate or suspend . . . any Service [to a third-party-vendor] for any reason at any time.”

Therefore, Amazon is fully capable, in its sole discretion, of removing unsafe products from its website.

Imposing strict liability upon Amazon would be an incentive to do so.

. . . .

In Musser, the court indicated that the auctioneer was not in a better position than the consumer to prevent the circulation of defective products because it lacked an “ongoing relationship with the manufacturer from which some financial advantage inures to [its] benefit . . ..” Similarly, in Nath v. National Equipment Leasing Corp., the Pennsylvania Supreme Court held that, because financing agencies perform only a “tangential” role in the sales process, “their relationship with a particular manufacturer does not, in the normal course, possess the continuity of transactions that would provide a basis for indirect influence over the condition and the safety of the product.” Here, while Amazon may at times lack continuous relationships with a third-party vendor, the potential for continuing sales encourages an on-going relationship between Amazon and the third-party vendors.

. . . .

Moreover, Amazon is uniquely positioned to receive reports of defective products, which in turn can lead to such products being removed from circulation. Amazon’s website, which Amazon in its sole discretion has the right to manage, serves as the public-facing forum for products listed by third party vendors. In its contract with third-party vendors, Amazon already retains the ability to collect customer feedback: “We may use mechanisms that rate, or allow shoppers to rate, Your Products and your performance as a seller and Amazon may make these ratings and feedback publicly available.”

Third-party vendors, on the other hand, are ill-equipped to fulfill this function, because Amazon specifically curtails the channels that third-party vendors may use to communicate with customers: “[Y]ou may only use tools and methods that we designate to communicate with Amazon site users regarding Your Transactions . . ..”

. . . .

The fourth factor we consider is whether Amazon can distribute the cost of compensating for injuries resulting from defects.

In Musser, the court “acknowledge[d] that it would be possible for the auctioneer to pass on the costs of imposing strict liability upon him; possibly as [the injured plaintiff] suggests, by indemnity agreements between the auctioneer and the seller.” However, although the court found that extending the meaning of “seller” to include the auctioneer would provide another remedy for injured customers, the court demurred, stating that this would “only marginally” promote the “purpose of the policy considerations” underlying § 402A.37

In this case, however, Amazon has already provided for indemnification by virtue of a provision in the Agreement:

You release us and agree to indemnify, defend, and hold harmless us, our Affiliates, and our and their respective officers, directors, employees, representatives, and agents against any claim, loss, damage, settlement, cost, expense, or other liability (including, without limitation, attorneys’ fees) . . . .

Moreover, Amazon can adjust the commission-based fees that it charges to third-party vendors based on the risk that the third-party vendor presents.

Amazon’s customers are particularly vulnerable in situations like the present case. Neither the Oberdorfs nor Amazon has been able to locate the third-party vendor, The Furry Gang. Conversely, had there been an incentive for Amazon to keep track of its third-party vendors, it might have done so.

The fourth factor also weighs in favor of imposing strict liability on Amazon. Thus, although the four-factor test yielded a different result when applied by the Musser court to an auction house, all four factors in this case weigh in favor of imposing strict liability on Amazon.

The decision of the Appeals Court was made by a panel of three judges. Two judges decided Amazon should be held liable for the injuries. One of the judges disagreed. Following are a few excerpts from that judge’s dissenting opinion:

This case implicates an important yet relatively uncharted area of law. No Pennsylvania court has yet examined the product liability of an online marketplace like Amazon’s for sales made by third parties through its platform. Our task, as a federal court applying state law, is to predict how the Pennsylvania Supreme Court would decide the case. . . .   We must take special care “to apply state law and not . . . to participate in an effort to change it.”

. . . .

In my view, well-settled Pennsylvania products liability law precludes treating Amazon as a “seller” strictly liable for any injuries caused by the defective Furry Gang collar.

. . . .

A “seller” in Pennsylvania is almost always an actor who transfers ownership from itself to the customer, something Amazon does not do for Marketplace sellers like The Furry Gang. For similar reasons, every court to consider the question thus far has found Amazon Marketplace not a “seller” for products liability or other purposes; several of those courts have done so under products liability regimes similar to Pennsylvania’s.

. . . .

Amazon is a multinational technology company. Among other ventures, it hosts online sales. Products are offered for sale at Amazon.com in three primary ways. First, Amazon sources, sells, and ships some products as seller of its own goods. Second, third-party sellers sell products through Amazon Marketplace “fulfilled by Amazon,” purchasing Amazon’s services in storing and shipping their products. Third, at issue here, third-party sellers sell products through Amazon Marketplace without additional “fulfillment” services. These sellers, like The Furry Gang, supply and ship products directly to consumers without ever placing the items in Amazon’s possession.

. . . .

Amazon envisions its Marketplace as an open one. It reserves the right to remove sellers’ listings or terminate Marketplace services for any reason and requires sellers to represent they are in good legal standing, but it does not apply a general vetting process to all sellers to identify those who do not in fact meet that standard. Amazon also does not narrow the Marketplace’s offerings by limiting the number of sellers who may offer each type of product: any number of sellers may register. In displaying products to customers, Amazon distinguishes products sold through the Marketplace from those sold directly by Amazon, identifying the seller responsible for the item in a “sold by” line placed prominently
next to the price and shipping information. The seller’s name also appears on the order confirmation page, before the customer clicks “place your order” to finalize the purchase. . . . Amazon’s conditions of use for customers affirm the distinction, explaining, in Amazon Marketplace purchases from third-party sellers, “you are purchasing directly from those third parties, not from Amazon. We are not responsible for examining or evaluating, and we do not warrant, the offerings of any of these businesses or individuals.” . . . citing Amazon, Conditions of Use

. . . .

A customer on Amazon Marketplace buys a product that has been chosen, sourced, and priced by the third-party seller. The seller contractually commits to “ensure that [it is] the seller of each of [its] Products” listed for sale. The relationship reflected in the agreement between Amazon and the seller is one of “independent contractors.”

. . . .

A seller under Pennsylvania product liability law is one “engaged in the business of selling . . . a product.” . . . . In nearly all cases, “selling” entails something Amazon does not do for Marketplace products: transferring ownership, or a different kind of legal right to possession, from the seller to the customer.

. . . .

Amazon Marketplace, like the auctioneer in Musser, takes an important part in assisting sales, but is “tangential” to the actual exchange between customer and third-party seller. Like an auctioneer, Amazon Marketplace provides the “means of marketing” to a third-party seller who accomplished the “fact of marketing” when it “chose the products and exposed them for sale.” Amazon Marketplace’s services to any individual seller for an individual product are not “undertaken specifically,” but rather, as with the auctioneer, provided on essentially similar terms to a large catalogue of sellers.  And like an auctioneer, Amazon Marketplace never owns, operates, or controls the product when it assists in a sale.

Here’s a link to the Appeals Court Decision

PG thinks the trial court got this right and the court of appeals became too entranced with Amazon’s size and power, thus deciding that Amazon had plenty of money to pay damages and ignoring a careful structuring of the relationship between Amazon and its Marketplace sellers which Amazon created and disclosed to customers who were contemplating a purchase from a Marketplace seller. This sort of relationship, if respected by courts, helps Amazon maintain low prices for its customers.

As one of many illustrations of the old legal maxim, “Hard cases make bad law,” PG believes the majority in the Court of Appeals focused on the size and wealth of Amazon together with the disappearance of the actual seller of the defective product and stretched more than a little to reach a decision whereby the injured plaintiff would receive some compensation from the only party available who had the money to pay such compensation.

While this may seem to result in a just outcome in a particular case, if it becomes binding precedent for determining the outcome of other cases, it is (in PG’s ineluctably humble opinion) a bad idea that will result in more companies besides Amazon being hit with damages just because they’re big instead of because they have behaved in an illegal manner (or maybe because they’re not big, but have a bit of money to pay to an injured person).

Amazon Gets Bulk of Complaint in AAP Filing with US Trade Commission

From Publishing Perspectives:

For years, many in the publishing industry of the United States and other parts of the world have wanted to see Amazon examined by American governmental regulators for potential anti-competitive practices.

And, as various elements of Washington’s apparatus now address issues in terms of the major tech platforms, the Association of American Publishers (AAP) today (June 27) is filing a 12-page statement with the Federal Trade Commission (FTC), urging the commission to more closely scrutinize the behavior of dominant online platforms that “pervade every aspect of the economy.”

And while we find 12 references to Google in AAP’s commentary, it will surprise few in the book business that Amazon is mentioned 33 times.

Today’s filing from the Washington-based AAP, in fact, references that Streitfeld article from the Times’ June 23 edition, though not the Amazon answer, and is responsive to the FTC’s hearings near the close of a long cycle called “Competition and Consumer Protection in the 21st Century” and frequently touching on privacy concerns—often, of course, the entry point to debate and examination relative to tech corporations’ focus on consumer data.

. . . .

Today, in a prepared statement drawn from the commentary and released to the news media last evening for publication this morning, AAP president and CEO Maria A. Pallante is quoted, saying, “Unfortunately, the marketplace of ideas is now at risk for serious if not irreparable damage because of the unprecedented dominance of a very small number of technology platforms.

Link to the rest at Publishing Perspectives

PG suggests that any supposition that Amazon’s publishing activities and its self-publishing platform aren’t viewed as a serious threat by traditional publishing would be rebutted by the strong opposition by legacy publishing’s chief lobbying organization.

PG doesn’t think this organization would be complaining so much if Amazon was just the largest bookseller in the US and many other places in the world.

Amazon Gets Bulk of Complaint in AAP Filing with US Trade Commission

From Publishing Perspectives:

For years, many in the publishing industry of the United States and other parts of the world have wanted to see Amazon examined by American governmental regulators for potential anti-competitive practices.

And, as various elements of Washington’s apparatus now address issues in terms of the major tech platforms, the Association of American Publishers (AAP today (June 27) is filing a 12-page statement with the Federal Trade Commission (FTC), urging the commission to more closely scrutinize the behavior of dominant online platforms that “pervade every aspect of the economy.”

. . . .

And while we find 12 references to Google in AAP’s commentary, it will surprise few in the book business that Amazon is mentioned 33 times.

Today’s filing from the Washington-based AAP, in fact, references that Streitfeld article from the Times’ June 23 edition, though not the Amazon answer, and is responsive to the FTC’s hearings near the close of a long cycle called “Competition and Consumer Protection in the 21st Century”

. . . .

A distinctively international element is engaged at points in which AAP relies on the European Commission’s investigations and action on Amazon’s use of “most favored nation” clauses (MFNs)and the May 2017 acceptance by the EU of Amazon’s commitment to stop using those clauses in distribution agreements with book publishers in Europe.

. . . .

AAP president and CEO Maria A. Pallante is quoted, saying, ““Unfortunately, the marketplace of ideas is now at risk for serious if not irreparable damage because of the unprecedented dominance of a very small number of technology platforms.

“In order to mitigate this crisis and protect the public interest, AAP urges the FTC to exercise much-needed oversight and regulation, particularly as to circumstances where technology platforms stifle competition and manipulate consumer outcomes.”

. . . .

The formulation used by AAP in setting up its commentary rests in two key areas: book distribution and search.

Regarding search, Google is naturally the key interest and AAP’s messaging to the media flags this, saying, “AAP notes that Google’s complete and untouchable dominance is highly problematic [quoting now from its own FTC filing] ‘because its business model is largely indifferent to whether consumers arrive at legitimate or pirated goods.’”

But in reference to book distribution, of course, it’s Amazon that comes in for the lion’s share of complaint. The association in its media announcements finds something of a thesis statement in its commentary to be “No publisher can avoid distributing through Amazon and, for all intents and purposes, Amazon dictates the economic terms, with publishers paying more for Amazon’s services each year and receiving less in return.”

The association delineates five “primary areas of concern” for structuring its commentary this way, we’re quoting here:

  • “Platforms exercising extraordinary market power in the markets for book distribution and Internet search
  • “The threat to competition when platforms act as both producers and suppliers to the marketplaces they operate
  • “Platforms’ imposition of most-favored nation clauses and other parity provisions that stifle competition, market entry, and innovation
  • “Platforms’ use of non-transparent search algorithms and manipulated discovery tools that facilitate infringement and deceive consumers
  • “Platforms’ tying of distribution services to the purchase of advertising services.”

. . . .

In its introductory comments, AAP asks the FTC to consider ways in which tech platforms differ from other players in dominant market operation. It’s here that the association starts grappling with the traditional idea that if prices are low, then anti-competitive harm to the consumer isn’t a factor.

“First,” the association writes, “the assumptions that consumers will purchase goods at the lowest available price and that competition for market share will exert downward pressure on market prices depend on consumers receiving timely and accurate information about prices and quality. … That is often not the case in markets in which one or a handful of platforms use proprietary search algorithms and manipulated discovery tools to tilt the playing field toward particular suppliers or their own distribution channels or products.

“Second, modern technology platforms benefit from—and in some cases depend on—network effects. The larger the network, the greater the competitive advantage over rivals and potential rivals and, once entrenched, the platform has a greater ability to preserve and extend its market power in ways that are not available in markets that are not characterized by network effects.

“Third, in markets dominated by modern technology platforms, an analysis of consumer welfare must not overemphasize retail price levels relative to other critically important factors. The analysis of consumer welfare also must account appropriately for factors such as decreases in quality, consumer choice, and innovation, and a corresponding rise in consumer deception. Nowhere are these considerations more important than in the marketplace for information and ideas.”

Link to the rest at Publishing Perspectives

.

 

Amazon, Youtube and the ‘Too Big to Police’ Platform

From Plagiarism Today:

Back in February, hot on the heels of the Christiane Serruya plagiarism scandal, we took a look at how Amazon could fix its massive plagiarism problem.

The idea was fairly straightforward. Simple, cursory plagiarism checks as works are submitted for publication would help detect a large percentage of would-be plagiarists and would discourage the practice more broadly. However, we noted that such an effort would likely still require a massive human investment that Amazon is likely either incapable or unwilling to make.

Unfortunately for Amazon, a recent report by David Streitfeld at the New York Timeshighlights that the problem goes much deeper than plagiarism. Counterfeit books, AI-generated biographies and “bait and switch” titles are also rife on the service.

According to the article, this is largely owed to Amazon’s aforementioned “hands off” approach to its store and that it assumes all of its sellers are operating in good faith until an issue is brought to their attention.

. . . .

According to the Authors Guild, counterfeiting on Amazon is seeing a “massive rise” and Amazon itself has acknowledged the issue, noting that counterfeiting is a risk factor in financial disclosure forms.

There, they said they “May be unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others, or otherwise violating our policies.”

So what is going on? How is Amazon spending millions and having the problem only grow? The reason is that Amazon has built a platform that’s too big to police and it shares that honor with another site we all know very well.

. . . .

As we discussed back in May, YouTube has become almost as well known for its copyright failings as it has for being the host of videos. Its Content ID system routinely makes mistakes and flags non-infringing content while, at the same time, it is still very easy to find infringing videos on the site.

But the problem goes far beyond copyright. YouTube has become a haven for a wide variety of objectionable content including hate speech, terrorism, conspiracy theories, sexualization of minors and much, much more.

YouTube has responded to these issues in much the same way that it’s responded to copyright issues, with a mixture of technology and policy changes. Whether it’s demonetizing certain kinds of content, using algorithms to remove unwanted material or applying age gates to hide certain content from minors.

However, all of these approaches have one thing on common: Humans are never the front line of defense.

The reason is quite simple, they can’t be. With an estimated 500 hours of video being uploaded to the site every minute, there’s simply no way. Even if only a fraction of a percent of all videos have copyright, community guideline or other issues, (which would be phenomenally low) that’s still far more than can be done with humans.

So, YouTube uses bots, like Content ID, to detect and stop most of the problems. According to YouTube, Content ID handles about 98 percent of all copyright issues on the site. Even if we assume that Content ID is 99% perfect, that’s still a large number of videos that require human intervention.

Link to the rest at Plagiarism Today

Point-Counterpoint: Amazon Responds at Length to a New York Times Critique

From Publishing Perspectives:

A robust response has been created by Amazon to David Streitfeld’s extensive examination of counterfeit books on the retail platform, an article published on Sunday (June 23) at The New York Times.

Streitfeld is an experienced observer of Amazon, and his Sunday article asserts, in part, that the retailer “takes a hands-off approach to what goes on in its bookstore, never checking the authenticity, much less the quality, of what it sells. It does not oversee the sellers who have flocked to its site in any organized way. That has resulted in a kind of lawlessness,” Streitfeld writes.

“Publishers, writers and groups such as the Authors Guild said counterfeiting of books on Amazon had surged. The company has been reactive rather than proactive in dealing with the issue, they said, often taking action only when a buyer complains. Many times, they added, there is nowhere to appeal and their only recourse is to integrate even more closely with Amazon.”

Amazon’s retort—which we’ll explain more fully below—is summed up in this sentence: “Nothing could be further from the truth.”

Nevertheless, a growing level of concern among some in the publishing community was confirmed a bit more than a year ago, when the Authors Guild—the United States’ chief advocacy organization for writers (both trade and independent)—announced it had arranged “a procedure with Amazon for resolving authors’ complaints with their Amazon book listings.” Even then, the Guild made a reference to counterfeit books as one of the hurdles it might handle, writing to its membership, “It is especially important that you let Amazon know when resellers are marking books as new that do not qualify as new under Amazon’s definition, or when you see infringing or counterfeit copies of books being sold on Amazon.”

. . . .

“While Amazon publicly says it has a ‘zero tolerance’ policy for counterfeit products and has built new technology to deal with the problem, its marketplace that allows third-party merchants [to] sell goods continues to be plagued by knockoffs.”

In short, the presence of third-party sellers on the retailer’s platform carries with it a serious challenge in quality control, and anecdotal incidents of wrongdoing such as those cited by Streitfeld tend to loom large when an operation is as vast as Seattle’s.

And the context in which the discussion now is taking place is worth considering. As recently announced, the Federal Trade Commission is to look at Amazon and Facebook, while the Justice Department is to examine Apple and Google, investigating practices that could potentially be ruled anti-competitive.

. . . .

Since the appearance of the Streitfeld article, Amazon has issued a lengthy statement of its own, “Our Response to The New York Times’ Story on Book Counterfeiting,” also dated June 23. Written without a byline, it’s on the company’s DayOne blog site in the “Books and Authors” category. At several points, it directly counters certain parts of the Times article.

One of the Amazon statement’s last points is a response to what the retailer says is the Times piece’s “inaccurate claims about competition among booksellers (a claim the Midwest Independent Booksellers disputed with the Times last year). There is widespread competition among booksellers, from major retailers to independent booksellers to grocery [stores] and drugstores. In fact, according to the American Booksellers Association (a trade group representing independent booksellers), the number of independent booksellers in the US has grown over 50 percent over the last 10 years.”

. . . .

“A recent New York Times article,” the Amazon statement opens, “claims that Amazon doesn’t care about counterfeits and takes a hands-off approach to what is sold in our stores. Nothing could be further from the truth.

“We invest substantial amounts of time and resources to protect our customers from counterfeit products, including books. We also stand behind every product sold in our stores with our A-to-z Guarantee [which promises consumers full refunds for products not received or not as advertised].

“Amazon strictly prohibits the sale of counterfeit products,” the statement says. “We invest heavily in prevention and take proactive steps to drive counterfeits in our stores to zero. In 2018 alone, we invested over $400 million in personnel and tools built on machine learning and data science to protect our customers from fraud and abuse in our stores.

“From the moment a third party attempts to register a selling account, our proprietary technology begins screening and analyzing during the account set-up process, blocking suspicious bad actors before they are able to register or publish a listing. In 2018, we stopped over a million suspected bad actors from opening Amazon selling accounts before they published a single listing for sale, and we blocked more than 3 billion suspected bad listings before they were published to our stores.”

The statement adds, “We provided many of these details to the Times and they chose not to include these facts in their story.”

And Amazon’s article then goes on to respond directly at several levels to Streitfeld’s story. For example, the Times piece looks at a case in which The Sanford Guide to Antimicrobial Therapy, a medical handbook, was so ineptly counterfeited that some of its information—important to medical practitioners’ treatment of patients—became hard to read.

“We’ve worked closely with Sanford Publishing,” the Amazon statement reads, “and took additional action in November 2018 to address their concerns. Since these measures were put into place, the publisher has not submitted any further notices of infringement.”

. . . .

And it highlights four programs as part of its consumer protection activity:

  • Brand Registry, Amazon says, has a membership of more than 130,000 brands and has seen a 99-percent drop in suspected infringements
  • Transparency, the program that uses a mobile app to scan a code for product authenticity, has more than 2,000 enrollees, says Amazon
  • Project Zero is a “self-service counterfeit removal tool” from which, Amazon says, its own systems learn to prevent new infractions
  • And the A-to-z Guarantee is the refund promise the retailer offers its consumers

Of course, Streitfeld’s accounts of counterfeited writings are compelling, particularly a case in which a book about Atari technology of the 1980s was stolen, given a new cover, title, and a fake author’s name—though the counterfeiter kept the actual author’s “biographical details about being the editor of ExtremeTech.com and writing for PC Magazine and Popular Science.”

. . . .

The original article is a deep, layered essay. And the retailer’s retort is a full-throated defense of itself. The company is speaking its corporate mind, just as Streitfeld and authors and publishers speak theirs. A debate in the open beats snarls in the shadows every time.

Link to the rest at Publishing Perspectives

Goodness!

“Atari technology of the 1980s”!!!

“The Guide to Antimicrobial Therapy”!!!!

Piracy on Amazon is costing publishers billions of dollars every minute!!

Where will this ever end?!?!

PG did note one item in the OP that he thought required a bit of editing for accuracy (he’s noted his changes):

The original article is a deep, layered essay. And the retailer’s [Amazon’s] retort is a full-throated defense of itself. The company is speaking its corporate mind, just as The New York Times Company (see below), Streitfeld, and authors and publishers who regularly purchase advertising in The New York Times, speak theirs. A debate in the open beats snarls in the shadows every time.

Fixed it!

In case you were wondering, following is a list of assets owned by The [completely unbiased] New York Times Company (per Wikipedia)

Media Properties

  • The New York Times
  • The New York Times International Edition
  • The New York Times International Weekly
  • T: The New York Times Style Magazine
  • The New York Times Book Review
  • The New York Times Magazine
  • The New York Times News Service & Syndicate
  • NYTimes.com
  • TimesDigest

Other Properties (related to The New York Times brand)

  • Times Books
  • T Brand StudioThe New York Times Idea Lab
  • Times Wine Club
  • Times Film Club
  • Times Journeys
  • NYTLiveThe New York Times Thought Leadership Conferences
  • The New York Times Travel Show
  • TimesTalks
  • Live Read
  • The School of The New York Times
  • The New York Times Store
  • TheTimesCenter

Other Assets

  • Wirecutter
  • HelloSociety
  • Fake Love
  • Blogrunner
  • Abuzz Technologies
  • Joint Ventures
  • Donohue Malbaie, Inc. (49%) with Abitibi-Consolidated
  • The New York Times Building (58%) with Forest City Ratner Companies

Investments

Investment portfolio as of January 2017:

  • Atlas Obscura
  • Automattic
  • Betaworks
  • Blendle
  • Dynamic Yield
  • Enigma
  • Federated Media Publishing (FMP)
  • Heleo
  • The History Project
  • Keep Holdings
  • Keywee
  • Panjo
  • Seen
  • theSkimm

And let’s not forget the largest shareholder of The New York Times Company, Carlos Slim, according to Forbes, the fifth richest person in the world (per Wikipedia):

On January 20, 2009, The New York Times reported that its parent company, The New York Times Company, had reached an agreement to borrow $250 million from Carlos Slim, a Mexican billionaire “to help the newspaper company finance its businesses”. The New York Times Company later repaid that loan ahead of schedule. Since then, Slim has bought large quantities of the company’s Class A shares, which are available for purchase by the public and offer less control over the company than Class B shares, which are privately held. Slim’s investments in the company included large purchases of Class A shares in 2011, when he increased his stake in the company to 8.1% of Class A shares, and again in 2015, when he exercised stock options—acquired as part of a repayment plan on the 2009 loan—to purchase 15.9 million Class A shares, making him the largest shareholder. As of March 7, 2016, Slim owned 17.4% of the company’s Class A shares, according to annual filings submitted by the company. While Slim is the largest shareholder in the company, his investment only allows him to vote only for Class A directors, a third of the company’s board.

Here’s what a newspaper not owned by Carlos Slim wrote about him in January, 2019.

From The Guardian:

While every lurid revelation of the [Joaquín] Guzmán [the Sinaloa cartel boss] trial has been breathlessly noted, the power of this mafia [the political and economic elite, which he {Mexican President López Obrador} calls “la mafia del poder” – the power mafia] has gone largely unremarked. The group is dominated by a dozen or so oligarchs and their families, who have a lock on such key economic sectors as telecommunications, media, mining and banking. Repeated forecasts of rapid development for Mexico have come to naught due to the suffocating hold that this small circle of super-connected individuals continues to have over its economy; by eliminating competition, they can keep prices high and profits surging.

At the center of the power elite is Carlos Slim. His estimated net worth of about $60bn places him seventh on Forbes’s international rich list. This one man’s wealth is equivalent to more than 5% of Mexico’s GDP. The core of his empire is América Móvil, Latin America’s largest mobile phone company; its longtime domination of Mexico’s telecommunications industry has kept the nation’s phone rates among the highest in the world, costing the economy an estimated $25bn a year.

Slim also owns nearly 17% of the New York Times, making him its largest shareholder. Like other American news organizations, the Times rarely writes about him and the ways in which he and other Mexican oligarchs have used their power to stymie the tax policies, public investments and income transfers needed to enable more Mexicans to enjoy the type of comfortable middle-class life depicted in Roma, the recent acclaimed film set in Mexico City in the early 1970s.

Link to the rest at The Guardian

In case you were wondering about the largest shareholders of Amazon, this is from Investopedia:

Jeff Bezos

The number-one shareholder in the company is Amazon’s chief executive officer (CEO) and founder, Jeff Bezos. Bezos was born in 1964 in Albuquerque, New Mexico and studied computer science and electrical engineering at Princeton University. Upon graduating, Bezos went to work for the Wall Street firm D.E. Shaw, becoming the youngest senior vice president in its history. He left the company and started Amazon in 1994, initially setting up the company in his garage in Seattle. After Bezos and a few employees wrote the software for Amazon, the company began to make $20,000 per week, selling products in 45 different countries. As of Bezos’ most recent filing with the SEC on August 14, 2018, the Amazon CEO owned 78.88 million shares of the company.

In September 2000, Bezos founded an aerospace manufacturer and spaceflight company called Blue Origin. In 2013, Bezos paid $250 million for the Washington Post. On July 27, 2017, Jeff Bezos surpassed Bill Gates as the world’s richest man with a net worth of over $124 billion. As of early 2019, he is worth $131.4 billion according to Forbes.

Andrew R. Jassy

Andrew R. Jassy is the CEO of Amazon Web Services, a subsidiary of Amazon that offers various cloud computing services across the globe. Before Jassy became the CEO of Amazon Web Services on April 13, 2016, he served as senior vice president of the group. With a team of 57 people, Jassy founded Amazon Web Services in 2003. According to an August 15, 2018 filing with the SEC, Andrew R. Jassy is Amazon’s second-largest individual shareholder, with a reported 91,231 shares of the company.

Jassy attended Harvard University, earning a bachelor’s degree and master’s of business administration (MBA). Prior to joining Amazon, Jassy worked at Coupa Software Inc. and founded a marketing consulting company, serving as its manager.

Jeffrey Wilke

Jeffrey Wilke has been the CEO Worldwide Consumer for Amazon since April 2016. Wilke joined Amazon in 1999 as vice-president and general manager and served as the senior vice-president for the consumer business prior to his current role. Wilke’s 60,040 shares of Amazon make him the company’s third-largest shareholder, according to an SEC filing on September 12, 2018. The CEO Worldwide Consumer holds 50,040 of those shares indirectly through a trust.

Wilke holds a BSE degree in Chemical Engineering from Princeton University and underwent graduate studies at MIT’s Leaders for Global Operations (formerly Leaders for Manufacturing) program.

Jeffrey M. Blackburn

Jeffrey M. Blackburn is the senior vice president of business development and digital entertainment of Amazon.com and has been at the company since 1998. Blackburn is also the head of Amazon’s M&A, investments and strategic business development worldwide. Prior to joining Amazon, he was an associate at both Deutsche Bank and Morgan Stanley in Silicon Valley. At Deutsche, he worked on Amazon’s IPO. Blackburn holds 62,874 shares of Amazon according to an August 29, 2018 filing with the SEC. Of those shares, 42,874 are held directly and 20,000 are held indirectly through a trust.

Wilke earned his undergraduate degree from Dartmouth College and his MBA from Stanford University.

PG notes a distinct lack of any express or implied connection to la mafia del poder, Carlos Slim or the Sinaloa cartel among Amazon’s largest shareholders.

Google’s Enemies Gear up to Make Antitrust Case

From The Wall Street Journal:

As U.S. officials prepare an antitrust probe of Alphabet Inc.’s Google and possibly other Silicon Valley giants, a loose-knit crew of its rivals is gearing up to help.

In industries from news to travel to online shopping, competitors of Google are readying documents and data in anticipation of meetings with the Justice Department, according to industry representatives.

Many of these companies have long argued that Big Tech platforms illegally abuse their market power. In recent years some of them have found a receptive audience in Europe, where authorities have thrice fined Google for alleged monopolistic practices. Google has paid the fines but is challenging them in court.

Now rivals are stepping up their advocacy in the U.S., where antitrust enforcers recently divvied up the job of examining antitrust concerns at large tech platforms, with the Justice Department preparing a Google probe. The Wall Street Journal reported on the potential probes by the department and the Federal Trade Commission earlier this month, citing people familiar with the matter.

Antitrust lawyers say any probe could take years to complete. Battle lines are already forming. Google is preparing its own data and arguments, the Journal has reported. It also recently overhauled its Washington lobbying operation with an eye toward amplifying the message that its products promote competition and benefit consumers.

. . . .

News Corp, which owns The Wall Street Journal, and other publishers say Google and other tech platforms siphon ad revenue away from content creators.

. . . .

Still more firms haven’t criticized Google publicly, but privately stand ready to provide information to U.S. authorities about practices they view as potentially anticompetitive, according to industry representatives.

“There is a lot more concern that you hear behind closed doors,” said Jason Kint, chief executive of Digital Content Next, a trade association for online publishers that has argued online tech platforms are harming competition and consumers.

. . . .

“We need to assume that internet giants, like any other big companies, will use their assets to maximize profit and strategic value,” said Brian O’Kelley, former chief executive of AppNexus, an advertising technology firm bought by AT&TInc. last year after what he says was an unsuccessful attempt to compete with “the Google Super-monopoly.”

“Either break up the internet giants or force them to treat their component parts at arm’s-length,” he said.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

From the Journal of Antitrust Enforcement (Oxford University, footnotes omitted):

‘Predatory Pricing’ is a legal concept that refers to business strategies, which are designed to stifle competition within markets by driving prices below cost.

In the economic context, this work argues that the current perception of recoupment is too limited and that it can occur without raising prices post-predation. In particular, it demonstrates that recoupment can be achieved in the post-predation stage by achieving greater technological or volume efficiencies that enable the attainment of a previously unattainable ‘break-even threshold’. Accordingly, this article suggests that in certain circumstances, predatory pricing is a sound business decision with a high probability of successful recoupment.

In the legal context, this work seeks to emphasize that under the Sherman Act, a plaintiff must only establish an injury that resulted from a rival’s below-cost pricing and demonstrate ‘a dangerous probability’ that the competitor will recoup his investment in implementing below-cost prices.2 Legally, price predation is inherently injurious and the plaintiff does not have to demonstrate any implication of the act of predation upon consumer welfare.

. . . .

The last section of this work is an attempt to apply these theoretical insights to Amazon’s current business strategy. First, it is argued that theoretically, it is entirely possible that Amazon is engaging in short-, medium-, or even long-term phases of below average variable cost (AVC) price predation as part of its overall expansion strategy. Secondly, the article maintains that if such predation occurs, it is subsidized by short- and medium-term borrowing. Thirdly, it argues that in the long run, recoupment will occur once Amazon achieves its ‘break-even threshold’ and that this type of recoupment will not necessitate any rise in average prices.

. . . .

The test as proposed by Areeda and Turner is composed of two distinct prongs, which must be satisfied to demonstrate predation.

Under the first prong, the plaintiff has to demonstrate that given the nature and condition of the market in which the alleged predator operates, it was rational for the alleged predator to predict that price predation would prove a profitable strategy. This is not a subjective test that requires evidence of the alleged predator’s intent but rather an objective test that involves a demonstration of objective facts that rendered predation a viable business decision. To satisfy this objective test, the plaintiff must prove the likelihood of recoupment at the onset of the predation campaign. In other words, it must be contended that the present costs of predation at the beginning of predation would have been more than offset by the present value of anticipated future profits.

Under the second prong of the test, the plaintiff needs to demonstrate that in a great share of its sales, the alleged predator’s prices were below an applicable measure of cost. This measure of cost is less rigid and depends on the nature of the alleged predator’s market. In some cases, the AVC will serve as an adequate measure, and in other cases that involve short-run price reduction, marginal costs will become a more reliable indicator.

. . . .

However, unlike Areeda and Turner, who assumed that in some particular cases price predation was a rational business decision, (Robert) Bork dismissed the feasibility of predatory pricing in any and all circumstances. In fact, Bork deemed the entire practice as completely irrational and insisted that the reason for the lack of any palpable proof of price predation in the historical cases of antitrust stemmed from the fact that the practice, for practical reasons, was fundamentally financial suicide.

. . . .

Most importantly, Bork defined Areeda and Turner’s theoretical stage of recoupment as the stage in which a firm would raise its prices in the period that follows predation. This narrow definition of recoupment effectively barred other potential strategies that might still ensure ‘that the losses he [the predator] incurs in the predatory campaign will be exceeded by the profits to be earned after his rivals have been destroyed’. And although Areeda and Turner did not articulate all of the ways in which recoupment can occur, it is clear that they did not construe the term as only encompassing raising prices after the goal of monopolization was achieved.

The first major Supreme Court decision that integrated some elements of the Areeda and Turner test was Matsushita. In the decision, the Court determined that the plaintiff was unable to demonstrate that price predation was a rational decision given the nature of the market in question and that the probability of recoupment was non-existent. Notably, however, this was also the first time that the Court cited Bork’s treatise approvingly on the matter as part of its decision. It can be said that the Court adopted the recoupment requirement from Areeda and Turner, but it also embraced Bork’s unsubstantiated rhetoric regarding the overall likelihood of the phenomena in any and all markets.

. . . .

[Critics of Bork contend] that certain markets may induce predation and render recoupment possible.

. . . .

In other words, both Hovenkamp and Bork’s more vocal critics essentially accept, albeit reluctantly, that recoupment can occur only via a rise in prices. To this date, no scholar in the field of antitrust has openly questioned the assertion that recoupment occurs only when the predator raises his prices in the post-predation period.

. . . .

Bork’s limiting interpretation of the term recoupment that ultimately came to be understood as the term’s sole acceptable construction. Only a rise in prices after predation qualified in his view as a business practice that harms both consumers and the competition. The second reason for this limitation was derived from Bork’s rather practical assumption that only a rise in prices in the post-predation period will render predation itself economically sustainable and therefore rational.

To better understand the difference between the definition of recoupment under the original Areeda–Turner test and Bork’s own understanding, the two definitions must be contrasted. Under the Areeda–Turner test, recoupment can be any corporate action that allows a firm to offset the losses it incurred during the predation period. The recoupment act itself does not need to be harmful to consumers. In other words, according to the Areeda–Turner test that harm does not flow from the act recoupment but rather from the entire practice of price predation that always does.

In contrast, Bork’s view of recoupment was composed of two distinct elements. The first was similar to the one articulated in the Areeda–Turner test. But the second required that the act of recoupment harms itself would harm consumers by the rise in prices. According to Bork, predatory pricing is only harmful to consumers if, and only if, its recoupment phase will also be harmful to consumers.

Link to the rest at Journal of Antitrust Enforcement

For the benefit of anyone who has made it through the typically-legalese sentence construction and paragraph structures of either of the two OP’s, PG will attempt to be simple and direct about his explanations and opinions on the subject, particularly as they apply to Amazon:

  1. As a general proposition, any action by a company that offers consumers lower prices for goods and services (or more valuable goods and services without increasing prices) is beneficial.
  2. The primary object of antitrust laws and regulations should be the protection of competition, not the protection of any particular competitor no matter how large or long-established.
  3. Individuals and organizations that attempt to approach the business of providing goods and/or services to others in an innovative manner (for which customers demonstrate their preference by their patronage) should not be limited or restrained because regulators and judges (who are highly unlikely to be competent to judge the virtues or drawbacks of disruptive technology or business innovations) cannot foresee how the innovative party will be able to harvest value from its innovations in the future. Today’s “cut-throat competition” may be tomorrow’s ordinary method of commercial operation.
  4. The ultimate validity of antitrust regulation lies in protecting competition and the opportunity of those inside and outside various businesses to compete with established participants by offering lower prices or other innovations to consumers (individual or business).
  5. The largest danger of the improper use of antitrust regulations lie in the potential for it to be misused to protect business incumbents when their customers demonstrate their preference for better prices or other benefits customers value which are offered by a competitor.

Amazon is clapping back at politicians on Twitter

From The Washington Post:

Amazon’s public relations Twitter account is starting to look a lot more like a political rapid response unit as the retailer increasingly becomes a punching bag for Democrats.

The company clapped back yesterday at Rep. Alexandria Ocasio-Cortez (D-N.Y.) and defended its $15 minimum wage for workers after she criticized Amazon chief executive and Washington Post owner Jeff Bezos for paying people “starvation wages” in an interview over the weekend.

. . . .

That’s part of a broader pattern: The company has also sought to fact-check statements from 2020 hopefuls in between tweets promoting one-day shipping and its Kindle devices. It disputed former vice president Joe Biden’s comments last week about how much it pays in taxes and pushed back in April on Sen. Elizabeth Warren’s criticism of its treatment of competing sellers on its platform.

. . . .

This is a marked change from the traditional tech industry strategy to keep an arms-length from the daily political debate and wait out 24-hour news cycles. But Amazon appears to be realizing that a quiet playbook doesn’t work as the concentration of corporate power becomes a key 2020 issue for Democrats on the campaign trail — who have no qualms with singling out specific companies.

“[Amazon] can’t afford to be passive about it,” said Larry Parnell, an associate professor of strategic public relations at George Washington University. “Corporate America is finding that engaging in the political process — like it or not — is part of doing business.”

. . . .

For Amazon, Twitter could be an avenue to quickly set the record straight when they feel prominent politicians are spreading false information about the company.

“Amazon is simply correcting the record when high-profile candidates or elected officials make statements about the company that are either incorrect or misleading,” said a person familiar with the company’s thinking. “Errors and misunderstandings become accepted truths if they go uncorrected.”

Link to the rest at The Washington Post

PG says this is (or should be) basic corporate public relations in 2019. He understands that a great many large well-known business organizations besides Amazon have rapid response teams that operate 24/7 to reply to and/or rebut social media criticism as quickly as possible.

PG would not be surprised if at least some of these teams include both official company spokespeople and those not formally associated with the company but who can also quickly act to generate additional online rebuttal messages. If you’re worried about potentially damaging effects from a Twitter mob, you might want to have your own Twitter mob on call.

Like him and the tone of his communications or not, Donald Trump works social media in a manner that PG thinks is effective (if not tasteful, dignified or suited to the office of the President). His tweets are eminently quotable, make news and frame political discussions. In the online universe, he can’t be ignored or overwhelmed by a digital mob.

Like it or not, Amazon is a large target for criticism from a wide variety of individuals and organizations. It can’t prevent criticism, justified or not, but a rapid response can help prevent an online assault from breaking out into the rest of the world with a lot of momentum.

Anyone who asks, “What does Amazon say about this?” should be able to obtain a quick answer. If Amazon doesn’t have an answer, human nature and mob psychology will assume the company is hiding something that reflects badly upon it.

 

Fedex Reduces Amazon Ties as Retailer Flexes Delivery Muscles

From Yahoo Finance:

FedEx Corp. said it wouldn’t renew its U.S. air-delivery contract with Amazon.com Inc., paring a key customer relationship as the largest online retailer deepens its foray into freight transportation.

The delivery giant will instead focus on “serving the broader e-commerce market” with U.S. package volume from online shopping expected to double by 2026, according to a FedEx statement Friday. The Amazon contract expires at the end of this month, and doesn’t cover international services or domestic operations at other units such as FedEx’s ground deliveries.

FedEx’s surprise move signals that the No. 2 U.S. courier will bank on smaller e-commerce customers that lack Amazon’s bargaining power for big volume discounts. Amazon’s emergence as a logistics giant is piling pressure on FedEx and United Parcel Service Inc. for cheaper and speedier deliveries, as the e-commerce powerhouse builds its own aircraft fleet and delivery capabilities.

“They know their Amazon business is going to continue to shrink,” said Satish Jindel, founder of SJ Consulting Group, referring to FedEx. “Why have your capacity be used up by a customer that’s going to continue to chip away? They’d rather use that capacity for other customers.”

Link to the rest at Yahoo Finance

Barnes & Noble, with Sales Falling, Is Sold to Hedge Fund

From AP Wire via Fox4KC.com

Barnes & Noble is being acquired by a hedge fund for $476 million and will be taken private.

The national chain that many blamed for the demise of independent bookstores has been ravaged by Amazon.com and other online sellers, but remains a critical outlet for publishers.

On Friday, it was acquired by Elliott Management and, in a twist, will likely become a national chain with a business model more akin to that of a local bookstore.

Elliott bought Waterstones one year ago, a national U.K. book chain that has successfully navigated through the online/e-reader revolution by returning a lot of autonomy to the managers of its nearly 300 stores, who can select books that they believe local readers want.

The man who runs that U.K. chain, who will become CEO of Barnes & Noble, said that is what he has in mind for Barnes & Noble.

Leonard Riggio acquired the century old Barnes & Noble in the 1970s, including its flagship Manhattan store, in the 1970s. He pursued aggressive expansion throughout the 1980s and established Barnes & Noble as a national phenomenon with the acquisition of B. Dalton Bookseller and its 797 locations in 1987. It became the nation’s second-largest bookseller and began selling books online in partnership with IBM and Sears.

The company continued to gobble up other larger booksellers like Doubleday Book Shops and also BookStop, which ran discount superstores in Texas.

By 1993, Barnes & Noble was a publicly traded company that was upending the publishing industry.

. . . .

Last year, Riggio was brought on stage [at] BookExpo 2018 in New York City.

. . . .

“Today, we stand together in common cause to promote and support bricks-and-mortar bookstores,” said Teicher. “I’ve been quoted as saying that it’s in the long-term interest of the overall book business that Barnes & Noble not just survive but grow and prosper.”

But Barnes & Noble has suffered.

With about 630 retail stores in the U.S. as of last year, it is smaller than when it acquired of B. Dalton Bookseller in the late 1980s. Its revenue peaked in 2012, and it has fallen every year since.

. . . .

“In chain bookselling, you need to try and get the best store for each location,” [new Barnes & Noble CEO James] Daunt told The Associated Press. “What works in Jacksonville, Florida, isn’t necessarily going to work in Hawaii.”

. . . .

Waterstones organizes multiple, simultaneous events at its stores, making them “a “fun place to discover books and enjoy the particularities of a bookstore.”

. . . .

Some industry watchers are skeptical, including Mike Shatzkin, the CEO of Idea Logical Company, a book-industry consulting company.

He called the entire large-store model for any retail chain “a 20th century concept” extinguished by the internet.

“It doesn’t surprise me that Barnes and Noble’s management never came to that conclusion because they built their fortune building bigger stores,” he said. “And I’m not sure Waterstone’s is going to lead them to a different approach.”

Link to the rest at AP Wire via Fox4KC.com

Jeff Bezos Buys Fifth Avenue Condo Spread for Around $80 Million

From The Wall Street Journal:

Amazon Chief Executive Jeff Bezos is set to finalize the purchase of three New York apartments Tuesday in a deal valued at around $80 million, according to people familiar with the transaction.

Mr. Bezos is buying a penthouse and two units directly beneath it at 212 Fifth Avenue, located near Madison Square Park, these people said. The main penthouse alone spans three floors, with a private elevator and large terraces, according to StreetEasy. If turned into a single-family home the three units would total more than 17,000 square feet, with 12 bedrooms.

. . . .

The deal comes almost four months after Mr. Bezos’s company ditched plans for a corporate headquarters in the Long Island City area of New York, and amid his divorcefrom longtime wife MacKenzie Bezos. Bloomberg Billionaire’s Index pegs his net worth at $106 billion. A spokesman for Mr. Bezos did not immediately respond to a request for comment.

. . . .

Mr. Bezos also has homes in Beverly Hills, Calif., Washington, D.C., West Texas and Medina, Washington.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

Nobody has asked PG’s opinion about this report.

But he does have the password for TPV.

PG fears this may be an indicator that Bezos will be taking his eye off the Amazon ball or focusing on Amazon less adroitly than he has in the past.

PG is aware of all the powerful communications systems Mr. Bezos can utilize to be virtually face-to-face with any Amazonian in the world from wherever Jeff is at a particular moment. PG is also aware that Mr. Bezos has access to a fleet of private jets that can take him across the country or around the world wherever duty might call. If Mr. Bezos wants to stay where he is, those same jets can bring as many Amazon executives as Jeff desires to meet with to him.

However, if this purchase means that Jeff is going to be spending a lot more time in New York City while the Amazon mothership remains in Seattle, PG is concerned. Part of his concern arises from experiences as an executive who didn’t live close to corporate headquarters earlier in his career.

Nobody in Seattle will be able to bump into him the hall or casually drop in on Jeff for a talk while Jeff is in New York. Various and sundry small signals that Jeff may be about to make a mistake will not be as easily discerned as they would be if Jeff were physically located closer to where his key executives spend most of their days.

PG is not an expert on society in either Medina, Washington, or in New York City, but he suspects Jeff will receive more invitations to social events with fellow billionaires in New York than he would in suburban Seattle. (Bill Gates also lives in Medina, but PG doesn’t think he throws a lot of parties with major media stars.)

Perhaps, Jeff is capable of keeping his eye firmly on Amazon’s ball in Seattle from 2900 miles away, but PG worries that such may not be the case.

Whenever Bezos retired, CEO succession at Amazon was going to be worrying for those who had emotional or financial investments in the company. However, a semi-retirement by Jeff is even more concerning for PG than a full retirement with a carefully-selected replacement ready to step into command would be.

A Worthy Guide to the Publishing Industry

From Nathan Bransford:

Mike Shatzkin is one of the most knowledgeable people in the entire publishing industry, and when I saw that he had written a book on the book biz with the late Robert Riger, this was an insta-buy.

The Book Business: What Everyone Needs to Know did not disappoint my expectations. Everyone has something to learn from this helpful guide, whether you’re a publishing newbie or a seasoned veteran. It’s organized in a very readable Q&A format and has everything from an overview of the major players to a history of the industry to the latest trends shaping the business.

I especially learned a ton about the ways in which the current e-book era resembles past publishing industry disruptions, especially the advent of mass market paperback books, which were initially very popular among readers of pulp/genre fiction and were disdained by the publishing establishment of the time. Sound familiar?

Link to the rest at Nathan Bransford

PG thinks a good question to ask in 2019 is why traditional publishing is entitled to such a large share of the revenue a book generates when, for most traditionally-published books, Amazon is the largest seller of those books.

He suggests that if you look at the legacy publishing chain of organizations and individuals who are taking a piece of the revenue the book generates either directly or indirectly, it doesn’t seem like a terribly efficient system of marketing and distribution for the book as a product, especially a printed book.

Here’s an overview:

ᶑ Author creates a manuscript

ᶑ Agent pitches manuscript and finds a publisher

ᶑ Publisher edits the manuscript (or perhaps hires a freelance editor to do that job)

ᶑ Publisher arranges for formatting of the manuscript and hires a cover designer to create the cover

ᶑ Publisher sends files of the manuscript to a book manufacturer (formerly called a printer), perhaps through a middleman.

ᶑ The book manufacturer may print the book itself or have the book printed offshore, often in China

ᶑ Finished hardcovers arrive on a container ship from China and are shipped to a wholesaler/distributor – usually Ingram

ᶑ The Publisher’s sales reps are pitching the book to bookstores in advance of its release. They’re usually paid a salary plus commission. Generally, a bachelor’s degree is required. Most don’t make a lot of money.

ᶑ The physical bookstore generally buys its books from Ingram or a smaller wholesaler at a discount from list price – 50% is the most common discount, although that may vary. To clarify, the bookstore usually pays $10 for a book that has a list price of $20.

ᶑ Ingram sends a portion of the money it receives to the Publisher.

ᶑ The Publisher then sends a royalty check to the Author twice a year. The Author’s check may be reduced by a reserve for returns, part of the royalties due to the Author, ostensibly designed to cover the Author’s royalties which will not be payable because of books sold to bookstores during one royalty period that the bookstore returns unsold for a credit during a following royalty period.

Each of these steps has a cost. Somebody is being paid to execute each of these steps. Ultimately, directly or indirectly the Author pays all or most of that cost as deductions against the Author’s royalty payment. The Author receives what’s left over after everyone else takes his/her/its slice of the pie.

If the supply chain costs were lower, traditional publishers might feel more inclined to compete for Authors by offering higher royalties. (Or not, but we’re talking the potential for economically rational decisions here.)

On the other hand, here’s the distribution system of an indie Author selling through Amazon:

ø Author creates a manuscript

ø Author formats manuscript or hires a formatter to do the job

ø Author uploads manuscript to Amazon and selects ebook only or ebook plus POD

ø Amazon stores the manuscript in digital form, offers the book for sale on a world-wide basis if the Author selects that option, processes credit card payments from readers and sends monthly a monthly payment directly to the Author’s bank account. For books priced within Amazon’s preferred pricing stratum, Author receives 70% of the price paid by the reader.

Amazon is the only intermediary between the Author and the reader. Once the Author uploads a manuscript, all steps necessary to place a book into a reader’s hands are performed by Amazon, utilizing the world’s most sophisticated and efficient selling platform.

These Trump Socks Went Viral—and a Nightmare on Amazon Began

From Wired:

When Donald Trump visited Louisiana earlier this month, he was greeted with an unexpected hairy surprise. Billy Nungesser, the state’s lieutenant governor, got dressed with the commander-in-chief in mind that morning. With the president and news cameras as his witness at the airport, Nungesser joyfully lifted the leg of his pants to reveal a goofy pair of socks: Each ankle bore Trump’s face, complete with a signature tuft of fake blond locks waving daintily in the breeze. The bizarre-looking socks quickly went viral and were covered by a smattering of news outlets. Stephen Colbert even mentioned them on The Late Show.

For Erica Easley, all the attention was great, at least at first. Easley is the founder of Gumball Poodle, a small Los Angeles–based sock company that originally came up with the hirsute design during the last presidential election. “They went really viral, beyond anything we’d ever experienced before,” she says about the aftermath of Nungesser’s photo-op. “And these socks have been on Rachel Maddow, The View, a bunch of things in 2016.” Wholesale orders started ticking up. Several media outlets linked to Gumball Poodle’s Amazon listing, and soon the Trump socks reached Amazon’s best-seller list for men’s novelty socks.

About a week passed before Easley noticed that something had gone horribly wrong. Dozens of third-party merchants, most of whom looked to be from China, had jammed her Amazon listing with what Easley believed to be knockoffs, selling for a fraction of the original $30 price tag. (Included in that price, for the record, is a tiny comb, to style your socks’ hair. Everything is made in the USA.) To make matters worse, Amazon had chosen one of the frauds as the default seller, shutting Gumball Poodle out. Meanwhile, other third-party sellers appeared to have taken Easley’s photos and set up their own, much cheaper listings.

Easley had done everything to protect her business from exactly this kind of attack. Her hairy sock design is patented in the US, and her logo, which is stamped on the bottom of the socks, is trademarked. What’s more, Gumball Poodle is enrolled in the Amazon Brand Registry, an enhanced suite of tools the company provides eligible brands to protect their intellectual property. But Easley found Amazon’s protections weren’t enough, and she says the company largely ignored her pleas for help. Only after WIRED reached out to Amazon for this story were the counterfeits removed.

. . . .

Gumball Poodle isn’t alone. “There are thousands of other trademark owners who face the same kind of nonsense every single day,” says James Thomson, a former Amazon employee and a partner at Buy Box Experts, a firm that consults with Amazon sellers. “Amazon does have a problem with counterfeits.”

Counterfeiting is a booming, trillion-dollar industry that costs businesses around the world billions of dollars a year. Its growth has been fueled by the rise of ecommerce, which a government report says has led to “a fundamental change in the market for counterfeit goods.” That report, published last year by the Government Accountability Office, found that the volume and variety of counterfeit goods seized by officials has grown year after year, and it’s increasingly difficult to distinguish knockoffs from the real thing. It also notes that fraudulent goods are sold on a number of different ecommerce platforms.

. . . .

But on Amazon, counterfeits can be uniquely devastating, in part because of the site’s sheer scale. Half of all US ecommerce sales go to Amazon, and the site is also where about half of all product searches on the web begin. Not many companies can afford to avoid it. If they do stay away, they risk letting other sellers determine how their brand is marketed on one of the biggest online retailers in the world.

Another problem is the way Amazon is designed. Unlike on eBay, Etsy, or other online marketplaces, a single Amazon product listing can feature offers from dozens of independent sellers. The company uses an algorithm to decide which merchant’s goods should be the default, based on factors like price and shipping speed. Winning the default slot, referred to as the “Buy Box,” gives sellers an enormous advantage. Customers can “Add to Cart” or “Buy Now” their products with a single click, while the losers are hidden behind a dropdown menu. The idea is to allow consumers to quickly make a purchase, without needing to sift through every similar option. But the system, experts say, also makes sneaking counterfeits into the hands of consumers easy.

Link to the rest at Wired

If the Key to Business Success Is Focus, Why Does Amazon Work?

From Working Knowledge, Harvard Business School:

Brian Kenny: In the world of computer science, Jon Wainwright is kind of a big deal. A computer language pioneer, he was the principle architect of both Script 5 and Manuscript. What makes John a legend has nothing to do with programming. Let me explain.

On April 3, 1995, Jon was in need of work-related reading material. He fired up his T1 modem and navigated the fledgling internet to the beta version of a new online bookstore. With the click of a mouse, he became the very first customer to make a purchase on Amazon.com. Fluid concepts and creative analogies, the book he purchased, never became a best seller, but Amazon took off like a rocket ship and hasn’t slowed down since. With a market cap larger than all other retailers combined, including Walmart, Amazon owns 49 percent of all online sales. In the time it takes me to read this introduction, the company will earn over $300,000. Will we ever see the likes of it again?

. . . .

Brian Kenny: The case is a great foundational piece to launch into some of the ideas [of the book]. I’m going to assume that anybody listening to this podcast has purchased something on Amazon, or watched something on Amazon Prime. I had forgotten about their modest beginnings, and just how much they’ve grown and expanded and changed… Let me start by asking you … what led you to write the case?

Sunil Gupta: As you said, everybody knows Amazon. At the same time, Amazon has become quite complex. They have grown into a business that defies imagination. That raises the question, is Amazon spreading itself too thin? Are they an online retailer? Are they video producers? Are they now making movies? In strategy, we learn everybody should focus. Obviously, Jeff Bezos missed that class.

. . . .

Brian Kenny: . . . . The case takes place in 2017. . . . Start us off by setting it up. How does the case open?

Sunil Gupta: At that point in time, Amazon had just bought Whole Foods, which was very counterintuitive. Amazon has been an online player. Why is it getting into an offline business? That was against their grain as an online player. The second thing is, food is a very low-margin category. Amazon is a technology company; its stock is going to stratosphere. Amazon had been (operating) Amazon Fresh for 10 years, and hasn’t succeeded. Why don’t they give up? That was a starting point. Of course, the case describes all the other 20 things they have done in the last 20 years and asked the question, what is Amazon up to?

. . . .

Brian Kenny: Amazon and Jeff Bezos are sort of synonymous. He’s a cult of personality there, like Steve Jobs was with Apple. Jeff’s been in the news a lot lately for other reasons, you know, personal reasons. He is probably one of the best-known CEOs in the world. What’s he like as a leader?

Sunil Gupta: I don’t know him personally. Based on the research I’ve done, he certainly is very customer obsessed. He’s focused on customer. He always says, “You start with the customer and work backwards.” He still takes calls on the call center. The culture is very entrepreneurial, but also very heart driven. I mean, the idea for Amazon Prime evidently didn’t come from Jeff Bezos, it came from a person low in the organization. He’s quick to adapt the ideas if he sees some merit in it. It’s almost a 25-year-old company that still works like a startup.

Brian Kenny: Was the original concept for Amazon … I mean, he sold books originally. Was it ever really a book company?

Sunil Gupta: I think it started more as an online retailer. Book was an easy thing, because everybody knows exactly what you’re buying. It’s no concern about the quality. His premise in the online store was a very clear value proposition of three things. One was convenience, that you can shop in your pajamas, so we don’t have to fight the traffic of Boston or Los Angeles. The second was infinite variety. I don’t have the constraint of a physical store. Even if I have Walmart, which is a huge store, I can only stock so many things. As a result, you only have the top sellers. In Amazon, I can have the long tail of any product, if you will. The third was price. It was cheaper, simply because I don’t have fixed costs of the brick and mortar store. I can reduce the cost structure and therefore I can be cheaper. Those were the three key value propositions. That’s how it started. The idea was, I’ll start with books and then move on to electronics and other things. But then of course, it moved far beyond being an online retailer.

Brian Kenny: This gets into some of the ideas in your book. I was really intrigued in the book about the notion of what kind of business are we in? Just that question alone. At face value, it looked like Amazon was a retailer. They went in directions that nobody could have imagined.

Sunil Gupta: Right. The purpose of the case was to illustrate how these are all connected. From a distance they look completely disconnected, and completely lack focus. Let’s start with how the concept evolved.

The first thing was, as I said, it was online retailer. Very soon it became a marketplace. Now, what is a marketplace? They basically allow third-party sellers to also sell on the Amazon platform, which is distinct from a traditional retailer. Walmart doesn’t allow me to set up shop within Walmart, but Amazon allows me to do that. Now, why would they do that? Simply because it increases the variety that they can sell on the platform. Therefore, consumers are quite happy with the variety of the product they can get on Amazon. Amazon gets commission without having the inventory and the capital cost.

Perhaps the most important thing about becoming a platform is that it creates what we call network effects. If everything I can buy is available on Amazon, more consumers are likely to go there. Because there are more consumers, more sellers are likely to go there. It just feeds itself and becomes a virtual cycle. That’s why there is only one Amazon. Even if I start an online retail [store] that is in many ways better than Amazon, nobody’s coming to gupta.com, because buyers and sellers are not there. That became the next phase, changing from an online retailer to a marketplace. Then it went into AWS (Amazon Web Services), and you say, “How can it go into being a technology company and compete with IBM and Microsoft?” It was competing with Walmart before.

. . . .

Brian Kenny: Let me just interrupt for a second. That’s a marked change in direction. They had always been a consumer platform. Now they’re in a business-to-business play. I bet a lot of consumers don’t even know about Amazon Web Services.

Sunil Gupta: Correct. That was not saying in a traditional sense, “This is my market.” That’s simply saying, I have this capability. There’s a demand for this capability. Can I do it?” Part of that was opportunistic, also. If you remember in 2001, the dot.com bubble crashed. If you’re a B2C company, you hedge your bets and get into B2B business. Part of that may have been luck. And then Amazon started producing hardware, Kindle, and now competing with Apple.

You sort of say, why is an online retailer getting into hardware production? If you think a little bit about it, the answer is very easy. Kindle was designed to sell eBooks as people move from buying hard copy books to downloading eBooks. The Kindle is the classic razor and blade strategy. I sell razors cheap in order to make money on the blades. I’m not making that much money Kindle, but I’m making money on e-books, which is very different from Apple’s strategy. Apple actually makes money on devices, but Amazon is not making money on devices, or at least not making huge money. Similarly, it moved into online streaming of the video content and suddenly became a competitor of Netflix. You say, “Why is a retailer becoming a competition of Netflix?” Again, if you think a little about it, the answer becomes clear. As you and I moved on from buying DVDs [to] streaming the stuff, that’s what Netflix did. They used to send the DVDs to us.

. . . .

Amazon is very good in moving with the customer. If the customer moves from buying books to e-books, Amazon moves in that direction. If customers move from buying DVDs to streaming, it moves in that direction. Now, can Amazon do it? Of course, they can. They have AWS. Netflix is one of the largest AWS customers.

. . . .

Brian Kenny: Are they leading or following? Are they creating a market? In the beginning it seemed like they created something entirely new. Now, are they anticipating, or are they just sort of reacting to what’s happening?

Sunil Gupta: It’s a combination of both. In some ways they are following the consumer behavior. [When consumers started] moving to streaming, Amazon was not the first—Netflix started the streaming thing, and then Amazon comes up with it. If you think about it, Amazon not only distributed third party content on videos, but now they have Amazon Studio. They are making movies. The competition now becomes Hollywood instead of Walmart.

You sort of say, “What has gone wrong with Jeff Bezos? Why is he making movies?” Making movies is a pretty expensive business and highly risky. Again, the key is to understand the purpose of the movies, which is to hook consumers on Amazon Prime. If you remember, Amazon Prime started at $79 dollars per year. The benefit at that time was two-day free shipping. Now, you and I are smart enough to do the math, saying, how many shipments do we expect next year, and is $79 worth it? Bezos does not want you to do that math. He basically says, “Oh, by the way, I’ll throw in some free content, some free music, some free unique movies.” Now you can’t do the calculation. Why does he care about Prime? Right now, Amazon has about 100 million Prime customers globally. Let’s say I get an average 100 dollars per year, that’s $10 billion in my pocket, before I open the store.

Link to the rest at Working Knowledge, Harvard Business School

PG has one quibble with the OP: He doesn’t think anyone “fired up his T1 modem” to look for a book in 1995.

Whenever PG used a T1 to access the internet in those ancient days, a T1 was referred to as a line. It was quite expensive and it ran 24/7/365. He always accessed a T1 through a corporate network center which operated behind locked doors inside a series of large glass boxes.

Connecting to the internet on a T1 line was silent while doing so through a modem on your desk was not.

PG realizes that Brian in the OP was probably trying to speak metaphorically, but apt metaphors tend to accurately reflect the reality of the object or action upon which the metaphor is based.

PG’s mother and sister are former English teachers, so perhaps he has some sort of recessive gene that promotes occasional bouts of rule-based overreach.

Amazon’s Antitrust Paradox

From The Yale Law Journal (footnotes omitted):

In Amazon’s early years, a running joke among Wall Street analysts was that CEO Jeff Bezos was building a house of cards. Entering its sixth year in 2000, the company had yet to crack a profit and was mounting millions of dollars in continuous losses, each quarter’s larger than the last. Nevertheless, a segment of shareholders believed that by dumping money into advertising and steep discounts, Amazon was making a sound investment that would yield returns once e-commerce took off. Each quarter the company would report losses, and its stock price would rise. One news site captured the split sentiment by asking, “Amazon: Ponzi Scheme or Wal-Mart of the Web?”3

Sixteen years on, nobody seriously doubts that Amazon is anything but the titan of twenty-firstcentury commerce. In 2015, it earned $107 billion in revenue,4 and, as of 2013, it sold more than its next twelve online competitors combined.5 By some estimates, Amazon now captures 46% of online shopping, with its share growing faster than the sector as a whole.6 In addition to being a retailer, it is a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading provider of cloud server space and computing power. Although Amazon has clocked staggering growth—reporting double-digit increases in net sales yearly—it reports meager profits, choosing to invest aggressively instead. The company listed consistent losses for the first seven years it was in business, with debts of $2 billion.7 While it exits the red more regularly now,8 negative returns are still common. The company reported losses in two of the last five years, for example, and its highest yearly net income was still less than 1% of its net sales.9

Despite the company’s history of thin returns, investors have zealously backed it: Amazon’s shares trade at over 900 times diluted earnings, making it the most expensive stock in the Standard & Poor’s 500.10 As one reporter marveled, “The company barely ekes out a profit, spends a fortune on expansion and free shipping and is famously opaque about its business operations. Yet investors . . . pour into the stock.”11 Another commented that Amazon is in “a class of its own when it comes to valuation.”12

Reporters and financial analysts continue to speculate about when and how Amazon’s deep investments and steep losses will pay off.13 Customers, meanwhile, universally seem to love the company. Close to half of all online buyers go directly to Amazon first to search for products,14 and in 2016, the Reputation Institute named the firm the “most reputable company in America” for the third year running.15 In recent years, journalists have exposed the aggressive business tactics Amazon employs. For instance Amazon named one campaign “The Gazelle Project,” a strategy whereby Amazon would approach small publishers “the way a cheetah would a sickly gazelle.”16 This, as well as other reporting,17 drew widespread attention,18 perhaps because it offered a glimpse at the potential social costs of Amazon’s dominance. The firm’s highly public dispute with Hachette in 2014—in which Amazon delisted the publisher’s books from its website during business negotiations—similarly generated extensive press scrutiny and dialogue.19 More generally, there is growing public awareness that Amazon has established itself as an essential part of the internet economy,20 and a gnawing sense that its dominance—its sheer scale and breadth—may pose hazards.21 But when pressed on why, critics often fumble to explain how a company that has so clearly delivered enormous benefits to consumers—not to mention revolutionized e-commerce in general—could, at the end of the day, threaten our markets. Trying to make sense of the contradiction, one journalist noted that the critics’ argument seems to be that “even though Amazon’s activities tend to reduce book prices, which is considered good for consumers, they ultimately hurt consumers.”22

In some ways, the story of Amazon’s sustained and growing dominance is also the story of changes in our antitrust laws. Due to a change in legal thinking and practice in the 1970s and 1980s, antitrust law now assesses competition largely with an eye to the short-term interests of consumers, not producers or the health of the market as a whole; antitrust doctrine views low consumer prices, alone, to be evidence of sound competition. By this measure, Amazon has excelled; it has evaded government scrutiny in part through fervently devoting its business strategy and rhetoric to reducing prices for consumers. Amazon’s closest encounter with antitrust authorities was when the Justice Department sued other companies for teaming up against Amazon.23 It is as if Bezos charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them. With its missionary zeal for consumers, Amazon has marched toward monopoly by singing the tune of contemporary antitrust.

. . . .

This analysis reveals that the current framework in antitrust—specifically its equating competition with “consumer welfare,” typically measured through short-term effects on price and output24—fails to capture the architecture of market power in the twenty-first century marketplace. In other words, the potential harms to competition posed by Amazon’s dominance are not cognizable if we assess competition primarily through price and output. Focusing on these metrics instead blinds us to the potential hazards.

My argument is that gauging real competition in the twenty-first century marketplace—especially in the case of online platforms—requires analyzing the underlying structure and dynamics of markets. Rather than pegging competition to a narrow set of outcomes, this approach would examine the competitive process itself. Animating this framework is the idea that a company’s power and the potential anticompetitive nature of that power cannot be fully understood without looking to the structure of a business and the structural role it plays in markets. Applying this idea involves, for example, assessing whether a company’s structure creates certain anticompetitive conflicts of interest; whether it can cross-leverage market advantages across distinct lines of business; and whether the structure of the market incentivizes and permits predatory conduct.

. . . .

This market structure-based understanding of competition was a foundation of antitrust thought and policy through the 1960s. Subscribing to this view, courts blocked mergers that they determined would lead to anticompetitive market structures. In some instances, this meant halting horizontal deals—mergers combining two direct competitors operating in the same market or product line—that would have handed the new entity a large share of the market.26 In others, it involved rejecting vertical mergers—deals joining companies that operated in different tiers of the same supply or production chain—that would “foreclose competition.”27 Centrally, this approach involved policing not just for size but also for conflicts of interest—like whether allowing a dominant shoe manufacturer to extend into shoe retailing would create an incentive for the manufacturer to disadvantage or discriminate against competing retailers.28

The Chicago School approach to antitrust, which gained mainstream prominence and credibility in the 1970s and 1980s, rejected this structuralist view.29 In the words of Richard Posner, the essence of the Chicago School position is that “the proper lens for viewing antitrust problems is price theory.”30 Foundational to this view is a faith in the efficiency of markets, propelled by profit-maximizing actors. The Chicago School approach bases its vision of industrial organization on a simple theoretical premise: “[R]ational economic actors working within the confines of the market seek to maximize profits by combining inputs in the most efficient manner. A failure to act in this fashion will be punished by the competitive forces of the market.”31

. . . .

Practically, the shift from structuralism to price theory had two major ramifications for antitrust analysis. First, it led to a significant narrowing of the concept of entry barriers. An entry barrier is a cost that must be borne by a firm seeking to enter an industry but is not carried by firms already in the industry.34 According to the Chicago School, advantages that incumbents enjoy from economies of scale, capital requirements, and product differentiation do not constitute entry barriers, as these factors are considered to reflect no more than the “objective technical demands of production and distribution.”35 With so many “entry barriers . . . discounted, all firms are subject to the threat of potential competition . . . regardless of the number of firms or levels of concentration.”36 On this view, market power is always fleeting—and hence antitrust enforcement rarely needed.

The second consequence of the shift away from structuralism was that consumer prices became the dominant metric for assessing competition. In his highly influential work, The Antitrust Paradox, Robert Bork asserted that the sole normative objective of antitrust should be to maximize consumer welfare, best pursued through promoting economic efficiency.37 Although Bork used “consumer welfare” to mean “allocative efficiency,”38 courts and antitrust authorities have largely measured it through effects on consumer prices. In 1979, the Supreme Court followed Bork’s work and declared that “Congress designed the Sherman Act as a ‘consumer welfare prescription’”39—a statement that is widely viewed as erroneous.40 Still, this philosophy wound its way into policy and doctrine. The 1982 merger guidelines issued by the Reagan Administration—a radical departure from the previous guidelines, written in 1968—reflected this newfound focus. While the 1968 guidelines had established that the “primary role” of merger enforcement was “to preserve and promote market structures conducive to competition,”41 the 1982 guidelines said mergers “should not be permitted to create or enhance ‘market power,’” defined as the “ability of one or more firms profitably to maintain prices above competitive levels.”42 Today, showing antitrust injury requires showing harm to consumer welfare, generally in the form of price increases and output restrictions.43

. . . .

Two areas of enforcement that this reorientation has affected dramatically are predatory pricing and vertical integration. The Chicago School claims that “predatory pricing, vertical integration, and tying arrangements never or almost never reduce consumer welfare.”49 Both predatory pricing and vertical integration are highly relevant to analyzing Amazon’s path to dominance and the source of its power. Below, I offer a brief overview of how the Chicago School’s influence has shaped predatory pricing doctrine and enforcers’ views of vertical integration.

Link to the rest at The Yale Law Journal

It has been a long time since PG took an antitrust course in law school.

That said, he disagrees with the fundamental premise of the OP that, at the present time, Amazon must be reined in because it is too big and competitors are having a hard time.

PG agrees with the Chicago School argument that antitrust law is designed to benefit purchasers. If a company pushes prices down, absent some other factor, that’s a good thing. Competition that benefits purchasers is a public good. Antitrust law is designed to punish those who act improperly to push prices up.

Under PG’s view, if a seller pushes prices down for a period of time in order to force competitors out of business, then raises prices because competitors are gone, it is then that an antitrust violation occurs and the seller may be punished.

Amazon has not shown any price-increasing tendencies. PG also suggests that Amazon has a lot of competitors selling goods and services online. As far as competition is concerned, the online retail world is very easy to enter – a website, a spare room for inventory, a nearby UPS dropbox and a credit card processing service (there are lots) is about all that is needed. After all, Amazon began in Jeff Bezos’ garage.

Since the infrastructure necessary to become an online seller of goods and services is already in place and that infrastructure is not controlled by Amazon, Amazon cannot raise prices on its merchandise without leaving itself open to underpricing by competitors.

Walmart has put at least tens of thousands of merchants in small and medium-sized cities out of business.

Only a few years ago, Walmart was the bête noire of the same types of people who are complaining about Amazon’s antitrust violations today.

From The Unconvincing Antitrust Case Against Wal-Mart:

I recently picked up a copy of the July Harper’s Magazine to read an essay by Barry C. Lynn entitled, “Breaking the Chain: The Antitrust Case Against Wal-Mart.” If you can’t tell from the title, the basic point is that antitrust authorities should break up Wal-Mart and put an end to the immense havoc that the retail giant has caused the economy.

. . . .

Let me first summarize the Lynn’s argument and then discuss why they are entirely wrong as a matter of economics and sensible antitrust policy below the fold. Here are the basic moves in Lynn’s case against WM:

First, Wal-Mart is a monopsonist. Lynn writes that one in five of every American retail sales occurs at WM, and WM is dominating its retail rivals.

Second, WM leverages its monopsony power in a manner which antitrust law should prohibit. Lynn seems to have two antitrust harms in mind here.

The first is that WM has “changed the game” with respect to bargaining between supplier and retailers. WM dominates upstream suppliers by demanding lower prices, and using its own in-house brands to discipline suppliers, resulting in shrinking manufacturer profit margins. The article discusses WM’s reputation as a hard-nosed, no nonsense negotiator and cites examples of negotiations with Coca-Cola and Kraft. Lynn points to the use of “category management,” a practice where retailers delegate shelf space display decisions to a manufacturer (called the “category captain”) within a product category (say, sodas or soups).

Of category management, Lynn alleges without any substantiation that the practice has resulted in collusion by suppliers as well as retailers:

“one common result is that many producers simply stop competing head to head . . . . in many instances, a single firm ends up controlling 70% or more of US sales in an entire product line . . .. In exchange, its competitor will expect that firm to yield 70% or more of some other product line, say, snacks or spices. Such sharing out of markets by oligopolies is taking place throughout the non-branded economy . . . but nowhere is it more visible than in the aisles of Wal-Mart.”

Note the tension between the claim of supplier collusion and shrinking supplier margins. However, more importantly is the notion that category management and other changes in the bargaining relationships are necessary bad on antitrust grounds. There has been very little economic analysis of category management As a side note, Benjamin Klein, Kevin M. Murphy and are working on a paper entitled “Exclusive Dealing and Category Management in Retail Distribution,” which analyzes the economics of these arrangements as well as exclusive dealing contracts in retail . . . . From an antitrust perspective, it is difficult to imagine why category management would be any more of a concern than exclusive dealing, which is analyzed under the rule of reason and violates the Sherman Act when a number of conditions are satisfied (monopoly power, substantial foreclosure, barriers to entry, etc.). Category management only grants the manufacturer the right to favor his own product, and can be terminated by the retailer at any time, whereas exclusive dealing completely forecloses rivals from shelf space.

. . . .

The second antitrust harm Lynn points to is equally unconvincing. Lynn writes that even if WM is efficient, increased concentration in retail represents a “gathering of power unchecked and unaccountable,” and those who would defend efficiency must “view the American citizen not as someone who yearns to decide for himself or herself what to buy and where to work in a free market but to say, instead, ‘let them eat Tastykake.’”

. . . .

The data don’t match the theory. Taking Lynn’s antitrust theories on their own terms, perhaps the best place to start is that the data simply don’t agree. Retail margins have remained nearly constant for the past twenty years . . . .  Barriers to entry at retail are negligible, and because supracompetitive profits are dissipated through competition, payments to retailers are ultimately passed through to consumers.

What about prices? Lynn talks a great deal about the good old days of antitrust before the Reagan administration where the “goal was to enforce a balance of power among economic actors of all sizes, to maintain some degree of liberty at all levels within the economy.” The essay is essentially an ode to these discredited days of antitrust when consumer welfare took a back seat to attacking concentration for its own sake. For example, Lynn describes comments by then AG William French Smith that “bigness is not necessary badness” as “radical” and “astounding.” Really? Not to any undergraduate student of industrial organization. But what about prices? Does Lynn consider any of the competitive benefits of Wal-Mart, or is the antitrust case against Wal-Mart to be made at the expense of the consumer in the name some fuzzy principle of antitrust populism? Lynn’s essay says very little about prices except the following:

“to defend Wal-Mart for its low prices is to claim that the most perfect form of economic organization more closely resembles the Soviet Union in 1950 than 20th century America. It is to celebrate rationalization to the point of complete irrationality.”

Does anyone really believe that a retailer who earns 30% retail market share by competing vigorously for consumers is the equivalent to a central planner? I hope not. Retail competition is incredibly robust, as is easily observed by watching retail profit margins over the past 20 years in which concentration has increased substantially. To describe Wal-Mart’s negotiations with large manufacturers like Coca-Cola and Kraft as analogous to central planning activity is ridiculous.

Luckily, there is economic evidence that Wal-Mart is in fact very good for consumers.

Link to the rest at The Unconvincing Antitrust Case Against Wal-Mart

PG suggests that bigness is not badness. Bad actions by large or small entities is badness.

Walmart (“Low prices every day”) and Amazon (“Free Shipping” “Prime Day) are especially beneficial to middle class and lower class consumers for the simple fact that those consumers can buy more with their dollars.

PG suggests that the current consumer-oriented antitrust regimen is far more friendly than its predecessors, such as the now-gone Fair Trade laws which granted producers the right to set the final retail price of their goods, limiting the ability of chain stores to discount.

Even if a retailer wanted to sell products to consumers at a lower price and believed it could do so profitably, Fair Trade laws allowed manufacturers to prohibit such discounting. Essentially, Fair Trade laws allowed manufacturers the right to engage in legal price-fixing, a practice that only benefitted inefficient retailers, not consumers.

 

The Amazon Effect Hits Fifth Avenue

From The Wall Street Journal:

Global retailers once seemed to pay whatever it took to lease space on Manhattan’s Fifth Avenue. That doesn’t appear to be the case anymore.

The section of the avenue that stretches about 10 blocks from Saks Fifth Avenue at East 49th Street to the southeast corner of Central Park is one of the city’s major tourist attractions, boasting luxury brands like Gucci, Rolex and Tiffany & Co.

Real-estate brokers said that for years many major retailers were willing to accept thinner margins or even absorb losses at a Fifth Avenue location because the prestige and marketing power of the address was worth the cost.

But the rise of e-commerce has made it tougher for fashion houses and other retailers to justify sky-high rents when sales at the Fifth Avenue store—or for the company overall—have been in a slump.

The result: It isn’t only outdated malls and poorly-located shopping centers in the American heartland that are struggling. One of the world’s most-trafficked and premier shopping corridors is feeling the strain, too.

“A lot of these Fifth Avenue stores are emotional brand statements and almost churches to the brand,” said Oliver Chen, a senior equity analyst at Cowen Inc. But rent expense matters too, he added.

. . . .

On those prime blocks the availability rate, which reflects vacancies and expiring leases that haven’t been filled, reached 25% in the first quarter. That is down only slightly from 27.5% in the fourth quarter—the highest availability rate since Cushman began tracking the Fifth Avenue strip in 2006. In the first quarter of 2018, the availability rate was 17.4%.

. . . .

In recent months, other apparel retailers such as Gap Inc. and Tommy Hilfiger have closed their flagship stores along Fifth Avenue to focus more on their e-commerce platforms as part of a new strategy to have fewer stores, the companies said. Tommy Hilfiger also closed its store on Collins Avenue in Miami as it reshapes its retail strategy in North America.

Ralph Lauren Corp. also closed its flagship Fifth Avenue store in 2017.  The space has remained vacant since.

Link to the rest at The Wall Street Journal

Amazon wants to pay the New York Times and BuzzFeed to expand so it can reach more shoppers outside the US

From Vox:

Amazon has a pitch for some US-based publishers: Expand overseas. We’ll make it worth your while.

The world’s dominant e-commerce player is in talks with big American publishers, including the New York Times and BuzzFeed, about deals that would reward them for expanding their international presence, specifically in consumer-oriented shopping sites.

Amazon already pays internet publishers that refer shoppers to the company via “affiliate links” embedded on their site, but it thinks that business could grow significantly if US publishers had more readers outside of America.

. . . .

It’s also an indicator that even though Amazon dominates online commerce, it still thinks it needs help getting shoppers inside its giant site. While Amazon is the place shoppers go to find something specific — it is increasingly challenging Google in the search results race as shoppers head directly to Amazon to look up a specific item — affiliate links can drive shoppers to stuff that Amazon is particularly interested in selling or that shoppers may not have known they could get from Amazon.

Link to the rest at Vox

How to Fight the Commoditization of Books

By Mark Coker via Publishers Weekly:

The mere thought is at once repulsive and terrifying: books as commodities. After all, a book is the original divine creation of its author, right?

We typically think of commodities as undifferentiated products such as corn or wheat. To a consumer looking for flavor and nutrition, one kernel of corn is the same as another. Though higher-quality corn can command premium prices, the price ceiling is ultimately determined by what the market is willing to pay for a given product.

In this respect, books are similar to any other commodity. Books are delivery vehicles for reading pleasure. Although each book is unique, the primary reason readers purchase books—reading pleasure—can be measured and commoditized.

If we divide the hours of reading pleasure one book offers by its price, we can create a simple metric: cost per hour of reading pleasure. This metric allows one book’s pleasure-delivery potential to be compared to another’s.

Readers are unlikely to consciously intellectualize their cost per hour of reading pleasure. Yet this metric guides consumer behavior much as gravity guides water to flow downhill. In a marketplace of interchangeable options for pleasure, consumers will gravitate toward the best-quality option with the lowest price, whether that quality is measured by brand, average review, or word of mouth.

How low can prices go? With agricultural commodities, the price floor is ultimately determined by the cost of production. If farmers can’t turn profits at the given market rate for their products, they stop producing those products. When farmers stop growing, supply decreases. This then causes prices to stabilize or increase to the point where new growers are incentivized to enter the market.

For decades now, most writers—even traditionally published writers—have maintained day jobs to make ends meet. This means authors are personally subsidizing the publishing industry by continuing to write books that don’t pay the bills.

Would we expect farmers to work for free? Certainly not. Yet many writers will continue writing even if there’s no money in it. Though one writer may write for the joy of writing and another to afford groceries, both require readers. And price is often the determining factor for finding readers.

. . . .

Kindle Unlimited causes significant devaluation on two fronts:

1. Amazon is training the world’s largest community of readers to expect five-star reading experiences for what feels like free. This makes readers reluctant to pay for books, which harms sales.

2. Because Kindle Unlimited decouples book price from author compensation, it means that Amazon has stripped authors of pricing power and can pay them less.

. . . .

2. Don’t underprice: readers will pay for quality. The e-book sweet spots for quality bestselling full-length indie fiction are typically $3.99 and $4.99, and $7.99 to $9.99 are good prices for quality nonfiction.

3. Avoid exclusivity. When indie authors make their books exclusive anywhere—even for a short time—it undermines their ability to build readership at other stores. Exclusivity makes the author vulnerable to exploitation when a single retailer controls the author’s access to readers. True independent authors publish, price, and promote with complete freedom.

Link to the rest at Publishers Weekly

PG says it’s a bear competing with Amazon.

The market value of an item is what a willing buyer will pay a willing seller for a book.

If market demand is elastic, the supply will adjust itself to the demand created by prospective purchasers.

PG suggests that Kindle Unlimited is wonderful for less-known authors because buyers don’t have to risk any money to see if they like what the author has written.

The factors governing the ebook market is different than the printed book market because, in the ebook market all the author’s (or publisher’s) costs to create the product are incurred upfront. Once an ebook is created, for the author, the direct costs of selling one ebook are the same as the direct costs of selling one million books.

Amazon incurs some per-unit ebook costs in the form of server time, credit card processing fees, etc., but for someone who is already running the world’s largest server farm selling zillions of different products, the incremental costs of selling a single ebook are the tiniest drop in an enormous ocean. For the cost of sending a single printed book to a customer who takes advantage of free Prime shipping, PG suspects Amazon could sell and deliver hundreds of ebooks to customers.

On a couple of specific points Mark makes in the OP:

Because Kindle Unlimited decouples book price from author compensation, it means that Amazon has stripped authors of pricing power and can pay them less.

Authors are not stripped of anything with Kindle Unlimited. They can price their ebooks pretty much any way they want to on Amazon, subject only (as far as PG knows) Amazon’s overall $200 max price for ebooks on KDP.

If PG writes a wonderful ebook for which he decides to charge $99 for each copy, he can do so. If a purchaser believes PG’s written ramblings are worth $99 or more, PG has demonstrated he has the pricing power to sell his book for $99 to an unknown quantity of readers numbering greater than one.

Pricing power in an open market is determined by supply and demand. Does the purchaser want $99 more than she wants PG’s book or does she want PG’s book more than $99? If PG prices his book at $1.00, the purchaser’s decision analysis is the same with $1.00 substituted for $99.

With respect to Amazon and authors, if Amazon can attract the kinds and quantities of books its customers are willing to purchase by paying an author 50 cents, why would a rational author expect that Amazon should pay more?

Traditional publishers and bookstores are a far less sophisticated system for determining optimum pricing than Amazon is. Their pricing decisions are pretty much a shot in the dark. For one thing, they’re dealing with thousands of different books and authors. They’re not set up to find the optimum price for any single book because they can’t pay as much attention to sales results for a single book as the author of that book can.

If Author A writes a 300-page romance novel that 50,000 readers are willing to pay $8.99 to acquire and Author B writes a 300-page romance that 50,000 readers are willing to pay $1.99 for, how likely is it that the publisher/physical bookstore will price each book at an optimal manner? If the publisher/bookstore releases each romance at a retail price of $4.99, Author A and Author B will both have lower royalties than each would have had with optimal pricing.

Whatever pricing power publishers and traditional bookstores have does not benefit any individual author. Rather these players use their pricing power to maximize prices from a large group of books. Ultimately, they don’t care if Author A sells many more books priced at $4.99 than Author B sells for the same price so long as the total take from all books, including those from Author C through Author Z, meet the store’s and the publisher’s sales and profit objectives.

PG says some authors will always make more money from their books than other authors do. However, Amazon has developed a much, much more sophisticated and powerful system for determining the optimum sales price of an author’s books than any publisher or bookstore has.

If the author permits Amazon to set the price of a book at zero under Kindle Unlimited and the author is satisfied with the amount of royalties the book generates, is the author treated unfairly?

The author is not permanently locked into Kindle Unlimited (unlike an author dealing with a traditional publisher), so the author is free to withdraw the book from Kindle Unlimited (and KDP Select) every 90 days and engage in more price experimentation through Kindle or through Smashwords.

World Book Day

Amazon Crossing, Amazon’s imprint for translations of books around the world, is celebrating World Book Day by giving away ebook versions of several of its best works.

The list includes mysteries, historical fiction, biography, true crime and “Book Club Fiction” (a new term for PG).

The nine books Amazon Crossing is featuring will be free until April 24.

Here’s a link to the page.

The books being featured are:

















Amazon’s E-Commerce Adventure in China Proved Too Much of a Jungle

From The Wall Street Journal:

 Amazon.com Inc. is checking out of China’s fiercely competitive domestic e-commerce market.

The company told sellers on Thursday that it will no longer operate its third-party online marketplace or provide seller services on its Chinese website, Amazon.cn, beginning July 18. As a result, domestic companies will no longer be able to sell products to Chinese consumers on its e-commerce platform.

The decision marks an end to a long struggle by America’s e-commerce giants in the Chinese market. The firms entered the Chinese market with great fanfare in the early 2000s only to wither in the face of competition from China’s faster-moving internet titans.

. . . .

In a statement, Amazon said it remains committed to China through its global stores, Kindle businesses and its web services.

Amazon China’s president will leave to take on another role within the company, the company confirmed. The China consumer business team will report directly into the company’s global team.

. . . .

When Amazon first entered China in 2004 with the purchase of Joyo.com, it was the largest online vendor for books, music and video there. Most Chinese consumers were using cash-on-delivery as their top form of payment. Today, Amazon China chiefly caters to customers looking for imported international goods like cosmetics and milk powder and is a minuscule player in the booming Chinese e-commerce market.

Amazon China commanded just 6% of gross merchandise volume in the niche cross-border e-commerce market in the fourth quarter of 2018, versus NetEase Kaola’s 25% share and the 32% held by Alibaba Group Holding Ltd.’s Tmall International, according to Nomura Securities Co.

“Everyone has merged with someone,” said Chris Reitermann, chief executive for Asia and Greater China at Ogilvy, which advises Alibaba. “It became clear that as a Western internet company you wouldn’t be able to succeed at scale without a Chinese partner.”

Link to the rest at The Wall Street Journal 

Heike Geissler’s Grim Account of the Amazon Workplace

From The Literary Hub:

Midway through Seasonal Associate, Heike Geissler describes a day off from the Amazon warehouse. It is spent at the Leipzig Christmas market, drinking mulled wine, and then at the fine art museum, strolling through the galleries, looking at paintings, and taking her first deep breath since getting hired for the holiday rush.

I’m thinking of this rare, tranquil moment in her book as Geissler and I visit the Guggenheim Museum on a brisk March day. I find her waiting out front, wearing a wool hat low over her face, angular and framed by blunt brown bangs. We shed our coats to bask in the warmth of Hilma af Klint’s lush, floral paintings, to take a photo together in the reflective surface of a Robert Mapplethorpe assemblage. In Seasonal Associate, art and literature serve as scarce reprieves from the dull work of the warehouse—unpacking, scanning, counting, imputing—a way to restore the creative potential “buried behind your fatigue.” Geissler knows this struggle first hand.

“When I was working at Amazon, there was no time for reading. I was too exhausted,” she told me over an impromptu lunch at The New Amity Restaurant. We split the coleslaw and pickles that came with my BLT and drank many cups of coffee.

. . . .

“There are plenty of nonfiction books written by journalists who embed themselves in bad industrial situations for a limited time, but no one has given a subjective, and literary account of 21st-century flex-time industrial work,” wrote Chris Kraus, writer and co-editor of Semiotext(e), over email.

Geissler, the daughter of a postmistress and a steel worker, grew up in East Germany and now lives in Leipzig, where, in 2010, she worked as a seasonal associate. Eight years earlier, at the age of 25, she won the prestigious Alfred Doblin prize for her debut novel, Rosa, which was met with wide critical acclaim. Less so her metafictional second book, on the difficulty of writing a second book. She then published a children’s book with an illustrator friend, relishing the freedom to experiment and collaborate. But she didn’t interview at Amazon looking for a good story.

“I needed money,” she told the audience at her New York Goethe Institute event. The mother of a young son (she now has two), writing and translating were not paying the bills.

Geissler did, however, take notes on her daily experiences in the warehouse, later assembling them into a manuscript. It was rejected by five German publishers before she decided to pull it. Instead, she re-edited and recorded herself reading several chapters out loud and put the audio files on her website. She wanted to speak to the listener directly, so she supplemented the first-person narration with a second person address.

. . . .

This means that reading Seasonal Associate feels disconcertingly immersive. You, the reader, are the one experiencing the monotony of training day, the draft that comes in from the loading dock, the flu that inevitably develops, the relief of the sick day, and then the dread of returning to work. Meanwhile the first personal narrator serves as a guide to your experience at the warehouse, the version of Geissler who has already experienced everything you are about to: the casual misogyny of the managers, the hands cut up and then wrapped, the half-hearted attempts to spend time with family after a long shift.

. . . .

At the warehouse she is spoken to like a child and treated like a “tool gifted with a voice no one wants to hear.” Everything that makes her an individual is an annoyance to her employer, who will not hesitate to automate her work as soon as it becomes cost-effective.

“There’s this whole narrative of your working life, the narrative of suffering,” Geissler said. “I’m always curious about how people live, what they have to do for money and we can change or improve that. The struggle must be to strive for better working conditions, for the best working conditions.”

. . . .

Amazon has embedded itself in consumer culture on both sides of the Atlantic. I think of the products that pass through Seasonal Associate: punching bags that come in multipart packaging, hair dryers, novelty mugs, and of course, books, thousands of books stacked up, health books, vampire books, and, in ironic twist of events, books of a writer Geissler once knew, a man who supports his family with his books, while she supports hers by boxing them.

. . . .

“There’s a large level of precarious work that creates the conditions by which you are buying a book for $9.99,” says Alex Shepard, writer at The New Republic, who has written about Amazon for the magazine. The promise of well-paid, white collar jobs in urban centers also depends on “ruthlessly cutting costs at every level. Not just in their supply chain, but in the supply chains of the companies that sell on their platform as well.”

. . . .

At her Goethe Institute event, the audience asked Geissler questions about not just Amazon, but also the possibilities of socialism, the rise of the far right, and the decline of labor rights, even in Germany, which has a strong tradition of unions and workers’ councils. German writer Kevin Vennemann, who wrote the afterword to Seasonal Associate, tells me that German readers responded to Seasonal Associate as a critique of a particularly American brand of capitalism now affecting work culture in Germany too, leading to strikes and ongoing issues with workers’ councils. In this context, Geissler has been read as a strong, new voice amid rapidly changing political and economic norms.

. . . .

“She reemerged with this book as a writer who takes a firm political stand and has theoretical tools for analyzing late capitalist working conditions. It’s rare for that kind of book to be embraced on a larger scale within German literature,” says Venneman.

. . . .

In Seasonal Associate, Geissler writes that she wishes she had done more to disturb the peace while still an employee, that she had resisted the urge to play by the rules, ingrained in her since childhood. Damaged the products. Stuck an insult inside a package. Slowed down the supply-chain. Instead, she writes, she and her co-workers took out their frustrations on each each other.

Link to the rest at The Literary Hub

PG says, in case you missed it, the author of the OP and the author of the book would like you to buy Seasonal Associate.

And, as indicated, you can buy Seasonal Associate at Amazon!

As a matter of fact, if you’re a warehouse worker, you’ll almost certainly pay less for Seasonal Associate at Amazon than anywhere else. That way, you’ll be able to buy the book and have more money left over for basic necessities.

PG says Seasonal Associate falls into the literary genre of slumming.

“I’m an intelligent, refined and educated person who spent time with the proles and this is what it was like. I hated it!!! You can’t imagine the scope of the squalor and filth. You can thank your lucky stars that you’re not a prole and have to live like that. And, while I was a Seasonal Associate, I met some proles who said they don’t like squalor and filth, but they can’t afford to go to graduate school.”

“But now I’ve been there, done that, wrote the book. I knew my publisher would want some authentic prole color from real proles for Seasonal Associate, so I got it and I’m finished with the prole scene except for talking about it in my book interviews.”

“For my next book, I think I’ll write about the empty lives of the filthy rich who live on yachts and sail around the Mediterranean with no thought for the poor. That will be a nice change from being a Seasonal Associate.”

As the author of Seasonal Associate learned, warehouse work (and a lot of other jobs involving manual labor) is physically hard work. The OP doesn’t say whether the author had ever had a job involving manual labor before, but, if she had not, then her being sore and tired after work is to be expected.

From his own experience doing manual labor significantly heavier than the author’s, PG suggests that you become physically accustomed to the work after a couple of weeks, but going home sore lasts longer than that. Eventually, your body adapts. However, if the author is in her thirties and has spent several years writing books, absent a serious and continuing workout program, her body would take longer to adapt.

This is information that anyone with experience in manual labor would understand. A Seasonal Associate without such experience would be surprised and might come to the erroneous conclusion that everybody’s work experience was the same as her own, even if they had worked in the Amazon warehouse for several months or years.

As to “late capitalist working conditions,” if capitalism is going to disappear, what will replace it?

“The possibilities of socialism” are mentioned.

That certainly worked out well for the workers’ paradise formerly known as the German Democratic Republic. East Germany was so wonderful that its citizens kept leaving paradise for West Germany. They were probably worried about the potential for adverse effects from too much of a good thing. By 1961, one in five East Germans had fled the country. That left fewer people for the Stasi, the East German secret police, to watch.

The mortality rates for both men and women were significantly better in West Germany than in East Germany. As one example, reported suicide rates were about 60% higher in East Germany than in West Germany prior to reunification. These differences persisted over a period of about 20 years despite the fact that most observers believed the reported East German health statistics were substantially massaged prior to publication.

Mortality from heart diseases and alcohol abuse was also materially higher in the East than in the West. Much of the difference between other causes of death in West Germany vs. the Worker’s Paradise was the marked superiority of West German medical facilities and a chronic lack of medical supplies in East Germany.

PG has calmed down and will stop now.

How Grifters Gamed Amazon to Sell the ‘Mueller Report’ Already

From The Daily Beast:

Special Counsel Robert Mueller’s long-awaited report on the Trump campaign will be released Thursday, the Justice Department announced Monday. Like all public reports, the document will be free to read.

That hasn’t stopped people from trying to sell Mueller report books on Amazon for months.

Amazon’s book listings are an SEO cesspool where grifters try to peddle ebooks on every trending topic. In recent months, self-published works on the anti-vaccination and QAnon conspiracy theories have soared in Amazon’s ratings. So as readers clamored to see the full Mueller report, publishing houses and self-published authors rushed to sell books on the still-unpublished document.

Alan Dershowitz, the celebrity lawyer and frequent Fox News guest, has not read the Mueller report yet. No one has, aside from Mueller’s team of investigators and Attorney General William Barr. But for more than a month, Dershowitz and the publishing house Skyhorse have been selling a book with the full text of the report, plus a foreword from Dershowitz.

. . . .

“There has never been a more important political investigation than Robert S. Mueller III’s into President Donald Trump’s possible collusion with Russia,” a product description for Dershowitz’s book reads. “His momentous findings can be found here.”

Of course, Dershowitz can’t write a foreword for a report he hasn’t read, and Skyhorse can’t publish the still-unreleased report’s text. Instead, Skyhorse has advertised the book on Amazon for more than a month, moving its anticipated release date back as weeks pass. The publisher now advertises as “placeholder” release date of April 30. (It was originally March 26.)

The flexible release date hasn’t stopped buyers from pre-ordering Dershowitz’s book. Amazon currently lists it as the “#1 Best Seller” in “federal jurisdictional law” category.

. . . .

Melville House, a Brooklyn-based publisher, is one of several outlets to reformat these reports as books worth buying. The publisher did brisk business selling physical copies of the Senate Intelligence Committee Report on Torture, repackaging the dense report as a readable paperback. Melville House is one of several publishers promising to sell physical copies of the Mueller report as soon as it can get the text through the printing presses.

But the crush of Mueller report titles on Amazon can leave smaller publishers scrambling to differentiate their reprints of the public report. One such book promises to be an “exclusive edition of Robert Mueller’s full-length report” and “the first to contain” a selection of accompanying documents. Other Amazon titles offer breathless praise for the yet-to-be-seen document. “History may judge The Mueller Report as the most important document of our time,” reads the product description of a Mueller report book with introductions by two former congressmen.

. . . .

Empty gag books like these, which hope to climb Amazon’s charts by latching on to popular search terms, are relatively common. In 2017, a blank 266-page book called Reasons to Vote for Democrats reached the top spot on Amazon’s book charts.

Link to the rest at The Daily Beast

PG thinks Amazon is tarnishing its brand by not working to stem this sort of activity. It has to be hurting legit indie authors.

The Golden Age of Youtube Is Over

From The Verge:

The platform was built on the backs of independent creators, but now YouTube is abandoning them for more traditional content.

. . . .

Aanny Philippou is mad.

He’s practically standing on top of his chair as his twin brother and fellow YouTube creator Michael stares on in amusement. Logan Paul, perhaps YouTube’s most notorious character, laughs on the other side of the desk that they’re all sitting around for an episode of his popular podcast Impaulsive. Anyone who’s watched the Philippous’ channel, RackaRacka, won’t be surprised by Danny’s antics. This is how he gets when he’s excited or angry. This time, he’s both.

“It’s not fair what they’re doing to us,” Danny yells. “It’s just not fair.”

Danny, like many other creators, is proclaiming the death of YouTube — or, at least, the YouTube that they grew up with. That YouTube seemed to welcome the wonderfully weird, innovative, and earnest, instead of turning them away in favor of late-night show clips and music videos.

The Philippou twins hover between stunt doubles and actors, with a penchant for the macabre. But YouTube, the platform where they built their audience base, doesn’t seem to want them anymore.

. . . .

The Philippous’ story is part of a long-brewing conflict between how creators view YouTube and how YouTube positions itself to advertisers and press. YouTube relies on creators to differentiate itself from streaming services like Netflix and Hulu, it tells creators it wants to promote their original content, and it hosts conferences dedicated to bettering the creator community. Those same creators often feel abandoned and confused about why their videos are buried in search results, don’t appear on the trending page, or are being quietly demonetized.

At the same time, YouTube’s pitch decks to advertisers increasingly seem to feature videos from household celebrity names, not creative amateurs. And the creators who have found the most success playing into the platform’s algorithms have all demonstrated profound errors in judgment, turning themselves into cultural villains instead of YouTube’s most cherished assets.

. . . .

YouTube was founded on the promise of creating a user-generated video platform, but it was something else that helped the site explode in popularity: piracy.

When Google bought YouTube in 2006 for $1.6 billion, the platform had to clean up its massive piracy problems. It was far too easy to watch anything and everything on YouTube, and movie studios, television conglomerates, and record labels were seething. Under Google, YouTube had to change. So YouTube’s executives focused on lifting up the very content its founders designed the platform with in mind: original videos.

The focus on creator culture defined YouTube culture from its earliest days. The platform was a stage for creators who didn’t quite fit into Hollywood’s restrictions.

. . . .

Between 2008 and 2011, the volume of videos uploaded to YouTube jumped from 10 hours every minute to 72 hours a minute. By 2011, YouTube had generated more than 1 trillion views; people were watching over 3 billion hours of video every month, and creators were earning real money via Google AdSense — a lot of money. Jenna Marbles was making more than six figures by late 2011. (In 2018, a select group of creators working within YouTube’s top-tier advertising platform would make more than $1 million a month.)

By 2012, creators like Kjellberg were leaving school or their jobs to focus on YouTube full-time. He told a Swedish news outlet that he was getting more than 2 million views a month, boasting just over 300,000 subscribers.

. . . .

Between 2011 and 2015, YouTube was a haven for comedians, filmmakers, writers, and performers who were able to make the work they wanted and earn money in the process. It gave birth to an entirely new culture that crossed over into the mainstream: Issa Rae’s Awkward Black Girl series would eventually lead to HBO’s Insecure. Creators like the Rooster Teeth team and Tyler Oakley went on tour to meet fans after generating massive followings online. YouTube had reached mainstream success, but in many ways, it still felt wide open. Anyone could still upload almost anything they wanted without much input from YouTube itself.

. . . .

Behind the scenes, things were changing. YouTube had begun tinkering with its algorithm to increase engagement and experimenting with ways to bring flashier, produced content to the platform to keep up with growing threats like Netflix.

In October 2012, YouTube announced that its algorithm had shifted to prefer videos with longer watch times over higher view counts. “This should benefit your channel if your videos drive more viewing time across YouTube,” the company wrote in a blog post to creators.

This meant viral videos like “David After Dentist” and “Charlie Bit My Finger,” which defined YouTube in its earliest days, weren’t going to be recommended as much as longer videos that kept people glued to the site. In response, the YouTube community began creating videos that were over 10 minutes in length as a way to try to appease the system.

. . . .

In 2011, YouTube invested $100 million into more than 50 “premium” channels from celebrities and news organizations, betting that adding Hollywood talent and authoritative news sources to the platform would drive up advertising revenue and expand YouTube to an even wider audience. It failed less than two years later, with what appeared to be a clear lesson: talent native to YouTube was far more popular than any big names from the outside.

. . . .

Then, suddenly, creators started encountering problems on the platform. In 2016, personalities like Philip DeFranco, comedians like Jesse Ridgway, and dozens of other popular creators started noticing that their videos were being demonetized, a term popularized by the communityto indicate when something had triggered YouTube’s system to remove advertisements from a video, depriving them of revenue. No one was quite sure why, and it prompted complaints about bigger algorithm changes that appeared to be happening.

Kjellberg posted a video detailing how changes had dropped his viewership numbers. He’d been getting 30 percent of his traffic from YouTube’s suggested feed, but after the apparent algorithm update, the number fell to less than 1 percent. Kjellberg jokingly threatened to delete his channel as a result, which was enough to get YouTube to issue a statementdenying that anything had changed. (The denial sidestepped questions of the algorithm specifically, and spoke instead to subscriber counts.)

These perceived, secretive changes instilled creators with a distrust of the platform. It also led to questions about their own self-worth and whether the energy they were spending on creating and editing videos — sometimes north of 80 hours a week — was worth it.

. . . .

YouTube was exerting more control over what users saw and what videos would make money. Once again, the community would adapt. But how it adapted was far more problematic than anyone would have guessed.

. . . .

By the beginning of 2017, YouTube was already battling some of its biggest problems in more than a decade. YouTube’s founders didn’t prepare for the onslaught of disturbing and dangerous content that comes from people being able to anonymously share videos without consequence. Add in a moderation team that couldn’t keep up with the 450 hours of video that were being uploaded every minute, and it was a house of cards waiting to fall.

YouTube had come under fire in Europe and the United States for letting extremists publish terrorism recruitment videos to its platform and for letting ads run on those videos. In response, YouTube outlined the steps it was taking to remove extremist content, and it told advertisers it would be careful about where their ads were placed. It highlighted many creators as a safe option.

But neither YouTube nor Google was prepared for what Felix “PewDiePie” Kjellberg — one of YouTube’s wealthiest independently made creators — would do.

. . . .

In mid-February 2017, The Wall Street Journal discovered an older video from Kjellberg that included him reacting to a sign held up by two kids that said, “Death to all Jews.” The anti-Semitic comment was included in one of his “react” videos about Fiverr, after having pivoted to more of a variety channel instead of focusing just on games.

His video, along with reports of ads appearing on terrorist content, led to advertisers abandoning YouTube. Kjellberg was dropped from Disney’s Maker Studios, he lost his YouTube Red series, Scare PewDiePie, and he was removed from his spot in Google Preferred, the top-tier ad platform for YouTube’s most prominent creators.

“A lot of people loved the video and a lot of people didn’t, and it’s almost like two generations of people arguing if this is okay or not,” Kjellberg said in an 11-minute video about the situation. “I’m sorry for the words that I used, as I know they offended people, and I admit the joke itself went too far.”

The attention Kjellberg brought to YouTube kickstarted the first “adpocalypse,” a term popularized within the creator community that refers to YouTube aggressively demonetizing videos that might be problematic, in an effort to prevent companies from halting their ad spending.

Aggressively demonetizing videos would become YouTube’s go-to move.

. . . .

The January 2017 closure of Vine, a platform for looping six-second videos, left a number of creators and influencers without a platform, and many of those stars moved over to YouTube. David Dobrik, Liza Koshy, Lele Pons, Danny Gonzalez, and, of course, Jake and Logan Paul became instant successes on YouTube — even though many of them had started YouTube channels years before their success on Vine.

YouTube’s biggest front-facing stars began following in the footsteps of over-the-top, “bro” prank culture. (Think: Jackass but more extreme and hosted by attractive 20-somethings.) Logan Paul pretended to be shot and killed in front of young fans; Jake Paul rode dirt bikes into pools; David Dobrik’s friends jumped out of moving cars. The antics were dangerous, but they caught people’s attention.

. . . .

Jake and Logan Paul became the biggest stars of this new wave, performing dangerous stunts, putting shocking footage in their vlogs, and selling merchandise to their young audiences. Although they teetered on the edge of what was acceptable and what wasn’t, they never really crossed the line into creating totally reprehensible content.

. . . .

It wasn’t a sustainable form of entertainment, and it seemed like everyone understood that except for YouTube. The Paul brothers were on their way to burning out; all it would take was one grand mistake. Even critics of the Pauls, like Kjellberg, empathized with their position. Kjellberg, who faced controversy after controversy, spoke about feeling as though right or wrong ceased to exist when trying to keep up with the YouTube machine.

“The problem with being a YouTuber or an online entertainer is that you constantly have to outdo yourself,” Kjellberg said in a 2018 video. “I think a lot of people get swept up in that … that they have to keep outdoing themselves, and I think it’s a good reflection of what happened with Logan Paul. If you make videos every single day, it’s really tough to keep people interested and keep them coming back.”

Still, Logan Paul was small potatoes compared to YouTube’s bigger problems, including disturbing children’s content that had been discovered by The New York Times and more terrorism content surfacing on the site. Who cared about what two brothers from Ohio were doing? The breaking point would be when Logan Paul visited Japan.

. . . .

Logan Paul’s “suicide forest” video irrevocably changed YouTube.

In it, Paul and his friends tour Japan’s Aokigahara forest, where they encountered a man’s body. Based on the video, it appears that he had recently died by suicide. Instead of turning the camera off, Paul walks up to the body. He doesn’t stop there. He zooms in on the man’s hands and pockets. In post-production, Paul blurred the man’s face, but it’s hard to see the video as anything but an egregious gesture of disrespect.

Within hours of posting the video, Paul’s name began trending. Actors like Aaron Paul (no relation), influencers like Chrissy Teigen, and prominent YouTubers called out Paul for his atrocious behavior.

YouTube reacted with a familiar strategy: it imposed heavy restrictions on its Partner Program (which recognizes creators who can earn ad revenue on their videos), sharply limiting the number of videos that were monetized with ads. In a January 2018 blog post announcing the changes, Robert Kyncl, YouTube’s head of business, said the move would “allow us to significantly improve our ability to identify creators who contribute positively to the community,” adding that “these higher standards will also help us prevent potentially inappropriate videos from monetizing which can hurt revenue for everyone.”

. . . .

The only people who didn’t receive blame were YouTube executives themselves — something that commentators like Philip DeFranco took issue with after the controversy first occurred. “We’re talking about the biggest creator on YouTube posting a video that had over 6 million views, was trending on YouTube, that no doubt had to be flagged by tons of people,” DeFranco said.

“The only reason it was taken down is Logan or his team took it down, and YouTube didn’t do a damn thing. Part of the Logan Paul problem is that YouTube is either complicit or ignorant.”

. . . .

[B]y the middle of 2018, lifestyle vloggers like Carrie Crista, who has just under 40,000 subscribers, were proclaiming how the community felt: forgotten. “YouTube seems to have forgotten who made the platform what it is,” Crista told PR Week. In its attempt to compete with Netflix, Hulu, and Amazon, she said, YouTube is “pushing content creators away instead of inviting them to a social platform that encourages them to be creative in a way that other platforms can’t.”

Even people outside of YouTube saw what was happening. “YouTube is inevitably heading towards being like television, but they never told their creators this,” Jamie Cohen, a professor of new media at Molloy College, toldUSA Today in 2018.

By promoting videos that meet certain criteria, YouTube tips the scales in favor of organizations or creators — big ones, mostly — that can meet those standards. “Editing, creating thumbnails, it takes time,” Juliana Sabo, a creator with fewer than 1,000 subscribers, said in 2018 after the YouTube Partner Program changes. “You’re just prioritizing a very specific type of person — the type of person that has the time and money to churn out that content.”

Individual YouTube creators couldn’t keep up with the pace of YouTube’s algorithm set. But traditional, mainstream outlets could: late-night shows began to dominate YouTube, along with music videos from major labels. The platform now looked the way it had when it started, but with the stamp of Hollywood approval.

. . . .

The RackaRacka brothers are tired.

“We loved it before when it was like, ‘Oh, you guys are doing something unique and different. Let’s help you guys so you can get views and get eyes on it,’” Danny says. “I’d love to go back to that. We have so many big, awesome ideas that we’d love to do, but there’s no point in doing it on YouTube.”

Link to the rest at The Verge

The OP is a very long article. PG has excerpted more than he might have from an article with a different topic, however.

While reading the article, PG was struck by parallels between how dependent indy videographers were on YouTube and how dependent indy authors are on Amazon.

A year ago, PG doesn’t believe he would have had the same response. The amateurism and arrogance demonstrated by YouTube management in the OP contrasted greatly with the maturity and steady hand at the top levels of Amazon. Amazon has not made many dumb mistakes. Amazon has also treated indy authors with respect and generosity beyond that shown by any other publisher/distributor/bookstore in the US (and probably elsewhere).

This is not to say Amazon is a perfect company or that it hasn’t made some mistakes, but Amazon has demonstrated good business judgment, done a pretty good job of fixing its errors and hasn’t changed the way it operates in a manner that has harmed indie authors in a serious way.

Obviously, Jeff Bezos, his attitudes, judgment and approach to dealing with others has imprinted itself up and down the corporate hierarchy at Amazon. That sure hand on the corporate helm has caused PG to trust Amazon more than he does any other large tech company.

Additionally, Amazon has been leagues beyond any other organization in the book publishing and bookselling business in attracting smart adults as managers, making intelligent business decisions, treating partners well and managing the business as if it wanted long-term success as a publisher and bookseller (see, as only one example of business as usual in the publishing world, Barnes & Noble).

However.

PG admits his faith in Jeff Bezos’ solid judgment took a big hit with the disclosure of Bezos’ marital misconduct and divorce.

This struck him as an immature example of the runaway hubris that has brought down quite a few large companies, particularly in the tech world.

PG is old-fashioned in his belief that the behavior of a virtuous individual will manifest itself in all parts of that individual’s life. He understands the common explanation for such behavior in terms of a person being able to segment his life into business and personal spheres and continue in public excellence while making serious mistakes in private behavior.

PG also understands that marriages can fail for a wide variety of reasons and assigning blame for such failure (if there is blame to be assigned) is impossible for someone who is not privy to the personal lives of each party. That said, PG suggests at least a separation, if not a divorce, would be a more standup approach by a mature adult exercising good judgment to a marriage that has declined to the point of a breakup.

A secret affair that is leaked to the press is not, in PG’s admittedly traditional eyes, up to the standards he has come to expect from Bezos. The general reaction PG has seen in the press leads PG to believe he is not alone in his opinion.

Mexico’s Walmart Pressures Suppliers on Pricing, Forcing Some to Ditch Amazon

From Nasdaq:

Walmart’s Mexico unit has penalized food companies supplying groceries to rival Amazon, pressure that has forced some to pull their products from the world’s largest online retailer, four people familiar with the matter said.

The tough tactics come as the two giants battle for supremacy in one of their most important foreign markets, one that Walmart currently dominates.

Two suppliers told Reuters they moved swiftly to pull their brands from Amazon, wary of jeopardizing their relationship with Walmart de Mexico. The companies, both of which sell common pantry goods, said Walmart accounts for more than half their supermarket sales in Mexico.

. . . .

“We could never tell anybody that they can’t sell to someone else,” Ignacio Caride, Walmart Mexico’s e-commerce head, told Reuters.

“If we think there’s an opportunity to lower our prices, because we see better prices at other retailers, we’re going to negotiate for that access,” he said.

. . . .

Amazon declined to comment.

Walmart is Mexico’s largest retailer, commanding nearly 60 percent of the country’s supermarket sales through more than 2,400 Walmart, Superama, Sam’s Club and Bodega Aurrera stores. Its online business in Mexico is growing fast, but it represented just 1.4 percent of revenue last year.

. . . .

Amazon launched its Mexican website in 2015 and is now one of the country’s biggest online retailers. It began selling groceries here in August.

Supermarket analyst Bill Bishop said Walmart wants to avoid a repeat of its experience in the United States, where Amazon quickly took the lead in online grocery sales. Walmart Inc’sMexico unit is its second-largest overseas market by sales after the United Kingdom, on par with Canada.

Link to the rest at Nasdaq

PG says it appears Walmart may have stopped sleepwalking.

Amazon Shoppers Misled by ‘Bundled’ Star-Ratings and Reviews

From The Guardian:

Badly translated versions of classic books and critically panned remakes of Hollywood films appear to have glowing endorsements on Amazon thanks to the website’s policy of bundling together reviews of different products.

Analysis by the Guardian shows products that have actually been given one-star ratings appear alongside rave reviews of better quality items, making it impossible for consumers to judge the true value of what they are about to buy.

The Guardian found numerous examples of “bundled” reviews that make poor products look highly rated – rendering the star rating effectively meaningless.

. . . .

The research found:

 Badly translated or updated Kindle versions of Emma by Jane Austen and Charles Dickens’ Great Expectations, which include references to “moms”, “guys” and “buddies”, but appear to have 4.5-star ratings from hundreds of reviewers.

 A 2017 TV version of Dirty Dancing that shares the 4.5-star reviews of the original film, despite being described by Hollywood Reporter as a “bloated” remake “that nobody asked for and nobody is likely to truly enjoy”.

 Reviews for Wuthering Heights appearing under listings for Jane Eyre, and vice versa.

 Complaints from consumers who said they had been misled when buying books from a variety of authors – from JK Rowling to Shakespeare.

 Star ratings being combined for different products in other departments, from electronics to gardening equipment.

The problems with some reviews seem to go back years, with complaints from readers pointing out they were appearing under the wrong works and editions since at least 2014.

. . . .

The combinations of formats and editions make it impossible for readers to pick between multiple versions of the same products, and allow those selling badly put together editions to piggyback on good reviews.

Anyone glancing at the reviews for a Kindle version of Emma retailing at £4.36 might believe it is worth buying, but a look at the opening pages reveals a poor translation of the original.

Emma’s mother has become her mom, and her love interest, Mr Knightley, is “a sensible guy” who uses the word buddy instead of friend.

A passage that is supposed to say “poor Miss Taylor” will be missed, instead reads: “She is surely very sorry to lose terrible Miss Taylor, and I am positive she can leave out her more than she thinks for.”

. . . .

A review from a reader, which appears to be about this edition, gives it just one star and describes it as terrible.

“Each page has a dozen errors. It reads as if it has been translated from a foreign language. ‘Dog’ in the original is ‘canine’ in this version; ‘file’ in the original has become ‘document’; ‘tremendous’ has become ‘maximum incredible’; ‘man’ has become ‘guy’.

“That is just a short summary of the errors in the first two pages. The whole thing is unreadable and a waste of money.”

Link to the rest at The Guardian

And iBooks?

PG did a quick Google search and couldn’t find any mention of iBooks in Apple’s big “moving to services” announcement yesterday.

Is there any reason to think Apple is going to pay much attention to iBooks going forward? Anything Amazon should be worried about?

Apple Doesn’t Have Prime’s Number

From The Wall Street Journal:

 Apple ’s extravagant unveiling on Monday of AppleTV+, its new video content streaming service, unveiled very little. Celebrities talked about their must-see shows without showing any clips. Apple executives trumpeted their plan to offer a bundle of content from different content partners without offering any details on pricing. So what to make of this newest entrant into the fiercely competitive and crowded streaming race?

Apple’s service will offer original shows in addition to content from companies like HBO, Starz, and Showtime. In that respect, it looks a lot like what consumers get on Amazon Prime—a mix of original and partnered content—curated by a tech company that has decided to maximize its current business by leveraging mass desire for incessant entertainment. For Amazon Prime members, however, viewing is free; Apple’s service almost certainly won’t be.

And does it make sense for the iPhone maker to be getting into content anyway? The company first put out its streaming box in 2007, but it has never commanded much market share. (Around 13% of connected TV users use the Apple box, according to eMarketer). The new service is mostly a way to draw more revenue out of Apple’s existing users.

That said, Apple is going to be writing big checks. The main point of its glitzy event seemed to be to showoff the talent it already has signed: names like Steven Spielberg, Oprah, Reese Witherspoon, Jennifer Aniston, M. Night Shyamalan and J.J. Abrams.

. . . .

If Netflix investors were worried, however, they didn’t show it. At the end of the big day, Apple shares were down 1.21% and Netflix’s were up 1.45%. Beneath all the glitz and fanfare, that may be the core takeaway: Apple is late to the game, and Netflix has an enormous lead. The newcomer also will be competing against media stalwarts such as Disney , Hulu and CBS. Consumers opt in and out of services with a few clicks, tuning in for a show on one service only to drop it after a few weeks in favor of another.

Link to the rest at The Wall Street Journal

Walmart Builds a Secret Weapon to Battle Amazon for Retail’s Future

From The Wall Street Journal:

Epiphany Davis arrived at work in lower Manhattan on a recent morning, consulted her cellphone and set off by foot in search of products ordered via text message by wealthy New Yorkers.

From her company’s loft-like headquarters, Ms. Davis walked to a health food store to get SmartyPants Kids vitamins, but the variety was out of stock. Checking her cellphone often for instructions, she walked to a grocery store for a single bag of Guittard milk chocolate chips. She rode the subway to a Nespresso store for three boxes of coffee pods, then walked to Bloomingdale’s to pick up a $245 navy blue MZ Wallace backpack.

Ms. Davis works for Jetblack, a personal-shopping company targeted at mothers launched last summer by a surprising newcomer to the field— Walmart Inc. A few hundred shoppers in New York City pay $600 a year to order anything by text message except for fresh food. Members were invited by Walmart, or referred by current members, and need to have a doorman to join.

Their orders go to Jetblack headquarters where dozens of agents sit at computers and field requests, from reordering diapers to making suggestions on high-end cribs, organic snacks and yoga attire. Couriers fetch the items and bring them back to a Manhattan delivery hub, where they are wrapped in black packaging and hand delivered, usually the same day.

It’s a labor-intensive operation that loses money. But making money isn’t the goal, at least not right away.

. . . .

Walmart is using Jetblack’s army of human agents to train an artificial intelligence system that could someday power an automated personal-shopping service, preparing Walmart for a time when the search bar disappears and more shopping is done through voice-activated devices, said Jetblack CEO Jenny Fleiss.

“It’s the tech of the future, right? It’s not what everyone is doing today,” said Ms. Fleiss, who previously co-founded apparel rental company Rent The Runway. The CEO said it could be five to seven years before the system is mostly automated and less reliant on humans. “This is a long journey,” she said. “And I think we were aware of that going in.”

Walmart is competing with Amazon, which has $233 billion in annual sales, including web services. In addition to Prime, the online giant has same-day grocery delivery from Whole Foods stores in some cities, plans to open dozens of small physical grocery stores and has sold millions of Echo speakers that let shoppers skip stores and websites altogether, and shop for products or request music with their voice.

Walmart is the world’s biggest retailer by revenue, with $514 billion in annual sales, but e-commerce makes up only a small percentage. That’s out of sync with where retail is growing fastest. Across the U.S., online shopping accounted for 9.7% of total retail sales last year and grew 14.2% from the previous year, according to the Commerce Department.

. . . .

Jetblack is a small piece of Walmart’s online investments, but it is one of the biggest gambles Walmart is making to attract wealthy shoppers and burnish its tech credentials.

Walmart primarily views the company as a research hub on AI and voice shopping. Some pieces of the business “could very readily be applied to the broader ecosystem in time,” she said. Jetblack’s software is learning to make agents more efficient, already suggesting language to use for many text interactions, said Ms. Fleiss.

Jetblack’s goal is that over time, through these interactions, the computer algorithm will learn to respond to requests with humanlike nuance but machine efficiency.

Link to the rest at The Wall Street Journal

Most Amazon Brands Are Duds, Not Disrupters, Study Finds

From Bloomberg:

The explosion of Amazon.com Inc.’s private-label products — batteries, baby wipes, jeans, tortilla chips, sofas — has prompted concern that the world’s biggest online retailer could use its clout to promote these house brands at the expense of merchants selling similar products on the web store. The issue even surfaced in Senator Elizabeth Warren’s recent proposal to breakup big technology companies.

Turns out most Amazon-branded goods are flops that don’t threaten other businesses at all, according to Marketplace Pulse. In a study, the New York e-commerce research firm examined 23,000 products and found that shoppers aren’t more inclined to buy Amazon brands even when the company elevates them in search results.

The study suggests popular political and media narratives about Amazon’s market power are overblown, despite the company capturing 52.4 percent of all online spending in the U.S. this year, according to EMarketer Inc.

. . . .

“This idea that Amazon can introduce a product and magically use data to dominate a category is just a conspiracy theory,” says Juozas Kaziukenas, founder of Marketplace Pulse. “There are a couple of successful examples everyone uses, but most of their products aren’t successful at all and many other companies continue to outsell Amazon even after it introduces its own competing brands.”

The study used sales rankings and the number of customer reviews as indicators of sales volume for different products, including Amazon’s own brands and brands sold exclusively on the site. Amazon’s success has been limited to basic products like batteries where shoppers are inclined to seek generic alternatives to save money, the study found.

Link to the rest at Bloomberg

Walmart Tipped to Take on Ipad with Its Own Android Tablet

From Slashgear:

Walmart plans to launch an Android tablet designed to compete with the cheapest iPad model, according to a new report. The sources claim Walmart’s tablet will be ‘kid-friendly’ and sold under the retailer’s ONN store brand. The company has confirmed plans to offer this tablet, but didn’t provide any official details about it, such as price and launch date.

Walmart already offers a number of electronics under its ONN brand, though they are primarily accessories like headphones. The company reportedly plans to focus on electronics and home items over the following year, at least according to alleged senior management presentations leaked by Bloomberg.

Among its alleged tablet plans is said to be a model designed for — or at least capable of being used by — kids. This model will supposedly undercut Apple’s cheapest iPad model, which is currently priced at $329 USD. It’s unclear whether the model will offer anything special as an attractive lure from Apple’s 9.7-inch slate.

. . . .

It’s unclear whether Walmart’s kid-friendly tablet will target older kids or come with the same protection features and parental controls as the Amazon Kindle Fire Kids Edition.

Link to the rest at Slashgear

Do Corporations like Amazon and Foxconn Need Public Assistance?

From The New York Review of Books:

A few years ago, Nick Buchheit, a maintenance technician in southeast Wisconsin, started to notice a disturbing pattern. After working five years or so at a manufacturing plant, he’d reach what seemed to be a wage ceiling, around $25 per hour, and get laid off. It happened once, then twice: he arrived at a factory, learned the shape and rhythm of the machines, and designed a maintenance program to make things easier for everyone else. But once “everything’s already set up,” Buchheit told me, “they go back to the $18-an-hour guy.”

He had found factory work soon out of high school, in Janesville, a city that has come to symbolize post-industrial decline. In 2017, with a wife and two children to support, he realized, “I can’t go further without having a degree.” That year, Buchheit enrolled in a local community college, squeezing classes around his job at an injection-molded plastics company. It was around this time that Buchheit’s corner of the state began to get international attention.

Taiwan-based Foxconn, the world’s largest maker of electronics components, had selected Milwaukee as its North American headquarters and Racine County as the site for its first American plant, an LCD television-screen factory that would, as the Journal Sentinel reported, eventually “create thousands of jobs.” In exchange, Foxconn would receive the largest corporate-incentives package for a foreign company in US history—between $219,000 to half a million dollars for every position created, according to the independent research group the Wisconsin Budget Project.

It was an odd choice for a cutting-edge campus, and an extraordinary gamble. Though manufacturing still exists in the area, it tends to be low-tech, and the job market is tight: just 3 percent of the local population is unemployed. It wasn’t unusual to offer tax breaks to a major employer, but the Foxconn package was so big that special legislation was required (though the Republican-controlled legislature had no trouble passing the bill). Many Wisconsinites, however, were furious: there had been no public debate about such a generous handout. Meanwhile, local schools and state universities were suffering from years of budget cuts, and inner-city communities had been hit by rising levels of incarceration and long-term unemployment not reflected in labor statistics.

Then, in 2018, the controversy over corporate mega-deals went national. Amazon announced that it would build new secondary headquarters (“HQ2”), in Long Island City, New York, and Crystal City, Virginia, with the help of tax incentives, outright gifts, and environmental and land-use exemptions. New Yorkers rebelled, protesting the size of the deal and its lack of democratic process, as well as Amazon’s hostility to union organization. To everyone’s shock, Amazon responded last month by cancelling its plans for New York.

. . . .

With the Wisconsin deal continuing to draw skepticism, Amazon’s proposed HQ2 plan in Long Island City became the most hyped and hotly contested subsidy program in the country. In 2017, Amazon, like Foxconn, had solicited bids from all over the US and Canada, in search of the best combination of tax rebates, land grants, and worker-friendly infrastructure like mass transit and housing.

. . . .

New York is an immigrant-friendly, pro-union town: Why subsidize a company that does business with ICE and busts worker-organizing? In addition, the deal contained no provision for local hiring; nor was there a strategy to prevent the displacement that would surely result from a sudden influx of high-earners.

Seattle, Amazon’s hometown, was a cautionary tale: there, the company has long attracted criticism for causing gentrification and avoiding taxes—it paid zero federal taxes on profits of $11.2 billion in 2018. Last spring, Amazon threatened to stop construction on a new tower, unless the Seattle City Council repealed a tax on large corporations. Then, in late February, having won the repeal, Amazon stopped construction anyway. Bezos wants to eat the carrot and wield the stick.

. . . .

According to Timothy Bartik, though, an economist at the W.E. Upjohn Institute in Michigan, these big-ticket incentives packages only became common practice in the 1990s. Research by Bartik and others has shown that tax rebates and land grants seldom pay off. In a paper he authored last summer, he found that incentives were decisive in “tipping a location, expansion, or job retention decision toward that state or local area” in only 2–25 percent of the cases examined. “In the other 75 percent to 98 percent of the time, the same decision would have been made without the incentive.”

Proponents of subsidies note that most deals are structured to claw back benefits from companies like Foxconn and Amazon if intermediate goals—in hiring or construction, say—are not met. When advocacy groups in New York suggested, after Amazon’s retreat, that the $3 billion could now be spent on public services, the New York Times columnist Andrew Ross Sorkin responded with a tweet about a crisis in “financial literacy”: “Quick lesson: NYC wasn’t handing cash to Amazon. It was an incentive program based on job creation, producing tax revenue. There isn’t a $3 billion pile of money that can now be spent on subways or education.” Similarly, when I pressed the Wisconsin Economic Development Corporation and the County of Racine about Foxconn’s failure to meet its hiring goals, both agencies replied with a shrug: the company would be ineligible for subsidies through at least 2020—and that would change only when it met the agreed targets.

Link to the rest at The New York Review of Books

PG has another question – Do cities like New York and Chicago and Detroit and Racine need employers like Amazon?

Taming Facebook, Google and Amazon

From The Wall Street Journal:

 The internet, the web, all things digital are officially in beta. Because they’re in beta, everything is forgiven—there is absolution for the infelicities, the flaws and the wrongs, intended and unintended. Here we are in the midst of e-evolution, looking for a moral and intellectual GPS at a time when our phone is supposed to measure heartbeat, steps walked, stairs climbed and hours slept, but gives no true sense of perspective or place. Yet there is an awakening, and we are on the cusp of a reckoning.

. . . .

Almost 12 years ago, as editor of the Times of London, I testified to a House of Lords committee: “Facts are incidental if not accidental, and the problem that we have as a society is that there is a significant number of people who have grown up in a different information environment . . . surrounded by much more information, but whose provenance is not clear. . . . The rumors will be believed; the fiction will be thought of as fact; and the political agendas, among other agendas, will be influenced by interest groups who are coming from some quite strange trajectory to issues based on collective understanding that is founded on falsity.”

The digital world has brought manifold benefits, but it shouldn’t surprise us that there are problems with provenance and opportunities for bad actors to damage democracies.

. . . .

A few facts about the media: Some 1,800 U.S. newspapers have closed in the past 15 years. An industry that employed 412,000 people in 2001 declined to 166,000 in 2017. Have the digital natives succeeded where the traditional titles have failed? No. In recent weeks, BuzzFeed, Vice, the Verizon digital properties and others laid off more than 2,100.

The creators are still being slain by the distributors, who are publishers, though they find it hard to pronounce the word. If you are intervening to filter out offensive material, you’re editing, and if you are editing, you should aspire to be a great editor, not selective and reactive but proactive.

. . . .

There is generally an understanding in business that connections lead to partnerships, which lead to relationships with responsibilities. But digital partnerships quickly descended into abusive relationships—serial cheating, digital denials, haughtiness, smugness, playing content creators for suckers. Allowing rampant piracy, sometimes actually encouraging it, was at the core of the business model for some.

. . . .

I’ll highlight one more egregious example—the Amazon Book Summary. These are blatant rip-offs, unauthorized bastardizations of best sellers that sometimes use the same cover art and for which authors and publishers receive no compensation. Amazon leveraged these unauthorized summaries by including them in its Kindle Unlimited and “Audible” subscription services. After complaints from publishers, the company promised to take action—but complaint compliance is not a sustainable strategy for Amazon, Facebook or Google.

Link to the rest at The Wall Street Journal

PG just searched Amazon Books for “Summary” and he was appalled at what he found.

Amazon Pulls Two Books Claiming “Cures” for Autism

From Book Riot:

 Amazon removed two books claiming to provide “cures” for autism on Tuesday. Both books were written several years ago and together had hundreds of reviews. A day earlier, Wired published a report on dangerous pseudoscientific titles for sale on Amazon, which included two of the books that were later removed. The book Healing the Symptoms Known as Autism contained the instruction that autistic children bathe in and drink chlorine dioxide, a very strong bleach used in industrial water treatment. The other book, Fight Autism and Win, supported giving children an antidote for mercury poisoning, a treatment known as chelation, which can cause potentially fatal kidney damage. Chelation is a response to the thoroughly debunked theory that vaccines cause autism. Earlier this month, the New York Times covered (another) recently-published study that confirmed that there is no link between the measles vaccine and autism.

Link to the rest at Book Riot

Amazon Launches New Ebook Quality Dashboard in Kdp

From The Digital Reader:

I just got an email from Amazon informing me that the retailer has added a new section to KDP called the eBook Quality Dashboard.  This is where Amazon will communicate any formatting issues. complaints, or errors reported by users.

I can’t see that page right now (neither of my workbooks have problems ATM) but I get the impression from the related help page that the EQD is intended to make it easier for those who have dozens or hundreds of titles in KDP to respond to multiple bug reports. The EQD will let users sort and filter the reported issues by attributes like:

  • Title
  • Author
  • Status (e.g., suppressed, warning)
  • Issue type (e.g., eBook content, metadata)

Link to the rest at The Digital Reader

PG received the same email and thinks the Ebook Quality Dashboard is  a good idea.

How Amazon’s Algorithms Curated a Dystopian Bookstore

From Wired:

Among the best-selling books in Amazon’s Epidemiology category are several anti-vaccine tomes. One has a confident-looking doctor on the cover, but the author doesn’t have an MD—a quick Google search reveals that he’s a medical journalist with the “ThinkTwice Global Vaccine Institute.” Scrolling through a simple keyword search for “vaccine” in Amazon’s top-level Books section reveals anti-vax literature prominently marked as “#1 Best Seller” in categories ranging from Emergency Pediatrics to History of Medicine to Chemistry. The first pro-vaccine book appears 12th in the list. Bluntly named “Vaccines Did Not Cause Rachel’s Autism,” it’s the only pro-vaccine book on the first page of search results. Its author, the pediatrician Peter Hotez, a professor in the Departments of Pediatrics and Molecular Virology & Microbiology at the Baylor College of Medicine , has tweeted numerous times about the amount of abuse and Amazon review brigading that he’s had to fight since it was released.

Over in Amazon’s Oncology category, a book with a Best Seller label suggests juice as an alternative to chemotherapy. For the term “cancer” overall, coordinated review brigading appears to have ensured that “The Truth About Cancer,” a hodgepodge of claims about, among other things, government conspiracies, enjoys 1,684 reviews and front-page placement. A whopping 96 percent of the reviews are 5 stars—a measure that many Amazon customers use as a proxy for quality. However, a glance at Reviewmeta, a site that aims to help customers assess whether reviews are legitimate, suggests that over 1,000 may be suspicious in terms of time frame, language, and reviewer behavior.

Once relegated to tabloids and web forums, health misinformation and conspiracies have found a new megaphone in the curation engines that power massive platforms like Amazon, Facebook, and Google. Search, trending, and recommendation algorithms can be gamed to make fringe ideas appear mainstream. This is compounded by an asymmetry of passion that leads truther communities to create prolific amounts of content, resulting in a greater amount available for algorithms to serve up … and, it seems, resulting in real-world consequences.

. . . .

Over the past decade or so, we’ve become increasingly reliant on algorithmic curation. In an era of content glut, search results and ranked feeds shape everything from the articles we read and products we buy to the doctors or restaurants we choose. Recommendation engines influence new interests and social group formation. Trending algorithms show us what other people are paying attention to; they have the power to drive social conversations and, occasionally, social movements.

Curation algorithms are largely amoral. They’re engineered to show us things we are statistically likely to want to see, content that people similar to us have found engaging—even if it’s stuff that’s factually unreliable or potentially harmful. On social networks, these algorithms are optimized primarily to drive engagement. On Amazon, they’re intended to drive purchases. Amazon has several varieties of recommendation engine on each product page: “Customers also shopped for” suggestions are distinct from “customers who bought this item also bought”. There are “sponsored” products, which are essentially ads. And there’s “frequently bought together,” a feature that links products across categories (often very useful, occasionally somewhat disturbing). If you manage to leave the platform without purchasing anything, an email may follow a day later suggesting even more products.

Amazon shapes many of our consumption habits. It influences what millions of people buy, watch, read, and listen to each day. It’s the internet’s de facto product search engine—and because of the hundreds of millions of dollars that flow through the site daily, the incentive to game that search engine is high. Making it to the first page of results for a given product can be incredibly lucrative.

Unfortunately, many curation algorithms can be gamed in predictable ways, particularly when popularity is a key input. On Amazon, this often takes the form of dubious accounts coordinating to leave convincing positive (or negative) reviews. Sometimes sellers outright buy or otherwise incentivize review fraud; that’s a violation of Amazon’s terms of service, but enforcement is lax. Sometimes, as with the anti-vax movement and some alternative-health communities, large groups of true believers coordinate to catapult their preferred content into the first page of search results. (Amazon disputes this characterization and says they carefully police reviews.)

Amazon reviews appear to figure prominently in the company’s ranking algorithms. (The company will not confirm this.) Customers consider the number of stars and volume of reviews when deciding which products to buy; they’re seen as a proxy for quality. High ratings can lead to inadvertent free promotion: Amazon’s Prime Streaming video platform launched with a splash page that prominently featured Vaxxed, Andrew Wakefield’s movie devoted to the conspiracy theory that vaccines cause autism.

Perhaps compounding the problem, Amazon allows content creators to select their own categories and keywords.

. . . .

With a product base as large as Amazon’s, it’s probably a challenge for the company to undertake any kind of review process. This is likely why quackery shows up in classified as “Oncology” or “Chemistry.” It’s a small reminder that Amazon isn’t exactly a bookstore or library.

Link to the rest at Wired

Perhaps PG is mistaken, but his take on contemporary society in the US is that there are a great many people who are anxious to silence those with whom they disagree.

It appears to him that, other than a few types of content that are clearly illegal, that “violate laws or copyright, trademark, privacy, publicity, or other rights” plus pornography, Amazon is content to allow its audience the right to decide what it would and would not like to read.

Majority of UK Shoppers Now Use Amazon

From Kam City:

New research from Mintel reveals that 86% of UK consumers shop at Amazon. And highlighting the ongoing popularity of the retail giant, the study found more Amazon shoppers have increased their shopping (21%) with the retailer than decreased it (13%) over the past year.

Overall, 70% Amazon customers shop with the retailer at least once a month, while 17% use the retailer on a weekly basis.

In terms of what’s in the basket, hardcopy media such as books, DVDs or video games (39%) remains Amazon’s most popular purchases. This is followed by electricals (30%), fashion/jewellery (30%), and toys (20%).

Meawnhile, 45% of households in the UK have some form of Amazon produced device, with Kindle (23%), Fire TV/TV Stick (16%), Fire Tablet (14%), and Echo (11%) proving the most popular.

. . . .

Meanwhile, the research confirms the popularity of Amazon’s subscription-based Prime service with 39% consumers having access to it and 26% personally being members. A further 13% share access through someone else’s account. Scaled to a national level, Mintel stated that this places Amazon Prime membership in the UK at around the 15 million mark.

Link to the rest at Kam City

Amazon’s Lord of the Rings Hints at an Epic Prequel

From Book Riot:

Lord of the Rings fans rejoice: in their new adaptation, Amazon is going far back. This is no re-adaptation. No, it’s going bigger—as many suspected and hoped, it’s going epic, and it’s going prequel.

The official Twitter account for the new adaptation has finally started tweeting. They first teased us a month ago with the exciting quote from J.R.R. Tolkien himself: “I wisely started with a map.”

. . . .

Earlier today we got the map itself, gorgeous, full, and bigger than the one we would see from the Lord of the Rings films; more ancient, too. Númenor, the land of Men, is visible: this is notable because it was destroyed thousands of years before our main trilogy begins, and because Aragorn is descended from that land. Harad and Khand are visible as well—the people of those lands fought for Sauron, but we don’t know much about them—and the space around the kingdoms we know is very empty, perhaps implying that we will get to fill it in with more detail with this series.

The tweet alludes to the rings, naturally; but most notably, the tweet that follows the map reads, “Welcome to the Second Age.”

Link to the rest at Book Riot

On Amazon, a Qanon Conspiracy Book Climbs the Charts — with an Algorithmic Push

From NBC News:

A book that pushes the conspiracy theory Qanon climbed within the top 75 of all books sold on Amazon in recent days, pushed by Amazon’s algorithmically generated recommendations page.

“QAnon: An Invitation to the Great Awakening,” which has no stated author, ranked at No. 56 at press time, was featured in the algorithmically generated “Hot new releases” section on Amazon’s books landing page. The book claims without evidence a variety of outlandish claims including that prominent Democrats murder and eat children and that the U.S. government created both AIDS and the movie Monsters Inc.

The Qanon conspiracy theory moved from fringe parts of the internet in 2018 to achieve national prominence thanks to supporters of President Donald Trump who wore clothes and held signs referencing “Q” at political rallies.

. . . .

Adherents of the Qanon conspiracy theory falsely believe that the world is run by a Satanic cabal helmed by former presidential candidate Hillary Clinton, and that President Donald Trump and Special Counsel Robert Mueller are secretly working in tandem to eliminate the cabal.

The book, “An Invitation to the Great Awakening,” is currently No. 9 in all books about politics, and No. 1 in all books about “Censorship,” one slot ahead of Ray Bradbury’s “Fahrenheit 451,” and immediately followed by classics “Lord of the Flies,” “The Handmaid’s Tale,” and “Of Mice and Men.”

. . . .

Amazon declined to answer questions about the book’s placement in the algorithmic recommendations carousels, including about whether the book might have been recommended to users on other sections of the site.

At several points last weekend, the book was a spot behind Dr. Seuss’ “Green Eggs and Ham” on the Top 100.

. . . .

Conspiracy theory researcher Mike Rothschild told NBC News that “An Invitation to the Great Awakening” is a new way for those pushing the Qanon conspiracy theory to make cash, since recent changes to YouTube’s algorithm have made it harder for conspiracy theorists to find new followers and cash in on true believers.

“They absolutely exploited flaws in Amazon’s algorithms,” Rothschild said. “They also know that Q has a small but devoted fan base that is willing to spend money. So if it gets a huge spike of sales just as it’s released, it’ll shoot up Amazon’s lists and get in front of more people, even if those initial sales make up the bulk of who pays for it.”

Link to the rest at NBC News and thanks to Nate at The Digital Reader for the tip.

PG says a mention on NBC will give the book another big boost. It was #14 on Amazon’s Top 100 bestsellers when PG made this post. It hadn’t caught up with The Wonky Donkey, however.



One of the Things We Don’t Do Very Well at Amazon

One of the things we don’t do very well at Amazon is a me-too product offering. So when I look at physical retail stores, it’s very well served, the people who operate physical retail stores are very good at it…the question we would always have before we would embark on such a thing is: What’s the idea? What would we do that would be different? How would it be better? We don’t want to just do things because we can do them…we don’t want to be redundant.

~ Jeff Bezos

Amazon’s Finally Coming for Your Local Grocery Store

From Eater:

Online retail behemoth Amazon is tackling the ultimate IRL retail challenge: It’s opening stand-alone grocery stores. The Wall Street Journal reports that “dozens” of Amazon groceries are planned in the coming years, with the first location slated for Los Angeles debuting “as early as the end of the year.” The news comes just days after the Amazon-owned Whole Foods announced that it would kill its 365 by Whole Foods stores, a “cheaper” iteration of the Whole Foods brand that lasted just two years. WSJ’s sources report that the Amazon grocery concept would be totally separate from Whole Foods, and expand upon the items usually carried by “Whole Paycheck”: Whole Foods famously does not offer any products with artificial ingredients; presumably, shoppers at an Amazon grocery could stock up on all the Coca-Cola and Doritos they want.

. . . .

Amazon has likely learned a lot from its 2017 acquisition of Whole Foods. Interestingly, the Amazon grocery stores will purportedly have a smaller footprint than the average supermarket — a strategy that 365 by Whole Foods also attempted. In January, it was reported that Whole Foods was eyeing recently shuttered Sears and Kmart locations as potential sites for expansion; today, WSJ reports that Amazon’s groceries could also be targeting vacated Kmarts.

Link to the rest at Eater

Amazon Share Grows and Big Publishers Make More Money

From veteran publishing consultant, Mike Shatzkin:

The financial reports of the major publishers have been following a pattern for some years now. Sales are about flat but profits have been steadily rising. One explanation for that fact is that the management of the major houses have been diligent about adapting their businesses to the new marketplace configurations or, as the saying goes, “squeezing costs out” of their operations.

But it could be more than that. In a piece published here well over two years ago, I said it was an “old joke” of mine that “Amazon is every publisher’s most profitable account” which, I observed, was not their objective! That has seemed apparent for well over a decade.

The explanation is simple. Amazon is the account that sells the most units with the least returns. Because Amazon has contractual relationships with the biggest publishers rather than purchasing from their published discount schedules, there is no way for an outsider to know exactly what the sales terms are. But the discounts and marketing fees to Amazon would really have to soar from the standard terms they began with to claw back more than the excess margin they deliver compared to other accounts.

So as the business shifts to Amazon, and it certainly looks from the outside like they are half or more of many publishers’ business, it shifts from lower-margin accounts and publishers make more money.

And because the big publishers have the lion’s share of the high-profile books, they are effectively insulated from being cut off in a trading dispute. It is likely that there is a growing gap between what the larger publishers get as a percentage of the retail price of their books and what smaller publishers can get from Amazon. That drives another component of current publisher economics: the growing consolidation of distribution under the major houses and Ingram.

As the business moves to Amazon, the publishers need more of the “normal” print volume to maintain their sales-and-distribution structures, to pay for the sales reps and warehouses. But gently declining print units mean per-unit costs will rise unless they are augmented by other people’s books in distribution. So far, for the most part, they have been because the smaller publishers are also seeing the same trend and find it harder and harder to support their own sales and distribution structures.

. . . .

Even with their economic advantages and great internal marketing capabilities, Amazon is really not a threat to take the biggest authors away, either through their own publishing operations or through self-publishing. Big authors are already rich and publishers are willing to pay them advances that effectively amount to royalties much higher than the contractual standards. What the big authors are mostly interested in, beyond the money, is maximum exposure. They want to be on sale in the largest possible number of places and reach the biggest number of readers. That is the key to making more money through dramatic sales to Netflix or Amazon or, particularly in the case of non-fiction, doing even more lucrative speaking tours employing the celebrity their books deliver them.

. . . .

In addition to the margin growth that comes from business shifting from scattered retail locations with relatively higher returns to Amazon, publishers are seeing growth in export sales, backlist sales, and, perhaps most dramatically, in digital audio sales.

. . . .

And easier-to-make backlist sales are another source of extra margin for publishers. In the pre-Amazon, pre-digital age, only the books that were actually in stores had much of a chance to sell. Even for the most capable publishers, most of the backlist simply wasn’t ubiquitously available a few months past publication date. Now, with more than half the sales made online, that’s no longer an issue. If the book is in print, it can be purchased. Publishers are increasingly awake to the modern reality that any book can get hot at any time, and sales efforts don’t have to wait for books to be positioned at retail locations to be effective.

. . . .

So the bad news for publishers — a dramatically shrinking store network with its last big chain, Barnes & Noble, in a steady decline that shows no signs of stopping — has, so far, been more than compensated for (in profit margin if not in unit volume) by growth. Sales shifts to Amazon have improved margins and reduced costs. Growth in backlist sales and export sales and audiobook sales have, so far, compensated for the loss of print book units that previously would have sold through the bookstore network.

Link to the rest at The Shatzkin Files

PG was going to look for a prior post in which he opined that Amazon was the best thing to happen to large publishers in a long while, but he’s short on time.

He has long regarded the hostile attitude of major publishers toward Amazon to be one of the more prominent examples of what business mediocrities are in control of those publishers. Why anybody would not have almost immediately preferred doing business with Amazon to dealing Barnes & Noble is beyond comprehension.

Amazon has effectively dragged major publishers into the twenty-first century by forcing them to evolve the way they do business into a much more profitable model – selling bits instead of dead trees, not paying to ship boxes of books back and forth to physical retailers, selling to readers across the nation and around the world, instead of only those within a short distance from a physical bookstore.

 

Amazon Shifts Power to Brands in Fight Against Fake Products

From The Wall Street Journal:

Amazon.com Inc. is starting to let brand owners delete listings on its site for products they deem fake, marking a sharp shift in its struggle to fight counterfeiters that cedes some of its responsibility to other companies.

The online retail giant on Thursday launched a new anticounterfeiting program, called Project Zero, that it says would better protect brands from scammers by letting them designate listings for removal, rather than going through a cumbersome reporting process with Amazon. The company has been testing it with roughly 15 brands for a few months, and will now start inviting selected additional companies to participate. Amazon said it wants all brand owners to join the program eventually but declined to specify a timeline.

As part of Project Zero, Amazon also is including a tool that generates a unique code for each product unit that the brand can print onto existing packaging or attach onto items using a sticker. The codes can then be scanned to ensure a product’s authenticity when it enters an Amazon warehouse. Amazon said its engineers also are working to better train the algorithms that automatically scan, block and scrub the site of suspect listings.

In shifting some monitoring duties and authority to brands themselves, Amazon is taking an unusual step. Other tech companies use outside contractors to help monitor their platforms but don’t generally let users remove content. Amazon, for example, has required brand owners to report suspected counterfeits to an internal team that would investigate and decide whether or not to remove them.

“We realize we’re not perfect,” said Dharmesh Mehta, Amazon’s vice president of world-wide customer trust and partner support. “It really puts the power in the brands’ hands.”

Link to the rest at The Wall Street Journal

Does Amazon’s Retreat from New York Signal the End of Corporate Subsidies?

From The New Yorker:

 In November, Governor Andrew Cuomo and Mayor Bill de Blasio held a press conference in New York to announce a deal to bring a new Amazon headquarters to Queens. The event felt familiar: two ambitious politicians, side by side, explaining that a large company had promised to create thousands of jobs in the area in exchange for enormous tax breaks and other incentives, totalling almost three billion dollars, from the city and state. It was the kind of scene that has played out in dozens of American cities and towns. “For years, big corporations have been getting tax forgiveness and tax abatements, as well as, in many cases, money to train workers, and, in some cases, outright cash grants or subsidized loans,” David Cay Johnston, the author of “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill),” which explores corporate subsidies, told me recently. “The reality, unfortunately, is that this is going on all over the country.”

Opposition to the Amazon deal was instantaneous and fierce. Retail workers and union representatives organized protests; local and national politicians complained that one of the largest and richest companies in the world didn’t deserve billions in tax breaks and criticized its opposition to allowing its workers to unionize; people took to calling Amazon “Scamazon” on Twitter. “Our subways are crumbling, our children lack school seats, and too many of our neighbors lack adequate health care,” two of the most vocal critics, Michael Gianaris, a state senator, and Jimmy Van Bramer, a city councilman, said in a statement. “It is unfathomable that we would sign a $3 billion check to Amazon in the face of these challenges.” Increasingly, it began to look like the company would not be able to gain the legislative approvals that it needed for the deal to go through without making concessions, in spite of the support that it had from the mayor and the governor.

. . . .

Shortly after the decision became public, General Electric—which, three years ago, had been offered millions of dollars in tax breaks to move its headquarters from Connecticut to Boston—cancelled plans to build a new office tower and drastically reduced the number of employees it planned to hire, citing financial concerns. Foxconn, the Taiwanese technology manufacturer, has also suggested that it might not go through with a plan to construct a ten-billion-dollar manufacturing plant in Racine, Wisconsin, which it had promised to build with the help of more than four billion dollars from the state; the company said that it no longer made sense to manufacture liquid-crystal displays in Wisconsin due to the cost. (Two days later, after criticism, Foxconn said that it was still planning to move forward with the plant.) Neither company cited public protest as the reason for its decision to modify its plans, but each decision took place against a backdrop of rising popular anger about income inequality and the advantages that are often bestowed on large corporations.

. . . .

According to Johnston, state and municipal governments have extended publicly financed benefits to corporations for decades, but the practice didn’t really take off until the nineteen-nineties, when major chain stores and developers of sports stadiums began to demand large tax breaks and construction financing in exchange for promises to create jobs and revitalize neighborhoods. In recent years, dozens of companies, including General Motors, Boeing, and Intel, have taken advantage of such deals. (The New York Times calculated, in 2012, that states, counties, and cities are giving away more than eighty billion dollars a year in subsidies to large companies.) In many instances, though, the promised jobs and other benefits to the community never materialize or end up being more modest than was initially suggested in flashy press announcements.

Johnston explained how the process typically works: “You come in as Walmart or Home Depot or Lowes and say, ‘I want to build a store on that land, and the guy who owns it doesn’t want to sell it.’ ” In its eagerness to entice the company to build there, the local government might seize the land through eminent domain and then sell municipal bonds—essentially borrowing money—against the lease on the store. The chain then builds its store and parking lot and employs local people to work there. The bonds that the government issued, meanwhile, are repaid not by the company but through residents’ sales taxes. “When you check out of a Walmart that has this deal, and you pay eight dollars and change in sales tax, that money does not go to cops, library, schools, or parks,” Johnston told me. “That money goes to pay the bonds.” Approximately ninety per cent of Walmart distribution centers were built this way, according to Johnston. The situation is exacerbated by the fact that states, and even different municipalities within states, can compete with one another to offer the most generous subsidies and the lightest regulation, leading to an arms race of giveaways. “Often these things turn out to be complete frauds,” Johnston said. Multiple studies have shown that some short-term economic benefits may accrue to the community that has extended the tax breaks, but, over the long term, there is little positive benefit (and often none) because the practice saps money from public education and infrastructure, which is extremely harmful to a local economy.

. . . .

Amazon’s presence in New York might also have helped diversify the city’s economy, which is heavily dependent on the insurance, finance, and real-estate industries for well-paying jobs, by creating opportunities for tech workers. “Once you get an employer that has a large need for certain employment skills, you get other businesses that will also locate nearby,” Johnston said. “That’s why Rochester had not just Kodak but Bausch & Lomb and Xerox. It’s why Fleet Street was called Fleet Street or Madison Avenue called Madison Avenue. That’s why this had potential for other development.” Polls of locals in Queens showed that the majority actually supported the deal. The fact that Amazon didn’t fight harder to make it work suggests that the company is sensitive to criticism and also that it knows it can get an equally good deal in another city. “That they were willing to walk so quickly suggests they were not worried about replacing the deal somewhere else,” Johnston said.

Link to the rest at The New Yorker

PG says one of the benefits of allowing states to make many decisions by themselves and pursue their own way of doing things is that others can see the impact of various financial and tax strategies on the state’s economic well-being.

He has previously linked to stories about the impact of higher tax rates and costs of living on the outmigration of one state’s residents to places with lower taxes and costs.

Differing state policies and programs are most definitely a feature and not a bug.

Amazon Reportedly Has Lord of the Rings Writers in a Locked Office with a Guard and Fingerprint Scanner

From Gizmodo:

Amazon has a lot riding on its secretive, $250 million deal with The Lord of the Rings author J.R.R. Tolkien’s estate, publisher HarperCollins, and New Line Cinema to produce a streaming show in the franchise’s Middle-Earth setting, with expectations that the budget could cross one billion dollars.

LOTR fans still don’t know an awful lot about the show—initial reports in 2017 suggested that Amazon’s production would primarily deal with “previously unexplored stories,” of which there is a lot to find in Tolkien’s massive fantasy universe. Later in 2018, other reports indicated that the show had signed a deal could use “material” from Peter Jackson’s film series, but it wasn’t clear what that meant. Amazon onboarded talent from Star Trek 4, and rumors proliferated it would involve fan favorite Aragorn. Unsurprisingly, the lack of info is probably due to Amazon’s efforts to keep details from leaking—and Amazon Studios chief Jennifer Salke said as much in a interview this week with the Hollywood Reporter.

Salke told THR that she, Amazon CEO Jeff Bezos, and Senior Vice President of Business Development Jeff Blackburn had scheduled a meeting with members of Tolkien’s estate in New York to “see some art, some creative work that they haven’t shown the world yet.” She added that the room where the writers are working is kept under “lock and key,” with windows kept taped closed and a security guard manning a checkpoint outside with some kind of fingerprint-based security system:

There’s a fantastic writers room working under lock and key. They’re already generating really exciting material. They’re down in Santa Monica. You have to go through such clearance, and they have all their windows taped closed. And there’s a security guard that sits outside, and you have to have a fingerprint to get in there, because their whole board is up on a thing of the whole season.

Link to the rest at Gizmodo

PG notes that stories like the OP are a wonderful way of gaining the attention of a large LOTR fanbase and stirring up interest in the project.

If the story hadn’t happened by accident, Amazon should have started it on purpose. 😉