How is Amazon Profiting Every Quarter from a Dying Industry?
Amazon's profits are up 30% this quarter from last year, and everybody wants to know what is it they are doing right, considering the fact that publishers are going out of business left and right and so Amazon CAN'T be selling books.

So what is it? Why is Amazon so goddamned successful right now, when everybody else is tanking?

If the bookstore isn't selling books, what are they selling?

From Publisher's Weekly:

"Amazon continued to roar along despite the recession, reporting an increase in total revenue of 18%, to $4.89 billion, in the first quarter ended March 31, and net income rose to $177 million from $143 million. Gains would have been higher if the impact of currency translations is excluded. Unfortunately for publishers, however, the gains were driven by the retailer's electronics and other general merchandise segment in both North America and abroad, which had gains of 42% and 34%, respectively."

So it turns out that all of their profits are coming from their "electronics" department, which includes their 400 dollar Kindle, and all of its fun accessories, like full price ebooks.

But this doesn't even make sense. Sure, the Kindle is selling well, but it is hardly flying off the shelves like an Apple product, especially in this economy where people can barely afford vehicles to get them to their jobs, where paying half a grand for a "book machine" is the sort of joke that a man with a bowler hat and curly mustache would tell on stage before blowing into a kazoo.

There IS one way it all adds up, however, without assuming that Amazon is dealing cocaine on the side (if you like "WEED," here are some other selections you may enjoy: "GLUE," "HEROIN," "TWILIGHT," by Stephenie Meyer): it all adds up if you know that Amazon's Kindle 2 only costs $185 to make, meaning that Amazon is turning a 51% profit on each unit, in addition to strong-arming publishing companies into accepting full DEE-ARGH-RIM jobs for their Kindle books, meaning that any people with any sense are reluctant to buy them.

Dang, man, so that means that unlike video game systems where companies take a huge loss on the console in order to sell cartridges (you know, so developers will make cartridges for their machines and people will have enough money leftover in their pockets to buy them (you know, so the profits are spread around between video game manufacturers and software companies (you know, so that the whole industry doesn't crap out completely))) Amazon is actually charging DOUBLE for the Kindle 2, as if they know that it is all a big con, as if they know that if they don't profit from ebook madness now, no one ever will.

Dang, man, what if bookstores charged admission at the door?

Posted by miracle on Sat, 25 Apr 2009 12:59:03 -0400 -- permanent link

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