Still Buying From Amazon? Take A Moment To Think About The Real Cost.

I know,believe me.  As a true book lover, I know the temptations are great.  And it’s not just books. Amazon’s incredible discounts have allowed more than a few people to buy gifts and needed goods they may have otherwise been unable to afford.

But there are other costs; not necessarily hidden expenses, and you need to weigh these costs when doing business with Amazon.

In a series of articles originally published in March of 2012, The Seattle Times put a spotlight on Amazon’s business practices. Amazon has been putting pressure on publishers to reduce their prices for years; culminating in the Department of Justice’s successful suit against Apple and several of the large publishers for alleged conspiracy to fix prices.  What few realize is a simple formula in publishing:  it’s riskier to bring a book to print than it is to bring the book to the reader. Publishers (isn’t Amazon a publisher now?) need to cover the expenses necessary to bring a book to print (editors, printers, marketing and all the other job-creating expenses used to find and bring an author to the public). Add to that the fact that Amazon may be your biggest client (buying up to 70% of your product).  When your biggest client demands you cut your prices well below  the fair market prices you’ve established for all your purchasers, that adds up to a big chunk of  your operating change.

Okay, so you’ve got no love for Antique Big Publishing. Print sales have been declining for at least 4 years or more, while e-books have been on a spectacular rise.  E-book sales have risen by as much as 60% in genre fiction.  E-book sales may be depressing hard cover sales of big titles, or they may be introducing a new audience to new ideas.  Either way, I can tell you this: The online revolution in publishing may mean everyone can get published.  But it doesn’t mean everyone should be published, and it doesn’t mean everyone will be published in the future, but more about that later.

How about the fact that Amazon puts little back into communities? Bloomberg reports that Amazon employs just 14 people for every $10 million in revenue. The IRS is pursuing $1.5 billion in taxes from Amazon. This, in spite of the fact that ,according to The Nation, Amazon,”…had $48 billion in revenue, more than all six of the major American publishing conglomerates combined, with a cash reserve of $5 billion. ” Yeah.  A real strange choice for Obama’s state of jobs speech.

Finally, despite these impressive numbers, Amazon operated at a loss of over $300 million annually for the first eight years of it’s existence, yet investors continue to pump money into the conglomerate.  Why? Because investors know that one day Amazon will completely dominate it’s markets.  They will be in a position to dictate what you buy , how you buy it, and how much you will pay for it. These incredible discounts will be a thing of the past.

Do you really want that?

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