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In recent announcements Amazon.com reported a net loss, and BandN.com reported diminished earnings. More recently BandN announced the closing of 200 stores over ten years. The question is, which will go belly-up first? KDP or Pubit? (by belly-up I mean sold off, or go bankrupt).

My impression is that both KDP and Pubit.com are not money-makers. BandN's brick and mortar stores are considered more of a financial problem than its ebook business, which is why they are being closed. Amazon.com has withdrawn funding for KDP customer support via phone and text chat, indicating that KDP is less profitable that its other divisions.

Based on the above I come to the idea, no doubt surprising to many, that Pubit has a brighter future than KDP. Both will be around for awhile, but eventually the financial drains will be stopped, one way or the other. I guess, and of course it is only a guess, that KDP's will be stopped first.

My ebooks are marketed with Amazon.com, BandN.com, Kobo.com and Philduke.weebly.com. My three best sellers on these sites, sell on these sites roughly in proportion to the sites' market shares- but what's interesting is that the best sellers are NOT the same. Here they are.

Amazon, my best seller is "Sherlock Holmes and the Flying Machine" with 4 illustrations $3.99
Barnes and Noble, my best seller is "Jack the Ripper versus Sherlock Holmes" with 6 illustrations $4.99.
Kobo, my best seller is "HEROIN God's Own Medicine" no illustrations $3.99.

If anyone has a good idea why these three different ebooks sell best on these three different sites, please post it, thank you.

Phillip Duke Ph.D.
 

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I live in the Seattle area, and based on the number of job postings and other developments we've seen from Amazon lately, in spite of their net loss I doubt they're in any situation they consider "financial trouble."  Amazon made net losses on Kindle for the first year or two it was out.  That was apparently intentional, as it got Kindles out to users much faster, and Amazon was willing to take the financial hit in order to bet on their financial strength in coming years.

KDP is most likely one of the lowest-overhead sectors of Amazon's entire business.  Amazon has a LOT of ventures under its umbrella that you may not even know exist.  My guess is they'll cut a lot of others loose before they let go of KDP.  If they had net losses, who knows where it came from (likely not KDP) and who knows whether net losses were a foreseen and expected part of a longer-term move they're making.  Bezos is a pretty smart dude.

PubIt I can't speak to.  I don't know much about Barnes & Noble as a company, nor about their financial health.  I've heard they're closing more stores.  With increased focus on the Nook and ebooks, I'm not sure whether that's in indicator of their doom or of an impending increase in profitability and a big success for them.  

As always with business, it remains to be seen.
 

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I don't believe either of them will go belly up, at least not in my lifetime. As ElHawk stated, it is remarkably inexpensive to run an online digital bookstore, especially when compared to the cost of a brick & mortar bookstore. I expect that Amazon only loses money on ebooks because they choose to do so in order to get their marketshare and inventory. Eventually, they will make adjustments to ensure KDP's long-term success. If I had to predict the failure of one or the other, I would expect Pubit to fail first, as they show no evidence of trying to improve.

As far as why you have different best-sellers at different vendors, that one's easy. Different shoppers.
 

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Amazon and KDP are not going anywhere.  KDP is easily their highest profit margin arm of their business.  They take anywhere from 30-65% of every book sold.  They bill us for the transfer fees as well.  The only cost on their side is the power bill on a few servers and employees to make sure it all works.  Support is outsourced to the lowest bidder like any other company.  Amazon's normal profit margin is less than 2%.  And it's up from this time last year.

KDP is pure cash in their pockets.  A product they do not have to create or invest in.  They don't have to promote or find buyers.  We do all that for them and are more than happy for them to take a cut.  No KDP and PubIt are here to stay.  No one is going to walk a way from a business model like this.
 

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Doubtful at Amazon going bankrupt, though I have seen that they operate at very thin margins with huge sales volume, which has all along seemed like a great strategy to build a huge, loyal customer base. The obvious solution, of course, is to raise the margins at some point in the future and thus solve the problem.

phildukephd said:
Amazon.com has withdrawn funding for KDP customer support via phone and text chat, indicating that KDP is less profitable that its other divisions.
That was a commonsense decision rather than a profit-driven one, I suspect. 95% of the issues authors were calling them about could be handled much more cost effectively by routing them to a FAQ or sending them to email support, where canned answers can be generated in two seconds by someone in a foreign country earning $3/day rather than wasting the time of a telephone operator getting paid $10/hour.
 

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phildukephd said:
Amazon.com has withdrawn funding for KDP customer support via phone and text chat, indicating that KDP is less profitable that its other divisions.
Where did you read this? I wouldn't be surprised if it were so for the reasons Robert cites, but am curious as to where you saw it.
 

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"Amazon.com has withdrawn funding for KDP customer support via phone and text chat, indicating that KDP is less profitable that its other divisions."
That indicates nothing about profitability. Each division will try to max profits regardless of what the others are doing. No division will ignore opportunities to improve because of the profits of some other division.
 

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ElHawk said:
I live in the Seattle area, and based on the number of job postings and other developments we've seen from Amazon lately, in spite of their net loss I doubt they're in any situation they consider "financial trouble." Amazon made net losses on Kindle for the first year or two it was out. That was apparently intentional, as it got Kindles out to users much faster, and Amazon was willing to take the financial hit in order to bet on their financial strength in coming years.

KDP is most likely one of the lowest-overhead sectors of Amazon's entire business. Amazon has a LOT of ventures under its umbrella that you may not even know exist. My guess is they'll cut a lot of others loose before they let go of KDP. If they had net losses, who knows where it came from (likely not KDP) and who knows whether net losses were a foreseen and expected part of a longer-term move they're making. Bezos is a pretty smart dude.

PubIt I can't speak to. I don't know much about Barnes & Noble as a company, nor about their financial health. I've heard they're closing more stores. With increased focus on the Nook and ebooks, I'm not sure whether that's in indicator of their doom or of an impending increase in profitability and a big success for them.

As always with business, it remains to be seen.
I agree. Amazon is also expanding (and has been for awhile) into hosting cloud support for others. Aren't they doing some support even for their rivals, like Netflix? I remember reading that somewhere. I'm not a techy, but I think expanding like that could be something that eats cash now for profits down the road. There, that's the limit of my business knowledge.
 

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KDP is not going belly up. Amazon is a monster and they have a very different strategy that has worked pretty well for them so far. They do not focus on pleasing shareholders with high earnings, their P/E ratio is among the highest, but that's always been their strategy. They are looking very long-term, investing in the company for expansion and growth vs. short-term for pretty earnings. KDP is just one small piece of the Amazon empire. They are huge in technology, were one of the first to offer cloud solutions to small businesses. They are quite diversified. KDP was always set up for rapid growth long-term as well, remember when they were selling bestsellers at 9.99 and pissing off publishers? At 9.99 it was a loss leader for Amazon, with the goal to be first thought for consumers for ebooks. I'd say they're doing well with that!

I dabble in the stock market and Amazon was/is a company I've researched and follow very closely.

Pubit on the other hand has some catching up to do.
 

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You can't really compare Amazon (KDP) to B&N. Amz shows less profit because it is plunging dollars into infrastructure. They just got a credit line in the billions at 1 3/4% interest.

B&N is struggling with its brick and mortar stores which will dwindle to a handful of flagship stores in the next 5 years. They have spit the ebook and Nook to keep it separate when  B&N crashes, but the website alone needs a new website to compete with Amazon. Catch-up can be prohibitively expensive.
 

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Amazon.com actually made huge profits last year, but then plowed them back into their business. They warned their stakeholders that net profit was going to be marginal at best in 2012. KDP has nothing to do with that.

"For all of 2012, the company booked a net loss of $39 million, or 9 cents per share, down from a profit of $631 million, or $1.37 per share. The shortfall was due to a 60 cent per share loss in the third quarter of the year, which resulted from a charge related to its stake in online deals site LivingSocial. The company said it was also due to heavy spending on its Kindle business, new geographic locations and video content. It also said it hired about 50,000 temporary workers at its distribution centers across the U.S. during the holiday season.

Revenue in 2012 grew 27 percent to $61.09 billion from $48.08 billion, slightly below analysts' expectations of $62.1 billion."
http://www.huffingtonpost.com/2013/01/29/amazon-q4-2012-earnings_n_2576293.html

If you read the whole article, there's a difference between revenue, net profit, gross profit, investment, etc. that makes the Stock Market think Bezos is on the right track.
 

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Bezos is a genius and Amazon is the climate change of commerce. Their level of impact on consumers has done nothing but creep ever higher in the past eighteen years. Mr Bezos, like all mavericks, ran against the herd pursuing an ultra-long-term policy when everyone else was in for the quick buck.

Here in the UK, The Amazon tide recently engulfed Blockbuster, HMV and Jessops: no tidal wave, just rising inch by certain inch till its competitors can no longer breathe. Watch out. Coming to a business near you. Soon.


Joe
 

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:D :D :D :D :D :D :D ;)

Sorry, but that's my reaction.


 

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Considering the long conversation I had with a rep on the phone from KDP recently, I'm doubtful KDP is going anywhere. They asked me a lot of indepth questions ranging from how I got started writing, to my writing schedule, all the way up to what I would do to improve KDP itself. It came across to me as if they're serious about expanding KDP and making it as author friendly as possible.  I don't know why they would be so interested in the things we discussed if they were planning to pare the platform down and get rid of it.

Everything can change on the whim of the economy, but I think KDP will outlast the rest with ease.  :)
 

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Amazon's goal is to destroy the competition and thus force the Publishers to lower their price margin on ebooks and thus allow them a broader price margin.
 

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Yeah I was explaining to my financial advisor in November exactly why he should sell his Apple stock and buy Amazon. He laughed me off and wouldn't let me invest until "after the fiscal cliff resolved." (Of course, this is ridiculous since he's done it all his life and I got interested when I realized Amazon was a permanent digital content center, not a device maker.)

So Zon stock only went up about 30 percent since then and Apple is dropping like Facebook bought it.

Check the news more deeply today and you will see Amazon beefing up its advertising opportunities (my prediction is ads in ebooks are hitting by next year at the latest), BN getting sullenly pouty about the poor spin it put on its terrible news, and also recently Amazon going after iTunes with the bonus mp3 downloads. And it's not just here that Amazon is winning--it is gobbling up the ebook market in Germany and Italy as well, and looks to be the early winner in Brazil in only a month.

Really, once Amazon gets seriously into music, Prime is an automatic for virtually every household in the US. They are already making their own movies and publishing their own authors, so how long until they start a record label?

I don't believe in the "long tail" kool-aid, but if there IS one, Amazon has it.
 
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