Becca Rothfeld, a former critic at the Washington Post, on the death of the paper’s books section.
    • Jiggle_Physics@piefed.zipEnglish
      7·
      22 hours ago

      I know you are thinking about the fact they started with books, and don’t want a real answer, but this is here for others too.

      Venture capital held them together until they expanded their offerings, and developed a network for shipping, internationally. It turned its first profit in 2001, 3 years after expanding beyond books. It didn’t start turning it’s first full year profit until 2004. However it was another decade of consistent losses, mixed with the profits. By 2014 they had developed their own international infrastructure for storing, and shipping, and providing an interface for purchasing products with their website. At this point they were basically allowing anything on their site, and third party business building storefronts on their infrastructure. During this time, they found that the data centers behind their website, could also become a major point of profit. AWS has since become is the primary source for income that covers their operating costs.

      So, basically, books lost money, VC saw potential, as they didn’t completely die in the bubble burst, and then supported them under the long term plan of creating a massive shipping network, and massive data services infrastructure, which is their real business. Once this infrastructure was in place they started producing reliable, year after year, profits, which made the shares the VC’s owned worth the the time, and risk. Now they basically just allow third parties to use their infrastructure, for a cut, and if some product becomes a consistent seller, they just order a copy to be made, at the level their purchasing power provides, which means they can sell it for less, and since they own the infrastructure, they can make it so you find their version first. This is how Amazon makes money.