Amazon launches yet another loss-leader, but what is its plan?

The Kindle Owners Lending Library will sell a lot of Kindles – but Kindles don't make money.

Amazon's Kindle Owners' Lending Library (KOLL) is expanding to the UK later this month, according to paidContent. The program allows Kindle-owning Amazon Prime members to borrow one ebook for free each month, and has been relatively popular in the US.

Although it started with a focus on traditional titles, in recent months it has become a key vehicle for promoting self-published authors through a program called KDP Select. The payment model earns authors who opt in comparatively large sums – Amazon says that "in September, authors earned $2.29 per borrow" – and asks for a 90 day period of exclusivity in exchange.

The program is yet another example of Amazon, depending upon your viewpoint, either being a devious long-term-thinker or displaying a foolhardy disregard for profit. Self-published authors who opt-in are paid from a pool of $700,000, and for a while Amazon even put books in the program without the publishers' permission, paying the full wholesale price whenever a customer took it out. Anyone who owns a Kindle and has an Amazon Prime subscription can gain access to it – but both of those are commonly perceived to be loss-leaders.

Amazon revealed yesterday that it makes no profit on Kindle Fires or the new Kindle Paperwhite, with Jeff Bezos confirming that "we sell the hardware at our cost, so it is break-even on the hardware".

Amazon Prime, meanwhile, costs $79 (£49 in the UK), and gives subscribers access, not only to the KOLL, but also to a library of free videos (including AAA, albeit older, titles like the Iron Man 2, True Grit, Sherlock and Downton Abbey) and free two-day delivery on most things the site sells. This last aspect alone is probably enough to make Prime a loss-leader; Amazon is notoriously cagey about these sort of things, but most analysts estimate that the average Prime user buys enough that the shipping costs outweigh the cost of Prime.

Independently, these two loss-leaders make sense. Prime serves to boost customer loyalty, and allows a feeling of instant gratification of the sort which mail-order companies had previously struggled to deliver. Kindles, meanwhile, lock customers in to buying all their ebooks from Amazon, basically forever.

But the KOLL is a loss-leader which serves to boost take-up of two other loss-leaders. It's turtles all the way down, at this point.

The larger battle which KOLL is fighting is against the publishers. By offering up KDP select authors for free, it serves to break the ice between the typical reader and the typical self-published author, enabling Amazon to consolidate its control over the publishing industry.

It's a battlefront which has also seen Amazon move from enabling self-publishers to becoming a traditional one itself. The company secured the exclusive North American rights to Ian Fleming's James Bond novels in April this year for its Thomas & Mercer imprint, which prints traditional paperbacks as well as an extensive Kindle library.

All of these loss-leading strategies mean that the company's finances are not particularly similar to those of more traditional corporations. Amazon's second quarter 2012 sales were $12.8bn; its second quarter profit was just $7m. Although the profit was especially low, because it included the $65m Amazon spent buying robotics firm Kiva Systems, the distinction stands.

And it's not just the revenue:profit ratio which is out-of-kilter. Amazon's price:earnings ratio (the cost of a share versus the earnings per share) stands at over 300:1; a normal value is around 10:1. (Incidentally, one of the noteworthy things about Apple is that despite having an astronomical market cap and share price, its P/E ratio 15:1. The company isn't overvalued, it's just overprofitable.)

The high P/E ratio implies that investors expect Amazon's profit to increase at some point in the future. But there's only two ways that could happen: either Amazon vastly increases its revenue, or it vastly increases its profit margin.

It sounds almost conspiratorial, but the only way the company can really do this – and its actions indicate that it knows it – is by becoming the only player in town. Amazon's success to date has been built around winning every price war going, but once it gains control of a field, then it wins that price war by default.

The problem the company has is that its competitors aren't taking its success lying down. Wal-Mart is the latest giant of Old Retail to attack Amazon on its own turf, testing same-day delivery (£) for a flat $10 fee in a few US locations.

As the New York Times writes:

If Wal-Mart expanded its same-day shipping across the country, it could essentially transform the more than 4,000 Walmarts, along with Sam’s Club and other divisions, into distribution centers. Amazon, by contrast, had fewer than 40 distribution centers in the United States at the end of last year and has plans to add about 20 worldwide this year. . .

Wal-Mart, meanwhile, has been building up its e-commerce site as it tries to do things that Amazon cannot, such as allowing customers to pay for online purchases with cash.

Amazon is in a good place to earn a lot of money. The Kindle dominates ebooks, a growing industry; the Kindle Fire is one of only two serious competitors to the iPad; and for a lot of people, "Amazon" has become to buying media what "Google" is to searching the web. But it's not the only company with a lot of advantages, and it's not guaranteed to own the future just because it was started in the 1990s.

Amazon's opaque network of loss leaders, plans for the future, and smart investments may still be leading somewhere. But it's unlikely that that place is as profitable as the company's investors hope.

A Kindle. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Is love necessary? Laurie Penny in conversation with Moira Weigel

The author of radical Marxist feminist text Labor of Love on emotional labour, finding freedom in relationships, and love's connection to work.

Laurie Penny: So Moira, your book, Labor of Love, is a radical Marxist feminist tract disguised as a salmon-pink self-help book, and it’s doing incredibly well. Nice work. You must be knackered.

Moira Weigel:  I’ve been overwhelmed by the response – surprised, frankly, and also grateful and encouraged that there is this kind of appetite for history and theory. It affirms my sense that the world is more ready for radical Marxist feminism than it might have thought. As an academic and writer, I am used to spending much of my time alone – it’s electrifying to be able to have conversations with other humans about this topic I obsessed about for so long. But it's also tiring: these past few weeks I have written and talked so much that I have decided I need to get a dog as soon as this book tour is over. I just want to stare into the eyes of a wordless creature for a while, and I may be too insecure to love a cat.

LP: I endorse this attitude. If I want to live with something that will judge me all day, interrupt my deadlines and expect me to work for its affection, I’ll get a boyfriend.

So anyway, I love your book, but I’ll start with my one real nitpick. As a British reader, I found Labor of Love to be an extremely American text  more specifically, a New York text. This makes sense as so many of the world’s ideas about romance are leached from American culture, but I’ve always felt New York to be a particular arcane circle of dating hell whose rules and customs are quite opaque even to those of us who’ve seen Sex and The City. This is a general complaint, rather than a complaint about your book, but New York forgets that it isn't the whole world, which is a problem when the entire American literary world lives there. In Britain, you know, we don’t really even date. We do a little bit now, because of the internet, but it’s still largely a formalised version of “get hammered, get laid, and see if you have anything in common in the morning”.

MW: Yes, I hear this! I tried, in the book, to talk about other cities in America, but I did not get to talk about other countries - though I’ve written about Chinese dating elsewhere. I think that dating was invented in America because it is basically an expression of a particular form of consumer capitalist logic applied to love – and America invented that logic, and New York maybe its capital. Its rise also has a lot to do with mass immigration and the working class immigrant cultures in American cities, historically speaking.

LP: New York is the zenith of a particularly mercenary love culture that I found, and continue to find, utterly terrifying. Intimacy is negotiated with the formality of a merger. But at the same time New York lives in the global imagination as one of the most romantic places on earth. Which, in the classical sense, it is.

Anyway, question two. Your book deals brilliantly with the way that the burden of planning romance, marriage and fertility falls to women, and the real emotional and practical labour involved in that. The discourse of emotional labour is suddenly everywhere in contemporary feminist writing. Why do you think that is?

MW: Emotional labour does seem to be trending, doesn’t it? I have noticed that more and more folks seem to be using that term, specifically – “emotional labour,” coined by the brilliant feminist sociologist Arlie Hochschild, instead of the Hardt/Negri terms “affective” or “immaterial labour,” which describe related phenomena and seemed to come up more often in left academic discourse until recently.

I have two interrelated ideas about why this might be. Firstly, I believe that there is a growing interest in emotional labour now because the permeation of every corner of our lives by the Internet, mobile phones, and social media, not to mention contemporary forms of economic precarity, mean that it's less and less clear what work is and is not  what production is and consumption and reproduction are. And in an age where we have to brand ourselves constantly for mobility, flexibility, etc, I think many people in developed countries are just doing MORE of it. 

Maybe it's that the kinds of folks who write and edit think pieces are finally having to do it, feeling exhausted. It seems to me that automation and globalisation were evjsceraring the American working class all through the 1970s and 1980s and the newspapers weren't that angry but now that the AIs are coming for the parallegals, financial analysts and journalists, we are seeing all these books and articles taking notice. 

Maybe it's like that: Flight attendants and call center debt collectors, the subjects of Hochschild’s book first exploring this phenomenon, The Managed Heart, were dealing with this shit when she was doing her fieldwork in the early Eighties. But now that media folks and tech folks are having to win over everyone on Twitter, they're realizing that service with a smile is a grind.

Secondly, I think there's been a resurgence of socialist feminism since around the time of Occupy, thanks to the Internet and new social movements. It seems to me that more and more young people are discovering the tradition that talked about the unwaged labour of women and its centrality to the economy despite being neglected by both classical liberal and Marxist economics. I'm thinking of Silvia Federici, Mariarosa dalla Costa and the Italian autonomist feminists, of course, as well as great American feminists like Angela Davis and bell hooks. Thanks to little magazines like N plus One and the New Inquiry, that intellectual recovery is disseminating those ideas to a very broad audience. And they're receptive because it's true. I sometimes joke that every woman is a socialist feminist whether she realizes it or not. And that's rad. If I have l one ambition for this book, it's to stealth-radicalise mums who had no idea they had the joy of so much just rage in them.

LP: That expansion of work theory is the great taboo the idea that labour itself extends beyond what is measured by the wage relation. Romantic love can be work, and so can domestic work, childcare, all of it – and the fact that we call so much of it "love" makes the that work invisible. There’s a resurgence of anti-work theory on the left, but even so, it’s amazing how many leftist men get incredibly uncomfortable when you start to apply ideas of labour and exploitation to gender relations. Particularly if it requires them to take a look at their own relationships.

Relatedly, I’ve noticed that a lot of the articles and discussions around your book specifically mention the fact that you’re married, and happily so. That must be frustrating. A lot of big political books that are coming out by women right now follow a certain trajectory which weaves in the ‘happy ever after’ ending – even Kate Bolock’s recent book Spinster, which is supposed to be all about the power of singleness. On the other hand, since your books is partly personal and all about love, it would have felt dishonest not to mention it. Do you think that the focus would have been different if you were a man?

MW: I do often feel pressure to talk about my own relationship. Not that I mind talking about it, exactly. It’s just… I would hope that my having spent years researching and writing on the subject seems like a more interesting qualification to talk about dating than my happening to be a partnered person. I don't think that would happen to a man nearly as much.

Nobody has asked me about the section of my afterword that deals with intense and loving female friendship. In fact, one or two reviewers have criticised the book by saying that it has a “marriage plot” – because it happened that I fell in love with the person I'm now married to while I was working on it, and there are a few – four, I just counted – sentences on the final page where I mention that. Immediately before those sentences there's a longer paragraph where I talk about the deep love and gratitude I feel for my dear friend Mal Ahern. Labor of Love grew directly out of several essays she and I collaborated on together and was deeply shaped by our relationship. The book is dedicated to both of them.

I do believe disagreement among feminist writers is healthy, and I'm eager to have many folks come into conversation with this book, so I hope I don't sound petulant. Still, it felt a little discouraging to see other women write Mal out.

LP: It’s almost as if we’ve internalised the idea that platonic friendship can’t ever be as important as romantic partnership. In terms of your own marriage, though, you shouldn’t have to apologise for being happy! Everyone deserves what you have, if that’s what they want, but the fact is the odds are against everyone getting it. One of the things that romantic orthodoxy prevents us from talking about honestly is that there just aren't enough men out there who both see women as real human beings and  are actively committed to being in equal partnerships with one of them. We’re supposed to fight for the relationship model at all costs, or die alone. We're encouraged to see those who don’t have a partner as somehow abject, instead of working on other models of human and particularly female fulfilment.

MW: A point I’m very keen to make is that I think the emphasis placed on monogamous romantic relationships in our culture is destructive to happiness – even the happiness of the people in such partnerships. The tremendous emphasis placed on having "A Relationship" with a capital R -- and "Defining the Relationship" – sometimes seems to lead people to devalue all other kinds of intimate connection, and lovers to treat one another worse than necessary. I like to think that all human interactions put us into relations with one another. And all relationships end – even if they last until death. That does not make them “a waste."

The cultural script that says that life, particularly female life, is still defined by a search for "The One" encourages us to devalue relationships that are crucial to our thriving – friendships and other forms of intimate connection. You see this in romantic movies and all kinds of pop culture representations – where, for example, your friends are a focus group you can dissolve once you have a mate. I'm encouraged that shows like Girls and Broad City and Orange Is The New Black  whatever their flaws  or Elena Ferrante's Neopolitan novels show a growing appetite for alternative narrative configurations. Where the end point is not always, only monogamous coupledom.

LP: In my last book, and in the one I’m working on now, I’ve felt pressure to provide that sort of story when talking about the labour of love – to offer a trajectory that tells readers that actually, the world of heterosexuality is still fraught and frustrating, but it’s still possible to find liveable partnership. In the end, the Love chapter of Unspeakable Things came out of two painful breakups, and was informed by a growing sense that alternative narratives to the standard fairytale had to be permissible. There was a lot of outrage in there that the women I knew seemed to be suffering so much in and out of relationships  and that got a huge response. In the years since, there have been more and more feminist writers opening up about the fact that, you know, maybe it’s okay to be skeptical about monogamous partnership and the bourgeois family, and that’s a brilliant thing in my view - that’s why your book is so important, and so radical. That skepticism has been missing from public feminism for so long, as the focus has been drawn back to helping middle-class white women achieve "work-life balance"  essentially ceding the ground to a politics that sees endless emotional and domestic labour as women’s lot, forever.

MW: On the other hand, if we go down the road of believing that capitalism is so fundamentally and profoundly corrupting that there is no way to have a relationship within it… I don't know that I believe that. I want to believe sexual desire and love offer lines of flight. Sometimes I have even felt embarrassed by my optimism, my faith that ultimately our sexualities and our desires are a source of tremendous freedom. I believe it is more than fine not to be an optimist about love – if by that we mean finding one partner to settle down with forever and have babies with. But if someone wants to give up on the enormous power that each of us gets at birth, free of charge by being desiring beings drawn to each other in infinite ways, I think I’d try to convince her not to.

LP: Agreed. I try to set my own cynicism against the fact that I want to fall in love again and again. I just don’t want to get married, or settle down. I want to fall in love with friends, partners, housemates, strangers. At the moment I’m getting to live a version of that dream, as I’ve been polyamorous for years and live in a functioning collective. Part of me always suspected, in my early twenties, that this was a phase I was going through, that eventually I’d settle down and couple up, because that was what it meant to be an adult  but as I approach my thirties I’ve come to realise that no, this is what I’m committed to, and it’s going to be a long-term thing for me. I’m very interested in the notion of "casual love" – love and intimacy that gets to be as free and easy as casual sex, without necessarily obviating commitment... Romance, unlike human labour, is an infinitely renewable resource.

MW: That's interesting. It's the one actual infinite resource. Unlike nature, unlike women's labour which we treat that way.

LP: They say we’re an important natural resource. You know what they do to natural resources these days? All of this is, on a fundamental level, about social reproduction. We have to remember that the work that is done within love and family scenarios, mainly by women, is work that has real, measurable value, work without which capitalism could not continue to exist. And the historical marginalisation of women has been about managing and ensuring the unstinting supply of that work, for free, for a long time. Changing the labour of love will involve changing those conditions – and it will take a lot of imaginative work.

MW: Yes, and work best done among more than two people – among friends and communities as well as individual lovers. Transforming those conditions requires expanding the idea of love beyond the narrow couple form,where it's a prize you get for following The Rules successfully. Not to be too reductive, but the ways that the labour of love has manifested have often been shitty – but they don't have to be. I am ultimately an optimist.

LP: On that note, the world needs to know, by which I mean I want to know, about this puppy you’re going to get.

MW: I am so glad you asked, because this is a matter about which I would like to seek some self-help. The puppy is a source of conflict for me and within my relationship. I won’t name names but one of us thinks it’s basically unconscionable to do anything other than adopt a dog. The other accepts the self-evident truth of that claim, but feels a deep and passionate attraction to purebred French bulldogs. The heart wants what it wants. If anyone in the world would like to give up a French bulldog for adoption please get in touch @moiragweigel.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.