Amazon: A Loss for Them is a Profit for You!

c44182e6856dc3ccb199d601304b3af6edac Amazon: A Loss for Them is a Profit for You!

Matthew Yglesias spells out one of the occasional glories of
sorta-kinda free market capitalism: how big bad companies and their
fatcat investors
lose so that you may win:
Amazon kept up its streak of being awesome this afternoon
by announcing
a 45 percent year-on-year decline in profits measuring Q4
2012 against Q4 2011. Not because sales went down, mind you.
They’re up. Revenue is up. The company’s razor-thin profit margins
just got even thinner, and in total the company lost $39 million in
2012.
The company’s shares are down a bit today, but the company’s
stock is taking a much less catastrophic plunge in already-meager
profits than Apple,
whose stock plunged simply because its Q4 profits increased at an
unexpectedly slow rate. That’s because Amazon, as best I can tell,
is a charitable organization being run by elements of the
investment community for the benefit of consumers. The shareholders
put up the equity, and instead of owning a claim on a steady stream
of fat profits, they get a claim on a mighty engine of consumer
surplus. Amazon sells things to people at prices that seem
impossible because it actually is impossible to make money that
way. And the competitive pressure of needing to square off against
Amazon cuts profit margins at other companies, thus benefiting
people who don’t even buy anything from Amazon.
I blogged a decade ago on the eternal
death of the book business as we peons eternally get more
access to more books.

See the article here:

Amazon: A Loss for Them is a Profit for You!


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