Great sentences on the modern condition.

by Henry on March 6, 2013

This Strossian insight brought to you by The Browser

Amazon isn’t a store, not really. Not in any sense that we can regularly think about stores. It’s a strange pulsing network of potential goods, global supply chains, and alien associative algorithms with the skin of a store stretched over it, so we don’t lose our minds.

Discuss

{ 85 comments }

1

Anderson 03.06.13 at 4:49 pm

There’s definitely something non-Euclidean about its pricing. Squamous, even.

2

phosphorious 03.06.13 at 4:58 pm

This explains the “Order filled by Shub-Niggurath” label on my most recent purchase.

3

JW Mason 03.06.13 at 5:16 pm

So, what other business have potential goods, global supply chains, and pricing algorithms? Let me see, that would be, um … all of them?

Sticking the word “alien” in there is just like putting it in italics: Amazon isn’t a store, man, it’s a store.

Here’s what Amazon is really. All the Strossian woo is just there to make the people doing crapwork invisible. Same as ever.

4

bianca steele 03.06.13 at 5:22 pm

pulsing

Yuck.

5

Cranky Observer 03.06.13 at 5:24 pm

I worked as a picker in the old, gigantic Sears catalog distribution center in Chicago shortly before it was torn down & replaced by a hyper-efficient cornfield DC. Built in 1890 the Sears catalog & the Homan Ave CMDC differed from Amazon… Not at all. Right down to the brutal pressure on & bankrupting of suppliers.

Well, one difference: to keep unions out workers were paid a living wage and one could raise a family on what one earned there with 5 years’ seniority or so. Otherwise, exact same operation. As in many things (downtown stores, ..), Sears gave up 10 years too early.

6

nick s 03.06.13 at 5:39 pm

Here’s what Amazon is really.

Throw in the FT piece on Rugeley for comparison’s sake. But Amazon is clearly more than just a mega-Argos, or Sears, as Cranky O notes, and I can only imagine how Sears shipped its stuff off in the late 1800s. It’s a mega-Argos that sells {products that exist} alongside {products that exist if you want them to exist} in a merging of wholesale, commodity retail and custom production.

Etsy and eBay sellers do commissions all the time, but with Amazon, you might describe these proffers for on-demand work as “raised to the status of inventory.”

7

js. 03.06.13 at 5:43 pm

with the skin of a store stretched over it, so we don’t lose our minds

Without entirely discounting the possibility that I have in fact lost my mind, I’d have thought that the “skin” was precisely what was missing from Amazon. In every other way it pretty much seems like a store.

8

Cranky Observer 03.06.13 at 5:51 pm

nick s,
Exact same way Amazon does today, except they use the Post Office, telegram, and railroad to do it (trucks & UPS by 1980, just as today). Including pick-to-order and drop-ship.

Internet does allow more complex assemble-to-order/kitting schemes, but the principles were all in place by 1890. You should have seen the pneumatic tube system…

9

JW Mason 03.06.13 at 6:22 pm

{products that exist} alongside {products that exist if you want them to exist}

Sort of like when I tell the guy at the deli I want my roast beef with extra hot peppers and no cheese?

10

Henry 03.06.13 at 6:46 pm

If the extra hot peppers were algorithmically generated …

11

nick s 03.06.13 at 6:50 pm

Sort of like when I tell the guy at the deli I want my roast beef with extra hot peppers and no cheese?

More sort of like if the deli had on display a plastic replica of every conceivable sandwich configuration, and you ordered by pointing to the one you wanted. That’s my point: on-demand transactions largely follow a different mental and social model to that of buying stuff in inventory.

You should have seen the pneumatic tube system…

The brilliant Molly Wright Steenson is all about the tubes.

12

Henry 03.06.13 at 6:55 pm

And more seriously, I don’t think that it is just ‘woo.’ There is something weird and alien and novel about the use of algorithms in half-arsed efforts to comprehensively explore a desire-space and see if there is anything there that connects to customers. This is not the same thing as the creepy and exploitative relations of actually-existing-capitalism, but it isn’t an ideological confection intended to distract from the man behind the curtain either. The Strossian reference was in fact deliberately intended to draw a metaphorical connection between the two – the monsters of Stross’s Accelerando are algorithms intended to exploit the failings of mere humans in market interactions that have gone feral and hyper-intelligent (when let loose, these algorithms destroy actual economies, generating vast and self-proliferating networks of largely imaginary trades in their place).

13

hix 03.06.13 at 7:04 pm

There are economies of scale in distribution, especially fast one and it is inconvinient to register at various competitors with a smaller offering range.
Thats about it. Most of the work at Amazon is done very non-modern by low paid and bad threated labourers doing simple repetitive tasks – up to the point where they are dumb enough to hire the cheapest possible security service that only occupies Nazis for unecessary surveilance. Amazon still does not appear particular evil compared to any other company relying on humans doing stupid task either . My local real pays some people a lot less than the “outrageous” 7 or 7.50 Amazon does. Internet ordering is great, but the real innovation would be to get the packing done by robots.

14

Substance McGravitas 03.06.13 at 7:04 pm

efforts to comprehensively explore a desire-space and see if there is anything there that connects to customers

Isn’t there an understanding that it WILL connect to someone? All you have to do is have the idea of it; someone will want it and then you make it.

15

Barry Freed 03.06.13 at 7:13 pm

So that explains why my Amazon promotional code was: Ph’nglui mglw’nafh Cthulhu R’lyeh wgah’nagl fhtagn.

16

Henry 03.06.13 at 7:23 pm

Or alternatively or additionally as you like, this

The Singularity has happened; we call it “the industrial revolution” or “the long nineteenth century”. It was over by the close of 1918. Exponential yet basically unpredictable growth of technology, rendering long-term extrapolation impossible (even when attempted by geniuses)? Check. Massive, profoundly dis-orienting transformation in the life of humanity, extending to our ecology, mentality and social organization? Check. Annihilation of the age-old constraints of space and time? Check. Embrace of the fusion of humanity and machines? Check. Creation of vast, inhuman distributed systems of information-processing, communication and control, “the coldest of all cold monsters”? Check; we call them “the self-regulating market system” and “modern bureaucracies” (public or private), and they treat men and women, even those whose minds and bodies instantiate them, like straw dogs. An implacable drive on the part of those networks to expand, to entrain more and more of the world within their own sphere? Check. (“Drive” is the best I can do; words like “agenda” or “purpose” are too anthropomorphic, and fail to acknowledge the radical novelty and strangeness of these assemblages, which are not even intelligent, as we experience intelligence, yet ceaselessly calculating.) Why, then, since the Singularity is so plainly, even intrusively, visible in our past, does science fiction persist in placing a pale mirage of it in our future? Perhaps: the owl of Minerva flies at dusk; and we are in the late afternoon, fitfully dreaming of the half-glimpsed events of the day, waiting for the stars to come out.

17

Matt 03.06.13 at 7:40 pm

My local real pays some people a lot less than the “outrageous” 7 or 7.50 Amazon does. Internet ordering is great, but the real innovation would be to get the packing done by robots.

That’s why Amazon bought Kiva Systems. OK, the actual packing is still human, but the run-and-fetch-something part is now robotized. This means less wear and tear on workers, fewer workers for a given volume of orders, and fewer angry Mother Jones articles. The middle part in that last sentence is the important bit; the bookends are ancillary benefits. It’s kind of like laser-guided bombs, designed to kill/destroy targets 100 times more efficiently than unguided bombs, but the way they’re marketed is “fewer dead bystanders” instead of “more dead targets.”

18

Barry 03.06.13 at 7:41 pm

“Internet does allow more complex assemble-to-order/kitting schemes, but the principles were all in place by 1890. You should have seen the pneumatic tube system…”

That was the whole point of Sears; they realized what the combination of mass production, railroads, telegraphs/telephones, post office and banking/check/money order system could do. I have a feeling that it was the communications and banking part that did it; it meant that ordering, production and shipping could be coordinated on the order of days and weeks, rather than weeks and months. The banking system meant that Mr. and Mrs. Farmer could easily send payment across the country in days (or same day, given Western Union). On top of this/built by this was sophisticated, large-scale office systems.

19

JW Mason 03.06.13 at 7:49 pm

See, Henry, I love the Shalizi piece quoted at 16. But it’s a perfect refutation of your argument here. The weird and alien thing was the invention of the department store and the whole universe of commerce it was part of, 100 years ago — not the minor tweaks that happened between Sears and Amazon.

20

Bruce Wilder 03.06.13 at 7:51 pm

when let loose, these algorithms destroy actual economies, generating vast and self-proliferating networks of largely imaginary trades in their place

Sort of like Goldman Sachs?

21

Ben Alpers 03.06.13 at 7:52 pm

Maybe it’s because I just finished reading Light, but that description of Amazon.com would also not be entirely out of place in an M. John Harrison novel. Which immediately raises the question: since, as many have pointed out upthread, Amazon is, in many ways, not really that different from any number of other gargantuan retail operations that have existed over the last century plus, what cultural work is the science-fictional language doing here?

22

JW Mason 03.06.13 at 7:52 pm

More sort of like if the deli had on display a plastic replica of every conceivable sandwich configuration, and you ordered by pointing to the one you wanted.

I’m sort of not grasping why this would be an improvement of the current system of algorithmically generating sandwiches on the fly.

What is the concrete thing that Amazon is doing that this metaphor is pointing at?

23

phosphorious 03.06.13 at 8:06 pm

“Sort of like when I tell the guy at the deli I want my roast beef with extra hot peppers and no cheese?”

No. . . more like a deli whose menu lists sandwiches at random. . . zebra on rye, quail egg salad, pumpernickel between two slices of turkey with chutney gravy. . . on the off chance someone might buy one.

Nobody requested a “Keep Calm And Rape A Lot” T-shirt. . . but they were offered for sale. Did Sears ever do anything like that?

24

bianca steele 03.06.13 at 8:34 pm

When you go to the printing place to have them silk screen some shirts, and they decide whether it’s in bad taste and they don’t want to print it up. I’m not getting the difference between their failing to vet someone’s silk screen and this. They would be getting the same criticism if they weren’t using “algorithms” and they’d forgotten to train staff to refuse to print those shirts.

Yes, it is technologically interesting that what’s essentially a database or search engine (Amazon works about the same as Google does in this regard, AFAICT, when you’re searching for something) can find “the place where this could exist if you wanted it to.” I’m not sure whether this is a violation of the search engine metaphor. Should a directory give me “the place that would hire someone to ghostwrite my book, if I asked them to,” by letting me ask for “where was my book ghostwritten”?

25

Henry 03.06.13 at 8:39 pm

JW Mason – right – that’s why I said “alternatively or additionally as you like.” On the one hand, you can see this as something qualitatively new – I don’t think there is a closehistorical parallel for algorithmically generated products like the offending (and non-offending) t-shirts. On the other, you can see this as a kind of perfection, or even apotheosis, of the tendencies within capitalism that CS identifies. Both are useful. But both of them are all about how this phenomenon is “alien,” which is why I think your original comment was a bit off the mark. To put it another way again: The Difference Engine is a story about what was immanent in Victorian society, or what is immanent in ours, depending on the lens through which you read it.

26

Barry 03.06.13 at 9:09 pm

“No. . . more like a deli whose menu lists sandwiches at random. . . zebra on rye, quail egg salad, pumpernickel between two slices of turkey with chutney gravy. . . on the off chance someone might buy one.”

I think it’s more like you punch in an order, the sandwich shop makes whatever it is. I think that the shirt in question was made by somebody typing in words to the ‘Keep Calm & …’ template.

27

Substance McGravitas 03.06.13 at 9:14 pm

I think it’s more like you punch in an order, the sandwich shop makes whatever it is.

No, the sandwich shop advertises every possible sandwich. This attracts a lutefisk-and-Nutella customer.

28

Tim Worstall 03.06.13 at 9:17 pm

Reminds me of Private Eye more than anything else.

New technolohy baffles pissed old hack.

29

Tim Worstall 03.06.13 at 9:21 pm

Sigh……technology. These keyboards have only been around a century or so, right?

30

Substance McGravitas 03.06.13 at 9:22 pm

It offered you every letter and you took the ones that appealed. Modern!

31

novakant 03.06.13 at 9:30 pm

Amazon isn’t a store, not really.

Indeed – stores have to pay taxes.

32

Hidari 03.06.13 at 9:34 pm

I bought an Xmas present for my Dad last year ın November. It arrived in March. I then bought a book for myself. I was faffed around for about two months and then they told me it was out of stock. Finally I tried to buy an item of jewellery for my partner. They said it they would deliver it in four months (!) and then when that time was up said it was out of stock.

Amazon isn’t a store. In a store you buy stuff and then take it away. Amazon is just shit.

Although their tax dodging is quite impressive.

http://www.guardian.co.uk/technology/2012/apr/04/amazon-british-operation-corporation-tax

33

UserGoogol 03.06.13 at 9:39 pm

Calling what Amazon.com is doing “advertising” seems to be making some fallacious analogies.

If you went up to a deli counter and asked for something with lutefisk and Nutella in it, they might say “well I could make you a lutefisk and Nutella sandwich.” That’s an advertisement. If you go up to Amazon.com and ask for a shirt with rape on it, then it will (well, would have) respond that it can provide you with a keep calm and rape a lot shirt. They’re both dynamically generated, it’s just that because of the difference between how computers work and how humans work, the computer stores a database of product writeups while the human is more flexible in what sort of message it might output.

34

Jake 03.06.13 at 9:41 pm

No, the sandwich shop advertises every possible sandwich. This attracts a lutefisk-and-Nutella customer.

The sandwich shop doesn’t list all the sandwiches they make. They list popular ones, if you ask for a specific sandwich they will say “sure, we make that”, and if you ask for sandwiches with turkey they’ll give you a bunch of options that they may or may not have made up on the spot.

Which actually sounds a lot like my neighborhood sandwich shop.

35

Substance McGravitas 03.06.13 at 9:42 pm

Calling what Amazon.com is doing “advertising” seems to be making some fallacious analogies.

Advertising is returning entries on search results. I haven’t played with Amazon in this way, but Cafe Press used to clog search engine results with not-yet existent or demanded products.

36

Hidari 03.06.13 at 9:43 pm

Sorry I should have added that as well as being amazed that Amazon is the shittest company in the history of the world and that its only discernible ability is to dodge tax and treat its workers like zombie slaves I am also amazed that Amazon is completely unable to turn a profit (like all internet companies, as I have pointed out before on CT to widespread apathy).

“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.

It’s a truly remarkable American success story. But if you own a competing firm, you should be terrified. Competition is always scary, but competition against a juggernaut that seems to have permission from its shareholders to not turn any profits is really frightening.”

http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html

37

Main Street Muse 03.06.13 at 9:59 pm

Because crossing the threshold of a WalMart store (located anywhere in the country) is such a better experience? And the Walton fortune built on the backs of low-wage, no-bennie employees is a better business model?

We are a consumer-driven economy, no? The business of America is commerce?

(And let’s note that Strossian insight was brought to us via the virtual power of a digital medium… even our conversations are only lightly covered in the “skin” of reality.)

38

Mao Cheng Ji 03.06.13 at 10:04 pm

“Sort of like when I tell the guy at the deli I want my roast beef with extra hot peppers and no cheese?”

No, I feel there’s more to it, it’s different. Capitalist economy is good at producing cheap identical things. That’s what’s efficient, that’s what big companies do. The guy at the deli is more like a craftsman; as a restaurant chain grows bigger, it becomes more and more standardized: you’re getting the meal number 4, maybe super-sized, but that’s it; that’s so far as it goes.

When a big corporation manages to sell – as a routine, without hiring a ‘dealer’, like car companies – a highly customized product, that’s something new. I think.

39

Matt 03.06.13 at 10:13 pm

I am also amazed that Amazon is completely unable to turn a profit (like all internet companies, as I have pointed out before on CT to widespread apathy).

No True Internet Company would turn a profit? Ebay, Google, Priceline, Akamai, Baidu don’t count until they start bleeding money like pets.com?

40

js. 03.06.13 at 10:16 pm

Just curious what the innovation(s) specific to Sears were. My understanding (from Cronon’s Nature’s Metropolis was that Montgomery Ward was the real innovator. (Sorry kind of off-topic.)

41

Tim Wilkinson 03.06.13 at 10:18 pm

Brought to you by the internet – the free market. Price-taking Ebay traders with low barriers to entry and relatively low transaction costs (including I should think not much tax being paid except to Ebay) – with less-imperfect information for all. Add 3d printers in a few years, too. The thing it seems to be best at innovating is cheap tat for impulse purchase by the affluent. And cool i-phone apps, to use the puerile jargon.

There is something different about presenting what looks like a finished product, rather than ‘T-shirts printed to order’ along with some suggested designs. Mayeb it’s just the suggested designs – none has been hit on by a designer or artists who actually thinks ‘this is good’ – instead an algorithm, relentlessly tickling peoples’ whims until they cough up some cash. Perhaps that perfect information business (as in Walrasian auctioneer/ideal Soviet planner) again – people need to be prompted to ‘discover’ they want something. There’s something fishy about it. The anti-Buddha walks among us. See also ‘advertising’.

In fact there isn’t really much of an informational free lunch going on – whatever bozo ends up buying the ‘keep calm and rape me off’ shirt has presumably browsed through a pretty wide range of alternatives before hitting on the one slogan that tickles his imagination-free fancy.

—–

On this profits thing, doesn’t this look very much like phase one of a predatory pricing strategy?

—–

+ a couple of links down the line from the OP and obvioulsy relevant to some earlier comments, this: http://www.cnbc.com/id/49333454

—-

The Stross piece also features algorithmically generated books, but ISTR that has been covered on CT and I would bet it has even if I didn’t seem to recollect it.

42

JW Mason 03.06.13 at 10:37 pm

Cronon’s Nature’s Metropolis

Ooooh, great book. I read that at the same time as Norris’ The Pit. Now there was a strange pulsing network for you.

43

Henry 03.06.13 at 10:50 pm

Isn’t it a good one? Haven’t read (or even heard of) The Pit (inquiring minds would like to know more …)

44

L2P 03.06.13 at 11:02 pm

“On the one hand, you can see this as something qualitatively new – I don’t think there is a close historical parallel for algorithmically generated products like the offending (and non-offending) t-shirts.”

“Algorithmical” seems to be a big deal here. But why?

If you go to a car makers’s site, you can make thousands of different types of cars. It’s not a big deal. It’s been that way since the late 90s.

It’s the same way at 3 Day Blinds. It’s not like they HAVE the blinds at the store. You go and tell them what you want and a few days later you have one of hundreds of thousands of different combinations of wood, fabric, styles, colors, etc.

None of this is new, except that there’s a tee shirt maker who’s got an “algorythm” (which, here, seems more like “random word generator. Color me unimpressed) that’s making the combinations. And?

45

phosphorious 03.06.13 at 11:16 pm

““Algorithmical” seems to be a big deal here. But why?”

I’m not perhaps entirely clear on this, but my understanding is that the “Rape” T-shirts came about in the following way:

Someone searched on Amazon for let’s say, the book “The Rape of Nanking”. . . and then was informed that “you may also like. . . ” a certain t-shirt with an algorithmically generated slogan. Nobody specifically requested such a shirt. . . and yet there it was, for sale at a reasonable price.

“Pulsing” indeed.

46

lemmy caution 03.06.13 at 11:49 pm

“Amazon ‘stocks’ more than 500,000 items from Solid Gold Bomb. “

As of today, Amazon ‘stocks’ 0 items from Solid Gold Bomb. This stuff is spam and I am not sure that you can blame Amazon for it.

47

Jake 03.07.13 at 12:45 am

Was the slogan algorithmically generated, or created by a person and judged (poorly) by a computer to be relevant to the user’s search? The first would be more interesting, the second seems more likely.

48

nick s 03.07.13 at 1:14 am

If you go to a car makers’s site, you can make thousands of different types of cars. It’s not a big deal. It’s been that way since the late 90s.

Oh, come on. If you go to a website or a dealer with a set of very specific custom options, the car is not going to show up for you to drive off within a few days. You will be asked to put down a hefty deposit and wait your turn. All of those sites have a section for “dealer inventory”, the set of actual existing cars within a feasible distance.

Was the slogan algorithmically generated, or created by a person and judged (poorly) by a computer to be relevant to the user’s search?

Scripted from pre-existing verb lists, according to the person responsible.

Cafe Press used to clog search engine results with not-yet existent or demanded products.

But CafePress is nothing but mockups, and the store templates used to make that clear, because you’d go in via a specific seller and see the same logo slapped over the same generic items (random example); it’s a bit less so these days. But the uncanniness kicks in when those mockups are juxtaposed with tangible products, and especially when the mockups aren’t so much “designed” as “churned out”.

49

Lawrence Stuart 03.07.13 at 1:48 am

@45 “Nobody specifically requested such a shirt. . . and yet there it was, for sale at a reasonable price.”

If this is how it works, why is the fact that a machine can (in this case, rather badly!) do it threatening? Salespeople size you up based on what you wear, what you drive, your history with them, etc. Sales is about creating desire. Good salespeople sell you things you neither knew existed, nor could have ever known you wanted. Isn’t this just carrying over that bricks and mortar sales principle to the digital store where the algorithm rather ineptly does the work of the sharp salesclerk? Or is it the ‘custom making’ aspect that is the source of unease?

To my mind, the real creepiness of this sort of push marketing comes with integrating payments, location tracking, profile building, etc. on mobile devices. Marketeers are able to track your buying habits and location, and so offer helpful ‘special offers,’ where you might like to have lunch, and such.

Like having a sharpie salesperson in your face everywhere all the time. Marvelous.

50

phosphorious 03.07.13 at 2:09 am

“Salespeople size you up based on what you wear, what you drive, your history with them, etc.”

No human salesperson would have suggested a “Keep Calm And Rape A Lot” T-shirt.

51

david 03.07.13 at 2:21 am

Cronon great. The Pit is like the Octopus only much less readable, and the Octopus is pretty stuff. The Pit is fun if you’ve a tolerance for bad novels, as there’s lots of neat stuff in it.

52

Lawrence Stuart 03.07.13 at 2:44 am

‘No human salesperson would have suggested a “Keep Calm And Rape A Lot” T-shirt.’

Exactly!

Or, well, it might depend on what part of town you are in. But anyway I do take your point: the algorithm is a clompy salesclerk. Score one for flesh and bone.

Which is a good thing, not?

53

tomslee 03.07.13 at 2:47 am

Amazon isn’t a store: it’s a technology company that happens to do retail. Apologies if this is obvious to people, but as it hasn’t been mentioned in this thread it may be new to some: the Amazon Web Services infrastructure is (1) technically amazing, (2) handles 1% of all internet traffic, (3) was half a million servers a year ago, and is getting bigger quickly: even its competitors run on it – eg Netflix. It’s growing rapidly in revenue and is a driving force towards a centralized web architecture. Give it a few years and the retail arm will be just one application that happens to run on the AWS cloud.

54

Salient 03.07.13 at 3:33 am

Also too, Amazon packaging, which is (I think) the foremost cardboard innovator of the century. There’s an abstract sense in which they’re making less money on the product you buy than on the box it’s shipped in.

Also also: as grows Amazon, so goes Internet censorship. That 1% of web traffic is pretty much under state control — the U.S. asks Amazon to stop hosting a site; Amazon complies; boom, gone/marginalized, since literally nobody else provides bandwidth and hostage like AWS.

55

Jake 03.07.13 at 3:56 am

The link with the story about the shirts is fascinating.

56

JW Mason 03.07.13 at 4:59 am

The Pit is like the Octopus only much less readable, and the Octopus is pretty stuff. The Pit is fun if you’ve a tolerance for bad novels, as there’s lots of neat stuff in it.

Hm, maybe it was The Octopus I read? Altho it was in a class on Chicago… Anyway, what I remember — the relevance to this post, and the connection with Cronon — is the sense of whole social universes in the hinterland being torn up and rebuilt in accordance with the blind operation of anonymous commodities markets.

57

Hidari 03.07.13 at 5:53 am

“Give it a few years and the retail arm will be just one application that happens to run on the AWS cloud.”

Or, Amazon will go bankrupt.I am not really up on my neoclassical economic theory but apparently that is theoretically possible.

58

The Raven 03.07.13 at 6:15 am

Mao Cheng Ji@38: “When a big corporation manages to sell – as a routine, without hiring a ‘dealer’, like car companies – a highly customized product, that’s something new. I think.”

Just so. “Capitalism” implies industrialism and that implied mass production. Amazon is beginning to reach beyond that into somewhere else. Amazon is also very good at retail. They ship on time, handle returns, and do a fair job of recommending products. Compare this with the common eBay sharks, and you realize that Amazon is, in fact, doing a pretty good job of customer service. This is something that previously took a human salesperson, and was only done for fairly high-end products; good-quality clothing, for instance. Now internet retailers can do it—not as well as a human salesperson, but still do it—for fairly inexpensive products. But only some of them do.

59

Martin Bento 03.07.13 at 6:45 am

If we’re going to worry about Amazon, I think the worthwhile worry is not some newfangled one about algorithms (though that might be worth adding to the old worries about Goldman), it is the old-school one about monopoly, and where that hits the road (or the fan) is in their opposition to agency pricing.

For e-books, and I think implicitly for all digital content, Amazon has the position that it should be able to buy materials from content producers (either principals like authors, or publishers, record companies) at a wholesale price to resale at whatever price it likes, even at a loss. This is as opposed to agency pricing, where the producer sets the price and resellers compete on other bases than price. They’re in two lawsuits about this; one against Apple. The Apple lawsuit also involves collusion, so, fair enough, bust Apple for collusion, but a lot of the arguments, and the second lawsuit, concern agency pricing as such.

A lot of well-intentioned people, e.g. Cory Doctorow, are with Amazon on this, on the basis that it produces lower prices for consumers. Which is probably true in the short run, but where there is no marginal cost of production, the volume leader will always be able to undersell all others. Meanwhile, worrying about a producer monopoly seems silly. It is not clear what role the future even has for publishers and record companies. In e-books, this is compounded by Amazon’s pushing of a proprietary format, but the issue would exist anyway.

60

Rob 03.07.13 at 9:45 am

Phosophorous @45 said:

Someone searched on Amazon for let’s say, the book “The Rape of Nanking”. . . and then was informed that “you may also like. . . ” a certain t-shirt with an algorithmically generated slogan. Nobody specifically requested such a shirt. . . and yet there it was, for sale at a reasonable price.

I think this is a slightly incorrect description of the process, and I think a few other commenters have described it this way too. It seems to suggest that Amazon is inventing products in response to customer searches, which just isn’t true (apologies if this is not what was actually meant).

As I understand it, Solid Gold Bomb is a manufacturer of t-shirts (amongst other things) and they sell their t-shirts via Amazon. They do this by providing a list of all of their t-shirts to Amazon, and Amazon will list them on their website. Customers can find them via search and recommendation systems operated by Amazon. These range from the fairly straightforward (‘you searched for “rape”, here are some products with the word “rape” in their names or descriptions, please narrow your selection by department’) to the slightly more advanced (‘customers who bought X also bought/looked at these items’).

Solid Gold Bomb noticed the “Keep calm and [verb] [object]” meme, and created an algorithm which generates new variants, providing it with a list of verbs and objects. I don’t know how sophisticated this system was, but I assume it works on similar principles to the Daily Mail-o-matic. SGB then submitted their list of t-shirts bearing these generated slogans to Amazon, where they were listed as ordinary products.

The suggestion that the Amazon website itself is using “algorithms” to invent products credits it with a lot more power and intelligence than it really has. SGB’s products are no different from anyone else’s – they have a catalogue of stuff they list for sale, it just happens to be algorithmically-generated stuff, no different from algorithmically generated Daily Mail-o-matic t-shirts would be. Someone still needs to submit the individual t-shirts for sale and there are, presumably, still some limits on how many t-shirts SGB could have in their “inventory” at any one time (the figure of 700 was mentioned somewhere, which doesn’t sound like a number high enough to justify the claims that we’re entering a totally new phase of capitalism here).

Maybe I’m just too inured to this kind of thing, or the fact that I have a good idea of what’s going on behind the curtain means that I don’t believe in the wizard’s powers, but I’m just not all that impressed by the hand-wavingly portentous way this is presented in the linked story. To call it “Strossian” is to do a disservice to Charlie Stross, imo.

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Tim Worstall 03.07.13 at 9:48 am

A slightly strange complaint to see here I would have thought:

“I am also amazed that Amazon is completely unable to turn a profit”

There’s enough people around here who would insist that profit is what is immorally extracted from the value added by labour. To then complain that labour isn’t being exploited enough just seems odd.

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clew 03.07.13 at 10:08 am

bandwidth and hostage

Nice, Salient. Hosting and bondage.

I read that Amazon doesn’t make a profit and wonder if that’s like old-school recording contracts never breaking even (or modern movies, etc).

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chris y 03.07.13 at 10:09 am

There’s enough people around here who would insist that profit is what is immorally extracted from the value added by labour. To then complain that labour isn’t being exploited enough just seems odd.

As one of those people, I would note that Amazon is world famous for the degree to which it exploits its labour. If it still can’t turn a profit, I suggest there’s something wrong with its business model – probably the fact that it has deviated wildly from its core business (selling books) into trying to compete in the tablet market, publishing (always a notoriously low profit business), flogging whole product ranges it almost certainly doesn’t understand, pretending to be eBay, etc. ad nauseam.

I think the word we’re looking for here is hubris.

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Mao Cheng Ji 03.07.13 at 10:17 am

Well, wikipedia lists Bezos’ net worth as $23.2 billion. Who needs profits?

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reason 03.07.13 at 10:39 am

The really different thing about Amazon is the customer feedback thing.

In a store you don’t get that, unless there is a popular cafe with a unique atmosphere.

The thing that would most destroy Amazon’s model is if somebody discovered that Amazon was manipulating what comments could be posted and retrieved. I go to Amazon to see what people think of a product (I always read good and critical assessments) and what a reasonable price might look like. Sometimes I then buy at Amazon, sometimes elsewhere.

Funy that nobody seems to have mentioned this.

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reason 03.07.13 at 10:50 am

Hidari @32
If your anecdotes are true, they are truly amazing. How did you manage that? I have used Amazon quite often and have never had that sort of experience. Not once.

Was the retailer Amazon – or were they just acting as a agent?

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reason 03.07.13 at 10:53 am

tomslee @53
Yes, the guy who suggested it was a bookshop is way off beam. Books may have been its first application, but there is nothing inherently book related in their business model.

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Hidari 03.07.13 at 11:18 am

“If your anecdotes are true, they are truly amazing. How did you manage that? I have used Amazon quite often and have never had that sort of experience. Not once.”

No honestly it was Amazon. I can’t even remember what the book for the present for my Dad was but it was fairly mainstream. I booked well before the Xmas rush too. I have had other experiences before now I come to think about it with more obscure books where they kept me hanging about for months before telling me the book was “out of print” (took my money first obviously).

Kobo iare another bunch of sharks and vipers who also took money off me for my Dad’s e-book xmas present THIS year and have so far refused to either deliver the book or reimburse me.

On the other hand I have never had any problems with E-bay.

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Hidari 03.07.13 at 11:30 am

“There’s enough people around here who would insist that profit is what is immorally extracted from the value added by labour. To then complain that labour isn’t being exploited enough just seems odd.”

Oh I am sure that Amazon are exploiting their labourers as much as they can and indeed as someone pointed out upthread, Amazon’s long term gameplan is to fire all their manual-labour staff and replace them with robots.

My point was much more basic as I am sure you gleaned…”everyone” (ie all the clever white boys) is convinced that there just must be some way to make money off the internet (long term I mean). Perhaps. But then again perhaps not. (CF for example here; it is talking about the media but could be talking about anything on the internet really : “As traditional journalism disintegrates, no models for making Web journalism—even bad journalism—profitable at anywhere near the level necessary for a credible popular news media have been developed, and there is no reason to expect any in the future.

There is probably no better evidence that journalism is a public good than the fact that none of America’s financial geniuses can figure out how to make money off it. The comparison to education is striking. When manag­ers apply market logic to schools, it fails, because education is a cooperative public service, not a business. Corporatized schools throw underachieving, hard-to-teach kids overboard, discontinue expensive programs, bombard stu­dents with endless tests, and then attack teacher salaries and unions as the main impediment to “success.” No one has ever made profits doing qual­ity education—for-profit education companies seize public funds and make their money by not teaching. In digital news, the same dynamic is producing the same results, and leads to the same conclusion.”

http://www.salon.com/2013/03/03/mainstream_media_meltdown/)

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Harold 03.07.13 at 11:30 am

Amazon is pretty quick with reimbursement in cases like that, I have found.

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Hidari 03.07.13 at 11:49 am

“Amazon is pretty quick with reimbursement in cases like that, I have found”.

Yes I got my money back on the books I didn’t receive FWIW.

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Rich Puchalsky 03.07.13 at 12:16 pm

It’s necessary to make some distinction between print-on-demand (or the equivalent) products sold through Amazon, and the kind of scamming that Hidari seems to have encountered with obscure books. There are a whole lot of products offered for sale through Amazon that don’t actually exist at the moment when they are offered for sale because the seller relies on the assumption that they will buy a copy for resale if anyone buys a copy from them through Amazon. This means that their prices are generally inflated (sometimes hilariously so) because they have to charge enough to make a profit on a product that they don’t yet know how much will cost, except through some average of past purchases they’ve made. And yes, if they can’t find the book at all at a price they like, they’ll just return your money several months later.

When a print-on-demand company advertises random variations of T-shirt slogans, it’s a kind of stupid, but not fraudulent as such because they really can make a T-shirt with whatever you want printed on it. But a lot of the “strange pulsing network” of “isn’t a store, really” is just because it’s a lot of con men. Similar to the way that the classified sections of many allterna-newspapers will offer you a whole range of jobs that you can do from home that you never knew existed.

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tomslee 03.07.13 at 12:37 pm

Amazon could make a profit; it is trading them for growth. On the Web Services side, they keep pushing down their prices despite having little real competition (at a recent conference, an Amazonian said that they have a list of top ten concerns with the AWS business, and competitors aren’t on it).

And as Mao Cheng Ji #64 says, the lack of profits doesn’t seem to matter much.

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Trader Joe 03.07.13 at 2:15 pm

I guess I always thought amazon was selling convenience at a reasonable price more than anything else and relative to many internet retailers – was also selling reputation/trust (i.e. a return policy and some belief that the goods on offer are legitimate).

While its certainly possible to buy mass-customized goods and/or obscure titles (even if massive delayed – which has been my experience as well) that’s a tiny fraction of Amazon’s total revenue and not really all that amazing since – as others have noted – amazon is really just a rent taking intermediary selling its high trafic internet storefront to those who lack the presence or reputation to drive their own flow.

The vast majority of what they are selling is identical to what you could buy at Wal-mart, Best Buy, Barnes & Noble etc. only you don’t actually have to go there, don’t have to talk to interact with actual people and can marvel at the fact that you “recieved your item in 1-2 days” when in fact you could have had it in a matter of hours or minutes if you had just chosen to leave your home to do so.

Hidari – Your point on profits is somewhat valid, but excluding non-cash costs and accounting driven accruals, the business is in fact profitable. Like most retailers the cash flows are more important than accounting profits and their cash flows are substantial so there is really no realistic risk of bankruptcy.

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reason 03.07.13 at 2:39 pm

Trader Joe,
as someone who quite often looks at Amazon first (for information and to know what issues a product – and its competitors – might have) and then goes and gets the items at a physical store, I can tell you that besides the issue of the effort of going to a physical store, there is the issue of product range to think about. Amazon have a truly amazing product range.

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William Timberman 03.07.13 at 2:55 pm

This gargantuan Amazonian digital utopia/dystopia reminds me a lot of the old Napster. The universal jukebox was an almost incredibly gratifying idea, but the reality was often just confusing. 4397 copies of Jumpin’ Jack Flash, at varying bitrates, degrees of completion, clarity, etc., some of them fakes seeded by the RIAA, and in the midst of downloading one, you had to pray that the poor shmoe offering it up wouldn’t close his laptop and go out to the kitchen for a bologna sandwich or a bowl of jook, or a day-old pakora. iTunes, on the other hand, just works, even though no way is it complete, nor, thanks to the marvelous order-bringing facility of capitalism, is it free. (Not that I’m suggesting that it should be free, mind you — I don’t want the cosmodemonic market enforcers coming after me, thank you very much.)

Right now, Amazon is kind of like 18th century London, in that if you have money in your pocket, and want to survive a trip across town in your sedan chair, you’ll need an armed escort. Maybe it’ll get better, but then again maybe it won’t. Caveat emptor.

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Jeffrey Davis 03.07.13 at 3:10 pm

What’s odd about Amazon is its profit margins. It’s like Sears run by 13th century Franciscans.

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reason 03.07.13 at 3:43 pm

“Right now, Amazon is kind of like 18th century London, in that if you have money in your pocket, and want to survive a trip across town in your sedan chair, you’ll need an armed escort”

What? I think you are talking about the wrong Amazon here. Not the jungle in South America, the online retail portal.

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William Timberman 03.07.13 at 4:19 pm

Yes, well, YMMV, etc., by all means pick a metaphor you like better if you want to. The thing about the online retailer that makes it just as much a (metaphorical) jungle as the place in South America is inseparable from what makes it the subject of this very au courant post in the first place. As a consumer confronting Bezos’ Amazonian vastness, you’re as likely to get (metaphorically) mugged, i.e. swindled, or eaten by (metaphorical) crocodiles as you are to wind up a satisfied customer, especially if you aren’t what commenters in this thread consider digitally literate. To borrow another metaphor, about another jungle, ordinary consumers should never get out of the boat. Even people who presumably know what they’re doing — like Hidari above — can be in for some awful surprises.

Like all frontiers, the digital frontier begins in lawlessness. That makes it interesting to futurists and sociologists and Crooked Timberites, but it can also be a damned nuisance to someone who was once accustomed to going to J.C. Penny for his/her teeshirts.

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Trader Joe 03.07.13 at 4:22 pm

Reason – fair point….but in the context of your usage (i.e. info gathering, reviews ) isn’t that just another description of convenience.

In your case its looking at one site for all the info you want. For another guy its the convenience to not get into his car. For a third guy its buying a book on lacross, a TV soundbar and a tent pole all on the same order ticket. Most companies choose to upcharge for convenience, Amazon usually doesn’t.

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james Morgan 03.07.13 at 5:57 pm

Amazon made a deal with the Ann Arbor District Library making them treat e-books like regular books, i.e. only one reader at a time. Isn’t this a violation of the antitrust laws?
At any point in time, 98% of the library’s e-books are not available, and it is diffr=icult work work through to find the few that are.

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reason 03.08.13 at 9:55 am

William Timbermann,
you are clearly digitally literate (you are commenting on a blog). This feigned helplessness doesn’t fool anyone.

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Martin Bento 03.08.13 at 6:47 pm

James, I have to back Amazon up on that one. If the library can buy one “copy” of a digital book, but let it to an arbitrary number of users at once, it is undermining the property concept underwriting the project. There are arguments for just socializing production of creative and intellectual work – I have made them myself – but you cannot expect Amazon to advocate its own demise, and said socialization would have to occur in a way that does enable creators to be compensation, which unlimited copying with no other compensation in place but the market, does not. Yes, there is Kickstarter, but I think it clear that Kickstarter will not fund everything in the library, the record store, or even the art gallery.

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Martin Bento 03.08.13 at 7:25 pm

Further, on the library thing: a possible solution might be this. The library makes ebooks available for reading through an Internet connection. Only one user can access a given “copy” at a time, but, as soon as she logs out, someone else can access that copy. This makes more sense with digital books than given someone exclusive access for weeks at a time, when they are only using it for a small portion of that time. The reasonable response from Amazon (not that one should necessarily expect the reasonable response) would probably be to charge libraries more, which might still be acceptable, and might still preserve libraries as a way for people to get publicly-funded or cheap access to a vast array of material.

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Martin Bento 03.08.13 at 8:18 pm

In fact, I think some libraries are doing something like what I suggested.

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