Issue #194

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This is issue no. 194. The last issue had a 45.17% open rate with an additional ⚡️ 7.32% of you going back to this article on Shopify going from strength to strength. Oh, just a relatively ignored tweet from November 2016 here.

The largest sites that make money from affiliate revenue — including, presumably, The Wirecutter — have contracts with Amazon that list custom affiliate revenue rates, and it’s unclear how those are affected. “We’re not going to comment on the specifics of these new affiliate rules,” a New York Times spokesperson told me. “But we remain confident in the Wirecutter business and Amazon remains an important partner to us.”

By Laura Hazard Owen

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Today's Top Intelligence (12 Reads)

Last Word: You're ahead of the curve

One of the longterm projects that I am working on is the improvement of archive searchability. Indexing old commentary and links is a heavy task and this is a one-person operation. That being said, one of the obvious trends that I've pointed out was the impending shift away from affiliate revenues by featuring Amazon links in articles.

The Verge: Bloggers are panicking...

So instead of wasting your time with further commentary, I'll explain why early 2PML readers were able to understand that the shift towards slimmer affiliate commissions was an inevitability: 

  1. Their European market faced similar affiliate payout "restructuring" in late 2015 / early 2016.
  2. An earlier-linked report on Amazon indicated that in the last two years, the eCommerce company was being increasingly judged on profitability. Their stock price reflected the reality that innovation was no longer enough to continue growth.  For every .1% improvement in gross margins, market cap inched higher. This wasn't always the case, as Amazon has been notorious for shunning short-term profitability for longterm innovation. 
  3. Amazon began hiring "editors" in early 2016, indicating that they were beginning to focus on establishing in-house publications that generate consumer demand. This would make some media groups expendable. 
  4. As user loyalty increased, so did data. Amazon's been excellent for buyers, not for shoppers. They've emphasized the importance of generating their own demand for this reason. Amazon wants to own full stack shopping, not just buying. 
  5. Facebook is incredibly profitable and they laid out the roadmap to achieving hyper growth over the last 12 quarters. They cut out media partners to increase profitability. And then Google did the same by highlighting their own products in their marketplace ads, removing the need for media buys and cooperation.

These points were discussed between issues 30 and 180 (I know, I know). The solution for many of the media groups who will be affected by these subtle changes is simple enough: a) begin investing in direct commerce and b) diversify coverage to authentically highlight the affiliate links that Amazon is currently incentivizing c) build direct relationships with preferred vendors and implement Skimlinks or Impact Radius as solutions. While these changes are the beginning, I do expect them to accelerate once Amazon begins to implement better in-house demand creation via new niche publications branded under Amazon or the WAPO umbrellas.

Smaller media or commerce startups can succeed by exploring how to cultivate sustainable consumer ecosystems.