This is Amazon Chronicles, a brand new site (well, a version of two old sites) by Tim Carmody that's just getting started. Things will be up and running here shortly, but you can subscribe in the meantime if you'd like to stay up to date and receive emails when new content is published!

Why shuttering Amazon's Devices group may be a mistake

Welcome back. It's been a busy few months for me, albeit not a busy few months on the newsletter. I got married! Do you have any idea how much work it is to plan a wedding? Because I did not. I had no plan for that much planning. My then-fiancée/now-wife is great at it. I struggled to keep my head above water. But it's over now, and we're delighted with how it turned out. And since part of our courtship was her subscription to and reading of this newsletter at its old home on Substack — yes, including the one where I posted a photo of my giant hand that I captioned "Ladies" — it seems only fitting that I return to it.

Yesterday, the New York Times confirmed an earlier report by the Wall Street Journal that Amazon is planning to lay off approximately 10,000 employees, making deep cuts in its devices group, as well as retail and HR. The mandate from CEO Andy Jassy is to boost overall profits by cutting in divisions that are unprofitable.

Amazon has a viral problem with its e-book return program

Here's what the kids are doing with e-book returns

Amazon has made crucial missteps in understanding its employees' future, from the distribution floor to the C-suite.

Two Amazon stories this week caught my attention (and maybe yours too!). Both have to do with Amazon's workforce — rarely major news unless there's something straightforwardly political happening, like a union election or a hearing about workplace injuries — and both involve a crucial misjudgment by Amazon in assuming that the company's successes can save it from its own shortcomings. (This is a kind of hubris that's far from unique to Amazon, but let's say it's not uncommon at the company either.)

Here's the first thing: Jason Del Ray at Vox/Recode obtained a year-old Amazon internal memo warning that the company could run out of workers to hire for its US-based warehouse locations as soon as 2024.

It was an accelerated growth cycle, not an accelerating one

(Why won't you let me add alt text to images, Revue? That… that is really stupid.)

It's always foolish to post a newsletter just before a big quarterly earnings statement is coming (tomorrow, if you didn't know). But there is so much going on, I wanted to try to make some sense of it all before it gets drowned out in the post-quarterly tsunami of Amazon news and speculation.

First, as a matter of housekeeping, something I genuinely thought would probably not happen (Elon Musk buying Twitter, and therefore Revue) now looks like it probably will happen, and I frankly don't know yet what that means for this newsletter. I've already been pretty outspoken that I don't plan to leave Twitter — the place just means too much to me, and I think it is much more a function of what the community makes of it than any input from the owners or executives in charge — but building a renewed business on that foundation is a different kettle of fish. My main worry, as I mentioned before, is that the tenor of Revue itself radically changes: I've already been on one so-called "free speech" newsletter platform and it just got me associated with a bunch of people I didn't want to be standing next to in a subway car, let alone a masthead. So just like I'm firing up my old Writer's Room Slack and making sure my other social network logins still work, I am looking at newsletter alternatives and will keep you posted.

Musk paying a price a fair bit above trading is actually close to the only good news for shareholders in digital media this week. (If you're an employee in digital media, it's bad all over.) Netflix announced a downturn in subscribers and even more pessimistic guidances going forward, and is looking into hacking away costs and adding an advertising-supported tier, things that seemed wildly improbably even a year ago. A lot of companies, maybe especially Netflix, convinced themselves that the negative data they were seeing was part of the pandemic bubble of economic uncertainty, when it turned out that the pandemic-driven urge for people to entertain themselves was actually keeping them afloat. A bubble that cuts both ways!

Plus a quick roundup of the week's Amazon news

Andy Jassy's first annual letter as Amazon CEO appeared last week, along with a related interview he did on CNBC's Squawk Box. I was sad to see this exchange (there's a little more but this is the core of it) turn into a fleet of breathless stories about Amazon maybe selling NFTs:

SORKIN: Could you see yourself selling NFTs?

Dear Amazon Chronicles Members,

Some of you have read (or have in your inboxes right now), the first Amazon Chronicles newsletter entry since December. That’s right, I am back at the steering wheel, with an update on the newsletter’s future and a short roundup of the best Amazon news from this week.

But this will likely be the last newsletter I write for Substack. I’ve decided to migrate the archives and the mailing list over to Revue.

I did this for a number of reasons. First, my agreement to publish on Substack had ended right about the time I put the site back on hiatus. I had to debate shuttering the newsletter altogether, restarting it under a different mandate, and/or changing newsletter platforms. Continuing it as it was on Substack was not a live option.

Dear readers,

When I last wrote in December, I said that I hoped I would have a chance to bring back this newsletter, and behold! Here it is, once again. This is the third extended hiatus this newsletter has taken in the 3+ years since it began, but I can assure you: all three were unavoidable.

In this case, I took off time to work on other projects and to find a new platform from which to publish. I looked hard at just about every email option out there: Buttondown, Ghost, Mailchimp, you name it. I even thought about taking the whole show over to Patreon, which has been a good home for me for years, but I wanted something that would still give me options to write in the hybrid supported-by-members-but-free-to-the-public model I outlined a long time ago in my essay "Unlocking the Commons."

Ultimately, I liked Revue for making its import options easy, for its integration with Twitter (still my favorite social platform and the source of most of my subscribers, free and paid), its low overhead costs, and even (surprisingly) its limited design palette. Maybe that design part will change! That would be great — I have ideas! But for now it's useful not to have to make so many decisions.

Dear Readers,

I wanted to let you know that I’m putting Amazon Chronicles on indefinite hiatus. Paid subscribers should have billing paused as of Wednesday, December 8th. Free readers will have to suffer the charm of even fewer emails about Amazon for awhile.

I’ve never had an easy time keeping this newsletter to a regular schedule. And this month, something always seemed to be getting in the way of a new edition: an emergency, an illness, a holiday, a dentist’s or doctor’s appointment, you name it. Plus, there is all the behind-the-scenes maintenance of the site, weighing business demands, delivery, subscribers, and other opportunities. There’s also the tug of other projects, some of which were conceived or even promised before this newsletter was a thing.

Finally, I felt like the most responsible thing I could do was to close up the doors and pause billing indefinitely until I could figure out what to do next.

A weekly, reported newsletter about Amazon was and remains a great idea, and I hope to come back to it when the circumstances permit.

Until then, or for whatever’s next, the best places to find me are on Twitter, at my Patreon, or via my Tinyletter.

Amazon’s latest quarterly earnings report was its most dour in some time: the company missed Wall Street expectations and was accordingly conservative in its guidance for the usually blockbuster holiday quarter coming up (“Operating income is expected to be between $0 and $3.0 billion, compared with $6.9 billion in fourth quarter 2020”). It’s a bumpy start for new CEO Andy Jassy, but also a chance to set expectations that Amazon isn’t going to slow down its investments because of a bumpy quarter or two just to give shareholders a sunnier bottom-line view.

Jassy emphasized continuity, both for customers and leadership: “We’ve always said that when confronted with the choice between optimizing for short-term profits versus what’s best for customers over the long term, we will choose the latter—and you can see that during every phase of this pandemic.” But what, exactly, are the long-term investments that Amazon is making right now?

We’ve nearly doubled the size of our fulfillment network since the pandemic began. In the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners. — Andy Jassy

The cost that jumped out to me on a quick read of the quarterly report was property. Purchases of property were up from about $11B in the corresponding quarter in 2020 to almost $16B in this quarter, and $31B to $57B in the corresponding year. That’s the difference between a record quarter and a modest one, and a reminder that compared to most of its cloud counterparts, Amazon owns and operates a tremendous amount of property and equipment. It’s constantly building and planning to build new facilities, and in a turbulent real estate market, that costs real money (even with Amazon using its political connections and the hunger for jobs to help pull some strings).

One way to read a good chunk of the last week or so of news stories about Amazon is as a complex push and pull between Amazon and the third-party sellers that make up its marketplace. On the one hand, Amazon wants to present itself as absolutely essential to those third-party sellers’ businesses, with all other options looking like shabby second-best choices; on the other, in order to actually be essential, Amazon needs to sweeten its arrangements with its sellers to actually make it substantially better than its competition.

Let’s start with a story that seemed a little silly when I first saw it: the Online Merchants Guild told David Dayen at The American Prospect that Amazon had sent emails threatening its third-party sellers that government regulation of Amazon’s marketplace could force it to shut down entirely.

The emails pushed sellers to register at an in-house website, supportsmallsellers.us, to “stay informed and involved on legislation that could impact your business”… The website asks for emails and physical addresses from sellers, and says that signing up will “afford you opportunities to communicate directly with your elected officials.” With physical addresses, Amazon could target messages from potentially thousands of seller constituents directly to their own members of Congress. This amounts to building a large lobbying army out of its seller partners, by asserting that their livelihoods are at grave risk from the legislative effort.

On the one hand, this makes sense; raise the specter of a worst-case scenario for your sellers, and then position yourself as the champion of small businesses, rather than be painted as their exploiter, especially before what could be a costly showdown with Congress and another unionization showdown (this time in a major media market that’s more labor-friendly.)

At The Verge, my old colleague/boss Nilay Patel has a new Decoder interview with Dave Limp, SVP of the devices group at Amazon. It’s available as a podcast or lovingly transcribed, and is well worth listening to / reading — I’ll be referring to the transcript throughout here.

As others have pointed out, this interview is about as candid as Limp has been about how he and the Devices group work within Amazon. But what caught my attention were Limp’s continual references to a well-known part of Amazon office culture: the six-page memo.

Jeff Bezos instituted the no slide decks / narrative memo requirement in an email to Amazon’s S Team back in 2004, and described it in an interview with Charlie Rose about a decade ago:

Maybe we’re just fools, but one reason why tech PR events announcing a new set of products and services have caught on as quasi-pop culture is that they offer a chance to see a vision of the future. We’re chasing that feeling we had the first time we saw the iPhone, or the MacIntosh, or even something as now mundane as Gmail. We want the experience of having someone open the lids to our heads again.

Amazon’s events rarely offer that feeling. It’s not that the company doesn’t have big ideas; it’s that they only occasionally come in the scale of a gadget. There’s the Kindle, there’s the various Alexa portals, and then there’s a lot of iterating around the edges, new variations on popular things we’ve seen before, either from Amazon or someone else.

As The Verge’s Dieter Bohn writes, “We expected AI to look like HAL 9000. Instead, it looks a lot more like a Hammacher Schlemmer catalog.” Or as Shira Ovide writes for the New York Times, “Amazon is America’s silliest inventor. It’s Ron Popeil without a filter, plus Alexa. Amazon seems to be making any doodad it can dream up and seeing what people do with it.” This does not sound like a company whose vision of the future seems radically compelling.

A California law signed by Governor Gavin Newsom on Wednesday aims to regulate and make more transparent warehouses run by Amazon and other employers. Here is Suhauna Hussain’s summary in the Los Angeles Times:

The first-of-its-kind legislation, AB 701, gives Amazon and other warehouse workers new power to fight quotas, which critics say have fostered dangerous conditions by pressuring workers to skip bathroom breaks and skirt safety measures… The measure requires warehouses to disclose quotas and work-speed metrics to employees and government agencies and prohibits penalties for stopping work to use the bathroom and other activities that affect health and safety. It also prohibits retaliation against workers who complain.

What strikes me about this new law is that while the bill regulates and prohibits some workroom practices (e.g., being fired for bathroom breaks or as retaliation for complaints), in other cases, the law simply asks that certain work quotas be disclosed to workers and the public, rather than kept hidden. In too many cases, advocates say, employees only learn about the work rule’s hidden quota (whether it’s for “time off task” or for a productivity metric) after they’ve been terminated for failing to meet it.

The law would also require companies that run warehouses to report to the government—and their own employees—the quotas and speed metrics they mandate for workers. “Right now, it’s very secretive,” said Christian Castro, communications director for the Los Angeles County Federation of Labor, AFL-CIO, which sponsored the bill. “E-commerce has been growing exponentially, it’s gotten even more popular during the pandemic…. Workers are telling us about an increase in quotas, not even knowing their quotas.”

A small news story slid in over the weekend, but I think it’s noteworthy enough to take a second look. It’s an interview with Bookshop.org’s Andy Hunter by Techcrunch’s Danny Crichton. There’s a lot of data here. For example:

• Bookshop’s sales are in 2021 are about even with where they were in the site’s annus mirabilis of 2020, when the site took off as physical bookstore sales dipped. This year, bookstore sales are largely back, but Bookshop’s sales remain strong.
• Bookshop is working (and helping its partner stores) to invest in human-curated book recommendations, rather than wrapping both arms around an algorithmic model. This could be a good differentiator going forward, both for Bookshop and between different bookstore partners.
• This ia also (we hope, and Hunter hopes) good for midlist books and ones by less established authors, which often get crowded out by blockbuster-driven algorithms and media hype.

All this is good. But here’s one item in particular that I wish had gotten more attention:

(This is the second part of an interview I did with reporter Alec MacGillis, author of the book Fulfillment, in the spring about Amazon and the evolution of mostly blue-collar work across the United States; see here for the first part of the interview.)

Tim Carmody: I wanted to ask about the relationship between Amazon and its workers and politics and politicians, whether it’s local or national politicians. I know that a complex relationship between politicians and a big employer and its workforce is nothing new. But despite a few high profile blow ups, like in New York City with HQ2, Amazon has been very savvy in terms of how they’ve courted local politicians, and the kinds of appeals they’ve offered.

Alec MacGillis: It starts with jobs and job turnover. Amazon does offer a lot of entry-level jobs, especially at the warehouses, even if it’s often for a short period of time, and often for a younger, blue-collar, blacker part of the workforce. And there’s a strong sense of, well, at least it’s something. That’s why area officials are so eager to get them in there, and often just shower them with tax credits, just being so incredibly obsequious in their overtures.

Back in the spring, I interviewed Alec MacGillis, author of Fulfillment: Winning and Losing in One-Click America. This was while union elections were taking place at an Amazon fulfillment center in Bessemmer, Alabama; I was just starting to think about a series on how Amazon was transforming work worldwide, and lo and behold, that’s what MacGillis’s book was/is all about.

Even now, months later, the transcript still pops. Here are some selections of what we talked about; there will probably be another installment later this week.

Alec MacGillis: To be quite honest, the book didn't even start as an Amazon book. I don't even really think of it entirely as an Amazon book, although, of course, it makes sense to shorthand it that way I really started out wanting to do a book about inequality in America and regional inequality, to come at it from the perspective of place, not just the income ladder that we usually talk about. Traveling all around with my reporting and just being so disheartened, depressed, and kind of alarmed by the rising levels of inequality between places. For years now being struck by this, and it's getting worse and worse and worse, to the point where you travel between some of these places now, and you get vertigo, because they're so crazily different.

This will be (I hope) a brief coda to my earlier post, “Tolkien and Amazon’s Fight for a Franchise.” In that post, I claim that J.R.R. Tolkien’s First Age stories, collected in The Silmarillion, The Children of Húrin, Beren and Luthien, and The Fall of Gondolin present a more coherent set of fuller-developed stories than the Second Age material on the forging of the Rings of Power and the rise and fall of Numenor Amazon chose to make the basis of its forthcoming television series.

Amazon’s creative problem is a difficult one, but its reasoning is fairly straightforward: it’s buying into the least developed, least zealously guarded material where it has the most room to make up whatever stories it chooses so long as they are broadly coherent with the published texts. Essentially, Amazon has the right to make Númenorean fan fiction. The main problem here is that you actually have to develop coherent characters and stories viewers want to follow along with, which is no easy task, whether your background mythology is a rich or a murky one (in this case, it’s both).

The Tolkien Estate’s reasoning, however, is less obvious. Apart from the already published, already popular books of The Hobbit and The Lord of the Rings, whose TV and movie rights were already sold during J.R.R. Tolkien’s lifetime, the stories of the First Age were seen as central to the legendarium, so much so that J.R.R. Tolkien strongly desired The Silmarillion and The Lord of the Rings to be published together, perhaps as a single volume. (Then, largely as now, nobody wanted anything to do with The Silmarillion; it was weird, it wasn’t entirely finished, it wasn’t a sequel to The Hobbit, and it didn’t even have any hobbits in it.)

Tolkien knew there were problems with updating his older stories and making them suitable for publication, but he also thought the two books were incoherent without each other. As he wrote in a letter to his publisher at the time, he believed that The Lord of the Rings, far from being a simple sequel to The Hobbit, had actually become a sequel to the unpublished Silmarillion.

Amazon is spending a huge amount of money on its new multi-season television series set in J.R.R. Tolkien’s fantasy universe: an estimated 250 million USD for the rights and 465 million USD just for the first season, making it quite likely the most expensive television series in history. This raises the question: just what is Amazon buying with all that money, or rather, what does it expect in return?

If the new Lord of the Rings-verse series is a tentpole, it’s a tentpole of a different kind: it’s not necessarily driving subscription numbers like an HBO series, and it’s certainly not anchoring an evening of programming like a network TV series. In 2019, Amazon Studios head Jennifer Salke outlined Amazon’s strategy this way:

We have a very unique business in the sense that our entire north star is to entertain and delight Prime customers all over the world, so there’s a different strategy there… We will curate shows to bring to that global, diverse audience. We’re not in the volume business. We’re in the curated business… I came from the network business, as did all of us, where you’re used to being able to go out and talk about success in viewership numbers. Our company doesn’t embrace that strategy.