In a letter to shareholders dated today, Amazon CEO Jeff Bezos - apparently taking a break from pulling shit up from the bottom of the ocean - provided a glowing assessment of his company and its prospects moving into the future.
The letter comes in advance of the scheduled April 26 Amazon shareholders meeting.
As the Puget Sound Business Journal details, Bezos spends a decent chunk of the letter patting Kindle Direct Publishing on the back, classifying it as good for readers who now have access to a more diverse selection of books at a fraction of the cost.
Bezos writes in the letter:
Kindle Direct Publishing has quickly taken on astonishing scale - more than a thousand KDP authors now each sell more than a thousand copies a month, some have already reached hundreds of thousands of sales, and two have already joined the Kindle Million Club. KDP is a big win for authors. Authors who use KDP get to keep their copyrights, keep their derivative rights, get to publish on their schedule - a typical delay in traditional publishing can be a year or more from the time the book is finished - and ... saving the best for last ... KDP authors can get paid royalties of 70%. The largest traditional publishers pay royalties of only 17.5% on ebooks (they pay 25% of 70% of the selling price which works out to be 17.5% of the selling price). The KDP royalty structure is completely transformative for authors. A typical selling price for a KDP book is a reader-friendly $2.99 - authors get approximately $2 of that! With the legacy royalty of 17.5%, the selling price would have to be $11.43 to yield the same $2 per unit royalty. I assure you that authors sell many, many more copies at $2.99 than they would at $11.43.
Kindle Direct Publishing is good for readers because they get lower prices, but perhaps just as important, readers also get access to more diversity since authors that might have been rejected by establishment publishing channels now get their chance in the marketplace. You can get a pretty good window into this. Take a look at the Kindle best-seller list, and compare it to the New York Times best-seller list - which is more diverse? The Kindle list is chock-full of books from small presses and self-published authors, while the New York Times list is dominated by successful and established authors.
Bezos also spends time touting Amazon's business approach of encouraging and creating "self-service platforms" like Amazon Web Services, Fulfillment by Amazon and Kindle Direct Publishing.
From the letter:
Invention comes in many forms and at many scales. The most radical and transformative of inventions are often those that empower others to unleash their creativity - to pursue their dreams. That's a big part of what's going on with Amazon Web Services, Fulfillment by Amazon, and Kindle Direct Publishing. With AWS, FBA, and KDP, we are creating powerful self-service platforms that allow thousands of people to boldly experiment and accomplish things that would otherwise be impossible or impractical. These innovative, large-scale platforms are not zero-sum - they create win-win situations and create significant value for developers, entrepreneurs, customers, authors, and readers.
Released online, the letter also provides a nugget of goodness for nostalgia buffs by including the company's 1997 letter to shareholders. In that letter, now 15 years old, Bezos prophetically notes - in italics, even - that "It's All About the Long Term."
We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.
Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.
Check out Bezos' full letter to Amazon shareholders (and the 1997 letter) here.