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Amazon in talks to fund publishers’ international expansion, sees significant growth opportunity

Amazon is in discussions with some top publishers—it intends to pay them to expand internationally, reports Vox.

This is unusual because while publishers already make money from Amazon’s affiliate program, the e-commerce juggernaut is now offering to pay them in advance for expanding internationally. In the case of its affiliate programs, Amazon pays publishers each time a shopper clicks on an affiliate link embedded on their sites and makes a purchase on Amazon.

Amazon already pays internet publishers that refer shoppers to the company via “affiliate links” embedded on their site, but it thinks that business could grow significantly if US publishers had more readers outside of America.

Peter Kafka, Executive Editor at Recode

A business investment rather than philanthropy

Details are sketchy at the moment, but the Vox report says that the company has been in discussions with The New York Times, BuzzFeed and New York Magazine.

All of these publishers already have international audiences. They have also invested in e-commerce with dedicated product reviews and recommendation divisions which include the Times’ Wirecutter, New York Magazine’s The Strategist and BuzzFeed Reviews.

And that’s where Amazon’s interest lies. It wants to grow its international business and so the payment is a business transaction rather than philanthropy.

While other tech giants like Google and Facebook have announced grants and programs for publishers, they have tended to be of a philanthropical nature. In Amazon’s case, the company is clear that it’s looking at business growth.

Reasons for caution

Tech giants like Google and Facebook have opened new sources of traffic for publishers, but they have also taken away the lion’s share of advertising revenue which had been the bedrock of the business.

Although they rely on publishers for quality content, their frequent strategy changes have burnt many. So publishers have grown increasingly wary of arrangements that may make them dependent on one of the big tech platforms.

In this case, matters will become clearer as more details emerge. The main point to consider will be what Amazon wants in return. The company plans to grow its international customer base and is relying on publishers to expand their readership which will also serve as its potential customers.

It’s also an indicator that even though Amazon dominates online commerce, it still thinks it needs help getting shoppers inside its giant site.

Peter Kafka, Executive Editor at Recode

But then Amazon’s interest is only in e-commerce. So it would likely be more interested in the product reviews and recommendation arms of publishers. While that may not be a bad thing in the first place as it would help publishers increase their e-commerce revenues, but what if it affects their editorial independence?

Laura Hazard Owen, Deputy Editor at Nieman Journalism Lab writes, “This is sure to raise ethical questions, as affiliate relationships often do for publishers.

“The main tension lies most typically between the editorial independence of reviewers—whose objective skill in evaluation is, after all, the value they’re adding—and the business side, which knows both that (a) positive reviews generate more sales (and thus more affiliate revenue) than negative ones, and that (b) some retailers give publishers a larger cut than others, potentially skewing the recommendations readers get.”

Would Amazon be okay with the reviewers it provided startup funding for linking to Jet if it has the cheapest price on the best waffle iron?

Laura Hazard Owen, Deputy Editor at Nieman Journalism Lab

However, looking at the positive side, she adds, “This would seem to be a relatively rare instance of the goals of a platform actually aligning with the goals of a publisher.”

Affiliate links have helped publishers offset some of their ad revenue lost to tech giants like Google and Facebook. But the kind of arrangement Amazon is discussing with publishers is unusual. Rather than simply paying a cut of sales to news sites, Amazon would, theoretically, fund their expansions in new markets in the hopes of getting a return on the investment later.

Monica Nickelsburg, Civic Editor, GeekWire

A healthy publishing industry is also in the interests of tech companies. Publishers create content that people look up on Google, share on Facebook and in the case of recommendations, go to Amazon to make purchases. But it has often been an uneasy alliance with publishers’ revenues depending upon the whims of the platforms.

Kafka writes, “Publishers I’ve talked to about Amazon’s discussions say they’re not uncomfortable contemplating taking money from Jeff Bezos and company. But they are aware that taking money from a giant tech company means you have to be aware that the tech company’s needs and strategy can change, which means they can’t expect Amazon to underwrite them forever.”

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