Spared for now, large publishers live in fear of Amazon commission cuts

Spared for now, large publishers live in fear of Amazon commission cuts
Written by publishing team

When Amazon told members of its affiliate program in mid-April that it was cutting commission rates, publishers started to panic.

And for good reason. The novel coronavirus crisis has dented advertising budgets and the outlook for business looks bleak. Now one of the growing bright spots for publishers looking for diverse revenue – a percentage of sales from referring products to readers – seemed under threat.

“We saw it and reached out to Amazon. Our rep said it doesn’t apply to us,” said Emily Kerr, vice president of growth for Gallery Media Group, the parent company of women’s lifestyle website PureWow.

The big publishers who do business with Amazon seem spared the cuts — for now. According to people familiar with the matter, prices have remained unchanged for commercial publishers including CNN’s Underscored, The New York Times’ Wirecutter, and Vox Media/New York Magazine’s The Strategist.

“When this news broke and really worried employees, our staff assured us that the relationship was strong and doesn’t exactly reflect that news,” said a source at a trade publisher.

High volume publishers usually have their own unique deals with Amazon, unlike hundreds of thousands of other sellers, such as YouTubers, smaller sites, and individuals who use Amazon’s affiliate program. For regular affiliates, Amazon has cut prices significantly starting April 21 for product categories such as furniture and home improvement (from 8% to 3%), groceries (from 5% to 1%), and beauty and business supplies (from 6% to 3%). %) %).

The cuts affected smaller affiliates more than the larger publishers. More than 18,000 people have signed a petition asking Amazon to change prices again.

Amazon declined to comment for this story.

While major publishers were relieved to learn that Amazon’s changes didn’t apply to them, the episode highlighted the enduring danger of relying too much on platforms. It’s a lesson media companies had to learn the hard way before, and now publishers are preparing for Amazon to change their minds and change their affiliate arrangements, too.

They sensed changes may have been looming in March, when Amazon asked some major publishers to de-emphasize Amazon links in their content as they faced supply chain stress amid the massive rush of orders during the coronavirus shutdown.

Publishers have also been subject to reduced affiliate fees from other retailers such as Walmart Facing the coronavirus crisis, especially when it comes to household goods and necessities like cleaning supplies. However, media executives say they enjoy boosting commerce as readers stay home and shop aggressively online.

Ryan Harwood, Group CEO of Gallery Media, said the company saw a 66% year-over-year increase in affiliate revenue, particularly in categories such as home, beauty, wellness and food. The fair plans to create more commercial products to be launched in the future.

“The bright side here is that Covid has given way to a period of real innovation based on shopping behaviors that we’ve seen largely from our customer base,” Harwood said.

However, Amazon’s publishers are preparing to cut prices. In fact, they are sure that the retailer will be a game changer. In March, Digiday Research found that 68% of media executives expected trading revenue to decline this year due to the outbreak.

“We are in a moment when the entire economy is in the air and we have no idea what the future will be like from a consumer standpoint and from an affiliate industry standpoint,” said the source for the trade publisher. “We don’t know if the current company structure will last forever.”

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