Broken as designed. It is always fun to see a business model that is broken.
How long before the company run out of cash?
This is reminiscent of the DotCom Bomb where all these Internet companies had no income and no profits. They got lots of funding, though. So this run through of cash was referred to as "burn rate": how many months of cash did the company have before it completely runs out.
Ouch! :-(
As the bubble burst, all funding for all of the DocCom companies evaporated. Even worse, the margin calls for all of the investors forced investors to sell everything resulting in a reinforcing downward spiral.
Double Ouch.
One thought, of course is that the increased volume/subscribers will result in the ability to change the paradigm.
I don't see how you fix Amazon into this mix however. Jeff Bezos makes a killing off of every book sold, even if the author doesn't.
Keywords: Amazon, AMNZ, NetFlix, Pandora, business model, broken model. burn rate
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