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I've been hearing interesting stories of some people's Amazon associate accounts having grandfathered commission rates, and that they were not affected by the ~ 50% drop last month. As such, their P&L will not show a drop-off in revenue which means:
It makes it harder for brokerages such as Empire Flippers & platforms such as Investors Club to re-price and value the asset.
Investors doing private deals who think they are buying an asset making say $10k/m may discover the site is now making $5k/m once they've added their Amazon links - and they may not notice the new lower revenue until after closing the deal.
Amazon associate site sellers may, in theory, be able sell to a buyer who also has a grandfathered account (at the previous commission levels) as if nothing has happened.
There may be some amazing arbitrage opportunities if it's possible for grandfathered account owners to buy sites at the (new) lower level and add to their accounts at the (previous) higher level.
If that last point is possible, then it could be an incredible arbitrage play to simply buy, hold and incrementally grow. But for a flip, you would also need the new buyer to have a grandfathered account (which would be unlikely). Unless you can somehow sell your Amazon account.
My understanding is that Amazon accounts can't be transferred (it's against their ToS) but could they be acquired within a share sale and not the standard asset sale? Hit reply with your thoughts on any of this, otherwise to be continued...
Success Fees Dropping
Flippa just announced they are reducing their success fees for sellers. Previously, there was a 10% success fee for sites up to $500k, but that's now changed to up to $50k. Sites sold between $50k to $100k are now charged 7.5%, and for sites above $100k+ it's now just 5%. So for a site selling for $101k you now save 50% in fees which is substantial. Investors Club, by Alpha Investors, has been leading the way here by having zero fees for sellers, flipping the model on its head by charging investors for access to deals (and now has a free tier too).
Our Industry Featured on CNBC
CNBC ran the story As Amazon soars during the pandemic, publishers that rely on it now feel left behind and it was great to see quotes from the Income School guys, and Doug Cunnington from Niche Site Project who stated “A lot of folks are devastated, but as long as sites have traffic, they’ll figure out a way forward."
Don't Sleep on Internal Links
Spencer Haws over at Niche Pursuits wrote a great case study on the power of adding internal links to orphaned pages to boost rankings (and therefore revenue). This is definitely one of the upside hacks you should look to implement when you first acquire a site.
And just like that, you're up to date with what's been going on in the world of website investing. If you got value out of it, please share using the button below so others can discover it.