Wisdoma by Brian Kindsvater

Someone in a Print on Demand group I am a member of was bragging they have made 11,669 sales on Etsy over the last two years, and according to eRank that puts them in the top 1% of all Etsy stores.

Sounds great until you realize what these numbers mean.

This is an average of 16 sales per day.

Assuming $5 profit per sale – I don’t know what they are selling so this might be generous – that is $80 per day or $2400 per month or $28,800 per year.

In other words – poverty income. Being in the top 1% of Etsy sellers means you are still in poverty when selling POD products.

No surprise this person’s Facebook profile indicates they also have a “real” job.

If you had a full-time job in California at McDonalds making $20 per hour you would be $160 per day plus benefits.

More income with potentially fewer hours because being in business yourself can be incredibly time consuming, although with POD much of the sales process is supposed to be hands-off. (However the customer support can be brutal).

POD to Etsy is heavily promoted on places like YouTube as a great way to make money. But for more than 99% of sellers, probably 99.9%, it is just a dream and another impossible get rich scheme.

No wonder there has been recent consolidation in the print on demand industry.

Did you know Amazon makes MORE money from Black Friday and other coupon sales even though products are cheaper? Yep.

This is how the coupon scam works …

Amazon charges a fee for product sales, typically 15% for many products.

So if a seller offers a product worth $30 and Amazon usually charges a 15% fee of $4.50 then the seller receives $25.50.

But when a coupon “sale” is done, such as Black Friday, Prime Day, other endless sales during the year, two things happen – PAY ATTENTION TO THIS:

1. Amazon charges its 15% based on the original product price – not the reduced coupon price.

2. Amazon charges the seller a “redemption fee” when a customer uses a coupon.

So if a seller offers a product worth $30 and Amazon usually charges a 15% fee of $4.50, if a $5 coupon is offered, the buyer will pay $25. The seller will only receive $19.90: $30 minus the $5.00 coupon minus the $4.50 Amazon fee based on the non-sale price minus a coupon redemption fee of $0.60.

Instead of making 15% ($4.50) on a $30 sale Amazon makes 20.4% ($5.10) on a $25 sale.

By using a coupon sale Amazon increased its cut of the buyer’s purchase by a whopping 36% from 15% to 20.4% by basing its fee on the non-sales price and charging the seller a redemption fee.

Wow.

This is a zero sum game where Amazon’s increased cut causes a reduced cut for sellers.

Customers get a deal. Amazon increases its profits 36 percent. Small business owners get screwed.

*** Note that Amazon INCREASES its profits from sales. Amazon is NOT offering a sales discount for itself when advertising coupon “deals” ***

But do customers really get a deal?

Sellers obviously have to increase their regular price accordingly which leads to higher prices for customers.

Bottom line: Coupon sales events such as Amazon’s Black Friday, Prime Day, other days lead to overall higher prices for customers, bigger profits for Amazon, and shrinking profits for business owners.

If Amazon were truly offering a “deal” it would not charge a coupon redemption fee and it would charge its commission based on the sales price paid, as well as decreasing its 15% rate. For example, if Amazon really wants to offer a 25% price discount it should not charge a coupon fee, base its commission on the sales price paid, and also reduce its commission rate and give the savings to buyers. Right?

One solution is to simply lower prices for product sales without needing to use a coupon – as happens in normal retail. It is the “coupon” which is the scam because it allows Amazon to maintain the product price for its commission rate and to extract a fee for use of the coupon. Business owners and customers would be better served if a $30 product was simply on sale for $25 without the need for the phony “coupon” which serves to increase Amazon’s profits and necessitates overall price increases so sellers can stay in business despite Amazon’s money grab.

How would you react to losing up to 50% of your pay from your employer? And paying it to your employer!

Welcome to the insane world of RedBubble.

RedBubble is an extremely poorly managed company from Australia. This penny stock enterprise has seen its market valuation drop a staggering 95 percent in value and the best end game scenario is likely a bankruptcy sale of the company to competent owners.

RedBubble is an online marketplace of products. Third party artists create designs which are placed on products such as mugs and shirts which are made and shipped by other companies. RedBubble sets a base price, guaranteeing its profit from every sale. The artists add their margin and that is the price the customer pays. Customer buys a product, RedBubble profits, and its costs are sending the design to the production and shipping company and paying the artist their margin. Easy money, right? Not if you’re RedBubble.

Repeatedly battered in the courts for illegal practices, in early 2023 RedBubble fired 1 in 7 (14 percent) of its employees. Then it cut in half how many designs an artist could create each day. One would think if a company needs more revenue it would seek more designs and sales, or increase prices. Instead, management came up with the new and wonderful reverse Robinhood strategy of stealing from the artists it depends on.

Here is how it works …

Instead of raising its base product prices which should guarantee the company a profit on every sale, RedBubble instituted a “tiered” program for artists which imposes a fee starting at an incredible 50 percent of the artists profits. If an artist can generate more sales the fee gradually declines to about 18.5 percent.

To be clear, how this works is if RedBubble’s base price for a product is $10.00 (which again, presumably is profitable with RedBubble only paying 4 dollars for its manufacture) and an artist adding their 20% margin for creating the design and marketing material to sell the product, then from the $12 paid by the consumer the artist receives $2.00. With the new Reverse Robinhood Strategy RedBubble is now taking up to a half, or $1 away from the artist and giving it to itself. So instead of the artist receiving $2, they only get $1.

The vague “tiers” mean if an artist sells enough, and becomes a rockstar, then can move up a “tier” and eventually not have to pay any fee.

There is no standard for who pays a fee or not. RedBubble makes clear it is at their discretion and there are no standards. Basically, RedBubble is just stealing up to half of the artists profits – taking money from the artists and putting it in its pocket.

How does one know what tier they will be in? LOL. RedBubble says artists have to accept new legal terms agreeing not to sue the company just to find out! Run that sentence back in your brain a few times. Yes, it is like the infamous Obamacare reference to needing to pass the law to find out what is in it.

Commonly, when a business needs more money they increase prices paid by consumers. When the government needs more money it taxes the rich. There is little purpose in taxing the poor because the poor don’t have the money.

Here, RedBubble is taxing the poor, up to 50 percent of their earnings. Ouch.

But if you’re a Rock Star that RedBubble does not want to piss off and drive away, then there is no fee.

Ultimately, RedBubble’s service is going to keep dwindling as artists leave, decide not to submit new designs to the service, and future Rock Stars never materialize because of the new fee.

If you are wondering if this is a tried and true strategy for businesses to follow when they are in financial distress – it is not. I cannot think of any company who has ever done this. It’s bonkers.

Ironically, there are many marketplaces similar to RedBubble and their number keeps increasing. It’s not like artists are trapped into using RedBubble because of its overwhelming marketplace clout. Rather, RedBubble is getting clobbered by Amazon and upstart print on demand companies.

If you are an artist considering Redbubble just stop. Don’t. Go anywhere else.

If you are an investor thinking the stock can only go up after dropping 95% and suddenly the company’s bank account will be juiced from stealing money from artists, think again. There are no dividends being paid. Nothing the company is doing will increase sales. Instead, sales will drop. This is a desperate and incredibly ill-conceived idea from a poorly managed company. If management were better it would be seeking a sale and that could be a reason to get in a low price. Frankly, it wouldn’t surprise me if the company was shopped for a sale after the initial juice of stolen artist money makes the books temporarily look better, but I wouldn’t expect a premium value to be paid to this mess of a company that is circling the drain.

An Internet Marketer, Michael Essek, recently wrote a missive defending his business and the Merch on Demand industry as a whole from AI, concluding there was nothing to fear from AI taking away their livelihood.

I disagree. The risk is real. I believe it will happen.

Here is what Essek said:
“No doubt by now you’ve seen impressive looking artwork created in seconds using AI text-to-image tools like Midjourney, Stable Diffusion, Dall-E and others.

Progress in this space has been so rapid that features I thought would be near impossible to develop (decent vector style outputs, accurate text rendering etc.) are already starting to arrive.

Looking at such swift progress, it’s hard not to wonder if this is about to become a very real threat to the humble T-Shirt designer, illustrator or artist trying to make a living from their work.

I mean – if an AI user can produce several decent quality versions of a T-Shirt concept in a matter of seconds, and a print-quality design in a few seconds more…doesn’t that spell curtains for the average designer?

It would seem to be pretty cut and dry on the face of it.

What takes me (an experienced designer) at least an hour to create by hand in Procreate and Photoshop takes AI a matter of minutes using something like Midjourney (and if that’s not the case just yet, it seems likely within a matter of months given current progress).

So how long can we human artists stay competitive if this AI continues to develop at current rate?

Will people really want to pay more for the ‘human touch’ of non-AI designs?

Will marketplaces like Redbubble and Merch By Amazon replace us all with AI designers?

And what about when AI art finally figures out how to draw hands, and do custom lettering that is spelled correctly?

If these questions keep you up at night, I understand.

But I do think there’s one major part of this whole equation that many doomsters and gloomsters are ignoring…

And that’s the IDEA part.

The idea BEHIND and the purpose OF the art – that’s what really matters.

That’s why there is any art in the first place.

Art, artwork, illustrations, and designs can do nothing – and ultimately, won’t exist – if they aren’t part of a bigger picture.

Yes, an AI image might look professional, be aesthetically pleasing, or fool people into thinking it was done by a human – but that doesn’t mean it has any real commercial use, in-and-of itself.

And it certainly doesn’t mean that such art is in any sense a threat to YOU – a designer who understands what people want (and why) – and is able to give that to them in the right way.

So here’s my point: an increase in the USE of AI art tools DOESN’T mean there’s been any increase in the number of people who can develop CONCEPTS for designs that will actually SELL.

In other words – AI art tools do nothing for the person who can’t come up with winning concepts already.

AI cannot spot trends, understand a current joke or meme, identify an appropriate framework for a T-Shirt design based on that joke, and put it all together to create something that moves people to buy.

AI cannot understand why a current aesthetic style is popular, and play on that style using well-known references to produce an original concept.

All AI art does is decrease the cost of just one part of the creative process (the ‘original’ artwork/design side); a part which was essentially dirt cheap even before AI arrived (in particular for the vast majority of T-Shirt designs, which require little more than some text and some simple graphic work).

This is not about listing what AI can’t do to help you feel better – it’s (also) an illustration of all the different parts of the puzzle that have to come together for an idea to go from ‘inside your head’ – all the way to someone’s shopping cart (real or virtual).

That includes the market, the motivations of buyers, the understanding of visual and textual references, types of proven designs and when to use them, the context of a topic, keywords, design choices, how you market, where you sell, and ultimately the strategy behind your business.

As AI only touches on one tiny part of that big picture, you can see why I don’t think it’s a legitimate threat to any smart and savvy designer, or to that designer’s path towards a sustainable business based on their art in the long-term.

That’s a mouthful – but I hope it makes some kind of sense.

TL;DR – Designers panicking over AI Art shouldn’t worry about it – they should focus on the more significant factors that drive success; perhaps the most important of which is the IDEAS behind their designs (which AI is very far from understanding). ”

Interesting perspective. Insightful. But I reach a different conclusion. Here are my thoughts ….

AI is already incredible. I’m selling products that are AI assisted. A few designs are 100% AI it is so good.

For now AI has increased my income.

I’m a realist though, having thought about the long term implications.

“there’s one major part of this whole equation that many doomsters and gloomsters are ignoring…
And that’s the IDEA part.”

What you’re unfortunately likely in the denial stage of grief about what is going to happen, or just don’t want AI to wreck your Internet Marketing business – is omitting the key point that the IDEA will be generated by buyers.

The wordy prompts now being used in Stable Diffusion – buyers will quickly learn how to modify their basic searches into detailed product requests.

Or ChatGPT can provide an assist to a user idea to flesh it out.

AI doesn’t need to spot a trend – although it can and are the basis of many prompts. Buyers can provide the trend.

You don’t think Amazon will automate this? LOL. That is what Amazon does.

Consumer provides a search query and in response Amazon will generate newly made AI created designs on the fly.

You’ve seen RedBubble’s stock price and financials. RB is in trouble.

Guess what huge expenses Amazon and RB can significantly reduce with AI?

1 – commissions to designers.

2 – employee costs (wages, benefits, HR) who have to deal with IP claims and counterclaims, idiots, fraudsters, Chinese copyright thieves, lawsuits, etc.

Will Amazon and RB continue to show human created designs? Sure.

And there will always be a very few branded superstars whose name is what sells the design.

But I expect human designs to gradually be downgraded in the results because they are less profitable – just like Amazon favors Prime listings over non-Prime products.

If there is anything that will hold Amazon back it is waiting for the courts to resolve IP issues. Amazon Merch is extremely conservative about IP issues.

My prediction is just like Google won the IP issue when it copied everyone’s images, websites, books, and literally everything — so will the AI providers win in court.

While I don’t have a time-frame for this, I am 100% confident AI will eventually automate much of the merch marketplaces.

This has to happen.

Amazon will not watch its Merch program die in the face of potential new AI driven marketplaces that can provide unlimited designs and re-designs with lower costs and pricing.

In short: follow the money.

TD Web Services is a web hosting provider in India. They’re cheap so I gave them a try. My short review of TD Web Services is that it is by far the worst web hosting provider I have used in my more than 20 years of experience.

What can you expect? Continual downtime where your websites are not accessible. Repeated IP changes as TD Web changes its hosting information (for whatever reason). Repeated changes to critical website pages such as htaccess, without your permission or notice, which take down your websites. Massive server changes, such as removing cpanel for some other cheap crap from India, which take your sites offline, prevent you from accessing FTP, or accessing your sites.

It’s brutal. It’s mindnumbing incredible. There are lots of web hosts – use someone else. Anyone else.