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Topic: Purchased credits?

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Subject: Purchased credits?
Date Posted: 8/21/2011 7:05 PM ET
Member Since: 6/10/2011
Posts: 4
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I'm wondering how purchased credits work... Does PBS make a pure profit from them?  I understand that there are expenses to running a site like this but have assumed that a good deal of that is covered by Amazon.



Cathy A. (Cathy) - ,
Date Posted: 8/21/2011 7:12 PM ET
Member Since: 12/27/2005
Posts: 4,150
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For every credit in the system, PBS has to keep money equal to a book's value in an escrow account. They also have to pay taxes on that money. So if you buy a credit for $3.45, $x goes into a bank account that can't be touched; and $y goes to the IRS, and $3.45-$x-$y goes to PBS to pay expenses. I'm sure what's left is a lot less than you might expect.

Also, Amazon affiliates make only a small amount on any Amazon purchase. In order for PBS to make enough from Amazon to pay their programmers, their system hosting bills, etc, they'd have to be generating several millions of dollars of business for Amazon every year.

Subject: Thanks!
Date Posted: 8/21/2011 8:26 PM ET
Member Since: 6/10/2011
Posts: 4
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Thanks for the breakdown it is very cogent. LOL, now I'm left curious about why they need an escrow account.

p.s. miss Coronado & SD (hometown)

Date Posted: 8/21/2011 8:41 PM ET
Member Since: 8/23/2007
Posts: 26,510
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I think the escrow account is to cover the credits that PBS sells incase the site shuts down or there's a mass run on book orders. Probably not likely to happen but since the site chooses to sell credits they have to back them.  I don't think they ahve to back the credits people earn.  I used to think they did but then Frugalreader abruptly closed and people lost the credits they earned.  So I think (someone correct me if I'm wrong) that they have to back credist that they sell because a book wasn't posted into the system and mailed to create the credit.

Date Posted: 8/21/2011 10:16 PM ET
Member Since: 8/16/2007
Posts: 15,225
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Every credit in the system has to be backed by a book or an escrow fund. Since the site sells and gives away (start up and credit assurance) credits there are bound to be unbacked credits in the system, not to mention people who transfer in credits and sell them without ever posting any books, so the site need to escrow so that if the it flopped every credit in the system would be able to get a book or be covered by the escrow in theory.