Things are different now.

Reed Hastings made a point of that yesterday when he used his quarterly investors’ letter to announce that Netflix was letting a “broad” programing deal with Viacom expire.

Netflix might still end up with some Viacom content, Hastings explained, but he only wants to buy particular shows from the cable giant.

My hunch is that Hastings cares a lot about Nickelodeon mainstays like “Dora the Explorer” — because kids love Netflix, and parents love to shove their kids in front a Netflix screen.* And not at all about MTV reruns like “Laguna Beach” — because who loves a nine-year-old reality TV series?

But Hastings doesn’t care enough about Dora to buy shows about Kristin Cavallari, too. And if he can’t get them separately, he may not buy them at all.

That is: Just like lots of TV viewers, Netflix wants to buy its programming a la carte.

Netflix’s pronouncement didn’t seem to be a surprise to Viacom. I asked the cable network for a response to Hastings’s letter a few minutes after he published it, and they had a statement in my inbox nine minutes later. By corporate PR standards, that’s basically simultaneous.

And it shouldn’t have been a surprise for the content industry in general.

Hollywood has enjoyed a very nice run for the last few years, where it could essentially take any old TV show or movie that it couldn’t sell anywhere else, and unload it on Hastings.

The deals were high-margin windfalls for the networks and studios. A network guy once chortled when he told me about a deal he had struck that would force Hastings to “gag” on his reruns, whether he wanted to buy them or not. But they couldn’t last.

And it’s been easy to see why in retrospect: Success and competition.

When Amazon joined Netflix in the digital streaming business, things got even better for studios, because they could sell the same shows to everyone. But now that the Amazon and Netflix catalogs look so similar, both services have started trying to distinguish themselves, just like HBO and Showtime.

They’re creating their own exclusive programming (Hulu is trying to do the same), which reduces their dependence on other people’s stuff. And when it comes to other people’s stuff, they’re much more particular, because they have a data set that gives them a pretty good idea of what their customers want to watch.

This doesn’t have to be bad news for the TV and movie guys. Hastings suggested on yesterday’s earnings call that any money he doesn’t spend on Viacom shows he doesn’t want could go right into Viacom shows he does want.

And for certain titles that the streamers really want, they may pay extraordinary prices. I’ve heard Amazon beat out Netflix for exclusive rights to “Downton Abbey” this year by paying PBS an eye-popping sum.

If Netflix keeps growing (quite possible — they are at 30 million U.S. subscribers right now, and Hastings says he’s aiming for 60 million to 90 million) and Amazon keeps chasing them (also very possible, since Jeff Bezos isn’t hung up on profits), then Big Media may continue to see their aggregate digital rerun dollars increase, because their buyers’ budgets are increasing, too.

But individual content owners who used to be able to unload anything, at any price, may find their pool of buyers is shrinking. It was good while it lasted.

* Guilty as charged!

But you can see what Jeff Bezos has in store for his viewers, right now, over at Amazon.com.

And he wants to know what you think.

As promised, Amazon has put up 14 pilot episodes for shows it is considering producing for its first foray into original programming — eight comedies and six kids’ shows. It wants viewers to rate them, and says it will use their input as it figures out which ones to actually order.

Right now you have to navigate over to Amazon’s video section to find the shows, but I imagine that Amazon will make a much bigger deal of them fairly soon. (Perhaps after a breaking news story resolves itself.)

Amazon isn’t promising that viewer voting alone will make or break a show. But their feedback will be “very influential” as Amazon makes it decisions in the next couple months, says Roy Price, who is heading up Amazon’s original video program.

After Price and his group make their calls, the shows will eventually be available only for Amazon Prime members, just like other videos in its on-demand subscription service. But anyone can watch the pilots, and anyone can vote.

In other words: This is sort of a novelty, designed to generate attention for Amazon’s programming, and a counterpoint to the way Netflix has gone about its original marketing, where it has preordered up full seasons of shows like “House of Cards” before ever showing them to the outside world.

And it’s also indicative of the way Amazon would like to go about making programming decisions down the road — some of it will come from old-fashioned gut calls about what might be good, and some of it will take advantage of the data that a Web player can aggregate and create.

So, what about the videos themselves? Take a look for yourself.

I previewed several of them, and found the standout to be “Alpha House,” a Washington comedy starring John Goodman, created by Doonesbury’s Garry Trudeau. It’s the one that seems most TV-like in terms of production value and star power (look for a Bill Murray cameo). And I get the sense that it’s the one Amazon is most excited about, as well.

Other videos don’t seem nearly as polished as the stuff you’d see at a conventional TV “upfront” presentation — most of the animated shows, for starters, are unfinished. But it’s also important to remember that the TV guys have years of experience making their stuff look incredibly compelling — and the overwhelming majority of the shows they promote in the spring are canceled within a year.

Here’s Bezos, four paragraphs into his annual letter to shareholders, released this morning:

We build automated systems that look for occasions when we’ve provided a customer experience that isn’t up to our standards, and those systems then proactively refund customers. One industry observer recently received an automated email from us that said, “We noticed that you experienced poor video playback while watching the following rental on Amazon Video On Demand: Casablanca. We’re sorry for the inconvenience and have issued you a refund for the following amount: $2.99. We hope to see you again soon.” Surprised by the proactive refund, he ended up writing about the experience: “Amazon ‘noticed that I experienced poor video playback …’ And they decided to give me a refund because of that? Wow … Talk about putting customers first.”

I don’t know why Bezos didn’t want to identify Blodget as “the industry observer” by name. But you can’t accuse him of quoting Blodget out of context.

Here’s the title of the post Bezos is citing: “Just The Latest Example Of Why Amazon Is One Of The Most Successful Companies In The World,” which Blodget posted on Dec. 9, 2012, presumably as he was finishing up his negotiations with Bezos (and researching another post).

If he wanted to, Bezos could have kept quoting Blodget. Here’s the “nut graph” of Blodget’s post: “Amazon is obsessed with making its customers happy. Unlike many other companies, Amazon will instantly trade off short-term profits for the chance to engender long-term customer loyalty.”

You also can’t accuse Blodget of praising Bezos solely to help secure an investment in his website (where I am also an investor, but much, much farther down the cap table). Blodget has famously been an Amazon bull for a long, long time.

And I’m reasonably sure that Bezos didn’t consult Blodget before he wrote today’s letter: Via IM, I just asked Blodget if he’d seen Bezos’s letter.

His response: “WHOA!”

As Blodget explains on his own site, the Amazon CEO is personally leading a $5 million investment round in Blodget’s six-year-old Web publishing business.

By my count, that brings total investment in Business Insider to more than $18 million; via IM, Blodget tells me that the new deal values the company above the $50 million valuation it earned during its last round in 2011. (Because of my conflict of interest, this makes me happy.)

So there’s the nuts and bolts of the deal (for more background on Henry and TBI, see Ken Auletta’s well-timed piece).

The only other thing to spell out here is that this deal reminds you that life is long, and relationships last.

In 1998, Blodget and Bezos helped boost each others’ careers, when Blodget correctly predicted that Amazon’s stock would pass $400 a share (thanks to Patrick LaForge for catching my bone-headed typo). Blodget has remained an Amazon bull since then, and it looks like Bezos has stayed in the Blodget fan club, too.

For instance, right now, he’s on a ship outside Cape Canaveral, along with some giant engines that used to power the Apollo 11 aircraft. He financed the team that just dug them out from the bottom of the Atlantic.

You can read lots more here, and Bezos and team have a trippy video about the expedition that’s all the more amazing because it’s real, and not a James Cameron make-believe movie (make sure to click on the full-screen option for this one).

So here’s your challenge, other billionaires: Can you make your hobbies this interesting for the rest of us?

This cataclysmic inevitability was brought to my attention over the holidays by my 6-year-old son. Far off though it may be, he believes our solar system’s imminent demise is cause for alarm sooner rather than later. (For him, that means sooner than getting a flu shot — but later than downloading the most recent service pack for Minecraft.)

Of course, I recognize my 6-year-old is thinking too far ahead. Too big.

But he did get me wondering, are the rest of us thinking big enough? Especially those of us who develop — and invest in — new innovations.

If not for being stuck on an antiquated United Airlines plane unequipped with Wi-Fi (is there any other type?), I may not have found the time to commit this thought to paper — I would likely have been overwhelmed by the next flurry of emails or meeting requests. It’s easy to lose sight of the big picture. In fact, as I survey the current startup landscape and consider the kinds of companies attracting VC dollars, it seems like the investing community isn’t thinking of the big picture at all.

Today, investors are less interested in transformative companies and more interested in trendy ones. Funding is flowing — and flowing fast — toward “quick-response startups.” These companies, more often than not, are launched during all-night hack-a-thons. They’re the wired brainchildren of eager coding buddies and Costco-like volumes of Red Bull.

Do many — or even any — of these startups, still in incubation, believe they can create a billion-dollar company on the heels of a market that’s already matured? No. And we don’t expect them to.

Because typically, companies like these aren’t founded to solve big problems — but rather immediate, narrow (and sometimes trivial) ones. For example, we now have dozens of VC-funded apps that help friends share photos, plan their weekend activities and order drinks more quickly in a bar. Yes, the first mobile photo-sharing app leveraged the social graph in unique ways and was — without a doubt — transformative. Three years later, however, startups continue to evolve the concept, but to what end?

Don’t get me wrong. I enjoy a cool app as much as the next guy. But we can’t continue funding the companies that produce them at the expense of companies that produce truly breakthrough technologies and experiences. It’s bad economics, and, to the extent that this mindset pushes out true long-term transformative thinking, bad for humanity as well.

Indeed, these quick-response startups reflect — and perhaps are causing — a new and worrying trend: As a recent article in the Economist — “Has the ideas machine broken down?” — points out, today’s inventions are producing far less “economic impact” than inventions of the past. Progress actually appears to have slowed since the early 1900s.

It seems, in short, that we have reached a plateau when it comes to the more recent megatrends that stimulated great innovation: Games, social, local and mobile. Now that these digital revolutions are maturing, we’re just tinkering around the edges. Making marginal improvements. Tweaking the charger ports on our iPhones.

This trend, by the way, is not all that different from what happened in the late 90s — when the spread of the Internet was followed by VC investment in every dot-com commerce play imaginable, including dozens of pet-related dot-com startups. (In retrospect, one may have been too many.) In some ways, the early aughts saw a dearth of fresh ideas, too — right after the Web 2.0 innovations hit the market.

Now, we seem to be trapped by the narrowness of our own thinking again. And we have to ask ourselves: What will it take to buck this worrying trend, to push past this period of creative stagnation?

The answer? The same thing it took in the 90s and the early aughts: more companies like eBay, Google and Facebook — startups that brought to life world-changing and enduring ideas.

These companies may have been founded by “hacks” like the ones portrayed in “The Social Network.” But they were hacks that created massive waves of innovation, as did the founders of Yahoo!, Amazon and Twitter. They pioneered at the front end of huge emerging trends, from Web to commerce, from social to mobile.

Today, there aren’t enough of these front-end innovators. Years after these companies created new markets and experiences, we still have startups paddling out into the surf, hoping to catch the big tsunami that long ago passed them by.

What we need, in other words, are more wave-makers. More pioneers. More Yangs, Bezoses, Zuckerbergs, Brins and Pages, not to mention more Jobses, Fords and Edisons.

And make no mistake, the investor community — especially the VC investor community — has a role to play in encouraging that level of genius. In many ways, we just have to return to our roots.

It used to be that venture capital was the most ambitious kind of capital there was. Investors like me would fund startups, and not expect to see the payoff until five to 10 years down the line. We did so because we chose companies of extraordinary promise that trafficked in big ideas — businesses that, with enough time and money, could create products that changed the way humans interact on a day-to-day basis. Microsoft, Google and Apple — these are companies built with long-term VC investment. And they gave rise to the Age of Information.

So, going forward, let’s be as ambitious and smart with our capital as we once were. Let’s take more risks and be more encouraging of big ideas and bold leaders. We can’t get trigger happy with our funding dollars and settle for a quick fix or a “me too” idea.

Let’s also remember that innovation can benefit those living in the developing world. After all, innovation brought automobiles to India that cost less than $2,000 — and stoves to Africa that also charge cellphones.

And, most importantly, before we invest, let’s ask ourselves some crucial questions:

• Will this startup change the world — not just my world? Is the problem it solves large enough and its appeal wide enough?
• Does this company meet a critical, unmet need — or does it just bring simplicity or efficiency to an already-tackled issue?
• How difficult is the problem I want to solve? And is my solution unique, based on strong intellectual capital or a patentable idea? Or is it a piece of Web functionality that could be easily and quickly cloned, copied and resold?

In the past, investors haven’t always asked these questions. But if we start now — and answer them honestly and correctly — then we can unleash a new era of greater creativity and better returns.

If my tenure at Foundation Capital has taught me anything, it’s that investing in truly meaningful companies pays off. There are startups with world-changing ideas out there. And discovering what they are — and bringing their ideas to life — will require each of us to slow down and devote some time to big thinking.

If my 6-year-old son can do it, so can we.

Charles Moldow is a general partner at Foundation Capital, focusing on consumer Internet companies. He was previously a founding executive at TellMe Networks and at @Home.

The Seattle-based company has lost four of its top executives, representing 40 years of combined service. So far, only one has been replaced.

All of the changes have happened quietly, without any announcements from the company — and stranger yet, most of the departed continue to be listed on the company’s leadership page.

But the departures are easily trackable after reading the company’s annual report filed last week with the Securities and Exchange Commission. When compared with the same filing a year earlier, it’s clear that Amazon’s top ranks are dwindling.

In 2011, the executive team had a dozen members. Now it has nine. The departures appear, though, to be part of a normal turnover process, rather than any meaningful restructuring.

Still, it’s hard to comprehend that Amazon’s management team has gotten smaller during the past year while the company’s overall headcount swelled to 88,400 in 2012 from 56,200 in 2011. Additionally, the e-commerce giant has entered several new businesses over the past decade.

The four executives who are gone are: Michelle Wilson, Amazon’s general counsel; Steven Kessel, SVP of Worldwide Digital Media; Marc Onetto, SVP of Worldwide Operations; and Sebastian J. Gunningham, SVP of Seller Services.

Two of the departures are easier to explain than the others.

For example, Wilson, who had been the company’s general counsel since 1999, stepped down in September to take parental leave. Her departure was documented by GeekWire in August, and Ty Rogers, a company spokesman, confirmed that she was replaced by David Zapolsky, who now holds three titles: VP, general counsel and secretary.

Another executive who can easily be accounted for is Kessel, who oversaw the company’s digital strategy, including books, music, video and the all-important Kindle. He has been on sabbatical now for about a year, as we reported last April.

“Steve continues to enjoy his well-deserved sabbatical, and we look forward to him returning later this year,” Rogers said.

Rogers also explained the departure of Onetto, though very briefly, saying that he had decided to retire after seven years on the job. Rogers declined to specify Onetto’s departure date, but according to the company’s annual report, he is no longer a top executive.

The biggest mystery of the four is the disappearance of Gunningham from the executive officer list (mostly because Rogers would offer only vague comments related to his standing at the company). Gunningham had served as the company’s SVP of Seller Services for five years. Update: Gunningham continues to hold the same title at Amazon, but is no longer a Section 16 officer, according to the company.

As I previously reported, I called what I believe to be Gunningham’s home number twice to clarify, but no one answered and his voicemail was full (Note to Gunningham: clean out your inbox!).

And, in response to multiple inquiries, Rogers repeated one answer: “As you may know, the 10-K only lists Section 16 officers.”

To explain, a Section 16 officer is essentially legal jargon for a member of the company’s executive team, so essentially Rogers is saying that Gunningham is simply that — no longer on the executive team.

Amazon, like other publicly held companies, is not required to disclose the departure of all executive team members, only the CEO, president, CFO, chief accounting officer and COO (although there are some exceptions). Therefore, the one way to notice if an executive has left is by checking the annual report year after year. In this case, that’s especially true since Amazon generally has no C-level execs. Rather, all of its officers hold the title of SVP.

Despite the departures, the Amazon team still has a bench of nine executives (including Wilson’s replacement), so it’s not like the company is running without an engine. And, of course, at the top of the pyramid continues to be founder and Chairman and CEO, Jeff Bezos.

Who knows? Amazon is fiercely dedicated to the notion that it won’t say squat about its business, and things stayed true to form during yesterday’s earnings call.

But the question did come up a few times during the call. Which makes sense, because Jeff Bezos is pumping a bunch of money into video — by Netflix CEO Reed Hastings’s account, perhaps a billion dollars a year.

So Amazon CFO Thomas Szkutak did make a point of telling Wall Street that things are moving up and to the right — both in terms of usage and investment dollars. A collection of his video-related quotes, via Seeking Alpha:

• “The percentage of Prime customers who were watching free content through Prime Instant Videos has gone up dramatically year-over-year.”
• “We have also increased Prime membership dramatically, year-over-year. They are also purchasing a paid content. Those customers that are using this, they watch free but they are also paying for new content which is great.”
• “I can’t give you specific for attach rates but the business is making good progress on the video content side. Again it’s still very early.”
• “We will continue to expand our selection, both in terms of Amazon Instant Video as well Prime Instant Video and we will do that in a number of different ways. We think we have a very interesting selection right now and you should expect that will be spending more on content as it relates to Prime over time. We will continue to add selection on the Instant Video. Beyond that, you have to stay tuned.”

In other words: Yes, we’re spending a bunch of money. And yes, based on outsiders’ guesstimates, we’re way, way, way behind Netflix in terms of overall video streaming usage. But we think our “spend now, earn later” strategy is going to pay off here, too.

Investors may be feeling justified, as Amazon’s revenue did come in light for the holiday quarter. (In after-hours trading, though, the stock is up nearly nine percent on strong operating income.)

Amazon said its revenue totaled $21.27 billion in the fourth quarter, falling short of analysts expectations, which were projecting revenue of $22.3 billion.

Amazon’s number, however, was in line with its own guidance. The e-commerce giant was forecasting net sales between $20.25 billion and $22.75 billion, representing a jump of 16 percent to 31 percent.

Historically, Amazon has been able to grow at twice the rate of the overall e-commerce market during the fourth quarter, and since eBay filed strong results, it was expected to do the same. But with sales growing only 22 percent year over year, the company missed that typically reliable benchmark.

According to comScore, online spending in the U.S. totaled $42.3 billion, representing a 14 percent increase over 2011. (Excluding unfavorable impact from foreign exchange rates in the quarter, Amazon net sales grew 23 percent compared with fourth quarter 2011.)

For Amazon, the story is all about its revenue, since it often invests all of its profits back into the business.

In terms of the company’s bottom line, results were also in line with Amazon’s guidance, but then again, it left itself a lot of room for error.

It had projected that results could be anywhere from an operating loss of $490 million to an operating profit of $310 million. In the fourth quarter, it reported operating income in the upper end of that range, increasing 56 percent year over year to $405 million.

Investors liked those results, and in after-hours trading, pushed the stock up $22.44, or 8.6 percent, to $282.79. That’s much closer to its recent 52-week high of $284 a share.

Its net income, however, decreased 45 percent to $97 million, or 21 cents a share. That, too, fell short of analyst expectations, which wanted Amazon to generate a profit of 29 cents a share.

Clearly, rather than making money, Amazon has continued its emphasis on investments by continuing to sink money into building more warehouses and developing new technology and services, like streaming video deals, cloud computing and its Kindle hardware division.

Investors want to know if that will continue this quarter.

For the first quarter, the company is projecting net sales to fall between $15 billion and $16.6 billion, representing growth of 14 percent to 26 percent. But again, there’s a wide range of expectations for its operating results, which are being projected to fall between a loss of $285 million and a profit of $65 million.

For the full year, net sales totaled $61.1 billion, up 27 percent year over year. The company also reported a net loss of $39 million, or nine cents a share.

In afternoon trading, shares were up almost $10, touching $284. A year ago, the stock was sliding toward its 52-week low of $172.

Amazon usually grows at twice the rate of the overall e-commerce market during the fourth quarter. The last three months of 2012 should be no exception.

According to comScore’s final tally for the November-December shopping season, online spending in the U.S. totaled $42.3 billion, which was a 14 percent increase over 2011, but fell short of its expectations. Ahead of the Christmas holiday, comScore was anticipating a 16 percent jump in spending.

So, if it follows form, Amazon’s year-over-year growth should end up around 30 percent.

Amazon is forecasting net sales between $20.25 billion and $22.75 billion, representing a jump of 16 percent to 31 percent.

Youssef Squali, an analyst with Cantor Fitzgerald, wrote in a note to investors today that he is expecting Amazon to report revenue of $22.05 billion, up 27 percent. The consensus by analysts is a little more bullish, at $22.3 billion.

The positive forecasts are expected in part because of the performance by others, most notably eBay and Google, which already reported fourth-quarter earnings. EBay beat analysts’ expectations by a penny, boosted by strong sales from its mobile and marketplaces division (and it, too, was trading at a 52-week high today, with a share price above $56, up more than 2 percent). Likewise, Google’s cost-per-click business increased 2 percent compared to the prior quarter, reversing a long period of declines, partly because of a strong performance by its new Shopping group.

Interestingly, halfway through the month of December, a monster quarter by Amazon was not a done deal.

There were a few signs that sales had been soft due to one concern: Procrastination. As Amazon’s base of Prime users grows, customers are becoming more comfortable delaying purchases, since they know they can get free two-day shipping on qualifying items. Coupled with Amazon’s reputation for on-time delivery, customers were able to wait until Dec. 21 in order to get packages delivered by Christmas Eve.

Another closely watched metric for Amazon will be its profit margins.

Jeff Bezos, the company’s founder and CEO, has been particularly outspoken recently about sacrificing margins for the benefit of generating more free cash flow.

Cantor Fitzgerald’s Squali is anticipating fourth-quarter operating margins of 1.3 percent, but cautions that “we have little visibility into this metric.” Amazon spends a lot of money on building new distribution centers, offering price promotions and free shipping. It is also investing heavily in cloud computing, packaging free video streaming with Amazon Prime, and its hardware division, including Kindle.

Due to those investments, operating margins may be very low.

To that end, Squali says that any commentary by Amazon’s tight-lipped management team on Tuesday will be key for the stock’s performance going forward.

On the whole, analysts are expecting Amazon to generate a profit of 29 cents a share. Amazon left itself a lot of room with its earlier guidance, saying results could be anywhere from an operating loss of $490 million to an operating profit of $310 million, compared with an operating profit of $260 million in the year-ago period.

Tune in after the bell on Tuesday for live coverage of Amazon’s results.

Amazon’s Prime Customers can now watch “The Closer,” the crime series that ran for seven years on TNT, and “Falling Skies,” the earthlings-versus-aliens drama that’s still running on Turner’s cable channel.

“The Closer” never got the kind of critical buzz heaped on “Mad Men,” etc., but it was very popular. And “Falling Skies” does pretty well, too.

A press release says viewers can watch “current” episodes of the latter, but that’s a bit misleading — you won’t be able to watch any new shows from the series until at least three months after the end of a new season.

So those are nice additions for Amazon. But not game-changers for the service, which doesn’t appear to be attracting many eyeballs right now — at least not compared to Netflix.

The main reason the deal is worth noting is that it’s another exclusive for Amazon and Time Warner, which has held almost all of its streaming content off of Netflix. Earlier this year, the two companies announced a deal to stream “The West Wing,” “Fringe,” and other Time Warner-owned shows on Amazon.

Meanwhile, the only Time Warner-owned content that you can see via Netflix streaming are shows that ran on the CW Network, which is co-owned by Time Warner and CBS.

But it wouldn’t be a shock to see that change sooner than later: While Time Warner CEO Jeff Bewkes used to go out of his way to denigrate Reed Hastings’s service, his newish position is that he’s happy to take a Netflix check — once he’s finished selling his stuff everywhere else.

In an interview with Matt Lauer on the “Today” show this morning, Jeff Bezos said, “It will be a record season for us, knock on wood.”

Amazon is hiring 50,000 seasonal workers to help pick up the pace in its dozens of warehouses worldwide, which will be humming at full capacity with employees packing and shipping oodles of boxes to homes in time for Christmas.

This year, physical retailers have lined up a fairly broad defensive strategy against the online behemoth. Many retailers are promising to match online prices, or even taking it a step further by offering same-day shipping in some markets (which is a day faster than Amazon can usually offer).

Still, Bezos was upbeat about the company’s holiday prospects, and likely for good reason. Last year, Amazon’s revenue grew 35 percent in Q4 compared to the same period in 2010 — double the rate of the overall e-commerce market. “We’ve always been in a hyper-competitive industry. That’s a good thing. It’s good for customers, and it’s good for the companies who are forced to innovate,” he told Lauer. “We have to evolve, and we are providing better customer service today than we ever have.”

Bezos appeared on “Today” freshly named as Fortune’s 2012 Businessperson of the Year for his role as the “ultimate disrupter.” Here’s the interview, which is worth watching to hear Lauer botching the name of Amazon’s best-selling Kindle Paperwhite (a.k.a. the Paperweight):

Visit NBCNews.com for breaking news, world news, and news about the economy

But the Netflix CEO says Jeff Bezos will have to spend a lot of money before that happens: Hastings says Amazon is losing between $500 million and a $1 billion a year as it acquires streaming video content rights.

Hastings says he generated those numbers based on the value of the content deals that Amazon won when the two companies competed head to head. He says he thinks Amazon’s costs are split evenly between its U.S. operations and Europe, where it operates the Lovefilm streaming service.

Last month, Netflix said it was on track to spend $2.1 billion on content over the next year.

In the U.S., Amazon rents and sells digital movies and TV shows on a one-off basis via its Amazon Instant Video service. It also offers a large catalog of titles for free to customers who pay $79 a year for its Prime shipping service, and recently began testing an option that lets customers pay $8 a month for Prime; Hastings’s estimate is based on acquisition costs for the Prime/video bundle.

Netflix charges $8 a month for its streaming service.

Hastings made his comments during an interview with Dow Jones editors in New York. Amazon hasn’t responded to a request for comment. Update: Here’s Amazon spokesman Andrew Herdener, via email: “We don’t comment on our individual investments but it’s correct that Prime Instant Video is an amazing value for customers. Not only do Prime members get unlimited streaming video, but they also get free 2-day shipping and the Kindle Owners’ Lending Library as well.”

Last week, a report from broadband service company Sandvine pegged Netflix’s share of Internet traffic at 33 percent, with Amazon at 1.8 percent. But Hastings says he takes the newcomer seriously: “Amazon is the best competitor we’ve ever faced.”

The online retailer’s net loss totaled $274 million, or 60 cents a share, on sales of $13.81 billion. Those numbers fall below analyst estimates and are at the midpoint of the ranges Amazon was projecting.

Wall Street expectations for the quarter were a net loss of eight cents a share on revenue of $13.9 billion. Amazon’s own forecast consisted of sales between $12.9 billion and $14.3 billion, representing growth between 19 percent and 31 percent compared with the year-ago period. It also expected an operating loss between $350 million and $50 million, down from operating income of $79 million a year ago.

The third quarter 2012 includes a loss of $169 million, or 37 cents a share, related to its stake in LivingSocial, the Groupon competitor. AllThingsD obtained the memo that LivingSocial’s CEO Tim O’Shaughnessy sent to employees today that explained the whole backstory.

In the company’s earnings press release, Amazon’s CEO and founder Jeff Bezos defended the company’s decision to keep margins thin, which is something investors and analysts always struggle to value. “Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,” Bezos said.

Although Amazon never discloses exactly how many devices it is selling (another point of contention), he provided vague results, like these: The recently announced Fire HD is the company’s best-selling product, and the next two bestselling products worldwide are the Kindle Paperwhite and the $69 Kindle.

“We’re selling more of each of these devices than the No. 4 bestselling product, book three of the ‘Fifty Shades of Grey’ series,” Bezos said.

Amazon provided guidance for the fourth quarter, which is typically the busiest time of the year for all retailers. It’s projecting a wide range of income, which could consist of a profit or loss:

• Net sales are expected to fall between $20.25 billion and $22.75 billion, growing between 16 percent and 31 percent compared with fourth quarter 2011.
• Operating income is expected to range between a loss of $490 million and a gain of $310 million; Amazon had a $260 million operating income in the fourth quarter 2011.

“Visibility into Amazon’s quarterly performance is notorious,” wrote Youssef Squali, an analyst with Cantor Fitzgerald in a note to investors. Citi’s Mark Mahaney similarly wrote: “Key (as always) will be the company’s operating income outlook, which we continue to view as largely a discretionary — not a structural — call by Amazon management and thus very hard to predict.”

Besides keeping analysts out of the loop on its plans, another reason why it’s so hard to put a finger on Amazon’s spending plans is because it is investing in everything under the sun. Some of the categories that have caught Jeff Bezos’s fancy of late are the Kindle Fire, video streaming and apparel. That’s not to mention the hard costs associated with building out more fulfillment centers.

Wall Street expectations for the quarter include a net loss of eight cents a share on revenue of $13.9 billion. Amazon’s own forecast includes sales between $12.9 billion and $14.3 billion, representing growth between 19 percent and 31 percent compared with the year-ago period. It is also expecting an operating loss between $350 million and $50 million, down from operating income of $79 million a year ago.

If Amazon’s results were as easy as looking at overall e-commerce spending, its performance would be a no-brainer. U.S. online sales in Q3 were up 15 percent year over year, according to comScore.

But it’s more complicated than that. Earlier this month, Bezos finally admitted that Amazon sells its hardware at cost, meaning that it will make more money after the new Kindle Paperwhite or the new Kindle Fire HD are in the hands of the customer. The strategy is hard for analysts to wrap their minds around, given that Apple has the exact opposite strategy. The iPad and iPhone maker, which is also reporting results today, is expected to report a profit of $8.91 a share on sales of $36.27 billion.

Amazon will release its numbers sometime after 1 pm PT today, with an earnings call to follow at 2 pm. Join us back here for coverage.

Asa Mathat / AllThingsD.com

Like others, I’ve asked Amazon how it manages to keep Kindle prices low while still offering some of the latest hardware, and, like others, I’ve never managed to coax out a straight answer. Just last month, I posed the question to CEO Jeff Bezos, and he dodged again, acknowledging only that “we don’t want to lose a lot of money on the device.”

But apparently Bezos has tired of dancing around the subject, because when the BBC asked on Thursday, he answered: “We sell the hardware at our cost, so it is break-even on the hardware.”

The comments came a week after the company started shipping the Kindle Paperwhite, the well-reviewed new e-reader that comes with a glowing screen. The new Kindle Fire HD with an 8.9-inch display will start shipping Nov. 20.

It should not be a surprise that Amazon doesn’t make money off the sale of these devices. Many teardowns have suggested that the hardware components alone cost close to the sale price. Additionally, Bezos has made it clear that he wants the devices’ success to be measured by the amount of books and other content people buy on them — not on the sale of the hardware alone. That’s probably why Amazon declines to disclose how many devices it sells each quarter despite pleas from Wall Street.

Amazon’s model is familiar to other retail business, where margins are low and made up on tremendous volume. But that’s in contrast with most consumer electronics companies, like Apple, which sells hardware at generous margins. Bezos declined to say which approach was better. In my interview with him, he explained: “Our approach is our approach, and we don’t even claim it’s the right approach. It’s not something that’s new, but it’s something we’ve done since the founding of the company.”

The site, which sells high-end clothing, shoes, handbags, jewelry and watches, will become a part of Amazon.com/Fashion, according to a statement that appeared on the front page of the site.

Reuters, which first reported the news, said Amazon launched Endless.com in 2007, and that the closure is part of a big push by Amazon to expand further into fashion and apparel this year.

In an recent interview with AllThingsD, Amazon’s CEO Jeff Bezos said he is spending a lot of time thinking about the apparel, and that its clothing business was getting “very exciting.”

“I think there’s a tremendous amount of invention going on there, especially in the Web presentation of apparel,” he said.

A spokesperson confirmed that the transition was taking place and said that other non-Amazon branded fashion properties, such as Zappos or Shopbop, would not be affected.

“Between Amazon, Shopbop and Zappos, our customers have easy access to an assortment of quality brands and a variety of shopping experiences for any fashion need, so we are shifting our Endless business to Amazon in order to focus on the Amazon Fashion experience,” the spokesperson said.

Amazon also operates MyHabit.com, a fashion site that sells items at a discount.

Apparel is one of the fastest growing categories online, according to eMarketer, which is predicting that the category will grow by 20 percent to $40.9 billion this year, up from $34.2 billion in 2011.

On the Web site, Amazon billed the changes as “exciting news.”

Not because Bezos has copied anything Jobs did, but because he has not. What he’s done that is Jobs-like is doggedly pursue, year after year, iteration after iteration, a vision unlike that of any other company — all in the name of making customers happy.

– John Gruber, in agreement with Om Malik that Jeff Bezos is the inheritor of Steve Jobs’s crown

While most of the attention last week was focused on Amazon’s new lineup of Kindle devices, this new feature will be critically important as the retailer lures developers to its platform.

By enabling developers to sell physical goods inside of games, it will not only open up a new way for them to monetize their applications, but it will also be a key point of differentiation for Amazon in going up against Apple and Google, which don’t have physical distribution capabilities.

Amazon said its first partner is Activision, which will be selling toys inside of Skylanders, its very popular children’s game.

Many people, including Netflix CEO Reed Hastings, expect Amazon to eventually detach its library from Prime and offer it as a standalone subscription.

And some content owners I’ve talked to say they like the idea so much that they’ll compel Jeff Bezos to do it whether he wants to or not.

Not so fast, says Bezos. Here’s his take on the subject, from Tricia Duryee’s extended Q&A with the Amazon CEO.

Duryee: We are also hearing that studios would like you to decouple video from Prime and have you sell it as a standalone service, like Netflix.

Bezos: There are a lot of studios, and they are not all like-minded. We have very good relationships with studios, and we just did a big deal with Epix a couple of days ago, so, yeah, I like our approach.

But could they make you change your approach?

Bezos: Well, it’s their content, so they can license it however they like, but they aren’t all like-minded. We are trying to offer people a service they like, so I’m very confident that we can find content for them.

Asa Mathat / AllThingsD.com

How does it keep prices low, while still offering some of the latest hardware? Not to mention, how does it give away an ever-expanding catalog of movies and books for $79 a year in addition to free two-day shipping?

In an interview with AllThingsD, Amazon’s founder and CEO Jeff Bezos provided some insight into the company’s economics.

During the conversation, the jovial leader laughed often (even when I suggested he lacked focus for selling everything from jeans to hardware). He was also quick to point out that while Amazon’s approach to making money may be different from others, he doesn’t necessarily believe others are doing it wrong — rather, they’ve just discovered what works best for them.

Here’s most of the 20-minute interview:

What stood out to me from the presentation today was your comments on Amazon’s ability to make money despite offering low prices.

Jeff Bezos: We do not like the razor and razor blade model, where you lose money up front and then somehow make it up on the backend. We also do not like the other model, where you make a lot of money on the device, because it doesn’t follow our approach.

By the way, one thing I should tell you is that our approach is our approach, and we don’t even claim it’s the right approach. It’s not something that’s new, but it’s something we’ve done since the founding of the company. In my view, you set up the business in a way that is aligned with the customer, or you can set it up in odds with the customer. When you have the option, you should figure out a way to be in alignment. Sometimes that requires you to be more patient, so it’s part and parcel with long-term thinking.

But if you were a short-term-oriented share owner, you might say let’s get the money up front. That’s where I decline to say that approach is wrong. I won’t say that. But it’s not ours. I work with the teams to set up the business models.

How long-term are you thinking for the Kindle?

Bezos: This one is pretty straightforward. We don’t want to lose a lot of money on the device.

Are you losing any money?

Bezos: We don’t disclose the exact bill and materials, so I can’t answer that. But we don’t want to lose a lot of money on the device because then we’d really hate it if you put it in the desk drawer. On the other hand, if you make a lot of money on the device, I believe you haven’t earned your money on it yet, and then you’ve incentivized them (the customers) to stay on the upgrade treadmill that I mentioned today.

In a previous interview, you said it takes five to seven years for a new business to either break even or become profitable. And you are now in year five of the Kindle.

Bezos: True story. Typically, of course, they vary a bit. We are in year five, but actually you could say we are in year eight because we worked on the device — the Kindle one — three years before we launched it.

Then, that must mean you are making money?

Bezos: Again, we don’t disclose that, but you’re good — you’re really good [at asking questions]!!

You also have a non-traditional content model. It’s hard to break down Amazon Prime to see how that works when content is included along with two-day shipping.

Bezos: If you talk about the original genesis of prime seven years ago, it’s a shipping program and you get free two-day shipping on a million items. Today, it’s 15 million items. But Prime was designed to be about wanting faster delivery and not wanting to pay for it. … So, if you change something to an all-you-can-eat buffet, then you don’t feel guilty. That’s the genesis.

But that’s expensive just offering that.

Bezos: Yes, many things we do are expensive! Refer back to before when I said “take a deep breath and be patient.” Deep yoga breaths, people! Yes, it’s expensive. It’s not like we didn’t do some arithmetic ahead of time. Despite what some have said from time to time, Amazon is a for-profit business. So, we looked at some numbers, and we believed that this would be a good program for customers and for Amazon — that’s the alignment I’m talking about. But it’s also good for third-party sellers. Once we added fulfillment by Amazon, it’s good for sellers, it’s good for Amazon and it’s good for the customer because they get an all-you-can-eat two-day shipping buffet.

How do you jump to adding content to that?

Bezos: So, then, you fast-forward to a transitioning digital world. What we try to do is find things that customers would want. You can always be differentiated, but it’s hard to find differentiation that customers care about. So, we are always looking for things that customers would love, and in the digital world, the two things that we’ve come up with so far for Amazon Prime is Prime Instant Video. We are investing hundreds of millions of dollars in Prime Instant Video. It’s very expensive, and also the Kindle Owner’s Lending Library. Again, very expensive. Licensing “Harry Potter” to lend out for free, that’s not inexpensive. That’s basically what our membership customer gets and we think about what are the things they would care about and that we can afford to do and is sensible. We do the arithmetic on it, and we think it will create that alignment.

We are also hearing that studios would like you to decouple video from Prime and have you sell it as a standalone service, like Netflix.

Bezos: There are a lot of studios, and they are not all like-minded. We have very good relationships with studios, and we just did a big deal with Epix a couple of days ago, so, yeah, I like our approach.

But could they make you change your approach?

Bezos: Well, it’s their content, so they can license it however they like, but they aren’t all like-minded. We are trying to offer people a service they like, so I’m very confident that we can find content for them.

Let’s switch back and talk about the new devices; clearly, you are trying to have a whole family of devices to offer customers.

Bezos: Yes, at different price points. $199, $299, and $499.

Do you see people owning more than one?

Bezos: I see people for sure owning one of these and one of these (pointing to the Paperwhite and Kindle Fire). And that’s already been happening. But families will own multiple tablets, and they do already, and the $159 Kindle with Kindle FreeTime will be perfect if they want to buy a tablet for kids. And, if your budget allows it, the large display with 4G/LTE, that’s the one you should get. If budget isn’t an issue, get the 4G/LTE Kindle and one of these (the Paperwhite), so if you read for a few hours, this is the perfect device because it’s so light.

You spent a lot of time going over Wi-Fi today. Clearly Internet access and accessibility is important.

Bezos: People don’t pay enough attention to [Wi-Fi]; it’s a mistake not to pay attention to it. These are connected devices. Think about it, you can buy more, but even just downloading photos from Facebook, how long do you want that to take? People have multiple devices these days, but they don’t necessarily want to download all their music to every device. But they do want to stream songs from any device they have with them. They also want to pull up Web pages fast — they go over Wi-Fi, too. It’s not just about buying things. These devices are not very useful unless they are connected to the Internet. The whole point is to connect to the Internet, and that means Wi-Fi. Even for 4G, you want Wi-Fi. You aren’t going to download a 3GB movie.

Is the price of the Kindle Fire HD with LTE ($499) subsidizing the data plan?

Bezos: I’m not going to break out the economics of any particular piece with you, but you’re right, it’s an astonishing price point.

How does special offers, or the advertising, play a role in the price point?

We had it on our E-Ink devices, but haven’t had it on the Kindle Fire. For those, it’s very good, no one really buys the non-special-offers version. Everyone buys the special-offers version. There aren’t two versions of this (pointing to the new 7-inch Kindle Fire HD). That was a decision we made because no one is willing to buy the non-special-offers version.

You’ve been a pioneer in the Android world, so tell me about your approach to using Android.

Bezos: We treat Android like Linux, and so it’s a base operating system layer. We have a large dedicated team that customizes Android and that’s what you see on the Kindle Fire.

Is it accomplishing everything you need to?

Bezos: Yeah.

Any plans to change things on that front?

Bezos: No, we like it.

What about extending the roadmap beyond these devices that we saw today?

Bezos: I can’t talk about our future roadmap, but we have some ideas about what we can do in the future. … You are exhausting me now, come on, Tricia! We just finished this one! You are such a demanding customer! What else do you got?!

But you do have demanding customers!

Bezos: We will certainly — not any time soon — but next year. We have some more things that we hope people will enjoy. It’s premature for me to talk about them.

Who are your competitors? People used to say it was Walmart.

Bezos: Well, you have to look category by category and business by business. In every place we do business, we have very sophisticated and competent competitors. And the other thing I’d say is that everywhere we do business, we operate in huge market arenas where there’s room for multiple winners. In retail, market sizes globally are more than $4 trillion, so you can build a very big company and still be in single-digit percentage of retail sales. So, that’s what I mean by there’s room for lots of winners. The device business, again, has huge opportunies and room for multiple winners. The same way for AWS — Amazon’s Web Services.

Anyone ever tell you that you have a focus problem?

Bezos: Hahahaha! That’s so funny because my Montessori teacher used to have to pick me up and move me from one task to the next.

So, no?

Bezos: So, no, I have never been asked that question. But I know where that’s coming from. I would say we do have a different philosophy from other companies — another common phrase is “stick to your knitting.” Our approach is, if we have a good idea, and if it’s something we think customers would care about, like AWS or Kindle Fire, then we don’t ask why do this, we ask why not do this? We have a high bar for doing those things. We don’t want to do me-too things. The people we’ve attracted over time to Amazon want to be pioneers. They want to be inventors. They want to do new things.

By the way, this is another place where I’d say what I’m outlining now is our approach. There are companies that are close followers and they are incredibly good at it, and they generate lots of returns for their shareholders, that’s also a difficult business. That’s just not us.

But one minute you are talking about inventing new antennas, and the next minute you are selling jeans.

Bezos: That is true. It is diverse. By the way, our apparel store is getting very exciting, too.

So, how do you manage your time?

Bezos: I try to spend my time on things that are at the intersection of what is important to the company and where I can add value. I found myself in a short meeting once about an intra-country tax dispute. The U.S. and the Japanese authorities both thought we should pay a tax, and each thought it should go to the other and vice versa. I was in this meeting and I realized that not even a normal lawyer could understand this issue, and not even a tax lawyer could understand this issue — only an international tax lawyer could understand. I said I don’t know if this is important, but I can’t add value here.

A lot of my time these days is spent on things, like apparel, because I think there’s a tremendous amount of invention going on there, especially in the Web presentation of apparel. I’m also spending a lot of time in our digital business, including content and devices. Again, there’s a lot of room for invention.

Final question: What’s the message that you wanted people to walk away with today?

Bezos: That we have the best tablet at any price. Last year, we wanted to build the best tablet at a certain price. And, this year, we wanted to build the best tablet at any price. Take away the price and it’s still the best tablet. It also happens to be only $499.

The Amazon CEO said that Android is accomplishing everything that Amazon needs it to and, at the same time, giving the company flexibility to customize things.

“We treat Android like Linux, and so it’s a base OS layer,” Bezos told AllThingsD in an interview on Thursday. “We have a large dedicated team that customizes Android and that’s what you see on the Kindle Fire.”

Amazon will also be using a customized version of Android on the new crop of tablets, albeit the more recent Ice Cream Sandwich flavor of the operating system.

On top of Android, Amazon has created its own user interface along with a suite of software and services, including the Amazon App Store. With the new Kindle Fire, the company has also licensed map data from a third-party service, widely believed to be Nokia’s Navteq.

Bezos shrugged off the notion that Amazon had any plans to shift away from the Google-created operating system.

“No,” he said. “We like it.”

Here’s what Bezos had to say about some of the other products that his company is cooking up. And check back later for more from his interview with AllThingsD.

Amazon CEO Jeff Bezos wouldn’t confirm that, but said the company does have more devices cooking in its kitchen.

“We will, certainly — not any time soon, but next year we have some more things that we hope people will enjoy,” Bezos told AllThingsD in an interview on Thursday, following the launch of the updated Kindle Fire and the debut of the Kindle Fire HD. “And it’s premature for me to talk about them.”

What is clear is that Amazon is putting several of the key pieces in place that it will need to eventually do a phone.

With the latest round of Kindle Fire devices, Amazon is adding sound input as well as mapping capabilities, things that are nice-to-haves in a tablet but clear necessities for a phone.

The company is also expanding its wireless abilities. Bezos noted onstage that the company had to develop its own 4G LTE model in order to fit in the Kindle Fire HD’s small quarters. The company is also adding Bluetooth.

That’s another feature that is nice to have on a tablet for things like wireless speakers and keyboards, but essential on a phone to connect to headsets.

Amazon is also developing important economic engines that will help it in the phone business.

The company has shown the ability not just to have ad-supported hardware, but to have advertisements that people actually prefer to see.

Bezos noted Thursday in the interview that few of Amazon’s current customers opt to pay more for the ad-free hardware.

“No one really buys the non-special offers version,” Bezos said, noting that the new Kindle Fires don’t even come in offerless versions.

Amazon also has shown the ability to use its hardware to drive sales of other products and services, from a la carte music and movies to the Amazon Prime service.

Indeed, Bezos was emphatic on Thursday that customers want more than just a nice piece of hardware.

Check back later for more from AllThingsD’s interview with Bezos.

Instead, the Amazon CEO spent most of his time going after one of Apple’s core products: His new line of Kindle Fires is aimed directly at Apple’s iPad, even though he never mentioned the company or its tablet a single time.*

But beyond the specs and stats Bezos trotted out today, his most interesting compare-and-contrast exercise was rhetorical: Amazon, he spelled out, isn’t in the gadget business, but the retail business.

In his words: “We want to make money when people use our devices, not when they buy our devices.”

That is: Amazon is selling Kindles and Kindle Fires so it can sell more stuff to consumers. That could be by selling them more media, like ebooks and videos, or by getting them to buy more physical goods, via Amazon Prime. Or it could be by advertising, which was also curiously absent from Bezos’s pitch today.**

All of which Apple does as well. Except for Apple, the equation is reversed — it is most definitely in the hardware business.

Last quarter, Apple generated $9 billion in iPad sales, and another $16 billion in iPhone sales. But it only generated $2 billion in iTunes sales, and its iAd business is mostly an afterthought.

That disparity certainly isn’t a new idea, and I’m not sure if it matters at all to consumers, who are unlikely to see how the strategy impacts any of their retail choices.

But Bezos must think it matters, or he wouldn’t belabor it onstage.

*Bezos did mention other tablets running Google’s Android, but only in passing, and only to argue that no one wanted to buy them. And now, thanks to Dan Frommer and The Verge, I see that the iPad was mentioned on Bezos’s slides more than once.

**Bezos didn’t mention ads, but he’s selling them: All of the new Kindle Fire models will feature at least a dusting of ads.