Actually, it still works great for selling stuff, but the advertising market is just not good.

The banner ads are no longer very effective because everyone ignores them, so they don't pay much.

Direct sales will still succeed, and Amazon.com is making good money on their music, DVD, and book divisions, but their rapid expansion was probably not smart. I think they should have been more cautious, but they were trying to take risks and succeed, so hey, sometimes you don't know what will work and what might be too risky...