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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 234.37+0.2%3:59 PM EST
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To: james paterson who wrote (74230)8/17/1999 12:58:00 PM
From: Wizard  Read Replies (1) of 164684
 
>>He explained that AMZN has a button on his site & every time someone clicks it AMZN pays him 25 cents.

if you like the model your friend has, take a look at GOTO whose site goto.com is based on this. It even discloses what Amazon is paying them per click (currently $.60 if you go to the site and search on 'books').

Do you actually think that you have uncovered something here? Do you not think that Bezos has a reason for doing this? Its the simple math of making assumptions on customer acquisition costs and Amazon is being very aggressive on this. It is not a secret. They want customers and are willing to pay up for them. Amazon might be spending too much in some places but they are willing to err on the side of too much rather than too little. That is the strategy and either you believe that the internet is going to take a decent slice of commerce dollars or you don't. Bezos thinks so and he wants to be the category leader. Looking back in 5 years, paying your buddy and others some cents for clicks is really not going to matter to Amazon.
The reason all the GOTO people don't just click on the site over and over again is because you have to have statistics that back-up the model such that the prices people are paying are worth it and GOTO has a database that tracks this. Your friend or anybody else that gets to the size where they matter will have to show that these costs make sense or else they will no longer get paid. For now however, AMZN is paying and in many cases overpaying by betting on the come that ecommerce will be significant.

Remember that AOL went through a similar stage and that stock dropped about 60% in 1996. Then it went up 40-fold. Investors have wised up to the internet so AOL was starting at a much lower base. However, the two are reasonably comparable. Amazon is not a sure thing but bottoming down 60% is deja vu all over again.

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