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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 234.70

-1.2%

Nov 14 9:30 AM EST

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To: Don Westermeyer who wrote (1525)	2/11/1998 12:16:00 PM
From: Joe E.	Read Replies (2) of 164684

Re Marketing Expenses: Look at this page: quote.yahoo.com Consider the online brokers shown there. Imagine in 6 months a book review page or a top 20 book sales listing page. Or an author interview page. Or a book first chapter listing page. Consider that online book sellers could be shown as buttons there. Say there are 4 buttons, AMZN, BKS, Borders, and the one that finds the cheapest source online. Which button do you pop to buy the book or to find out what else the author has written? It is a lot easier to change booksellers than brokers. This is of course why all of the booksellers are after exclusives. I can see the bidding for exclusives going up up up for AOL, Yahoo, et cetera, since AOL and Yahoo et al can demand an amount equivalent to what they would get from the four button sites together. And why not eight buttons - I think that could be tastefully done. Only if AMZN spends so much on marketing that Barnes and Nobles and Borders both say uncle will AMZN remain the dominant internet bookseller. Amazon's fortunes depend greatly on the will to persist shown by the boards at BKS and Borders. I don't think the land based booksellers will fight to the death, though. They may give up if AMZN can use the stock price as a weapon. On net, I thnk there will have to continue to be huge expenditures for marketing for AMZN to continue to grow sales faster than their new competition. AOL just signed up 1.5 million newbies in the last 4 month. BKS has first shot at these people. AMZN will have to spend a bunch to convert them. Nobody here has said that marketing expenditures will go away, but I think that one of the three crucial questions in evaluating AMZN is how much of their revenue will go toward marketing. AOL is down to 16% of revenues yet still growing quickly. Yes, a very different business, but what better comparisons are there?

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