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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Bo Le who wrote (33849)	1/9/1999 12:49:00 PM
From: H James Morris	Read Replies (3) \| Respond to of 164684

>>AMZN is not, but crowds are.<< This is true. Ps Have you noticed how crowded it's getting here?

To: Bo Le who wrote (33849)	1/9/1999 7:45:00 PM
From: Glenn D. Rudolph	Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 5 did, a more aggressively negative stance would probably be warranted. Trend Watch Neutrality It is roundly appreciated that Tel-Save (TALK), the telecommunications provider, holds a special place in the heart of many Internet sell-siders thanks to its place in Internet advertising and commerce history. You'll remember that Tel-Save's $100 million deal with AOL (Q1:97) marked a watershed event in the history of advertising; for the first time, a company had spent a significant amount of money for exclusive rights to sell a product or service to the AOL membership base. At the time, this was radical (and portentous) stuff. This week, AOL announced that it was extending its relationship with Tel-Save until 2003, increasing the size of the original deal (to something close to $200 million) and taking an even greater equity stake in the company by giving the company $55 million (AOL will now own about 15% of Tel-Save). Though we discuss the specifics of the new deal under The Week below, the announcement caused us to think anew about the power of the portal position; of “owning” the consumer and being able to direct them to a certain brand message, a certain content destination, or a certain transaction. Undeniably (and as the Street has wholeheartedly illustrated) the economic potential of this position is substantial; AOL's ability to “tax” the many advertising and commerce partners that AOL has in many industries for each interaction they want to have with AOL's 30-35 million strong consumer base (15 million accounts times ~2.2 people per account) is unrivaled and is reflected in the price of the stock.. However, in our view, generating the greatest economic value (having access to the greatest number of revenue streams from a certain industry segment like, say, retailing) from the “portal” position demands a certain neutrality. What do you think would happen if AOL suddenly “chose sides” in the retailing space and, say, took a sizable equity position in The Gap? How would J Crew respond? Eddie Bauer? Land's End? Would they be worried that AOL, since it has a greater economic inventive to treat The Gap more favorably with placement and promotion, would play favorites? Probably, and they'd most likely take the next logical step of spending their advertising dollars elsewhere when it came time to renew. A step that, over time and despite AOL's immediate gain in the value of their Gap position, would shrink the total economics that AOL would otherwise be able to siphon from the apparel space as a whole. Which brings us back to Tel-Save. The first question we asked ourselves (and then asked AOL) upon hearing of the Tel-Save investment was: is this a shift in AOL's strategy? Will AOL now “take sides” in certain industry segments where they've previously partnered or would they remain Switzerland and gladly accept multiple vendors' advertising and commerce dollars? For its part, AOL seems to be entirely committed to, on balance, neutrality with respect to who and how it partners, a strategy that we believe is the right one over time, since it will afford them the greatest economics from this very unique and highly valuable “portal” position. Prima facie, the Tel-Save deal, it could be argued, flies in the face of that contention. As with all things Tel-Save, however, this is a special case. Shoring up the company with a slug of equity and a nice endorsement from AOL is, at its core, probably a straight-forward economic equation on AOL's part. Let's see, AOL takes a $55 million stake in a company it believes in, increases the likelihood that it receives all of its unearned revenue from the