Amazon.com (AMZN) Purchases Goodreads

Last week, e-commerce giant Amazon (AMZN) announced that it would purchase Goodreads, a niche book recommendations social site with more than 16 million members. Goodreads' members have added 530 million books to their digital collections, and written 23 million reviews. Although the two companies did not disclose the terms of the deal, but a widely followed tech blogger, Jeff Bercovici, noted that the acquisition was worth roughly $150 million, based on Goodreads' angel and series A funding.

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Goodreads' website allows members to list, rate and review books they have read, and share favorite passages. It also has a recommendation tool for recommending new books to avid readers. Goodreads' functions are somewhat similar to those offered on Amazon's Kindle, so the acquisition seems like a natural fit. Goodreads users can also see what their friends are reading and join online discussion forums and one of its 30,000 book clubs. Amazon believes that the Goodreads acquisition will help generate more sales of physical and digital books throughout the year. Goodreads' founding in 2007 coincides with the arrival of Amazon's Kindle, which turned the traditional business model of publishing upside down and made customers rethink how they purchase and store books. However, many Goodreads members and authors harshly criticized the deal, believing that the site would be commercialized and monetized after the Amazon integration. Many Goodreads members believe that their reviews would be cross-posted onto the Amazon website, and vice-versa, thus making the site little more than an extension of Amazon. Other members feared that their reviews would be censored according to Amazon's stricter guidelines. "Amazon's acquisition of Goodreads is a textbook example of how modern Internet monopolies can be built," stated novelist Scott Turow, president of the Authors Guild. "The key is to eliminate or absorb competitors before they pose a serious threat." CEO Otis Chandler reassured readers that the site would stay mostly independent from Amazon, while stressing the combined strength of the two sites. "I think the bulk of our users, which are readers and authors, are going to be incredibly excited about the opportunity that this is going to enable," he stated in an interview with Time Magazine. "For readers, Goodreads is going to get better. It's going to get more exciting for readers who use Kindle. And for authors, as Goodreads grows, there's going to be more and more opportunity to connect with readers, which is really the business Goodreads is in." Yet in the end, Amazon's acquisition of Goodreads is but another piece of Amazon's expanding footprint on the web. The company recently added a wine marketplace, developed original programming for the Internet, and is working with automakers to integrate its Amazon Cloud Player into vehicles to rival satellite radio giant Sirius XM (SIRI) and Internet radio leader Pandora Media (P). Although those projects are far more ambitious, Goodreads should be a good fit for the company, and a good way to expand the size of its primary site and Kindle platform. Goodreads' suggestions tool can also be seamlessly integrated with Amazon's own search tools to provide better recommendations based on personal tastes. Other News About AMZN Amazon to Buy Book-Focused Social Network Goodreads Amazon expands into a niche market. Three Hidden Benefits of The Amazon Acquisition of Goodreads Are their ulterior motives for the acquisition? Other Stocks in the News It's Time to Start Worrying About BlackBerry Are weak initial sales for BB10 devices a reason to worry? Will Dollar General Make Investors 'Fistfuls of Dollars'? Will dollar stores flourish in a tough economy? Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Apr 2, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2016. Content published with author's permission.

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