Extending a 1997 marketing agreement, Internet bellwether America Online will continue to promote e-tail giant Amazon.com. Both companies have grown plenty since the original deal was signed making a big deal even bigger.
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Amazon knew what it was doing back in 1997. Like a bus full of tourists at a commission-paying mall stop, AOL delivered millions of potential customers drawn to the online service giant's friendly user interface. Having topped a half-million in customers and listing 2.5 million titles, Amazon didn't want to lose its competitive advantage. AOL had 8 million subscribers -- and growing.
AOL knew what it was doing, too. Having gone to a flat-rate fee schedule over hourly charges, AOL was beginning to reposition itself. The content-based business model was beginning to embrace e-commerce. With millions of users, AOL was able to offer prime real estate to the growing fleet of dot-coms.
The deal was significant then and it's even more important now. For starters, both companies are much larger today. The number of AOL subscribers, including CompuServe's netizens, has more than tripled over the past three years. The online titan has also grown through timely investments that include the juggernaut buyouts of Netscape and soon Time Warner (NYSE: TWX).
Amazon has made even bigger growth strides. With the perpetual broadening of its product line to add new stores the e-tail leader now lists more than 18 million unique items. Even more impressive, after 2.5 million new accounts were added last quarter, Amazon's cumulative customer accounts is now more than 23 million.
Both companies have also become global leaders. Earlier this month, America Online unceremoniously spun-off its AOL Latin America (Nasdaq: AOLA) venture while Amazon is set to officially open up shop in France come Thursday.
With both companies now longer and wider, the giants are well served to lean on each other. AOL has suffered through renegotiations with smaller cash-strapped e-commerce and content providers like DrKoop.com (Nasdaq: KOOP) that can't keep up the pace with AOL's multimillion exclusive marketing agreements. AOL needs Amazon.
Meanwhile, acquisition and foldings of online service providers has narrowed the field of worthwhile channels of sponsorship for e-tailers like Amazon. Amazon needs AOL. A perfect marriage, now with vows renewed. So, what's the gift requirement for a three year anniversary? Profits? A return to favor? Wrap with care.
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