Hmm, I think I might be becoming an Amazon.com (NASDAQ:AMZN) bull again. Not that I ever entirely stopped believing in Amazon, but there have definitely been some phases when negative arguments resonated, and I certainly could see the point that maybe it was just getting too big to remain a high-growth innovator. However, upon a visit to Amazon.com yesterday, I have to admit I saw some pretty exciting elements that I'm not sure many people are even aware of.
It's been clear for a while now that Amazon is well aware of some of the most important trends on the Internet, most notably reining its large customer base's collective intelligence. It has woven new features into its site, such as tagging, discussion, plogs, and ProductWikis, alongside related features it has long provided, like user ratings, recommendations, and reviews.
The Long Tail Effect (a term popularized by Wired magazine's Chris Anderson, who has penned a book on the subject that is due out in a month) is alive and well, and it's long been a major boon to Amazon. Companies like Amazon and Netflix (NASDAQ:NFLX) have thrived because networks of individuals can help recommend more obscure content to one another; a friend and I were actually just recently discussing our sense that Amazon's recommendation engine actually outshines that of Netflix. (My wallet has fallen prey to Amazon's spot-on recommendations quite a few times.) Other high-profile companies that have arguably benefited from this idea include eBay (NASDAQ:EBAY) and Apple (NASDAQ:AAPL) with its iTunes store. (One could argue that Motley Fool Stock Advisor includes a who's who of Long Tail Effect beneficiaries, seeing how Amazon, eBay, and Netflix have all been recommended by David Gardner.)
At any rate, I was impressed with Digital Locker's evolution into Your Media Library. (A few months ago I posed the idea that the Digital Locker might be Amazon's secret weapon.) Not only can you pick up digital content there (I purchased a digital article, which was available within seconds), but you can also view all your historical purchases through Amazon and rate them, tag them, review them, and otherwise log your experience.
When I examined Amazon's Digital Locker in the past, I knew it was meant to be a repository for digital content like Amazon Shorts. I talked to an Amazon spokesman today, and he explained that Your Media Library is indeed an upgraded version of Digital Locker; the new and improved version was launched in May in conjunction with Amazon Upgrade, which allows customers to purchase reduced-price digital copies of books when they buy full-priced hard copies.
The reorganized site underlined an interesting element: It might become an engine through which all your purchases might be tracked for posterity and ultimately, for community intelligence. (Your ratings, tags, reviews, and so forth can be made publicly available by changing your account settings.)
Some people have criticized Amazon for lacking in innovation lately (not to mention blowing off profit margins and coughing up too much for technology), but I'm starting to wonder if there's a lot more going on than meets the eye. It seems to me that the pieces are really starting to come together, and Amazon's coming up with some interesting ways to drive increased sales from its large customer base and push high-margin digital content sales too. People have underestimated Amazon before, and it wouldn't be the first time this e-commerce giant had the last laugh.
Amazon.com, eBay, and Netflix are Motley Fool Stock Advisor recommendations. To find out other companies that David and Tom Gardner have recommended to subscribers, click here for a 30-day free trial.
Alyce Lomax does not own shares of any of the companies mentioned.
