Whatever you do, don't sell your Amazon (AMZN) - Get Report because of this article. That's not the point; that's the wrong conclusion. But hear me out about how I believe the landscape should change.
Let's talk first about
National Gift Wrap
, which sells gift wrap retail in the Philadelphia area. National Gift Wrap decides that it wants to be a .com. It adds a site, and next thing you know it is doing business hand-over-fist with gift wrap, worldwide, even in places that National had been blocked from selling because it did not have the rights.
It is only a matter of time before the gift wrap manufacturers who sell the gift wrap to National wise up to all of the business National Gift Wrap.com is doing. They say, Hey, let's set up our own consortium, International Packaging Products.com, and wipe out National Gift Wrap.com! We can offer, through IPP.com, a blow-away price with no inventory risk and we can capture the international business that National has been taking. IPP.com can be the home run. And National can't stop it.
Isn't that what has to happen to Amazon.com? Do you really think that all of the publicity these publishing houses do for books should really accrue in part to Amazon? With their own Web site, they can capture all of the value they put in and kill Amazon! (And the heck with those foreign rights, which were used to change the words truck to lorry and elevator to lift!)
There is a problem. The mills like National GiftWrap.com. It helps them figure out what the public likes; it saves them money. Also, people like dealing with NationalGift.com. Cool Web site, reviews, no favoritism that they know of.
Same with Amazon.com. I have to believe that the people at
are glued to Amazon for instantaneous sales information.
They probably worship the site!
And it is precisely this kind of logic that has been used, wrongly, against
; that is, once we all get Web friendly, what will we need this closed-system ISP for? But AOL has transcended its simple ISP tasks to give added value and its ease is a pure win. AOL is a fixture even as it should have gone away.
Ideally, Amazon could evolve into a centralized electronic-order clearing house for publishers, which would do their own fulfillment. It would look the same as it does now, but wouldn't physically handle the books. That would change everything about the way the money gets sliced up in book publishing, and still make Amazon a stock worth owning.
Which is why I said don't short it because of this article.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At the time of publication, the fund was long AOL, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending an email to firstname.lastname@example.org.