AOL takes $100M stake in Amazon.com

America Online (AOL) has invested US$100 million in Amazon.com Inc. as part of an expanded marketing pact between the online retailer and the Internet service provider.

The agreement, which marks the extension of a 1997 marketing agreement between the two companies, is intended to bring Amazon.com's offerings closer to AOL users, who spent an estimated $7.8 billion shopping online during the second quarter of 2001, according to a statement issued by the companies.

The two companies plan to jointly develop online shopping services that will be rolled out in time for the year-end shopping season in 2002, the statement said. In addition, AOL and Amazon.com will collaborate on the development of other e-commerce initiatives, including customer authentication and wallet services.

In return, Amazon.com will promote AOL as its exclusive ISP (Internet service provider) marketing partner and will make AOL software available for download from the Amazon.com Web site, the statement said. The online retailer will also offer AOL service subscriptions alongside products and services from AOL's parent company, AOL Time Warner Inc., on its Web site, the statement added.

The agreement will be expanded internationally, the two companies said.

Under the terms of the original 1997 deal, Amazon.com agreed to pay AOL $19 million over three years to receive a permanent button on AOL's opening screen image that connected AOL users to Amazon.com's site. The agreement also called for AOL to receive additional payments if Amazon.com's sales revenue exceeded certain levels and for the online service to incorporate a navigation tool in its NetFind search engine that allowed users to search for books on Amazon.com.

The initial agreement was first extended in August 2000, making access to Amazon.com available on other AOL brands, including CompuServe and Netscape NetCenter.

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Sumner Lemon

Computerworld
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