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0 pointschrisseaton5y ago0 comments

> the vast majority of internet users were hooked on Amazon and only buying through Amazon links. Consequently, Amazon was paying Goodreads a huge amount of money in referral fees

This doesn't make any sense.

If consumers were already only buying through Amazon... why would Amazon continue to pay referral fees? The referral fee is there to get people who wouldn't buy through Amazon to buy through Amazon. But they were already buying through Amazon... so what's the point?

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6 comments · 1 top-level

dageshi5y ago· 5 in thread

They're saying that goodreads became an alternate front end to amazon for finding books but users used amazon (via affiliate links) to actually buy the book.

Goodreads was better at helping users find new books they wanted than amazon themselves and so it made sense for amazon to buy them.

chrisseatonOP5y ago

> Goodreads was better at helping users find new books they wanted than amazon themselves and so it made sense for amazon to buy them.

I still don’t get it - people were already finding books on Goodreads and buying them on Amazon... so why did Amazon need to buy them? Why pay for it if it’s already working for you? And why pay a referral fee if people already want to ignore other options and go to Amazon to buy after finding on Goodreads?

Abhinav20005y ago

Because they had to pay goodreads a commission each time (say 5% —> i’m completely making this number up and its probably a lot lower).

So if 70% of goodreads profit is from Amazon, amazon figured they could just buy them since the cost of running goodreads is a lot lower than the commissions it makes so amazon was basically paying them anyway. better (in their view at the time) to just pay goodreads one off and buy the company than to pay each year in perpuity. depends on the price they bought it at

1 more reply

frosted-flakes5y ago

Amazon's referral program is open to everybody to use. How could Amazon restrict GoodReads from being a part of it?

2 more replies

prepend5y ago

I think the book reading data was good for amazon to use to sell more books.

Goodreads’ privacy policy prevented them from selling the data to Amazon, but if Amazon pwned Goodreads then they could use the data in compliance.

Mediterraneo105y ago

> And why pay a referral fee if people already want to ignore other options and go to Amazon to buy after finding on Goodreads?

Because if Amazon stopped paying those referral fees, then the website can stop posting links to Amazon, and instead post links solely to Amazon's competitors. Yes, people are hooked on Amazon and so even in the absence of a direct link they might browse over to Amazon and search for the product there, but that introduces a lot of friction and so Amazon would lose some business.

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