Amazon Acquires Shelfari and Places It in an Awkward Competition

Today news comes to us that Amazon has finally acquired the social network for bibliophiles Shelfari. Amazon has been a long-time supporter of the Seattle-based startup with its investment of September 2007 but the relationships now move to the higher level with the acquisition.

Shelfari developers do not disclose either the acquisition amount or what exactly the plans are for after the acquisition is completed - just mentioning that “there are a lot of new opportunities in the future that will benefit each of you” (exactly the text we expect to get from every new acquired startup).

From the very beginning Shelfari has acted like an Amazon affiliate since the page containing reviews and information for every book had a link to buy it on Amazon. So the business model was quite clear - the startup heavily depended on Amazon for its revenue. But it was also evident that if Amazon saw a potential of huge revenue for the site (which it probably did), it could decide the site should better be acquired not to pay the affiliate earnings when all the money could be kept there for Amazon itself. Chances are this has been one of the reasons for acquisition as well.

Jason Kincaid mentions that this purchase has now brought two competitors into the same Amazon “family” that Shelfari is so happy to join. The thing is that Amazon already owns AbeBooks, the online marketplace for rare and used books that already has a 40% stake in LibraryThing which is a direct competitor to Shelfari. Users of both Shelfari and LibraryThing often mention that the two websites feature similar functionality but LibraryThing lacks some web 2.0 gloss that Shelfari has. It will definitely be interesting to watch the situation develop and witness how Amazon chooses to act with two similar products competing with each other but ideally both bringing profit to Amazon’s pockets. I believe we will soon see either a merger of two properties (for that Amazon will have to acquire the remaining 60% of LibraryThing stake, I believe) or Amazon will make a decision to only work with Shelfari and further develop its offering to book lovers (and sell the stake in LibraryThing).

But no matter what Amazon’s decision will be, I personally think that it is heartwarming to see real books turning into lucrative business in the middle of this virtual world.