In Amazon’s Purchase of Shelfari, a Possible Front in the Battle with Borders—and a Triumph for Social Book Sites

Last week, we reported that Amazon is acquiring Seattle-based Shelfari, a literary social networking site. We also noted that Cambridge, MA-based LibraryThing (which Amazon also owns 40 percent of) had some harsh words for its West Coast rival. John Cook of the Seattle P-I provided some useful insights and comments here (e.g., the deal is less than $10M, not a home run). But the acquisition left me wondering about more than just the future of these two startups, and whether it was a good exit for Shelfari. It made me think about Amazon’s strategy, and how the deal fits into the larger context of social sites built around books and other consumer goods.

For starters, some of the technology in the deal sounded similar to a new feature of Borders’ online bookstore that we profiled a few months ago. In June, I reported on Borders breaking away from its competitor Amazon’s services and launching its own “magic shelf” user interface—a “virtual” bookshelf, designed by Cambridge, MA-based Allurent, that lets you browse book covers as if you were in a real store. My first thought when I looked at the Shelfari site was that, superficially at least, it resembled Borders’ magic shelf. So I wondered: did Amazon’s acquisition of Shelfari have anything to do with the Borders move?

I first contacted Shelfari to get its side of the story, and was met only by world-class PR-speak, in an e-mail from an Amazon official: “Shelfari and Amazon’s common goal has been and will continue to be to deliver the best product and services to customers. Both companies are dedicated to building great communities that celebrate books and will work together to create enhanced experiences for members. As always, our joint focus is on customers not the competition.” (This is what happens when you get bought.)

Not surprisingly, the co-founder and CEO of Allurent, Joe Chung (an Xconomist), sees things a bit differently. “I think Amazon probably is responding at least somewhat to the magic shelf,” Chung says. But he explains that Amazon is “probably buying the innovation and team more than the specific property and they probably figure they are better off picking these things up to keep them out of competitors’ hands.” Fumi Matsumoto, Allurent’s co-founder and chief technology officer, adds, “It’s just really great for us to see these rich user experiences going mainstream.”

I also reached Tim Spalding, founder and CEO of LibraryThing, but he declined to be quoted. He did point me to his blog, in which he highlighted Zoomii, another online bookstore with a novel cover-browsing interface, and also an older post about Borders’ magic shelf (which got mixed reviews from the commenters). About the most recent Amazon deal, Spalding writes that he has “the greatest contempt” for Shelfari, and that “once the Amazon/Shelfari deal goes through, we are competing against Amazon.” Which is a challenge he seems to be taking on with gusto. “The good news from the Shelfari deal,” he writes, “is that when startups get acquired, they tend to stagnate.”

Given that Amazon owns a good portion of LibraryThing as well, this would seem to be a thorny situation for Spalding, to say the least. But whether his company or Shelfari ends up on top, the Amazon deal appears to bode well for the business of online communities built around books and other products. After all, a big player getting involved—and a little bad blood between competitors—never hurt innovation.

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