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Add one more line to the resume of Amazon.com founder and CEO Jeff Bezos: he's a movie mogul. The Web site recently began running a series of five short films produced by Tony and Ridley Scott, with stars including Minnie Driver, Chris Noth and Daryl Hannah. This will help cap off Amazon's first decade, which now has the e-commerce flagship raking in more than $5 billion a year and making a profit. The digital superstore, which originally sold just books, now hawks everything from plasma televisions to hockey socks. Enterprise sat down with Bezos in New York earlier this month:
NEWSWEEK: What's the idea behind Amazon Theater?
BEZOS: Historically, we do something around the holiday time to give some kind of free gift to customers. And so there's a win for Amazon, because it drives traffic to the Web site; there's a win for the customer, who ends up getting this free content. Then there is a win for the celebrities. They all get boutiques, so you'll be able to find the complete collection of Minnie Driver films, for example. And if films prove to be popular, we might do different experiments with independent filmmakers.
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Will you eventually sell media content online like Apple?
Everyone from Wal-Mart to Microsoft is doing it now. It is still very early, and there's still lots of improvements that can be made to that experience. Certainly music is a part of it, and it is an area that we're very interested in. We do not want to do a me-too offering that wouldn't really add any value.
Is Amazon going to compete against Netflix with a subscription movie-rental model?
All I can tell you about that is, we do believe we're well positioned to do that business. Look at the churn rates in that industry, and you look at how many customers they have to acquire to get a new customer acquisition, and do that math. A substantial fraction of the monthly subscription fees are being paid out in the form of customer-acquisition costs. We could do that at significantly lower cost, and pass on all the savings in the form of lower prices.
Another cost you avoid is TV advertising. You don't do much anymore.
Somewhere between none and none.
What are you able to give your customers by not doing that?
Lower prices, and in particular, free shipping. Worldwide, the amount of dollars that we're spending on that is very, very heavy--much more than we were ever spending on TV. We believe we're much better off taking that money and giving it to customers instead.
When you made your projections for fiscal 2005, some people thought they were pretty good for a retailer but not high enough for an "Internet company." Are you eager to end that sort of categorization?
I've never been able to get excited about any of the semantic arguments. We're very different from traditional retailers in a whole bunch of ways. We turn our inventory 17 times a year, which is off the charts compared to even the best retailers in the business. We have a very large number of talented software engineers and computer scientists, and that is the wind that fills the sails of our business. So when people ask me, are you a retailer or an Internet company, I say, "Yes."
What kind of Christmas are you expecting?
I expect us to have a record holiday season. This will be our 10th, and every one has been bigger and better from a customer-experience point of view than the one prior. I see no reason why that shouldn't be the case again this year.
In one of the short films, you do a cameo. Is this the beginning of a new career?
I'm going to keep my day job.
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