Danger: E-Commerce Spin Ahead

Fewer customers? That’s actually a good thing. Court injunctions? We see that as a confirmation of our business model. Slower growth? Really a blessing in disguise.

Welcome to the world of e-commerce public relations spin. A special branch in the time-honored art of counter-intelligence, one that requires a high level of skill and a poker face.

The good news is that people aren’t as gullible as the people offering the spin hope they are. The bad news is that the spinning still won’t stop.

Who Needs Customers?

The spin out of camp Yahoo! is that the 80 percent plunge in the auction listings it has suffered since rolling out listing fees is actually good thing. Quality over quantity and all that.

The argument isn’t exactly a strong swimmer. It’s as if a company that’s just watched its stock price plunge comes out to say that the low-quality shareholders have been sifted out. In some instances, less isn’t more. It’s just less.

After all, people surf into Web auction sites to see what’s for sale. Fewer listings means less stuff, and less stuff is inevitably going to mean less traffic, which in turn will cause the auction sellers to list elsewhere.

Spin and Marketing

The interesting thing is that Yahoo! Auctions knew a downturn would be the short-term impact of the new listing fees. Everyone told them so — the analysts, the auction users — but Yahoo! did it anyway. The company hoped to bite the bullet hard now and reap the benefits later.

Whether Yahoo! Auctions will benefit from the listing fees remains to be seen. One thing appears certain, however. Even the flacks at Yahoo! were taken back by the size of the plunge. They had to be. Otherwise, they would have come out with a much more plausible story than the one they’re offering now.

The spin: Less is more; quality trumps quantity. The truth: Yahoo! failed to forecast just how many people would flee fees.

Courting Disaster

The folks at Napster and Berteslmann also had a spin-fest this week, after they learned that an appellate court came down on the side of an injunction stopping the online swapping of copyrighted music files on the Napster site.

Unfortunately, the companies’ spin was clouded by indecision. Napster said it wants to fight the decision and thinks it can win. The company argued that early decisions against VCRs went much the same way, only to be overturned by the Supreme Court later.

But Napster is also saying that the decision might be a good starting point for a re-evaluation of the company’s business model, as well as a jumping off point for an industry-friendly Napster than everyone can get behind and make money on.

The spin: This is a good time to rethink things. The truth: 57 million Napster users know the end is nigh and are already searching out alternatives. The massive user base Bertelsmann and the record labels salivate over is starting to dissolve.

King of Spin

Meanwhile, they are dizzy in Seattle, Washington, where the spin machine has been working feverishly for three weeks now. But Amazon’s biggest spin came right in the form of an earnings release/growth warning/layoff announcement/profit promise.

Anytime a company crams that much information into a single press release, there’s spin on top of spin. This was no exception.

Amazon was waving the big flag of profit so furiously that it successfully distracted attention — for a while at least — away from the fact that the best growth business on the Web was seeing a slowdown.

Stop the Madness

But numbers can only be spun so long before people start to see them for what they are. The questions are still flying about the slowed growth.Why did Amazon sales grow slower than overall online sales in the fourth quarter? Exactly how do Jeff Bezos and company define profitability?

The spin: Amazon was about to mature into a company turning profits. The truth: We didn’t expect the growth to stop so soon, but now that it has, we’d better get to making money.

All of these scenarios share a common thread. There is some shred of the truth in each of the spin jobs. But only a shred. And that’s just not enough.

What do you think? Let’s talk about it.