The mere mention of Amazon.com is shorthand for contextual, user-engaged transaction marketplace, the economic strength of which will rival Internet advertising for some companies. Retail e-commerce sales--up 17% the first half of the year to $94.7 billion--are expected to be the bright spot in a credit-crunch-dampened holiday fourth quarter, according to comScore. Online advertising should grow another 30% to $38 billion in 2007. Amazon founder Jeff Bezos understands it's not just about search or about selling, but all of the viral nuisances, physical processing and new applications that ultimately will determine his 12-year-old company's success.

The fact is, the $39 billion Amazon has no equal in its broad scope and effective use of social commerce, in which user recommendations, general feedback, research and carefully tapped profile data assure its growth (eBay's combined personal and commercial model notwithstanding). Amazon has mastered the critical success factors on the Internet as identified by Goldman Sachs: It maximizes user engagement, optimizes monetization, and is expanding the global footprint for its universal services.

The mining and exchange of user information to render useful transactions makes Amazon unique and safe in ways that Google, in its broader search and user data applications, may not be able to achieve. The transaction revenues supported by Amazon's massive retail clearinghouse have sufficient privacy, reliability and relevance working in its favor. Amazon also plays well with others, as evident in its growing partnership with and support of third-party vendors that now contribute about one-third of its overall sales. Amazon continues to expand its Web services to include data storage and physical goods fulfillment infrastructure, which are especially important to smaller vendors and help generate supplemental revenue.

Why is Amazon's success important? Because it represents the scaled overlay of community, data exchange, and e-commerce (from pitch to fulfillment) that product and service ventures require in the digital space. As other interactive players continue to discover, it is critical--but not always easy--to unobtrusively manage a viral community in which user participation facilitates more informed and secure transactions. The explosion of mobile platforms will up the ante by pairing geographic targeting and behavioral ad placement.

Amazon recently put its big toe in the interactive entertainment waters with a well-received iTunes rival MP3 music download service that is free of digital rights management (DRM)restrictions. So much for Apple's walled garden.

Amazon's leap into music downloading puts Apple's iTunes on notice that it's not just about selling tunes, but about making friends and mining those connections. Consumers' desire to be connected to products, services and information that match their interests and needs is bigger than nifty devices and protocol. Users have been conditioned to look forward to Amazon's "if you liked that, then you'll love this" greeting.

So it is not surprising that this week, Starbucks begins instant music downloads available to store patrons with iPhones or iTunes software, following Amazon.com's one-click speed shopping lead. Sony is using its PlayStation 3 console to download video. IAC is revamping its Pronto comparison shopping Web site to incorporate more of the user recommendations, product research and other social networking components that have worked well for Amazon and even Shopzilla, which is owned by E.W. Scripps.

As successful as Apple has been with its iPod, iPhone, and iTunes content underlay, the nature of digital interactivity is that there are always other ways to make things happen. Technology and access are vast and affordable. Others can and are replicating skilled search tools designed for specific uses and audiences that are every bit as effective in their own right as what Google and Amazon offer, even with all their elaborate algorithms and experimental Web sites.

That said, there was some irony in Amazon being held up as a digital paradigm of sorts during last week's heated Congressional hearing debate between titans Microsoft and Google on whether the proposed Google-DoubleClick merger would afford the Internet search giant a decisive competitive advantage.

Google contends that it needs the tools Double Click provides to display the advertising the Internet search giant brokers in much the way Federal Express and other shipping companies already facilitate Amazon.com, according to Google Chief Legal Officer David Drummond.

Microsoft General Counsel Brad Smith argued: "Google is already Amazon and is already Fed Ex, and now they are proposing to buy the post office."

"If we believed this was a market where better technology or better value by itself could carry the day, I wouldn't have come here today," Smith told the members of Congress. "But that's not the market we're dealing with."

Amazon might beg to differ as it continues building on its own success in response to changing marketplace competition and opportunities, regardless of its bigger rivals. Rather than driven by Google's desire to convey the world's information, Amazon is devoted to users' need for "stuff" that is "moving from books to bits"--which will boost its overall revenue more than 30% this year, including more than $5 billion in new source revenues.

Amazon's skilled and precise use of contextual relevance--from consumer recommendations and reviews to professional evaluations, to third-party service providers--is not easy to replicate, as InterActiveCorp.'s portfolio of e-commerce franchises is learning. Rather than recreate the wheel, Microsoft's Live Search is integrating Amazon's product information into its conventional service.

Although Google is unmatched in its ability to bring together targeted consumers and advertisers in enterprising ways, its scope is wide-ranging and often appears more intrusive than Amazon. But both companies are positioned to aggressively ride the rapid shift of search, marketing and sales to mobile devices and platforms, where the display of goods and user feedback, and secured, swift electronic transactions become more challenged.

Despite Amazon's inability to gain traction with Wall Street even with its improved financial performance, the e-retailer is providing a template for interactive functionality that can be extended into many niche and nascent growth areas. Its new MP3 service and its ongoing video download arrangement with TiVo, which could justify Amazon's rumored acquisition of Netflix, are just the start of what can be its non-PC dependent advantage in the fight for footing in the digital home hub.

Although it has remained true to its original retail mandate, Amazon may find that it has more in common with colossus Google in the future on the fast track to digital wealth and wisdom. The two Internet leaders recently joined forces in a "distributed search" of satellite images on the Web--coordinated by Amazon's Mechanical Turk Internet application for review by some 20,000 global volunteers looking for traces of millionaire aviator Steve Fossett, who vanished during a solo flight over northern Nevada a month ago. It's the ultimate in social networking.

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