ON MY HOTLIST: How hype hit two players
What a long, strange trip it's been.
For the interactive industry, these landmark Grateful Dead lyrics seemed to sum up the roller coaster events of Aug. 9, the day the Dead's longtime leader Jerry Garcia died.
On that date, Mountain View, Calif.-based Netscape Communications Corp., a company you had to be in the know to know, went public, netting a cool $565 million for founder Jim Clark and a pocketful of change (OK, $52 million) for twentysomething co-founder Marc Andreessen.
Across the country in Manhasset, N.Y., news of a different sort was making the rounds. Interactive Age, a publication launched at the height of the interactive hype last fall, announced it was shutting down its print version, tacitly admitting that ad revenue for a vertical publication about the interactive industry just wasn't there.
Think about it. On the same day that a company built on a lot of talk and promise found itself with a market cap of $2.2 billion, another company, CMP Publications, decided the profit potential in a magazine covering the Internet wasn't as great as had been thought. Interactive Age will become an online-only publication, operating under the theory that writing about the 'net is best done on the 'net.
The world's not spinning nearly as fast as you think it is. It's spinning faster.
We've all seen the money fly into and out of the interactive TV market faster than you can say "500 channels." But the Internet is something we can latch onto. It's real. It's not a pipe dream. And best of all, there's plenty of opportunity to make money off of it.
If you want an example, look no further than the one-year deal Gatorade just did with Starwave, profiled in the chart on this page. As a charter sponsor of Web sites from ESPN and Outside, Gatorade gets its pick of places to advertise.
What did Gatorade pay for this, the largest Web sponsorship to date? About $300,000--pennies compared to the fees of its ad star, Michael Jordan. But Internet deals will only get bigger.
How could people put so much faith in the fortunes of one tiny company like Netscape and so little faith in Interactive Age?
The answer, I think, is the same for both.
Despite the dichotomy of their fortunes, Netscape and Interactive Age share one thing in common: They were built on hype--a powerful market-maker and market-breaker.
So far, only Interactive Age has had to face reality. But the day may come for Netscape and its investors as well.
For marketers and media companies working to make the Web a place to do business, the events of Aug. 9 should hammer home this message: As real as the Internet is, there are no sure places to place your bets. The best you can do is stake your claim and hope for the best.
Will there be more days like this in the interactive industry? No doubt. Here's hoping--for the sake of Netscape and the revamped Interactive Age--that the next time it happens we'll be singing the Dead's "I will survive'' instead.
Debra Aho Williamson is editor of Interactive Media & Marketing. You can e-mail her at firstname.lastname@example.org.
Copyright August 1995 Crain Communications Inc.