MICROSOFT GEARS UP TO WOO ONLINE CONTENT PROVIDERS

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Microsoft is out to make the online world more friendly to content providers.

With attractive revenue-sharing arrangements and a development tool code-named Blackbird that promises to make online multimedia a snap, the Microsoft Network is preparing to carve up a big chunk of the online pie for itself.

For the moment, however, details about the network, unveiled at last week's Comdex/Fall show, are sketchy.

What is known is the Microsoft Network will start next year in 35 countries and 20 languages, creating the first global online service. The service will ship with the Windows 95 operating system.

Initially, the network will work over phone lines. Microsoft also plans to test cable TV delivery.

Microsoft itself will deliver some services, providing online support for its software products and giving access to encyclopedias and dictionaries.

Chairman-CEO Bill Gates contends the interface will be far simpler to navigate than those on rival services.

"What's amazing is how little innovation there has been in these user interfaces," he said.

Much less is known about just how Microsoft will go about the business of running an online service.

The company isn't disclosing basic subscriber fees, but they likely will be below the $10-plus a month charged by rivals.

Microsoft promises content providers will keep the majority of revenues they generate through the service, a more lucrative arrangement than seen on other commercial services.

Microsoft is known to be seeking high-profile providers to act as "anchors" for the service, but so far isn't revealing the names of any of them.

Mr. Gates said he is "very interested" in working with Hollywood on interactive content.

"We're going to work with all the studios on an open basis," he said.

A demo shown at Comdex included mock-ups of USA Today and Viacom's Nickelodeon cable TV channel. William Miller, Microsoft director of online services marketing and business development, said the company is talking with those media outlets but wouldn't say whether any deals have been signed.

Microsoft also promises flexibility in how content providers present their offerings. Microsoft is supplying the medium; it will largely be up to content providers to deliver a creative and compelling message.

Some of the creativity could come from the multimedia tool code-named Blackbird.

"You need to have powerful tools which will allow you [to control] the look and feel of your own" product, said one executive. Blackbird "allows content producers to put content out in a way much more consistent with the way they run their business."

"Once that tool's available, even more jazzy, exciting stuff will be available" on the Microsoft Network, said Mary Modahl, senior analyst at Forrester Research, Cambridge, Mass.

Mr. Miller promises more answers when Microsoft issues a rate card in the first quarter with more details for content providers about pricing and revenue sharing.

Some content will be included in the basic rate. Other content-an electronic newspaper, for example-will be sold on a pay-per-view rate or by subscription.

Initially, Microsoft will be selling only global access on the network, with an emphasis on U.S. content providers. Over time, Mr. Miller said, Microsoft may let content providers pick what region they want to reach.

Media companies will control advertising sales for whatever content they're providing. Microsoft initially will not sell advertising, however.

"We're still trying to decide if there's a place for advertising," Mr. Miller said. "We're not closed to that idea."

Indeed, Microsoft is open to what amounts to a remarkable-though ultimately lucrative-possibility: free advertising.

Mr. Miller said Microsoft initially won't charge, for example, if a car marketer wants to deliver interactive marketing messages similar to what Toyota Motor Sales USA does on Prodigy. Microsoft could take a share of any revenues the car marketer generated by selling information or products online, Mr. Miller added.

"We think we have a lot to learn about interactive advertising," Mr. Miller said. "We don't profess to know everything."

Debra Aho Williamson contributed to this story.

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