Just one year later, Microsoft Corp. is paying big bucks to content sites to carry the logo of its own browser, Internet Explorer.
With deals to provide free short-term subscriptions to paid content from sites like The Wall Street Journal and ESPNET SportsZone, Microsoft is adding a twist to Web economics that will force media companies and marketers to create two versions of everything.
"This is a watershed event in revenue creation for content developers online," said Rich LeFurgy, VP-director of advertising and marketing for Starwave Corp. "Internet Explorer 3.0 allows users to get value [free subscriptions to premium content on the Web] that others wouldn't get."
As part of Microsoft's deal, sites including ESPNET SportsZone (http://espnet.sportszone.com) and the The Wall Street Journal Interactive Edition (http://www.wsj.com) will until yearend offer premium content free to users of Internet Explorer 3.0, which launched last week. Terms weren't disclosed.
Netscape, in contrast, is sticking with its tried-and-true marketing plan with the launch today of Netscape Navigator 3.0. It will promote the browser through Web advertising and links with sites that use its full features, said Alex Edelstein, group product manager for Netscape Navigator.
Netscape says it doesn't plan to pay content providers.
"We're always willing to listen to a business proposition," Mr. Edelstein said. "But we have no immediate plans to start duplicating every step Microsoft takes. ... It's hard to turn down somebody who's handing you big wads of cash, but none of the content companies are going to turn away the 40 million Netscape Navigator users that are out there."
MICROSOFT TRAILS . . . FOR NOW
Microsoft today claims just 8% to 10% of the market, while analysts put Netscape's share above 80%. But analyst Rob Enderle of Giga Information Group predicts Microsoft likely will leapfrog dominant Netscape within the next year to control more than half of the browser market.
As the two companies constantly one-up each other with technological advances and carve out deals with content providers, they will polarize the Web into two camps: Microsoft-enabled sites and Netscape-enabled sites.
Sites like the Journal's Interactive Edition, for example, are creating elements that can only be seen by those using Explorer browsers.
"Two different standards would only splinter the Web even more for users, content providers and advertisers," said Scott Smith, senior analyst with Jupiter Communications. "Microsoft will most likely win this battle because it's offering content providers development money in exchange for developers using Microsoft tools."
But Microsoft is coping with the dueling interests of being a software company and media company wannabe. In the browser deal and other deals, Microsoft is promoting other companies' content even as it builds its own.
The strategy is similar to the way Microsoft agreed to build access to CompuServe and America Online into Windows 95 after those services made Explorer their default browser. Those agreements will help Explorer, but they could hurt Microsoft Network, which initially was the only service built into Windows 95.
NETSCAPE LOSING BATTLE
Microsoft has vowed to spend big to build market share-it has set aside $5 million through yearend to promote its browser, a product it gives away for free.
Netscape is "not realizing the marketing battle that they are losing," said Giga's Mr. Enderle.
Another place Netscape may be losing the marketing battle: in search engines.
A DEAL WITH YAHOO!
Internet Explorer offers the capability of browser search, in which a user can search for a Web site right from the URL address box instead of visiting a search engine home page. When users tap the feature, they automatically go to a co-branded Microsoft/Yahoo! results page as part of a deal under which Yahoo! is the official Internet Explorer search engine.
Netscape, on the other hand, charged five search engines $5 million each for equal play on its home page. The deals don't expire until March, said Yahoo! Director of Marketing Karen Edwards. Although Netscape tested technology similar to Microsoft's, the search engines pressured it to abandon the application, Interactive Age Digital reported.
"Microsoft is doing a great job of shaking things up all at once," said Jupiter's Mr. Smith. "Search engines are nervous, Netscape is nervous, providers are nervous and advertisers are nervous."