Web portal war intensifies over communities

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Online communities are the latest essential portal accoutrements, as evidenced by last week's stock and acquisition activity. And today Excite adds to that competition when it unveils Excite Communities, a free home pages-building product, with backend technology supplied by Seattle-based Throw, which Excite acquired in March.

Excite Communities will try to address some of the criticism lobbed at home pages sites, specifically that they have been unable to attract major advertising. In 1997, online community GeoCities had $4.6 million in revenue, but reported a net loss of nearly $9 million.


Excite Communities hopes to attract ads through a controlled environment. (Excite said it's just beginning talks with advertisers for sponsorship and ad deals.) The service, which is a network of sites organized into categories, has a feature that lets a user select which other users are able to access the site. For instance, a user can have one area open to business associates while another might be open to family members. Even though a user creates the page, all invited community members can help build the site by adding content. Features may include an online photo album, group calendars and group address books. Users can also select the communities they want to be listed under, arrange private chat sessions and leave private or public comments on pages.

"This is where it crosses the line between traditional publishing and an enclosed communications tool," said Scott Derringer, Excite Communities product manager, explaining the privacy functions available to users.

"If you look at existing community products," said Craig Donato, VP-product marketing at Excite, most of the traffic to home pages is an individual visiting his or her site. "It's the cul-de-sac of one--and that's not a great reach scenario for advertisers."

"This aggregates a very targeted audience," he added, "and it aggregates them in a controlled way."


Excite might be late entering the virtual city race. Last week, GeoCities' stock value jumped to $1.1 billion in an initial public offering. In January, Yahoo! took a $5 million minority stake in the home pages site, which has 2.1 million members. Yahoo! has links to GeoCities for home page building.

Also, last week Lycos purchased WhoWhere?, which offers free home pages, e-mail and directory services, for $133 million in stock. WhoWhere? owns home pages site Angelfire, which has 1.3 million registered users. Lycos, which purchased Tripod in February for $58 million in stock, now claims to be the biggest online community with 3.1 million registered users.

In making the acquisition, Robert Davis, chairman-CEO of Lycos, brushed off suggestions online communities don't have ad potential. When Lycos bought the online community, Mr. Davis said, "Tripod was a site that had no revenue." He added it's contributing in a "positive way today."


America Online is beta testing Hometown AOL, a home page-building product divided into 11 communities. And Infoseek is also working on a communities site with 280, a company it recently acquired.

"A lot of these add-on features, like chat, become commodities," said Melissa Bane, senior analyst at Yankee Group. "I don't necessarily picture these as customer-acquisition but [rather] as customer-retention features."

"I think where more of the opportunities lie for these guys [portal sites] is in acquisition," she added.

In the last six months, online communities "rocketed to the top of traffic on the Web," said Bill Bass, senior analyst at Forrester Research. "I'd think they're pretty important.

"Someone's not going to build personal home pages on six different sites, they're going to build one," he added.

Copyright August 1998, Crain Communications Inc.

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