By Leslie Walker
Washington Post Staff Writer
Thursday, December 17, 1998; Page B01
Most people still see Yahoo, Lycos and the other Internet "portals" as glorified search engines, despite the more than $1 billion they've spent adding fancy services this year.
Better to see them as the ABC, NBC and CBS of cyberspace.
The parallels start with the ratings wars. Yahoo and America Online are pulling away from the pack, each drawing the eyeballs of nearly half the 62 million-strong wired world. Microsoft Corp. and the Lycos Network are neck and neck for No. 3, but the Walt Disney Co. is taking aim at that slot, too, with its preview release of the Go Network this week.
Even more similar are the business strategies. Like an ABC or a CBS, a Web guide seeks to distribute "programming" -- whether it's search results, shopping opportunities or news -- on a global basis. It fights for ads and audience loyalty.
"We are going after the mass market," says Harry Motro, chief executive of Infoseek Corp., Disney's partner in the Go Network.
As the Web guides buy up independently owned sites and link them to their own services and content "channels," they are reshaping the ways in which we move around, interact with and perceive the Internet's ocean of information. They are also consolidating market power into a handful of players, creating what could become the new-media empires of the 21st century.
It's a lot like the 1920s, when the nation was wringing its hands about how the new medium called radio -- then a patchwork of struggling, independently owned stations -- would pay for itself.
AT&T tested the world's first "chain-broadcasting" network in 1923 by stringing together three radio stations and simultaneously piping programs to New York, Rhode Island and Massachusetts. The economic benefit was to lower program production costs by spreading them across many stations, an innovation that gave rise to mass audiences and mass advertising.
Of course, there's no single mass audience -- it's actually a grouping of smaller ones. Radio stations realized this early on, and began different types of shows for different types of listeners. The Web by its nature is dramatically more open to the kind of market segmentation that occurred first in radio and was accelerated by cable television.
The big Web gateways like Yahoo have simple front doors, but behind them they are stringing together micro-sites with specialized material to amass an audience big enough to attract advertisers.
Yahoo and Excite have opted against giving their many sites different names, believing that surfers are confused enough with all the variety out there and need the unifying influence of a single brand. Go to a Yahoo-owned site and you know exactly who runs it.
Lycos believes the opposite. It's building a collection of separately branded sites appealing to different groups of people. "Why does Viacom own MTV and VH1?" asks Lycos chief executive Robert J. Davis, referring to cable TV channels aimed at different music audiences. "To segment the audience, like we're doing with the Lycos Network."
Lycos soared in the audience "reach" ratings this summer by purchasing a string of sites that were growing organically, by word-of-mouse, and then allowed each site to preserve its original name. Even though Lycos had its own patented search engine, it bought another one, HotBot. It also purchased two "homesteading" sites -- Tripod and Angelfire, virtual communities that offer free tools to build home pages and private meeting places.
This week, Lycos announced a "network affiliate" program. Lycos will license programming -- in this case six software tools, such as e-mail, chat and home-page builders -- to smaller sites in return for the right to sell ads and share in the revenue.
Lycos is also a believer in new-media synergy, bringing the Internet's powers to bear for cross-promotion -- the use of one wing of the family to draw business to another. Web guides do this by placing links between their disparate sites, so that people might never leave the closed world defined by the service, zipping instead from site to site within it.
Offline, Disney is the King of Synergy. And it plans to combine online and offline promotion in ways no other Internet player can. Consumers should prepare to see signposts for Disney's Go Network everywhere in the real world -- television, radio, movie theaters, stores, even cruise ships and theme parks.
"It's going to be a brand war over the next three years, and it will not be for the meek," Infoseek's Motro says. "It will be for people who understand consumers and brands."
He's right, of course. But don't count new players like Lycos out. Because this is also a war to understand something new -- the Internet. Savvy companies that figure out how to harness its free marketing oomph may be a match for the Mouse of Magical Kingdom fame.
But in the end, Yahoo's chief executive Timothy Koogle notes, "This is not the kind of business where winner takes all."
Indeed, the decentralized world of the Net could turn out to be more like cable television, with far more winners than the Big Three.
© Copyright 1998 1998 The Washington Post Company