.COM – LIVE
Hosted by Leslie Walker
Washington Post Columnist
Thursday, December 17, 1998
Welcome to the debut edition of ".com – Live." I'm your host Leslie Walker. Every other Thursday, I'll be online from 1 to 2 p.m. Eastern to explore the economic forces whirling through cyberspace. The live discussion gives you an opportunity to talk directly with entrepreneurs, visionaries and online business people about the competition to make money online and how the Internet is remaking the world of commerce.
Read today's column, "Prime Time on the Web; The Portal Wars," and join us for a discussion on the evolution of search engines.
Our guest today is Robert J. Davis, president and chief executive of Lycos Inc. (www.lycos.com), a Massachusetts company that started as a search engine three years ago. A spending spree this year made the Lycos Network of sites the fourth most trafficked on the Web. Lycos bought Wired Digital, owner of the HotWired news service and HotBot search engine, along with several smaller companies.
Davis believes his business strategy has put Lycos on track to catch up to Yahoo!, the No. 1 search service on the Internet. He will be online to discuss the fierce competion among the Web search services and answer your questions about their services-navigation, chat and a host of interactive features that are either offered now or in the works.
Hello and welcome to the first installment of .Com-Live, a bi-weekly show about the .coms of cyberspace. We're going to talk about how the Net is transforming commerce, and how commerce is changing the Net. Today our guest, Bob Davis, will talk about Lycos and those other Yahoos that we all still call by their birth namessearch engines.
Leslie Walker: So, Bob, what's driving the ratings war between the big Web guides?
Robert J. Davis: The ratings war is for some very good reasons but essentially we have a massive medium in the making and a lot of companies are chasing a piece of it.
Washington, DC: What do you think of the introduction of Disney's GO Network? Are they too late in the game?
Robert J. Davis: I would never underestimate the power of a company with the assets of Disney...but to date no major media company has learned how to build audience on the web. I don't count them out but it won't be easy.
San Diego, CA: How does Lycos make money? What percentage of your revenue comes from advertising? And how in the world can the Internet support a dozen of you guys when everybody seems to be losing money?
Robert J. Davis: We make our $ thru the sale of advertisng. This is about 70% of our revenues with the balance being commerce. If you compare us to any historic media model we are doing much more in a very short period of time. We are a cash flow positive company in an industry poised for 35% margins.
Leslie Walker: There are skeptics who think the Internet is too decentralized to create a truly "mass" medium. It's hard to amass the kind of eyeballs around interactive Web products that advertisers are used to reaching through television. What's your opinion?
Robert J. Davis: The internet allows for audience aggregation as long as sites such as Lycos continue to produce quality products. Our approach is very similar to that of a TV network in that we have many programming parts - we just happen to call them web sites that appeal to a wide range of interests.
Rosslyn Hts., VA: I remember Lycos from way back. Wondering if you could tell us a brief history -- wasn't it a nonprofit out of Carnegie-Mellon for a long time?
Robert J. Davis: Lycos was in fact from CMU. The university sold the technology to what became the company for a fee and an ownership interest in our business.
Arlington, MA: Today's article states that Yahoo and AOL are pulling away from the pack. Do you agree that they are significantly ahead of Lycos, placing Lycos in a second tier, and how many networks do you think the industry can support after an inevitable shakeout?
Robert J. Davis: Today's article was a great synopsis of the industry. Rather than anyone pulling away from Lycos I like to think that we are chasing down our competition. Yahoo reaches 47.6% of internet users. Lycos reaches 44.5%. We have grown over 200% this year alone. They have grown less than 15%.
Bethesda, MD: Do you sell "keyword" search terms for your search engines, so businesses can their way up in the search returns and improve their visibility? And how much of the placement in your Web guide is bought by advertisers versus editorial content? How do you draw a line between them?
Robert J. Davis: We never sell and never would sell search returns. Our success as a company is built on the trust we have with our users. The webguides are almost entirely created by our personal editorial team. Any advertiser content is either a graphic ad or labeled as "sponsored by"
Leslie Walker: When you peer into the future, how you see the search engines evolving? What can we expect the next-generation HotBots to do that they don't do now?
Robert J. Davis: Well the HotBot question is a great description for a search engine as at Lycos we acquired a company that actually owns the search engine at hotbot.com
Reston, VA: Mr. Davis and Ms. Walker: If the Web is metaphorical to television, do you think the Web will be "owned" by five or six networks 10 years down the line? Why or why not?
Robert J. Davis: I think the web will surely be dominated by a limited number of "networks". I expect we will see 7 or 8 significant players but there will continue to be hundreds - maybe thousands of companies that are outside the networks who make a nice living for themselves. Beyond that the networks will never replace the web's ability to allow everyone of us to become a publisher.
Arlington, VA: Do you think there'll come a day when people are charged for every search?
Robert J. Davis: At Lycos you will never be charged for a search. You can hold me to that!
Washington, DC: I used to be a big fan of Lycos' website reviews, but they don't seem to be updated anymore. Can you tell me if Lycos has any plans for this feature? Thanks.
Robert J. Davis: We continue to update the reviews each week but have added some new offerings that introduce new elements to the site rating process. Our webguides have 2 million entries listed all by category that are rated and scored by the users of the web. We feel this to be a great combination with our reviews.
I agree with Bob on the future of Web "channels." I don't want to take the TV network analogy to television too far, because the Net is its own medium, for sure. Its interactivity and decentralized nature will make it hard for companies to dominateespecially traditional media companies that have offline businesses to protect.
Washington, DC: How will the introduction of high-bandwidth access to the Internet affect the "portals"? Is Lycos prepared?
Robert J. Davis: We have much focus on our broadband offerings but I think the webwar will be decided by the strengths of the brands that are being established in today's narrowband environment.
We are halfway through our live discussion with Robert Davis, CEO of Lycos. Please continue to
Washington DC: What is your opinion of the AOL/Netscape deal and how do it affect the portal landscape?
Robert J. Davis: The is one to watch very closely. From a Lycos perspective it is good for us in that it continues the industry consolidation that we set off with our Tripod acquisition.
Point au Roche, NY: If you are looking to surpass Yahoo, what features differentiate Lycos enough to lure loyal Yahoo users away?
Robert J. Davis: Plenty of them. But as much as anything else the great sense of community we are building on the site. We add 53,000 members EVERY day in the Lycos network in that we use our service not just as a way to find things but we also use it to make it easier for people to get together, get to know each other and just "hang out" in the virtual world. We are really proud that we are making the web fast, easy and people-centric.
Leslie Walker: Business strategies are changing so fast on the Web it's hard to tell who's playing what role. Lycos announced it was opening a store to directly sell merchandisedoes that make you a retailer? Or in commerce, does Lycos aim to be more of a virtual mall?
Robert J. Davis: We don't see ourselves as a retailer anytime soon but we do see commerce as a very importnat element in our community strategy. By aggregating on our site we hope to make it easier and less expensive to shop online.
Washington, DC: For me the best part of the web is what you just mentioned, that everyone is a publisher...but with the web dominated by 7-8 portals which are in turn most likely owned by multi-national media mega-corporations, will home made sites ever reach a level where they can exist for free and be accessed by the major engines, even if they are "inappropriate?"
Robert J. Davis: What you describe is at the heart of our value system. Both our Tripod.com and Angelfire.com sites give people 11 megabytes of free disk space and a simple to use tool that lets you build a home page or business site. These sites are always placed in the Lycos search index and have the same oppty to be viewed as does one from NBC or Time Warner.
Leslie Walker: People are worried about search engines peering over their shoulder when they search for stuff. How much information do you collect on me when I do searches on Lycos or HotBot?
Robert J. Davis: We know far less about you than do the offline companies. Databases built by media companies, credit card businesses, etc, are all sold 100 times over. We have strict privacy vows on our service that are posted from our home page that outline our commitment to users.
Seattle: I typed my name into the Lycos search engine, and my personal home page didn't turn up among the first 10 finds. But on Hot Bot it was the first find. Why the difference?
Robert J. Davis: You illustrate the fundamental reason that we own 2 search engines. Each product has different "skills" and between the two of them we believe we give you the best search expereience on the web. Every search on Lycos can be sent to HotBot ( and vice versa) with a simple mouseclick. Its all about fast and easy.
Leslie Walker: New media always affects old mediaTV changed the economics of radio. Cable television stole eyeballs from broadcast networks. How do you see the Internet affecting traditional media? Will TV feel it the most? How about newspapers?
Robert J. Davis: The web hits at all media. Classifieds in newpapers are seeing a new breed of competitor online. The networks compete with web companies for viewer time. The media world will be a completely different landscape 5 years from now.
Washington, DC: Why dis you decide to keep the Angelfire and Tripod brands separate? Why not keep a free homepage site under one brand name?
Robert J. Davis: Think of an environment where NBC named every show Seinfeld. It would be pretty confusing and not much fun. The same is so online. Each of our products serve a different role and the names reflect that.
I find it fascinating that most Internet users use more than one search engineas if they can't get enough from the thousands of returns from one. And in the Lycos network, there's only a 20 percent overlap between people who search with HotBot and the patented Lycos engine. Sort of supports the idea that Net won't consolidate into three big players.
San Francisco, CA:
Robert J. Davis: Actually this is very supportive of our advertisers and commerce partners. As Lycos continues to become known as a place to shop just as it is now a place to publish and search, it will benefit all those doing business on the site. For instance, do you typically shop in a strip mall or in a full scale mall? The full scale mall gives more choice and brings in more shoppers. The same will be true on Lycos.
Robert J. Davis: People search on over 800,000 terms a day. Sex is often among the top terms, entertainment is the top category, but with that many searches you can be sure it covers almost every topic imaginable.
Arlington, Virginia: How do you feel about the future of internet stocks and their astronomical prices? And what is Lycos's strategy regarding y2k?
Robert J. Davis: I think most of them are undervalued. This is one of those rare times when a business and lifestyles are being revolutionized at the same time. The web is driving all of this.
It's hard for Internet users to tell these days who's the retailer and who's the mall owner in cyberspace. Manufacturers (like Levi's and Clinique) are selling direct, and even Lycos opened its own store to sell some direct merchandise recently. Never a dull moment out there!
Washington DC: Who's going to win the battle for news on the Web? And what do you think of Washington Post Managing Editor Steve Coll's proposal that the AP stop selling to portals?
Robert J. Davis: Well as you might expect me to say - Wired news at wired.com is the big winner (its a Lycos website) but beyond that I believe the brands will dominate.
That's all we have time for today. Thanks to my guest, Bob Davis of Lycos, and to everyone who sent in questions. Stay tuned for the next show, where Navigator Linton Weeks will be talking with Net luminary Esther Dyson.
Be sure to stop by next week for another edition of .Com-Live. Cheers to you all!
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