America Online Inc. will collect $89 million over four years from Drkoop.com in return for featuring the Web health-care company's information online, AOL announced yesterday.
Investors promptly bid the shares of Drkoop.com up by 56 percent, reasoning that despite the money the stock-market newcomer will shell out to AOL, exposure on five different services of the world's largest online company will be a boon to its revenues. The stock closed at $36.87 1/2.
Drkoop.com is chaired by C. Everett Koop, a former U.S. surgeon general who achieved national recognition through anti-smoking and other campaigns. According to a May report by Media Metrix Inc., a Web measurement company, the site that bears his name is already the top Internet health information site, with 1.4 million different visitors during the month.
Because it can deliver millions of pairs of "eyeballs," AOL routinely collects millions of dollars from such content providers as Cnet Inc. and online auctioneer eBay for inclusion in the AOL lineup.
Drkoop.com will be featured on five AOL-owned spots in cyberspace: the standard service, which has 17 million subscribers; CompuServe, which has 2 million; Netcenter; Digital City; and AOL.com.
This is AOL's first major marketing deal in which the customer has also agreed to purchase software from the corporate alliance that AOL formed earlier this year with Sun Microsystems Inc. as part of AOL's purchase of Netscape Communications Corp.
Drkoop.com will buy software from the Sun-Netscape Alliance and computer hardware from Sun Microsystems to help run its online service. AOL did not disclose how much it expects to collect in this part of the deal, but it did say the money would be on top of the $89 million.
According to AOL, this part of the arrangement will also help ensure that people can really get the Drkoop.com content on their computer screens.
Companies featured on AOL usually experience a big surge in numbers of people trying to visit their sites -- that's what the companies are paying for, after all. But the added attention can be a huge technical drain. At times, the traffic spurts literally shut down a site, which in turn is bad news for AOL.
Over the holidays last December, for instance, AOL had to constantly remove promotional links for such companies as Toys R Us Inc., because the added volume paralyzed those shopping sites, said AOL spokesman Tom Ziemba.
With the Sun hardware and software from the alliance, "we'll make sure that won't happen," said Ziemba.
This arrangement was not a requirement for Drkoop.com to get access to AOL's services, Ziemba said.
The Drkoop.com information will primarily be located on AOL's health "channel." But Ziemba said that on days of particular relevance Drkoop.com could get a link from the welcome screen that all AOL users see when they log on.
CAPTION: C. Everett Koop's DrKoop.cpm will be featured on five AOL services.