With $35 million and backing from Microsoft Corp. and three media giants, BET Holdings Inc. of Washington plans to launch what it hopes will become the premier meeting and shopping place for African Americans online.
Scheduled for a November start, BET.com will be free and have electronic mail, instant messaging, news, entertainment, shopping and other services, all targeted at African Americans, BET Chairman Robert L. Johnson said in an interview.
Possible coming attractions: Spike Lee selling his movies direct, a black-oriented guide to nightlife in Philadelphia, an African American version of online auctioneer eBay.
BET, which made its name in black-oriented cable TV, is launching its venture at a time of increased concern in government and industry over a "digital divide," a gap between those who use the Internet--disproportionately white, high-income Americans--and those who don't.
Johnson predicts BET.com, which is to be formally announced in New York today, will attract more minorities to the global computer network and give black-owned businesses a nurturing place online. "We have come together to ensure African American consumers are not left out of the economy," Johnson said.
Despite the disparities, many sites are appearing on the World Wide Web with the aim of attracting specific ethnic and gender groups. For instance, NetNoir Inc. of San Francisco--"The Black Network"--offers many of the the types of services that Johnson promises.
And competition among women-oriented sites is heating up, with newcomer Oxygen.com fighting with the likes of iVillage.com and the locally based Womenconnect.com. "I think women do go to these sites," said Gary Arlen, a Bethesda Internet analyst. "They like that there's someone paying attention to their needs."
Arlen said that as some big "portal" sites fade away because they are trying to be all things to all people, sites geared toward specific groups might succeed because they take people directly where they want to go rather than in random directions. "Communities are what the Web is all about," Arlen said.
But Mark Hardie, an analyst with Forrester Research Inc., a Cambridge, Mass., market research firm, said serious questions remain about whether ethnic group members want to structure their online exploration around sites aimed at their group. Hardie is African American, and he doesn't particularly search out Web sites targeting blacks. "The audience that's online now is not Afrocentric," he said.
So far, "community" sites have made very little money. The same is true for sites geared toward specific geographic areas.
Microsoft recently sold its money-losing Sidewalk local sites, which gave information on topics such as restaurants and movies in specific cities, to TicketMaster-CitySearch. "Local and affinity [sites] have been tremendous challenges," said David Card, an analyst with Jupiter Communications Co., a New York City research firm that focuses on emerging technologies.
But Johnson believes the ethnic model will work. He is counting on his media empire's brand, best known for its popular cable channel Black Entertainment Television, to help set it above other black-oriented sites. It also will be aided by the financial and promotional backing of Microsoft, cable TV companies USA Networks Inc. and Liberty Media Group, and News America Digital Publishing, the electronic publishing division of Rupert Murdoch's News Corp.
"We'll spend more money to launch this product than any other African American [Internet] product that has ever been launched," Johnson said.
"BET is early to market and that's a good thing," Hardie said. "BET has a brand like no one else has. It's a powerful brand that crosses television, cable and print."
BET.com will operate as a separate subsidiary, of which the outside investors will together own about 45 percent.
It will be much more comprehensive than the current MSBET.com site, a joint effort with Microsoft that offers African American-oriented news and information but no commerce. While the Redmond, Wash., company will continue as a backer, the site will drop the "MS" because BET by itself is recognized by more than 90 percent of African American audiences, the company said.
Many analysts say a big challenge will be to get more minority homes online in the first place. Some say BET may strike one or more deals with Internet service providers to offer lower cost or free access, and perhaps free or inexpensive computers. "If they don't do lower-cost access, then it won't do a whole lot other than create interest," said Card of Jupiter Communications. "But interest is still helpful."
Johnson said he "wouldn't be surprised" to see an Internet service provider come to him for a partnership. "We've got to dispel the notion that a computer is a high-tech, complicated, expensive device," he said.
A recent Commerce Department study found that households with annual incomes of $75,000 and above are more than 20 times as likely to be online as those with the lowest incomes. Black and Hispanic households are only 40 percent as likely as white households to have Internet access.
The report also found that the online gap between white households and black and Hispanic households had increased by more than 6 percentage points from 1997 to 1998.
Still, about 3.9 million African Americans will be online by 2000, according to Forrester Research. "This is the optimal time to make the substantial investment," Johnson said.
Johnson said his potential users will like the fact that the site has an African American owner, with strong partners. He said this new venture is like a lot of others--music, film, television, publishing--in which African Americans had to create their own distribution networks to break into the market.
BET plans to promote the site across all of the company's properties. Its cable shows, for instance, will likely run ads for it. "There are hundreds of African American businesses waiting in the wings for this content and capacity to come together," Johnson said.
The launch of BET.com would be another chapter in the building of Johnson's media conglomerate. When he founded cable channel Black Entertainment Television in 1979, it aired two hours a week. Now a 24-hour channel, it has 57.8 million cable households and reached more than 90 percent of African American households with cable access in June 1999, according to Nielsen Media Research.
Since the original launch, Johnson has added more specialized cable channels, magazines, restaurants and even movie studios to his offerings, creating a true African American media conglomerate. The company runs a 24-hour jazz channel called BET on Jazz, Heart & Soul Magazine, which focuses on black women's health and beauty, and BET Arabesque Films, which produces African American movies.
Johnson owns 64 percent of BET Holdings, while Liberty Media owns 34 percent.
Johnson intends to make money on this venture. "We've got the greed motivation," he joked.
He also wants other minorities to make money.
Taking a page from the America Online Inc. how-to-make-money-on-the-Internet playbook, Johnson said he'll charge content providers and advertisers for space on the site. He's seen AOL rake in millions from companies such as eBay Inc. and First USA Bank.
BET.com hopes the venture will take in revenue from advertising, electronic commerce and sponsorships. Johnson said he plans to spin off the portal as a public offering, probably in 2000 if the conditions are right.
"This is the first big general-purpose play aimed at the African American audience," Card said. "The fact that they're a media company in the real world, particularly in television, is important."
The Net's Divide
White households use the Internet at well over twice the rate of black and Hispanic households.
Percent of U.S. households using the Net
NOTE: Figures are for 1998
SOURCE: Commerce Department