AT&T is merging its New Media Services unit with Industry.Net, a start-up run by former Lotus Development co-founder Jim Manzi that acts as a clearinghouse for marketing and distribution information for industrial equipment. In a deal signed this morning and set to close July 1, the two entities will merge to create Nets Incorporated in Cambridge, Massachusetts. The new company will operate both the existing Industry.Net Site and the AT&T Business Network information site announced last week.
Industry.Net has information about some 4,500 companies, which goes to about 200,000 registrants, mostly engineers and others who specify purchases of industrial products. The site publishes specific information for basic manufacturing industries, including news from trade associations and company product catalogs. The Business Network is based on a similar concept, a site that doesn't handle electronic transactions or purchasing but collects information about business resources on the Net to help managers, professionals, and entrepreneurs find the information they need.
Companies pay fees ranging from $3,000 to $200,000 a year for areas on Industry.Net, but the service is free to users. AT&T Business Network is currently supported by ads but will eventually include new subscription and pay-per-use services.
"Our mission is to become the leading provider of news and commerce services for the business-to-business marketplace," said Manzi, now chairman, president, and CEO of Nets Incorporated. "We believe AT&T and the Business Network will help us attract many more users in Industry.Net and other future networks we intend to pursue."
Nets Incorporated, which will have some 300 employees in the merged operation, will operate both the existing Industry.Net site and the AT&T Business Network. AT&T will become a minority shareholder in the new Nets Incorporated, a sort of holding company for the other two businesses, which will continue to operate under their existing names. Other terms of the deal were not disclosed.
AT&T officials say the merger is a reflection of its previously announced strategy to create sites that aggregate content but not to create new content itself. But the company has ambitions to create a collection of such sites, each targeted at specific audiences. "Our better position is to associate ourselves with content but not to do our own digital studio ourself," said John Petrillo, AT&T executive vice president and strategist who will serve on Nets Incorporated's board.
In addition to AT&T Business Network and Industry.Net, AT&T will soon begin beta testing the AT&T HealthSite, a consumer-oriented health site with content from Rodale Press, IVI Publishing, and MediLife, which creates interactive software to help people manage chronic illnesses.
But some industry watchers questioned AT&T's real interest in the market. Gregory Wester, research director at the Yankee Group, noted that no mention of exclusivity was made. "Yes, there's an opportunity for strong cross-promotion and branding, but that hasn't been [specified] yet. It's fairly convincing to me that AT&T does not see that particular space as mission-critical." He noted that Manzi initiated and closed the deal in only ten weeks.
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