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HolidayBuyer's Guide
Internet

Content sites as portal competitors

The true competition for Net gateways could come from newspapers, stock firms, and other cultivators of timely, popular information.

While the big content aggregators are busy fighting to become the most popular gateways onto the Net, another class of enemy is threatening to strike from behind: companies that can use their strong brand names, original content, and customer loyalty to successfully draw users.

With all the hype on Wall Street and the talk in tech circles about the astronomical value of aggregator sites such as Yahoo, Excite, and Lycos, the true competition for eyeballs could end up coming from newspapers, stock firms, sports sites, and other cultivators of timely, popular information.

Way back in the early days--about two years ago--the Yahoos and Excites of the Web world began as search sites and then gradually started aggregating content. When the goal shifted to becoming the home page for as many users as possible to draw ad dollars, the search sites began offering free email, then paging services, then free home pages, etc.

But this business model is relatively new, especially when compared to the habits people have cultivated for years in terms of media consumption. For example, people have been reading daily newspapers for decades. Whereas the aggregators have to try different gimmicks and spend large sums of money to add all sorts of treats to hopefully draw loyal users, many content sites have built-in audiences and are just now adding functionality to make themselves stand out.

Adam Schoenfeld, senior analyst at Jupiter Communications, said the firm has been advising its content clients to "out-portal the portals by adding utility functions" such as free email, paging services, and the like. "Why leave all the fun to the five or six 'traditional' portals?"

Why leave all the fun to the five or six 'traditional' portals? "Free email?should now become a standard feature of most highly trafficked content sites," Schoenfeld wrote in a January analyst briefing. "Content players should not allow search engines and portals to be the only sites using free email to lure loyal customers, maintain loyalty, and generate incremental revenue from the extra page turns."

He noted that some sites already are adding features inherent in portals. "The smart content sites that have big brands are on to this," he said, pointing to the New York Times e-commerce deal with Barnes & Noble as an example. Readers who turn to the Times' Book Review section online can link right to Barnes & Noble's site and buy books being reviewed.

Adding the functionality the portals have employed to content sites will "increase page turns, bring more loyal users, and will help with branding" on the Net, he said.

Along with newspaper sites, Schoenfeld said financial sites such as Charles Schwab and Fidelity "have the ability to do this" because "customers have a strong affiliation with them." Fidelity, for example, allows users to personalize stock market news. E*Trade, another competitor in the online financial space, is working on a project called "Destination E*Trade" to beef up its offerings and functionality, according to firm spokesman Tim Ryan.

In considering what functionality to add, Schwab examines "what investors really want," said Teri Felix, Schwab vice president of electronic brokerage marketing. "We want to integrate a broad range of functionality that appeals to everyone from the beginning investor to the experienced trader."

Competition for eyeballs could end
 up coming from the cultivators of timely, popular information. As for being a good start page, "Our Market Buzz area offers one-stop shopping," she noted. Market Buzz essentially aggregates content from other financial sites such as TheStreet.com and Thomson MarketEdge.

That strategy is not unlike that of the search page on Netscape Communications' Netcenter portal site. It rotates "default" search engines for users, even though the search sites such as Yahoo are Netscape's main portal competitors and Netscape now has a deal with Excite to create a Netscape-branded search engine. The idea is to give users everything they need on one page, including key content from competitors, so they won't stray to other sites.

Jupiter's Schoenfeld noted that sports sites such as CBS SportsLine, with scores updated throughout the day, also have the potential to be portals.

SportsLine, for one, offers stock quotes from CBS MarketWatch, chat, auctions, and a bookstore, along with deep original content about teams, players, and trends among a variety of sports. Some services, such as personalization, require membership, which costs $4.95 per month or $39.95 per year.

 
More from Associate Net Editor Beth Lipton
To a certain extent the Net local guides that have proliferated over the last year or so--such as CitySearch and DiveIn--are part of the "alternative" portal group as well, in that they often offer content that is timely and relevant to users' daily lives. However, local sites might not yet have the "critical mass" necessary to be successful portals--except for those that have teamed with newspapers, such as some of CitySearch's guides.

"It's hard to be a portal when you're local--most of them don't have the traffic or the brand yet," Schoenfeld said, but noted that those affiliated with newspapers stand a better chance.

"People spend 90 percent of their time within 10 to 15 miles of their homes," said CitySearch chief executive Charles Conn, regarding why users would choose a local guide as a Net gateway. Plus, he added, "We have a level of information that is not available on the search and portal sites."

Elon Musk, executive vice president of products and technology for CitySearch, noted that the firm's upcoming joint project with the New York Times, dubbed New York Today, will be the first CitySearch property with free email--but not the last.

"We're adding functionality like all the stuff you get at a My Yahoo [Yahoo's personalized page], plus an array of original content you can't get at a My Yahoo," he said.  

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