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MS revamps network for launch

Microsoft sets the stage for a radical makeover of the Microsoft Network, confirming that a new studio system will produce original Web content for the online service.

Microsoft (MSFT) today set the stage for a radical makeover of the Microsoft Network (MSN), confirming that a new studio system will produce original Web content for the online service.

The Redmond, Washington, company today also significantly enlarged its beta testing program for MSN to a pool of 100,000 users in an effort to stress-test the service before it officially relaunches as early as November.

Like two other online services, Prodigy and Compuserve, MSN is in the midst of a massive migration to the Internet. By year's end, all of the companies plan to allow access to their chat, discussion, and information areas through the Internet and Web browsers, rather than proprietary networks and client software.

But as the online services in effect become big Web sites, the companies have had to rethink their business models and adjust their strategies.

"The Web, and the ability of content providers to build their own independent media franchises on the Internet, destroyed the original online service content model," Adam Schoenfeld, vice president of market research firm Jupiter Communications, said today. "AOL realized very early on that the best bet was to roll their own."

Today, as previously reported by CNET, MSN revealed its answer in the form of Microsoft Multimedia Productions (M3P)--a "studio" that will cultivate fresh MSN content from independent companies as a way of luring audiences to the MSN Web site. As all of the major online service move to the Net, creating compelling programming or "shows" is becoming the key to differentiating each service.

"You have to compete on content and programming rather than technology," said Madeline Kirbach, business development manager for M3P.

AOL has created a similar "greenhouse" program for developing new content for its online services, as well as the Net. But Microsoft executives assert that M3P is different since Microsoft is investing in only specific Web programs created by companies, not the companies themselves.

MSN will own the rights to its Web programs outright and also will negotiate rights for using the brand in other areas, such as merchandising, said Kirbach.

Officials also said the majority of the existing content providers on MSN will not be moving to the Internet with the service. Rather, most of MSN's departing content providers have chosen to develop their own independent Web sites, saying that the benefits of staying with Microsoft's supersite are unclear.

"I would say that the real reason we're not shifting over [to the Net with MSN] is we didn't get good results from MSN," said Phil Hood, editor of New Media magazine. earlier this month.

"It doesn't matter where you are on the Internet," said Hood. "A huge volume of Web traffic comes through AltaVista."

Microsoft said it will cut deals with some of its current content providers to develop new shows. The company is also in the process of turning existing MSN properties such as Encarta and CarPoint into MSN sites.