With the revision, PurchasePro will pull out of its deal to pay AOL $20.7 million for advertising and marketing. AOL, a division of AOL Time Warner, will pay PurchasePro a one-time fee of $1.5 million to satisfy performance agreements; it also has the option to continue using PurchasePro's software in its Netscape Netbusiness Marketplace.
PurchasePro originally struck a deal with AOL in March 2000, agreeing to pay a lump sum of $25 million to be featured across AOL's network of sites and have the Internet giant use its software.
"We always work with our partners to address their changing business needs," said AOL spokeswoman Wendy Goldberg.
PurchasePro becomes the latest Internet company to restructure its financial relationship with AOL. Since the implosion of the Internet stock bubble, AOL has had to revise some of its high-profile, multimillion dollar marketing relationships that were so commonplace during the boom years.
Companies including Drkoop.com, Vitaminshoppe.com and 1-800-Flowers.com have all reworked deals with AOL. Many online retailers have backed away from high-priced deals for placement on major media sites because of tighter budgets and a reassessment of the effectiveness of such deals.
"We still have agreements in place for revenue sharing and other things, but the payments under the interactive-marketing agreement and the technology-development agreements have been eliminated," said Chris Benyo, PurchasePro's senior vice president of marketing.
Benyo added that the new agreement would balance the amount of cash flowing out of the company.