AOL fights search rivals
The online giant lines up three new content deals, creating or upgrading partnerships with E Online, Intuit, and Marvel Comics.
The online giant announced three
new content deals today, creating or upgrading partnerships with E Online, Intuit, and Marvel Comics.
The deals come on the heels of AOL's announcement that it will be raising its monthly rate from the industry-standard $19.95 per month to $21.95 per month in April. The rate hike got mixed reviews, with Wall Street cheering and users weighing in on both sides. AOL's competitors in the online service market, such as Microsoft Network, have not commented or made similar moves yet.
Rates for Net access are beginning to change across the board, however. While some Internet service providers and online services such as Netcom and AOL-owned CompuServe already have rates at more than $19.95 per month, others are lowering rates to lure users. MCI Communications, for example, is bundling $14.95 per month Net access along with its long distance service.
AOL was criticized heavily earlier in the year after it divulged private information about a Navy officer member to a military investigator, which led to the Navy's attempt to discharge him for violating the military's "don't ask, don't tell" policy regarding homosexuals.
Company representative Janine Dunne said the announcements were not part of an overall strategy to prove to users that the online giant is worth the extra $2 per month. "AOL makes these kinds of announcements all the time," she said today.
"Just because we're the leader doesn't mean we want to rest on our laurels. We're always adding new content partnerships to enhance the experience for users," she added.
Patrick Keane, an analyst with Jupiter Communications, thinks the new deals are meant to show the desirability of virtual space on the service. "In general, I think real estate is becoming more valuable to content partners," he said. "AOL is the place to be right now in terms of consumer eyeballs. That's why you see people ponying up so much cash" for anchor-tenant status on the service.
Keane added AOL does not have to worry about losing significant membership because of the rate hike, mostly because of the hassle involved in switching services. "Consumer inertia is a very viable force to be reckoned with. People don't want to move."
He did question the rate hike strategy in general, though. "The question is, do you want to lower rates and get even more people or raise them and just get more subscription fees from existing users?"
According to the announcement made today, Intuit will be an anchor tenant in the Personal Finance and WorkPlace channels on AOL.com, the online service's Web presence, the companies said.
Under the terms of the three-year Intuit deal, Intuit will pay America Online $30 million, with approximately $16 million paid up front. AOL also will be eligible for a share of the revenues generated through the Intuit content, the companies said.
AOL said it is the first time one party will provide most of the content for a major category. Much of the content will mirror that found on the site for Intuit's popular finance software, Quicken. AOL's Personal Finance Channel also offers content from Business Week, Hoovers, Morningstar, Investors Business Daily, and the Motley Fool, among others.
The Intuit deal is a boost to AOL's finance content, since the online service declined to renew its contract with Dow Jones late last year. Although the deal is being called exclusive, Intuit has a finance and investing channel on Excite, the search-cum-content site that competes with AOL.com.
The AOL deal "is not exclusive for Intuit," Intuit executive vice president Bill Harris said today. "Intuit will continue to work with Excite and could work with others." He added Intuit will bundle AOL's client software onto certain software disks, such as those of its Quicken product.
AOL increasingly has brought content from its proprietary service to the Web. At the same time, search companies such as Excite and Yahoo have created Web-based online services complete with content and free email. Intuit forked over $40 million to Excite in June 1997 for a 19 percent stake in the company.
Kate Delhagen, an analyst with Forrester Research, said the Intuit deal is very telling in terms of AOL's overall strategy to move away from the network business and concentrate on generating traffic on AOL.com.
The deal "says AOL is turning a lot of effort and energy to AOL.com. [The Web site] is not just a neglected stepchild anymore," she added. "As AOL gets out of the network business, its best bet is to transition its tremendous membership base to AOL.com."
AOL says its Personal Finance channel provides 60 million stock quotes per day and maintains 6 million active investment portfolios.
E Online will become an anchor tenant on AOL's proprietary service within the Entertainment channel. Under that deal, E Online will be featured on the channel's front screen and will provide entertainment news, gossip, celebrities, movies, and TV information. Breaking news, online polls, and celebrity chats also will be offered. The channel already features content from AOL's own showbiz effort, Entertainment Asylum.
Also in the entertainment space is Marvel Comics--publisher of "Spider Man," the "Incredible Hulk," and the "X-Men" comic books, among others--already an AOL partner. The deal announced today upgrades the alliance to include the Marvel Zone, the comic company's subscription-based service. The service, which costs $3.95 per month and $34.95 per year, will be available free to AOL members.
Marvel Zone includes programming such as a CyberComic and the opportunity for members to submit their own comics for possible display. AOL will continue to be the exclusive distributor of Marvel's 24-hour trivia game, chat rooms, message boards, guest chats with Marvel creators and editors, and a new monthly chat forum debuting this year that will feature "comic legend" Stan Lee.