Lycos strikes gold in deals

Net search firm Lycos has inked six e-commerce, finance, and content deals totaling $30 million, the company says.

2 min read
Net search firm Lycos (LCOS) has inked six deals totaling $30 million, the company said today.

During the month of March, Lycos signed e-commerce, finance, and content deals with CDnow, E-Loan, GetSmart, HomeShark, Preview Travel, and Realtor.com. The $30 million in fees come from e-commerce, advertising, and sponsorship, according to Lycos.

The impressive dollar value on the deals shows the company's increasing strength, especially since it acquired Net community Tripod in February. Tripod serves the attractive 20-something market.

Investors clearly liked today's announced deals. Lycos's stock rose nearly 7 points today, closing at 51-1/8.

"It reinforces the value of Lycos's position in the online space," said Andrea Williams, an analyst for Volpe Brown Whelan, which has a "strong buy" rating for Lycos. "It signals that these companies--Lycos and its peers--can attract large sums of money from companies who want to get access to their distribution."

Lycos is by no means alone in its ability to cut deals. Its competitors, such as Yahoo, America Online, and Excite, also are busy forging lucrative alliances.

All are aiming for one thing: to become a gateway to the Internet. Most analysts agree that there will be only a handful of players that earn the coveted position of home page. From there, companies can guide people across the Net or, ideally, to places within its own network. In the end, the company that gets the most eyeballs earns the most advertising dollars.

And in Lycos's case, the acquisition of Tripod makes it even more attractive. Tripod, a community network with original content as well as free personal Web pages, attracts a young crowd--and generally an audience that buys a great deal of CDs and other products.

"That demographic probably accounts for the CDnow sale," Williams said.

All the deals include an exchange of money for the ability to reach Lycos's audience, both at its search engine and at Tripod.

For instance, CDnow will pay Lycos $18.5 million--$16.5 million in cash and $2 million in stock--for the exclusive right to sell CDs and music-related products to Lycos's members. It also will be featured in shopping and entertainment areas and "will have an extensive presence through music-related search results pages," the companies said.