Sources said the targeted company is a privately held firm called NewHoo, which uses volunteer editors to compile its directory.
Netscape refused to confirm or deny the existence of a deal. However, the company is scheduled to make a business announcement tomorrow.
NewHoo--whose name appears to be a takeoff on Internet directory giant Yahoo--relies on search engine software called Isearch, which is copyrighted but is freely available and freely distributable in source code "with very few restrictions," according to its Web site. Sources said the software was created in 1994 under a National Science Foundation grant.
An acquisition of NewHoo would appear to help fulfill two key strategies for Netscape: add features and traffic to its Netcenter Web portal, as well as expand the use of so-called freeware on the Web.
Netscape joined the burgeoning freeware trend this year when it said the source code for its Communicator software suite, which includes the Navigator browser, would be offered free of charge. The decision stemmed largely from intense competition from Microsoft's own Web browser, Internet Explorer, which already was free. Netscape also embraced open-source software by launching the Mozilla Web site.
According to sources and NewHoo's Web site, the company relies on volunteers for its services. The directory's stated goal is to "produce the most comprehensive directory of the Web by relying on a vast army of volunteer editors. The small paid editorial staffs at commercial directory sites can't keep up with submissions, and the quality and comprehensiveness of their directories have suffered."
It lists 105,151 sites and 24,455 categories compiled by a staff of 4,740 editors.
NewHoo has some fans on the Web already. One review reads: "What is so important about this difference is that it proclaims the democratic nature of the Web; it makes the statement that Web users should be able to define their favorite sites on their own, and not rely on a small staff at a company like Yahoo or Excite to make sites available for them."
As reported, Netscape recently has been expanding its site with new features and making acquisitions to add users. Last week, for example, the company said it bought AtWeb, a Web site service and promotion company, to enhance Netcenter's small-business channel.