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The Great Gates Giveaway (Mediaweek - 865 words - August 19, 1996)
Microsoft adds value by offering useful pay services for free
New Media / By Cathy Taylor
It took only one announcement last week for Microsoft to gain visibility, if not market
share, for its Internet Explorer Web browser and to set the new media world abuzz in what
for most industries are the dog days of summer. But Bill Gates' company isn't most
companies, and the interactive business isn't most businesses. Most importantly, the
software giant that is acting more and more like a media company also may have rewritten
some of the economic rules that have been expected to govern the major consumer sites on
the Internet that had planned to charge consumers for online content.
After weeks of talks with major media sites on both coasts (Mediaweek, July 15), Microsoft
last week announced development and marketing deals with seven sites on the World Wide
Web. Though the deals vary in their particulars, they each in their own way help Microsoft
gain a firmer foothold in its increasingly contentious battle with Netscape, whose
Navigator Web-browsing software currently has at least an 85 percent share-of-market.
The seven sites are The Wall Street Journal Interactive Edition, ESPNet Sportszone, MTV
Online, Riddler.com, Hollywood Online, Microwarehouse (a shopping site) and a financial
site called InvestorsEdge.
The news was timed to coincide with the release of Internet Explorer 3.0, the newest
version of the browser. It was unleashed last week with the fanfare that has become
typical of the software market; it was made available for downloading free over the
Internet at precisely 12 midnight last Tuesday.
For its money, Microsoft is getting more than just content from these sites--it's also
getting these sites to develop features that can be accessed only through IE. For example,
as IE 3.0 was released, Riddler unveiled a palindrome game on its site titled AHA! that
can be played only with IE. Similarly, Hollywood Online opened a special area, 'Explore
Hollywood,' that is reachable only through IE 3.0.
In return for their participation, the sites get to share in the magic of the monied
Microsoft marketing program. They got their first boost last week via an ad that promoted
the sites in major newspapers. Hollywood Online told Mediaweek that it saw an immediate
increase in traffic on its site of 30-40 percent. 'It was incredible,' exulted Stu
Halperin, executive vp and cofounder of the entertainment service.
But what may be the most intriguing of this first set of Internet Explorer deals are those
struck with the Journal and ESPNet, both of which are among a handful of popular Web sites
that have been trying to convince consumers to pay for access to all or part of their
sites. While many Internet watchers have been following the development of a potential
subscription revenue stream on the Internet with interest, the two sites' deals with
Microsoft may for now obliterate the chance of determining the consumer appetite for
paying for Internet content, because Microsoft will pay the subscription freight for
IE-using Internet users. Executives at ESPNet and the online Journal were unapologetic
about the opportunity to goose up their paid subscriber bases, no matter where the money
comes from. 'This just allows us to continue to promote the service at a competitive rate
and allows potential members to realize what they're getting,' said Kris LeBoutillier, a
representative from The Wall Street Journal Interactive Edition. The online Journal is
currently in the process of converting its approximately 600,000 registrants into paying
customers. It should be noted that the two deals currently expire at the end of December,
but given Microsoft's willingness to do whatever it takes to win the browser battle, it's
easy to conceive of those deals being extended.
While it's also easy to assume that any Microsoft deal is just about money, there's also
the technology issue. Several executives said last week that Microsoft's development tools
had made it easy to create content specifically for IE and that in some cases they felt
that they'd be able to create better content for their customers using tools that are
supported only by the Microsoft browser. 'The consideration is not necessarily alienating
a competitor (Netscape),' said Geoff Reiss, vp of sports publishing at
ESPNet producer Starwave.
Added Greg Stuart, executive vp/director of marketing at Riddler, a company programmer was
able to build the IE-supported game in a week using Microsoft development tools. 'We have
been trying to carry on a relationship with Netscape for some time,' said Greg Stuart,
executive vp of marketing for Riddler.'
As for Netscape's response, most of it last week seemed relegated to a vitriolic
side-by-side comparison of the two browsers on its highly trafficked Web site, as part of
the ballyhoo surrounding the release of its Navigator 3.0 browser, which is being released
today (Aug. 19). Visitors to the company's site last week encountered a series of
promotional messages about their 3.0 product overlaid on top of the company's usual home
page. Among those messages was a claim that the Microsoft site itself could be downloaded
64 percent faster with Navigator than it could be with IE.
Copyright ASM Communications, Inc. (1996) ALL RIGHTS RESERVED
Copyright © 1997 ASM Communications. All rights reserved.
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