Lycos, the portal that would rather be known as a hub, yesterday announced the acquisition of WhoWhere, a provider of directory, e-mail and home page services. The deal is valued at $US133 million, with WhoWhere receiving about two million shares of Lycos stock. The Lycos network now includes five sites including Lycos.com, Angelfire.com, WhoWhere.com, Mailcity.com and Tripod.com, with an aggregated audience of 10.6 million.
The acquisition "changes the landscape of the portal space," said Lycos CEO Bob Davis in a press conference. "This is now a two-horse race. While there are a handful of us in the portal space, there was no formidable competitor [to Yahoo]" until now, Davis boasted. With the purchase, Lycos becomes the fourth-most visited site on the Net, just behind Yahoo, America Online and Microsoft.
But Davis says the deal goes beyond making a grab for more eyeballs. "This is a specific strategy," he told The Standard. "One that looks to the long-term revenue [to be made in the portal space]." Davis believes that Lycos is building a "hub" rather than a "portal." For Davis, the term hub better describes the "rich community experience" he believes will keep users rather than just attract them.
Of all the portals to the Web, Lycos is the only one that has aggressively sought to capture the community space. But some question how Lycos will be able to leverage it. "The community space is a challenging market," says Brett Bullington, executive vice president of competing portal Excite. "It's a harder sell, and it's a challenge to make that business model work." GeoCities, the Web's largest community site, which today began trading publicly, has not yet turned a profit though it consistently ranks as one of the top ten most-visited sites. Tripod, another community site, was losing money when Lycos acquired it in February.
Excite, meanwhile, has its own plans to offer home pages. In July, the company quietly purchased Throw, a Seattle-based technology firm that provides Web-page building tools.
Lycos' latest purchase highlights the incestuous and sometimes ironic nature of many of the deals being struck between Web sites. With the acquisition of WhoWhere, Lycos now owns the very company that powers Excite's free e-mail service, MailExcite. Theoretically, any MailExcite user is a Lycos user.
Bullington says that the development won't affect Excite's relationship with WhoWhere, at least for now. "The relationship will remain intact. Our users are protected by the terms of our contract." He added, "We will re-evaluate the relationship in the future." Bullington also noted that Excite had already set a precedent for this kind of situation when it purchased Classifieds 2000, which had partnerships with both Lycos and Snap.
WhoWhere, which started out as a Web directory, has built its business around cobranding and private-labeling Web-based applications including directory services, e-mail and its latest offering, home pages. In November 1997, WhoWhere acquired Angelfire, which has become one of the fastest-growing Web sites, for its home page technology. Davis said he could not disclose either WhoWhere's or Angelfire's pre-acquisition revenues.