Netscape Communications Corp., in the process of renegotiating the fees that search engines pay to be displayed on its high-traffic Web site, is adding free e-mail and other features to make it more competitive with some of its own customers.
Netscape described these services as part of “Project 60,” a plan to revamp its Web site, Netscape.com, over the next 60 days. It hopes to evolve into a more comprehensive “portal site,” or entry point to the Internet, that offers features similar to those on the sites of Yahoo Inc., Excite Inc., Infoseek Corp., Lycos Inc. and other search engine companies.
Under pressure from Microsoft Corp. in its browser and server business and facing increasing competition from search engine companies, Netscape began remaking its Web site into a broader on-line service for businesses last September, hoping to keep users on its site longer and thus reap more advertising revenue.
As part of the 60-day plan, Netscape will offer free e-mail service easily accessible on the front page of its site under an agreement with Internet mail provider USA.net. Financial details of the deal were not disclosed. Netscape’s new service, called WebMail, will include other features such as spell checking and a personalized in-box displaying a summary of messages.
Netscape will redesign its home page and add new features, including a Netscape-brand search engine that is being created with or licensed from an as-yet undisclosed partner. Members will have the choice of several search engines, but Netscape hopes to capitalize on awareness of its brand name. It also hopes to hold onto users who traverse Web links from the Netscape search engine. Each page a user clicks on through a Netscape search engine will produce advertising revenue for Netscape.
Analysts said the additions to Netscape’s Web site, which is also called NetCenter, were a good move for Netscape, because one of its greatest assets is the traffic on its site. In the past, Netscape’s site was viewed as a portal, but people used it as little more than an entry point to the Internet and soon left it to peruse other sites.
Search engines pay Netscape to be listed under the Netscape browser’s “Net Search” button. Of the $95 million Netscape reaped from its home page last year, more than $40 million came from selling positions to search engines.
But as search engines such as Yahoo! and Excite have increased their own brand awareness, they’ve come to rely less on traffic forwarded through Netscape and more on people going directly to their Web sites.
Some of them have started to earn money from advertising on their sites and from electronic commerce. And in recent weeks, their share prices have skyrocketed.
Although Netscape has fallen out of the limelight, it still gains more revenue from its Web site than do any of the search engines.
“This will certainly make us more competitive with folks like Excite and Yahoo, but we will continue to do business with them,” Executive Vice President Mike Homer said. “In our search program, we have featured multiple search providers and will continue to do that.”
Netscape’s strategy of competing more fully with search engines may be undercutting another of its major sources of income: the fees search engines pay to be featured on Netscape’s home page, some analysts say. But revenues from that business grew 60 percent in 1997 over 1996, Homer said.