Inc Terra Lycos - Enjoyed Growth As An Independent Portal, 1999

ENJOYED GROWTH AS AN INDEPENDENT PORTAL (1999)

At the beginning of 1999 Lycos was enjoying tremendous growth. Its audience reach had grown to 46.5 percent, only three percentage points behind Yahoo!. According to a Media Metrix report, Lycos attracted 26.3 million visitors monthly and was the fastest-growing Web portal. The company had recently launched its first national TV advertising campaign, which also included radio spots in 11 major cities and was estimated to cost $25 million. Lycos and the National Football League announced Lycos would create Superbowl.com, the official Web site for Super Bowl XXXIII, in 1999.

In early 1999 Lycos was one of the few remaining independent Internet portals. Walt Disney Co. owned a significant portion of Infoseek; Netscape was sold to AOL; Snap was 60 percent owned by NBC; and Excite was being absorbed by @Home. In early 1999 USA Networks, which also owned Ticketmaster and Home Shopping Network, and Lycos were negotiating a deal valued at $22 billion to merge and create USA/Lycos Interactive Networks Inc. However, CMGI Inc., Lycos's largest shareholder with a 22 percent interest in the company, opposed the combination. By May 1999 the deal was declared officially dead.

Meanwhile, Lycos's revenue continued to climb. According to figures released by Media Metrix Inc., Lycos surpassed Yahoo! for the first time in March 1999, when nearly 32 million people, or 51.8 percent of U.S. Internet users, visited Lycos, compared to 31.2 million visitors, or 50.8 percent, to Yahoo!. Lycos's visitors included those at the Tripod and Angelfire Web site hosting services, the WhoWhere Internet directory service, the Wired Digital news service, and the Lycos and HotBot Internet search sites, all of which were run as separate entities under the Lycos Network. To further develop its community of users, Lycos launched Lycos Clubs, which enabled members to create virtual clubhouses around shared interests.

Other initiatives in 1999 included the Open Directory, a guide to the Web that was operated by some 8,000 volunteers. Lycos Radio Network was introduced in April 1999, making Lycos the first portal to incorporate streaming audio and video. Bertelsmann, Lycos's international joint venture partner, invested $12 million for the expansion of Tripod Europe, which was the fastest growing online community in Europe. Meanwhile, Lycos's largest shareholder CMGI Inc. acquired AltaVista from Compaq Computer Corp. for $2.3 billion. For its fiscal year ending July 31, 1999, Lycos reported a net loss of $4.4 million on revenue of $40.6 million.

Later in 1999 Lycos established music.lycos.com, a comprehensive online music destination that offered MP3 search and hosting areas, legal MP3 downloads, 35 radio channels, music news, reviews, chat rooms, message boards, commerce, and an MP3 player download. The company acquired Internet Music Distribution Inc. for about $38 million in stock. Internet Music's music-playing software, Sonique, allowed users to download music files and play them on their personal computers.

To bolster its financial services and create a community of users interested in financial information, Lycos purchased Quote.com Inc. for about $78 million in stock. Quote.com provided stock quotes and other financial information. Lycos also expanded its gaming content with the purchase of Gamesville.com, which had 2.2 million registered users, for $207 million in stock.

Lycos expanded internationally in the final months of 1999. It formed a pan-Asian joint venture, Lycos Asia, with Singapore Telecom. Lycos Asia launched a site in Singapore and planned to go online in Malaysia and the Philippines. Other plans called for setting up customized versions of Lycos in 10 Asian cities. Lycos launched 12 country-specific sites in Latin America as well as two sites for Spanish speakers in the United States. The firm also launched a Japanese version of Tripod.

For the 1999 holiday shopping season, Lycos introduced the Lycos WebShopper, a new comparison-shopping tool, and added links to epinions.com and other sites that provided consumer and professional product reviews. Lycoshop, which featured listings from major retailers and comparative shopping services, was also launched. As a result, Lycos reported a 450 percent increase in the number of unique shoppers for the holiday season over the previous year. As of December 1999 Lycos claimed an audience of 29 million users.