Lycos Deal: All Show, or Will It Generate E-Commerce?
The merger of Lycos Inc. with assets of USA Networks Inc. at first glance sparkles like a diamond, but when it comes to electronic commerce, analysts say it may be little more than a lump of cubic zirconia.
The deal combines the significant traffic driven by Lycos’ network of popular but disconnected Web sites with the national cable TV reach of USA Networks and its divisions, including Home Shopping Network, Internet Shopping Network/First Auction and its majority interest in Ticketmaster.
This deal hammers home the sentiment that commerce, not content, is king online.
“Traditional media companies haven’t done very well on the Internet because they thought it was about content, because that’s always been true in the past,” said Bill Bass, an analyst with Forrester Research in Boston. “But what has really drawn people online is commerce.”
Online retailing pioneer Amazon.com Inc. is one sign of this, attracting more online visitors than Walt Disney Co. and other media companies, Bass said.
USA Networks chief Barry “Diller knows that commerce can be some pretty compelling content,” Bass said. “And this is the first merger.”
HSN and Ticketmaster’s customer service representatives and mail-order-processing facilities will help Lycos on the fulfillment end, and USA Networks’ reach to 70 million homes will drive traffic to the site.
But while those entities all have parts to the electronic commerce puzzle, it’s not clear that they fit together, analysts said.
“Yes, television is a good mode for advertising, but it’s not exactly the same customer base,” said Erina DuBois, electronic commerce analyst with Dataquest Inc. in San Jose. “People who sit and watch TV and buy are passive, but those shopping on the Net are very targeted.”
The deal gives USA Networks a tremendous amount of traffic to drive to its First Auction and Ticketmaster sites on the Internet, but Lycos will continue to struggle to compete with portal rivals America Online, Yahoo and Excite in developing loyal visitors, said Jill Frankle, an analyst with Framingham, Mass.-based International Data Corp.
“It doesn’t really change what Lycos has to offer as a portal today,” Frankle said. “They can say they have the ability to reach half of the Internet users, but that doesn’t necessarily translate into commerce.”
Lycos’ Web sites include two search engines, the community-related sites Tripod and Angelfire, and tech community sites.
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