NBC Snapped

First, a quick recount of what happened to NBCi. I can summarize this rather quickly, because you've heard the story before. In 1997, NBC bought out the CNET portal Snap.com. To jump on the media portal bandwagon, NBC brass quickly cobbled together a makeshift site. There was nothing really unique about NBCi to differentiate from the competition, other than the zillions of primetime TV spots NBC burned off trying to promote it. As Disney found out, having your own TV network to promote your internet property doesn't guarantee it will be a success. NBCi's lacklustre content and functionality, along with NBC's rudderless management of it, pretty much guaranteed this ship would eventually hit the rocks. And it did. Last week, NBC cut the lifeline and started steaming for more profitable ports.

How to Live a Long and Healthy Life as a Portal

So, you want to be an Internet portal when you grow up? Here's some hard facts of life you better learn now.

One..Yahoo, Microsoft and AOL have a stranglehold on existing portal traffic. According to the latest MediaMetrix numbers (or as late as you can find, being last October), each of these three destinations get twice the traffic of their next nearest competitor (Lycos). All of NBC's sites together (including NBCi and Xoom.com) were only getting 20% of the traffic that Yahoo received. And Yahoo can't even make money!

Two...the world isn't ready to completely change it's lifestyle habits built over the last several hundred years. Just because technology allows us to live our lives online doesn't mean we're ready to do it yet. The Internet will be adopted and become a huge part of our lives, but don't bet your mortgage payment on it happening overnight.

Three…if you want to succeed and prosper as a portal, be prepared to do two things. Survive and survive. I personally believe the rewards will come to those that wait it out, but it isn't going to happen in this fiscal year or maybe even the next.

Money, Money Everywhere

How do you make money as a portal? Not by selling banner ads. The proposed revenue model of raising money from selling traditionally based advertising space just hasn't worked for portal sites. The right answer hasn't come to light yet, but here are some suggestions.

Offer a Premium Service

The fact is, no one today will pay for the privilege of using a search tool when there are free equivalents available everywhere. Infoseek tried to charge people for the right to use their search service in '95 and the whole concept flopped. But if a search portal could come up with the right "value add", perhaps people would be willing to pay a low annual subscription fee.

Danny Sullivan of Search Engine Watch suggested an example in a recent article where a Yahoo subscription could include a number of legal MP3 downloads. Perhaps a portal could introduce a sophisticated e-commerce search service that would scour the web for the lowest prices on a given product, then give the buyer this information bundled with consumer reports and other information. A third alternative could be a combination of search technology and "push" delivery, where the user sets the search parameters of topics they'd be interested in on a regular basis and relevant information would be gathered and stored for them in their own online library. A fourth alternative might kill two birds with one stone, but it would require an industry wide buy in, which could be impossible to achieve. The most popular searches out there usually are for porn sites. Why not put filters on the popular search sites and if searchers want access to the uncensored version, charge an annual subscription fee? It would be a "sin tax" in Internet terms. Like I said, the idea might sound good in theory, but could be impossible to implement.

Just Stick to the Basics

I've said it before, and yes, I'll say it again. Google is the best search service out there. The results are relevant, the interface is clean and the index base is massive. And guess what? Google announced that it should turn a profit this year. That's without banner advertising and paid submissions. Google's revenue comes from its Adword's and Premium Sponsorship programs as well as providing search services to other sites. Google sticks to the basics and does them very well. I hope they'll be reaping the benefits of this simple, straight forward business philosophy.

Take a Percentage of Sales

Yahoo is another portal that should start seeing less red ink on their ledger. One strategy used by Yahoo has been to set up Yahoo! Shopping. Online merchants can set up storefronts in Yahoo's online mall and take advantage of the Internet giant's incredible brand awareness and traffic numbers. In return for providing the traffic and infrastructure, Yahoo helps themselves to a slice of the profit. One word of advice. If you go this route, consider carefully before you make adult oriented merchandise available in your mall. Yahoo was recently exposed as offering hard core videos, earning themselves the nickname "Yawhore". The sensitive material has since been pulled offline.

Licensing Fees

Several search services offer their background technology to webmasters who want to implement search tools on their own sites. This has always been a major source of income from Inktomi and, more recently, Google. If you want to play this game, however, you better be certain that you offer the best tools. Webmasters are a pretty savvy bunch when it comes to search engines and they'll know what's good and what's not. This is one reason why Google has been able to capture a significant share of this market.

Another ready, albeit small, potential source of revenue is to make special arrangements with automated search tools to allow bulk queries. Both Northern Light and Google have shut the door on metasearch tools such as Copernic and Mamma in an effort to restrict the demand placed on their servers. Users of WebPosition Gold and other automated query agents have similarly found themselves left out in the cold with these search sites. Perhaps a deal could be reached where for a license fee, these tools could have access to the index.

Make 'em Pay to Play

Many of the major search portals have also introduced paid submission schemes. You can see a full run down of the options in a previous NetProfit. In an ideal world, I'd like to see free submissions for all, but given the choice between paying to play and watching the major search portals disappear one by one, I'll reluctantly pony up my submission fee. I do like submission fees that guarantee inclusion or consideration for an index or directory, but don't have any bearing on relevancy rankings, such as Inktomi's and Yahoo's. In fact, Inktomi has recently announced that the quality of the submissions through their paid program is far higher than that through their free submission alternative. One other note before I leave this topic. It's imperative that submission fees don't reach the point where the small players are excluded. Yearly submission fees for a site shouldn't be any more that $200 or $300, at the most.

Do It on a Shoestring…For Now!

My final word of advice for the search portals. Live on a budget! You're staking new territory in the online frontier, and like most pioneers, that will mean some hardship at the outset. Don't follow NBCi's and Go's lead and throw millions away quarterly on huge marketing budgets and bloated staff lists. You can't force revenue from a market that isn't sure what to do with you yet. There will come a time in the not too distant future where the huge traffic numbers generated by the search portals will lead to profits. More revenue vehicles will appear and will satisfy the users need for objectivity in search results and the shareholder's need for a better bottom line. Until then, just concentrate on the Internet basics: improve usability, simplify the interface and give us access to content.