Co-branding fever hits EarthLink, theglobe.com

Summary:Monday's deal between theglobe.com, a community Web site, and Internet service provider EarthLink Network could benefit both parties, according to industry observers.

Monday's deal between theglobe.com, a community Web site, and Internet service provider EarthLink Network could benefit both parties, according to industry observers.

It also underscores a trend: full-featured Web sites rounding out their offerings with Internet access.




Yahoo/MCI deal makes way for new partnerships.




Under the EarthLink (ELNK) deal, the two companies will use cable and network television to market a version of EarthLink's access software with theglobe.com as its default home page.

If new members sign up for theglobe.com's gold membership plan, EarthLink will waive its $25 set-up fee. EarthLink will also feature theglobe.com in the "what's hot" area of its site.

The two companies are following a wave that picked up a few months ago when Snap! Online, a CNet (CNWK) project that offers a ready-made home site co-branded with local ISPs around the country.

In exchange for using the site as their default home page, ISPs get a cut of the ad revenue.

"For ISPs, it ultimately makes more sense to outsource the front end than to try and build it yourself," said analyst Patrick Keane of Jupiter Communications LLC.

"The content sites are trying in general to be a Web-based online service. They already offer home pages, e-mail, chat, etc. ... the one missing piece to finish that AOL puzzle is the access side," he continued, noting that even America Online now outsources its access service.

Unfortunately for Snap!, analysts say, its business model hasn't been hard to duplicate, and competitors have quickly joined in.

Most of the high-traffic Web sites, including directory services such as Excite (XCIT) and Yahoo!(YHOO), have ISP partners driving users to their ever-increasing arrays of services.

The pact between Pasadena, Calif.-based EarthLink and theglobe.com, in New York City, is no different. Theglobe.com offers community services -- free Web pages, e-mail, chat rooms, and the like -- and is in the process of building its brand.

The more expensive promotions possible through the alliance should help extend that brand, and EarthLink will get the opportunity to sign up some of theglobe.com's 1.3 million registered users.

And the trend isn't over
"You're going to see more plays in this area, where specific groups ... offer co-branded services to share in each other's (customer) lists and create a little value," said analyst Matthew Kovar of The Yankee Group, in Boston. "It's part of the carving up of the services that make up the Internet."

The directory services, in their current position as the darlings of Wall Street, are in the best position to compete.

They could lure in ISPs with hefty cuts of advertising revenue -- more than lower-traffic sites like theglobe.com would be able to afford.

But don't necessarily look for Excite to eat the lunch of community sites such as theglobe.com or the higher-traffic GeoCities.

"I don't think everybody's going to get to be the portal," said Ben De La Cruz, an analyst with Simba Information, in Stamford, Conn. "But the market is pretty big and varied -- there's room for a number of players to eke out a business."

Topics: Outsourcing, Software

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