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AltaVista's next move in portal wars

AltaVista's next big move in the portal wars will be to offer Internet access. But unlike the ISP deals offered by such competitors as Yahoo! Inc. or Excite Inc., AltaVista will be giving the service away.
Written by Matthew Broersma, Contributor

The multi-featured portal site, which is in the midst of a rush to introduce new deals and features, will begin offering AltaVista-branded Internet service in the next few weeks, the company confirmed. AltaVista has announced several new features and services since the announced sale of a controlling interest in the company to CMGI, which owns stakes in a wide variety of Internet companies including Lycos Inc.

Portals Yahoo!, Excite, Lycos, Infoseek and Snap.com began offering conventional ISP service several months ago, but that's not the only area where AltaVista is playing catch-up. The site recently announced it will offer a personalised home page, something pioneered by Yahoo! last year and quickly imitated by most other players. "All of the other portals have been offering these types of deals for a while now," said analyst Bridget Leach of Giga Information Group. "With the renewed and reinvigorated AltaVista under CMGI, they're going down the checklist of features, so as to be on par with what everyone else is offering."

1stUp, founded late last year, aims to provide brand-name companies such as AltaVista with wholesale Internet connectivity and with software to display advertising banners. As with other free ISPs, the advertising is displayed as long as the user is connected, in a window that cannot be closed, and the ad revenues pay for the service.

1stUp believes its ad inventory will be attractive to advertisers because of the brand-name appeal of distribution partners like AltaVista. "We will be announcing numerous other big-name customers soon, so we will be able to offer the buying power of not just a single brand name, but multiple brand names," said Charles Katz, co-founder and CEO of 1stUp. "More advertising dollars are becoming available online, especially for the top brands, and the cost of connectivity is going down. As those curves cross, the economics of free ISPs work out perfectly."

The portal is 1stUp's first distribution deal, but it hopes to work through retailers, computer manufacturers and other companies that want an Internet presence. AltaVista is in the midst of its third major reincarnation, after starting life as a search engine that was popular for its speedy and comprehensive search results, and later moving into the portal space by adding features such as news feeds and a subject-oriented directory.

In the wake of the CMGI purchase, the company has stated it wants to push into the first tier of Internet destinations, alongside America Online Inc., Yahoo! and Disney's Go Network. But despite its bold moves, AltaVista may be hampered by a persisting view of itself as a technology, rather than a media company. "Their technology was part of their claim to fame, and they don't want to abandon it, but they can't survive on that alone," said analyst Leach.

The most recent figures from MediaMetrix, an Internet traffic measurement service, showed that AltaVista ranked 10th among digital media/Web properties, after Time Warner Online and Amazon.com. The largest such property was America Online, including its proprietary service and Web sites.

In the aftermath of the CMGI announcement, Alta Vista executives have been gearing up for a big push. Indeed, Ross Levinsohn, the newly-hired vice president and general manager of Alta Vista's new media division, said the company intends to spend as much as $60m (£43m) on advertising and promotions through the remainder of this year.

"We're still building our furniture," said Levinsohn, who previously was in charge of programming for CBS Sportsline. "By the end of September, we'll have rolled out the basics."

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