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Are portal sites losing their magic?

Internet users are getting more sophisticated, and that could mean trouble for the portals, the biggest sites on the Internet, according to new findings.
Written by Matthew Broersma, Contributor

Nielsen//NetRatings Inc., which measures Internet audiences and traffic, says that the growth of portals such as Yahoo!, Excite@Home and Go Network has levelled off recently, even as the Internet population as a whole continues to grow. Traffic from U.S. homes to portal sites rose by 5 percent from March to May, the company said in published reports.

Industry analysts speculate it could be because as mainstream users grow more sophisticated about Web browsing, they don't have as much need for a site that gathers everything they need into one place. "Once users become savvy with the Web, they no longer need the convenience and helping hand that a portal can offer them," said analyst Bridget Leach with Giga Information Group. "They'll go straight to their destination site."

As previously reported on ZDNN, growth has been tailing off on the portals for several months. But in April, it coincided with slower growth in the Internet as a whole, probably due to the return of balmy weather. Now more users are flocking to the Internet again -- but they're going directly to a variety of specialty sites, with such topics as education, sex and finance, instead of stopping first at the all-in-one portals, Nielsen//NetRatings found.

The figures might not turn out to be a long-term trend. But if they do, it would be the end of one of the Web's biggest moneymakers. For the last two years or so, portals have reached stratospheric capitalisation levels on Wall Street and raked in the majority of online advertising dollars, precisely because they attracted the majority of Web traffic.

Led by Yahoo!, most of the portal sites evolved from search engines to full-featured services including news and information, discussion groups, classified ads, games, free e-mail and just about everything else.

Forrester Research predicts that portals will control only 20 percent of Web traffic by 2002, but others say the sites can maintain their lead -- if they find ways to stay relevant to increasingly sophisticated users. "Portals are used for a variety of reasons, they're not just search engines," said analyst Leach. "They'll still be used for some of the services they provide, like portfolio management. They'll remain the place to go for the majority of users."

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