By Malcolm Maclachlan,
In the software world, open source is all the rage. In portals, the new buzzword could be "open content."
Open content can be used to describe online arenas where the users themselves create the content. Yahoo made a major move Thursday in open content with its $3.6 billion stock purchase of GeoCities.
The GeoCities service provides free home pages to 3.5 million members. The company makes revenue by posting advertising on member sites.
The term "open content" was coined by Rich Skrenta, founder of NewHoo, a directory that was acquired by Netscape in November.
NewHoo maintains a list of millions of websites, maintained by a group of 6,000 volunteer editors who choose what they see as the best of the Web in any given category. Netscape lets people download the directory through what it calls the Open Content License, said Chris Tolles, manager of the open-directory project at Netscape.
This license stipulates anyone who uses the directory on a site link back to NewHoo. The NewHoo directory became an official part of Netscape's Netcenter portal Monday.
"We feel it really validates this model," said Tolles of the Yahoo purchase.
Companies have spent billions of dollars trying to get people to engage in top-down content such as news and streaming media. However, many of the most popular uses of the Web have always been person-to-person.
Chat rooms have been one of the most important factors driving America Online's success. Free e-mail services capitalize on this same principle.
With GeoCities, said analyst Barry Parr of Framingham, Mass.-based International Data Corp., Yahoo has gotten a huge, free promotional staff to create content.
"You've got a million people trying to get all their friends to go to GeoCities," Parr said. "That could be a great in for Yahoo."
This has become especially true, he said, now that most central portal services are outsourced. Search was once the center of most portals, but now, most big players use Inktomi for search services. News, free e-mail, stock quotes, calendaring, and other services are now the same across many sites.
This means portals are relying more on intangibles that a community such as GeoCities can provide. It is also a great move for GeoCities, Parr said.
The home-page service on its own might not be considered a great advertising buy, he said, but if Yahoo can buy across all its properties and on all GeoCities pages, it becomes much more attractive.
This deal marks a the second part of a major week for Yahoo, said analyst Ron Rappaport of Zona Research, in Redwood City, Calif.
Its major marketing deal with News Corp. on Monday will give the company the ability to draw new users online through the Fox TV network and other properties, Rappaport said. The free home-page service on GeoCities will give those users something cool and interactive to do when they get there, he said, helping turn them into loyal Yahoo users.
Like @Home's acquisition of Excite last week for $6.7 billion, this deal targets the AOL-Netscape combination of users. However, while @Home is seeking to counter AOL's mix of connection and content, Yahoo is going after its other strength -- a community of loyal users.
GeoCities has this type of community, Rappaport said, but could have lost it by making the wrong deal. Yahoo, he added, was the right deal.
"I would argue that Yahoo has the Internet cache Netscape did back in 1995," Rappaport said.
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