Friday, May 16, 2008

Lycos relaunch bets on social networking niche

By Efrain Viscarolasaga

Once a global player in the Internet revolution, Lycos Inc. has seen its ups and downs since the late 1990s, struggling to find a new identity among the latest generation of Internet players.

With the relaunch of its Lycos Cinema product last week, and a string of other social networking and web publishing features expected to be announced soon, Lycos is now working to reinvent itself as a provider of social networking services.

The moves may not bring the company back to its peak — it was sold to Terra Networks SA for $5.6 billion in 2000 — but executives hope they can make the Lycos brand relevant in a fast-moving social Internet world.

“We’re not a media and entertainment company, and we’re not a portal,” said Charles Ball, vice president of sales and marketing at Lycos. “And over the past few months, we’ve started to not act like it.”

Over the past 90 days, the Waltham-based company has undergone a significant reorganization internally, said Ball. The company’s 80 employees are now organized in three product divisions — search, social media and web publishing — and its infrastructure, from office space to its data centers, has all been upgraded, though executives would not disclose the cost of the renovations.
The company’s home page has also undergone changes to reflect its new attitude. Gone are the gateways to sponsor properties, replaced by its own website-hosting brands, Tripod and AngelFire, which are front and center with Lycos Cinema.

“Seven months ago, we still had tabs from companies that had bought real estate on Lycos as a portal,” said Ball. “It was a hard decision, to the point of turning down hundreds of thousands of dollars, but we wanted to make it clear that we are not a portal company.”

The new version of the video-on-demand offering expands the number of simultaneous viewers (and chat participants) from about 30 in the former version to thousands. The chat ability during features is unique, according to analysts, and adds a level of social interaction that has not been seen in online video. In addition, a pay-per-view feature has been added, which opens the site to longer-format and event-driven programming.

‘They may be a little late’
After the Lycos acquisition by Terra in 2000, its family of websites boasted 111 million unique visitors per month and was routinely ranked in the top ten of most visited Internet sites on a monthly basis. In 2004, the company was sold to Daum Communications Corp. of Korea for $95.4 million, a fraction of the billions paid by Terra.

Bo Peabody, a managing general partner with angel investment group Village Ventures in Williamstown and the founder of Tripod Inc., which was sold to Lycos in 1998 said that, given Lycos’ brand and traffic, the move to social networks is “the right thing to do” — depending on its goals.

“We don’t know what Daum’s plans are,” he said. “If they are looking to build the company to be a solid player and possibly sell it, it’s a good strategy. But if they want to redefine the category and the industry, they may be a little late.”

From startup to battle-scarred
While Ball said the reinvention of the company has created a “startup feel” at the company’s headquarters, the Lycos brand enters the social media market as a battle-scarred veteran of the Internet game. Several of the company’s early acquisitions, such as Tripod and AngelFire, were the forefathers of social media. What’s more, Lycos still boasts 20 million unique users per month, according to Ball.

“As a startup, would you rather have $10 million in venture funding or 20 million unique visitors per month?” said Ball. “Having been through a few startups, I’d rather the visitors.”

Despite the popularity of FaceBook and MySpace, the social media space is still young, and that could give Lycos a chance to leverage its assets and become a player in the industry, according to some industry insiders.

“I don’t think it is out of the question for new or old brands to carve a place in social networking,” said David Card, an analyst and vice president with JupiterResearch. “The space is totally undefined, so they are not too late, but they are going to have to prove (to advertisers) what their properties are worth.”