As part of the effort to make its Netcenter a major World Wide Web portal site, Netscape Communications has partnered with Excite in a two-year deal worth at least $US70 million.
Executives from both firms say they expect that figure will top $US100 million.
"This dramatically alters the Internet portal landscape," said Mike Homer, executive vice-president and general manager of Netscape's Web site division.
Under the agreement, Excite will create a new "Netscape powered by Excite" search engine that will receive at least half of all search traffic from Netscape's site by the second year of the deal, with Excite getting another 25 per cent of the traffic during that second year. This marks a major change from Netscape's current policy, which rotates Internet search requests among a number of Web site partners, including Yahoo.
Excite will sell advertising on the Netscape-branded search engine, as well as a number of NetCenter Web channels where Excite will provide content, including information such as classified advertising. Revenue will be shared, although executives declined to discuss specific formulas. Excite will pay a guaranteed $US70 million to Netscape under the deal, while Netscape must guarantee certain traffic levels that will support such ad revenue.
In turn, Netscape will receive some warrants that can be converted into Excite stock, representing a "single-digit" percentage of Excite's overall market capitalisation. "Both parties have skin in the game," said George Bell, president and CEO of Excite.
Bell declined to discuss specifics of how advertising rates might change under the new partnership. However, he said, "you don't have to extend your imagination very far" to see the "increased value of Netscape and Excite together".
For the deal, Excite was interested in gaining access not only to Netscape's large volume of visitors, but was also drawn by the fact that many of those users are relatively new on the Web and thus have yet to form online surfing habits.
Netscape, the Web's second-most heavily trafficked site in April, according to RelevantKnowledge numbers, had been expected to announce a major alliance with one of the Internet's top search engines.
At the conclusion of the two-year agreement, which begins June 1, Excite will turn over its search and directory technology to Netscape. Netscape will provide some server and personalization technology in exchange.
The new Netscape branded search and co-branded Netscape/Excite channels are expected to launch the end of June.