Open Market, Lycos sign e-commerce pact

Lycos has signed a broad revenue-sharing deal to use Open Market's e-commerce software to host Web storefronts on the Lycos site.

The move signals a new phase for Lycos' e-commerce strategy and comes at a time when rival Yahoo is preparing to expand its e-commerce hosting operations as it absorbs GeoCities.

Lycos, regarded as the No. 2 portal site in terms of reach, will install Open Market's Transact software to run its electronic marketplace, which today consists of products listed under Lycos Store. The deal, which will give Open Market a piece of every sale made using its software, also includes Open Market's ShopSite tools for building online storefronts.

"We will build one network-wide marketplace," said Jeff Bennett, Lycos' vice president of e-commerce. "Also, we've got millions of home page members within Tripod and Angelfire. We will enable those members to turn their homepages into stores where purchasing can occur."

To date, Lycos doesn't host branded storefronts, instead grouping its e-commerce activity under the Lycos Store, which offers products from different sources but without the merchants' brands, plus links to almost 200 e-commerce partners. By contrast, Yahoo Stores hosts some 3,500 store fronts running merchant software that Yahoo bought last year with Viaweb.

That piece of the strategy is somewhat akin to an aborted plan that GeoCities, which Yahoo is acquiring for more than $4 billion in stock, tried last year. The GeoShops program, which was designed to put merchant storefronts in topical neighborhoods on GeoCities, is being scrapped in favor of Yahoo Stores, according to Yahoo Chief Operating Officer Jeff Mallett.

For Open Market, the revenue-sharing deal could prove quite lucrative.

"This could be worth tens of millions of dollars over the next three or four years," said Open Market's Keith Lietzke, director of commerce service provider marketing. "It's a wonderful opportunity for us."

For Lycos, the deal also could add thousands of existing merchants that created their stores with ShopSite, Open Market's store-building tools, to shopping areas on Lycos' network, which includes the portal site itself, community sites Tripod and Wildfire, HotWired and WhoWhere.

That means some 6,000 merchants that have built storefronts with ShopSite, many of them hosted at the 80 ISPs around the globe that use Open Market's Transact software, could get a presence on Lycos. For merchants, that means access to 20 million Lycos users. For Lycos and Open Market, it means a percentage of every transaction generated on stores hosted elsewhere.

Lycos has not announced specific dates to go live with the new e-commerce offerings, but some elements are expected to launch within three months.

Open Market's Transact software is a transaction engine for e-commerce sales, providing customer authentication and authorization, online order and payment processing, automated tax and shipping calculations, order-tracking and status, and online customer service.

Reuters contributed to this story.