November 3, 1997 6:25 PM PST

IE deals made with empires

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The world's two largest media empires are making some of their best and latest entertainment content available only through newer versions of Microsoft's Internet Explorer browser, underscoring the software giant's growing clout in the delivery of information on the Internet.

Microsoft says it didn't demand any exclusivity in the arrangements with Time Warner and the Walt Disney Company, adding that IE won out over Netscape's Navigator and other browsers because its technology best fit each company's needs, and the companies say they agree. Netscape says it retains as loyal customers both Disney and Time Warner.

But Microsoft foes worry that media deals like these--not just selling software--will allow the company to take over this market, particularly as the company drives toward integrating the software browser into the world's dominant operating system. They also note that these deals come amid the increased scrutiny of Microsoft by the Justice Department and Congress over charges involving unfair business practices, allegations that the company vehemently denies. That could include taking a look at the company's exclusive licensing deals with Web content providers.

In one instance, Disney has decided to use a customized version of IE 4.0 or 3.0, dubbed a "D-browser," for customers to get the latest features available on its subscription-based service for children, Disney's Daily Blast. The key feature here is D-mail, the company's first foray into the email market and its boldest step yet to create an interactive online service.

D-mail, which is to be followed by a multiuser instant-messaging feature called D-phone and a 3D virtual-reality meeting place, will be launched starting November 17.

That means anyone who uses Netscape's Navigator, which is still the browser of choice for a majority of Netizens, must first download IE 4.0 or 3.0 to get these upgraded features. They still can use Navigator to surf the Web. IE 3.0 users don't need to take any extra steps to get the advanced features.

In the second example, Time Warner's Warner Brothers has launched "Entertaindom," giving users access to three different areas of content: "Playdom," featuring games, music, and animation for children; "Screendom," featuring information about Warner Bros. motion picture and television blockbusters; and "Tunedom," featuring music news. Interactive cartoons of Looney Toon characters such as Road Runner, announced today, are another example of the content. (See related story)

But Navigator users who try to enter Entertaindom's cool content from the Web are told the following: "You're almost there! You must first download Microsoft Explorer 4.0."

That's not cool, according to some consumer-rights advocates. "It's the octopus connecting its tentacles with other concentrated media companies and squeezing out others," consumer activist Ralph Nader said today. "The juggernaut moves on."

Added Gary Reback, an antitrust attorney at Wilson Sonsini Goodrich & Rosati: "If one company seizes the portal to the Internet, its ability to control content is enormous.

"Based on the competitive data I've seen, a large number of people prefer Netscape," said Reback, who, like Nader has been an outspoken critic of Microsoft. "Why would a content provider willingly cut itself off from a large segment of the market? What's going on?"

A Disney spokeswoman responded by email: "Because we are offering a customized version of a browser (to implement parental controls, D-mail, etc.), we had to choose one or the other of the commercial browsers. We chose IE because it gave us more flexibility in the ways we can customize it to create a unique and special Disney experience."

She did not elaborate. Sources said Microsoft paid Disney a generous licensing fee to promote and distribute its Daily Blast on the Microsoft Network online service. But the spokeswoman said that "this has nothing to do with the MSN licensing agreement."

She added that the Daily Blast, minus the new features, always has and will continue to run on either browser. (Disney has yet to offer a Macintosh compatible version of Daily Blast, either; it was expected by midsummer but executives promise to make it available by year's end).

As for Time Warner, Jim Banister, vice president and general manager for Warner Brothers' Online, said, "We believe that Microsoft has a strong ability to influence the consumer market, and we are absolutely focused on the consumer market." The content deal with Microsoft has a "period of exclusivity," he said, but much, if not most, of the content from "Entertaimdom" eventually will be offered on the Web.

He also pointed to Microsoft's ability to provide a "spectrum of conduits" for delivering information, such as its WebTV subsidiary, as well as Active Desktop. That, in turn, fits well into Microsoft's operations as a content provider itself, through MSNBC, Microsoft Network, Slate, and other media ventures.

Technology plays a role, too. "With IE 4.0's capabilities, we can add a new range of animation, sound, and interaction to give our online visitors an entertaining Internet experience consistent with the entertainment value consumers have come to expect from Warner Brothers," said Jim Moloshok, senior vice president of Warner Brothers Online, in a statement.

Warner Brothers' Online Active Channel is built to take advantage of functionality in IE 4.0, including dynamic HTML and Channel Definition Format-based Webcasting.

Bill Spencer, business development manager for IE 4.0, said Microsoft's strategy to win the two companies' business was three-pronged. First, offer technology such as "push" that makes it "easy for users to have a similar experience in print where stuff is delivered right to their door." Second, capture the entertainment space by offering technology such as dynamic HTML that makes it "easy for people to create cool, compelling effects." Third, he said: "We are promoting our partners in return for them promoting IE."

In Disney's case, he added, the fact that IE 4.0 was free may have had some influence in the company's decision to use it as the architecture for a customized browser. IE 4.0 also makes it easy to build a customized browser, the company added.

Netscape defended its relationship with both Disney and Time Warner. "We absolutely have a very strong relationship with both companies" through the recently launched "Netscape Everywhere" program, said Jerell Jimerson, director of online content services. He pointed to the listing of ABCNews.com (from Disney) and CNNfn (from Time Warner) as premier channels on Netcaster. "We drive a tremendous amount of traffic to their home page," he added.

But as for the exclusivity of the Microsoft deals, he said, "My personal perspective is that they don't make a lot of sense. At the end of the day, it's about putting as much content in front of as many people as you can."

 

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