MSN changing channels

When the new Microsoft Network launched last October, it had a look and feel similar to television. Nine months later, it's not so clear that's what Netizens want.

MSN's content strategy--combined with efforts on other fronts, such as offering goods and services online--was supposed to put the online service in contention with market leader America Online (AOL). Although MSN has moved up the online rung to second or third place (depending on how you count membership), it has hardly put a dent in AOL's lead.

"The metaphor [Microsoft] created was 'on stage with channels,'" said Emily Green, an analyst with Forrester Research. "That was thought-provoking, but it hasn't been able to leverage that in subscriber gains. It hasn't created a buzz in the industry beyond, 'Wow, that's an interesting application.'"

Now it appears that MSN--and its parent, Microsoft (MSFT)--is in the process of rethinking the way it presents content, altering it to fit the needs and wants of Netizens.

Today, the Wall Street Journal wrote a story that clearly shook MSN's top executives, who spent the morning in meetings trying to figure out how they would respond to the article, which stated that the service was "revamping its strategy."

Executives insisted they were not actually shifting strategies, but they did acknowledge that they were looking at overhauling shows and offerings to make them more utilitarian and not strictly entertainment-based.

MSN will continue offering shows. In fact, it will add new ones to the fall lineup to bring the total from 26 to 43, according to Jeff Sanderson, general manager of marketing for MSN.

But instead of shows that simply aim to entertain as in television, what's expected are shows that are "educational, informative, and engaging," MSN product manager Jessica Ostrow said. In other words, she meant shows that give people what they want when they log on: information.

There may come a day when people log onto the Net primarily for entertainment, but for a variety of cultural and technological reasons, that day is not yet here.

"Our own research has shown the consumers we talk to are most attracted to the functional aspects of the Internet," Forrester's Green said. "They think of the Internet as a tool."

Therefore, if Microsoft has a show, it better have some kind of message or point because that's what the audience wants--at least for the time being.

When it launched MSN, the software giant said it wanted to provide the "first compelling online entertainment," noted Mark Mooradian, an analyst with Jupiter Communications. "It's something that had not, except in a few small places, been done. That was the model for what they were aspiring to do. It now seems that what they're talking about is pulling back from that notion."

Microsoft managers insisted today that they're still dedicated to entertainment, but it does appear that the model is shifting from a sitcom-like metaphor to a educational-programming metaphor. The company also will continue to emphasize its free content, which was part of the original strategy.

Microsoft's intention was to make money in three ways: subscriptions, advertising, and e-commerce. It still makes the most money from subscriptions. MSN now has 2.3 million customers, with 1.7 of those in the United States. But it also relies on the advertising and transactions, and it will probably depend more on revenue from these sources.

That is why MSN is expected to bring some properties that are only available to its own members out to where non-MSN members can view them (and generate clicks when there are ads). Sites where people can spend money have always been intended to be on the open Net anyway, where anyone can make a purchase and help pad Microsoft's pockets.

However, Sanderson emphasized that this is not a change in strategy. He added that, in all fairness, the Web is a moving target, which changes and shifts all the time.

"We are not changing strategy. There's an evolving nature of what's out there on the Web. The strategy is evolving."