May 21, 1998 8:35 PM PDT

Yahoo ends ties to Netscape

Yahoo will discontinue the Net guide it provides for Netscape Communications, in a move that reflects the rapidly changing rivalries in the home page race.

In statements late today, both companies stressed that the decision was mutual. Earlier in the day, Netscape announced that its four "premier" search providers would no longer include Yahoo.

Today's moves underscore how Portalopoly quickly partners can morph into competitors in this ever-shifting landscape. Both are competing to become top "portal" sites--gateways onto the Internet--and Netscape is putting together a rival site to Yahoo.

When Netscape Guide by Yahoo launched in April 1997, Yahoo was considered a search engine and Netscape was in the business of providing Net browsers and software. Now, Netscape's Netcenter is aiming to serve the same function that the guide did.

Yahoo pulled out of the deal because its partnership with Netscape resulted in lower traffic from the site than expected, Yahoo chief operations officer Jeff Mallett said. In addition, he said, Yahoo did not want to continue paying to market the site.

When the guide was established, Yahoo paid Netscape a one-time $5 million fee to be featured over a 24-month period. Yahoo will use the leftover credit to pay for its license as a "distinguished" search partner, which will give Yahoo a link to its site toward the bottom of the coming Netcenter revamp.

Netscape Guide by Yahoo, which can be entered through a button in Netscape's Communicator 4.0, as well as a link in Netcenter, will be taken down from Netscape's site July 1.

Mallett also said Netscape was no longer a good distribution point for Yahoo now that Yahoo has more than 1 million external links at various sites throughout the Internet.

The dissolution of the relationship comes after Yahoo's decision today not to renew its status as a premier search provider on Netcenter's Net Search page. The total percentage of Yahoo's traffic from Net Search has been at an all time low of 5 percent for the past two months, Mallett said.

"Neither of us were giddy about the results over past year," he said.

Netscape also said it did not get the results it had expected out of the deal. The company is undergoing its "Project 60" campaign, a 60-day push to make Netcenter a competitive portal site featuring content channels, free technology services, and personalization capabilities. Within the next 30 days, Netcenter is expected to relaunch with a new look that it hopes will give other portals a run for their money.

"As we move forward with our plans to build out Netcenter and turn into a major portal on the Net, the guide with Yahoo no longer made sense," a Netscape spokesperson said.

 

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