Valuations look like they may be starting to shake, shimmer and she-bop as most of the top 10 Web sites head south for an early summer swelter. Combined the group lost 4.6% the past week according to my number crunching. The only bright spot was Lycos (NASDAQ:LCOS), recovering from a long date of disco dancing some sort of tango-a-go-go from USA Networks.
Lycos value per unique user gained 9.3% to $158 on news it wouldn’t merge with Barry Diller’s shopping machine. That news begat great quarterly results and a 2-for-1 split announcement which helped LCOS shares.
Internet.com’s | March | 5-13-99 | 5-19-99 | 5-5-99 | 5-19-99 | Percent |
WEBDEX | Users | Market cap or PMV* | Market cap or PMV* | User | User | change |
(millions) | (millions) | (millions) | Value | Value | ||
AOL.com* | 47.0 | $22,000 | $20,000 | $468 | $425 | -9.1% |
Microsoft.com* | 32.0 | $9,150 | $8,750 | $286 | $273 | -4.4% |
Lycos | 31.9 | $4,622 | $5,053 | $145 | $158 | 9.3% |
Yahoo | 31.3 | $34,074 | $31,731 | $1,090 | $1,015 | -6.9% |
GO Network (SEEK) | 23.8 | $3,173 | $2,875 | $134 | $121 | -9.4% |
GeoCities | 21.3 | $3,668 | $3,447 | $172 | $162 | -6.0% |
Excite | 18.9 | $8,747 | $8,128 | $464 | $431 | -7.1% |
Time Warner web sites | 13.3 | $1,875 | $1,750 | $141 | $132 | -6.7% |
Blue Mtn Arts | 11.1 | $750 | $700 | $68 | $63 | -6.7% |
Amazon.com | 10.7 | $23,027 | $22,483 | $2,145 | $2,094 | -2.4% |
TOTAL | 241.2 | 111,086 | 104,917 | 5,112 | 4,875 | -4.6% |
AVERAGE | 24.1 | 11,109 | 10,492 | 511 | 488 | -4.6% |
MEDIAN | 22.5 | 6,685 | 6,591 | 229 | 218 | -5.0% |
As more and more Web sites appear my theory is that the larger one size fits all sites may start to lose overall value. The analogy–consider a desk or counter top. It’s only as useful as it can be given so many pieces or projects on it. In Web lingo we call a Web site with multiple features “sticky.”
But as an alternative I think some sites may be getting beyond sticky and just plain “gluey,” too much going on giving users the impression of not a place to hang out but a flypaper-like experience.
Said another way, the pendulum of Web strategy circa 1994-1999 has been add, add, add, add, add more and more and more, stuff. Pretty soon the Web site(s) become overlinked.
Ironically, what the larger portals have done is consolidate topics and features, in essence, editing the Web’s chaos. Yet with growth the challenge for them is in not re-creating a chaotic experience in these ‘micro-universes’ or microcosms of the entire Web which they have become.
Something like Amazon.com (NASDAQ:AMZN) becomes more valuable through its own investments in other niche sites than as a pure etailer. For example, Amazon’s 44% stake in Drugstore.com which just filed to go public, drives some of AMZN value.
AOL has played this very well. Another word for it is ‘holding company,’ Consider AOL as a holding company with several investments in Internet companies such as iVillage, Motley Fool, and dozens more. These portfolio companies have a relation with AOL but I think the value lies in NOT being part of AOL.
AOL could just as easily have the ‘women’s club.’ But the value is in letting iVillage (NASDAQ:IVIL) be that vehicle for value.
Food for thought. Note Go.com(NASDAQ:SEEK) dropping the most of the top 10 here, down 9.4% to $121 per unique user. Having poked around Go.com the problem is evident to me right away: there’s a lot of generic features and, even more ironically, nothing at all sticky about it. Like a piece of flypaper without the glue.
The $165 million Infoseek agreed to pay Disney (NYSE:DIS) over the next 5 years for promoting the service also looks undercapitalized in a world where Amazon files $2 billion shelf and NBC/Xoom ink more than $800 million in promo.
Excite (NASDAQ:XCIT) at $431 per unique user reflects the high expectations of its merger with @Home (NASDAQ:ATHM) to be a broadband leader.
On the ultimate non-sticky extreme there’s Time Warner which has the unenviable position on the top 10 Web sites here as being the only one not listed by its “dot.com-ness.” Time Warner needs a Web strategy some 5 years after Pathfinder has done anything but blaze trails. Somebody pass this to Gerald Levin.
Gerald, take it from a guy who’s turned down 3 investment banking positions in as many years to be a Web pioneer and do this stuff for the benefit of Internet users everywhere: fire those i-bankers if you’ve hired any to scout Web deals. Hire some if you haven’t. Or save the trouble with this: acquire Lycos. It’s the only one left that can save Time Warner’s vortex of mediocrity on the Web, CNN.com/CNNfn.com being the only items worth mentioning.
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