CHANGES AT ZIP2 CONCERN AFFILIATES

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By: Jennie L. Phipps

Widely-Used Web Vendor Purchased Again Last Week

CORRECTION: An earlier version of this story incorrectly stated that Zip2 would end its community publishing program. Vice President Bruce Murray said Zip2 will continue to offer the program, which he called one of the company’s best products.

As CMGI folded Zip2 into MyWay.com last week, some newspaper executives expressed frustration with the speed of change at the company, and the perception that the newspaper industry is no longer the company’s primary focus. MyWay officials are expected to address these concerns in a conference call with newspapers Tuesday.

A vendor of Web directories and other products for media companies, privately held Zip2 was purchased by Compaq Computer Corp. in April for $300 million, and placed in Compaq’s AltaVista division. In August, CMGI Inc. purchased a majority stake in AltaVista from Compaq.

Last week, a CMGI subsidiary, MyWay.com announced it would buy Zip2 in a stock transaction. The two companies will merge under the MyWay.com name.

‘Zip2 changes its strategy about every 15 minutes,’ said Lincoln Millstein, group vice president and publisher for Times Co. Digital, the new media division of The New York Times Co., which three years ago invested in Zip2 before it was sold to Compaq. ‘I can’t get too excited because between the time you and I finish talking, they’re going to change it again.’

Landmark Communications of Norfolk, Va., was one of the first major newspaper companies to buy the Zip2 product and its newspapers were beta sites, but now Gordon Borrell, vice president of new media, said his company feels neglected.

‘Everyone seems to be a bit wary of this because the initial Zip2 that we all knew and loved three years ago is yet another step removed from what it was,’ he said. ‘They first focused on the newspaper industry. But as they grew by leaps and bounds and had new masters after new masters, it was hard for them to have a customer service focus or to keep focused on the newspaper industry.’

Chris Jennewein, vice president for technology and operations for Knight Ridder New Media in San Jose, Calif., agrees to some extent, but believes the Internet world has redefined what competition means. ‘I don’t think that it’s possible anymore to divide the world into black and white – competitors and partners,’ he said. ‘Zip2 and Knight Ridder can be a partner at some level and a competitor at others. I think every move potentially matters, but we have been very happy partners using some but not all of their products, and we will continue to do that.’

That sounds a lot like the message MyWay Vice President Bruce Murray is delivering to newspaper partners. Formerly vice president at Zip2, Murray will talk with them via conference call Tuesday. He said that although Zip2 is disappearing, MyWay will continue to deliver everything it delivered before the merger.

Frustrated by complaints, Murray said, ‘We go to great lengths to communicate with our affiliates, and it seems like it never registers.’ In the last year Zip2 has held four meetings for affiliates and their employees, he said. ‘I don’t know of another supplier to the newspaper industry that has held such symposia as consistently as Zip2 has.’ The company also has an advisory council of newspaper partners, Murray said.

‘What local media companies did when they signed on with Zip2 three years ago was to align themselves with a company that promised to deliver world-class technology,’ he said. ‘We’ve been true to that promise, and now we are in an even better position, offering to bring the full scope of CMGI companies to bear on the local marketplace.’

Combining portals and ISPs

Formerly known as Planet Direct, MyWay.com has more than 800 Internet Service Provider (ISP) partners. Zip2 brings more than 200 relationships with local media companies to the table.

Company officials see many synergies between the two groups. ‘We have more than 10,000 local businesses advertising in one form or the other on the Zip2 platform,’ Murray said. ‘This is a big opportunity for ISPs to get involved.’

While he couldn’t offer specifics about how newspapers and ISPs will work together, Murray is convinced they will benefit both. ‘Wouldn’t it be great to be able to package Internet access with advertising all in one order? When an advertiser signed an annual newspaper advertising contract, he could get free Internet access for a year. Wouldn’t that be a nice kind of synergy?’ MyWay will benefit by enlarging its network and growing its sales force.

Growth is exactly the point, agreed Charlene Li, senior analyst for Forrester Research in Cambridge, Mass. She believes Zip2 has tired of working with some newspaper partners because they have been too slow in growing online publishing and e-commerce.

‘I don’t think that they are intentionally dumping newspapers,’ she said. ‘Some of (the newspapers) are very good partners, but (Zip2) realize(s) that they need to diversify. I think they had to do something because they weren’t going anywhere. They were very much stagnating. Why should they limit their technology to just newspapers? From their point of view, it doesn’t make any sense.’

One issue to be resolved is community publishing software. Murray said Zip2 will continue to offer its popular community publishing feature.
MyWay.com has used community publishing software from KOZ.com, and CMGI is an investor in the Research Triangle, N.C.-based vendor. ‘We will likely have an opportunity to speak further with the people from KOZ, but any speculation about the nature of those conversations is highly premature,’ Murray said.

The new company will have about 225 employees and be headquartered in Andover, Mass., where CMGI is based. Zip2’s offices in Mountain View, Calif., will remain open.

When privately held, Zip2 had quite a few newspaper investors, including Knight Ridder, Belo, Hearst Corp., Morris Communications Corp., and Freedom Communications. These companies profited handsomely from the Compaq purchase earlier this year.

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Jennie L. Phipps (jennielp@bignet.net)
is an independent writer and editor based in Bloomfield Hills, Mich.







(c) Copyright 1999, Editor & Publisher

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