Zip2's Evolving City Site and Portal Strategy

By: Steve Outing The U.S. newspaper industry's response to the online city guide industry is largely tied up with Zip2, the 3-year-old Silicon Valley technology provider. The company started out as the provider of an online Yellow Pages service that is used by newspaper Web sites. But now the company has evolved to offer pretty much a full suite of services that publishers can use to compete directly with the likes of Yahoo! and America Online at the local-market level.

According to Zip2 founder and executive vice president Elon Musk, the company has now evolved to the point of offering what was originally envisioned at the company's outset -- the technology to allow local publishers to execute a true "portal" strategy. It now includes the original Yellow Pages service/business directory; free Web e-mail service (using, for now, WhoWhere? technology); a local arts and entertainment guide; a community publishing component; personalization features; templated vertical services for advertising/editorial categories like homes and autos; and address mapping capabilities.

To be added to that in the coming weeks will be general Web search functionality, says Musk. Hence, Zip2 now offers pretty much what the big guns of Yahoo! offer -- co-branded with local newspaper publishers.

The "new" Zip2 strategy is seen in the New York Times' New York Today city guide Web site, which the newspaper created using Zip2's technology. Musk says that three to six similar major newspaper sites will roll out through the end of this year.

One upcoming Zip2 deal will add New York Today-like features to the Web site of the Orlando Sentinel. Rather than have a separate site and separate URL, as the Times did with its city site, the Sentinel is sticking with a single URL, so the addition of new city site features will appear to be a major enhancement of the existing newspaper site. Musk says that deal with Sentinel parent Tribune Co. represents revenue to Zip2 of more than $1 million from licensing fees and revenue sharing.

Musk points out that his company's strategy is the same as when Zip2 started -- to create all the various components that publishers would need on the Web to compete in the race to become a "portal" site (though that now over-used term wasn't in anyone's mind then) -- although it might appear to some that Zip2 is revamping its business model.

Whatever happened to Pantheon?

Zip2 early on bought Pantheon, a developer of Web editorial and advertising publishing systems, and the former Seattle company's technology provides the basis for some of the Zip2 city guide services. Pantheon's Builder software continues to be used independently by numerous news Web sites, and Musk claims to be committed to supporting it with technical support for the popular software. But while Zip2 will provide Builder maintenance upgrades, the company is no longer marketing the software for use independently.

Rather, customers who approach Zip2 interested in using the Pantheon Builder and Interpreter products will be sold on the city site program instead. According to Zip2 vice president of marketing Gina Clark, the company is still willing to license the Pantheon Builder software to publishers, but on a case by case basis. Decisions on whether to license just the Builder software will be evaluated based on the support burden the arrangement is likely to create.

The Pantheon products have "been very good products for us," Clark says, but as the newspaper online business matures older software becomes less relevant. Musk confirms that the company's focus and resources are clearly aimed at the city site suite of services, no longer on off-the-shelf software.

Impact of Excite deal

Zip2's Yellow Pages remain an important component of the overall Zip2 service. In late July, the company announced a deal with Excite to be the search service's Yellow Pages provider -- a move which will mean that the Zip2 Yellow Pages are expected to be among the most highly trafficked on the Web, says Musk. Zip2 hence gains access to Excite's huge base of Web traffic and will distribute that among its 160-plus media affiliates.

The Excite deal resulted in Zip2 halting most of its advertising, on the Web and also in print. Musk explains that the Excite deal will bring such wide exposure to Zip2's service that banner ads throughout the Web are unnecessary. He calls the Excite deal basically an advertising deal which significantly increases Zip2's exposure while doing away with traditional Web advertising.


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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company


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