IQ News: Distribution is King: Microsoft

Looks for Outside Partners
Even mighty Microsoft can’t go it alone on the Web. After launching most of its content sites on its own, the software giant has decided to push for a mass audience by striking deals with outside distributors.
Until now, Microsoft’s content has been available as channels on its Internet Explorer browser, through the proprietary Microsoft Network and selectively via the Internet. Its interactive media group includes MSN, the local content Sidewalk sites, CarPoint, travel agent Expedia, Microsoft Investor, MSNBC on the Internet, Slate magazine and Mungo Park.
The first deal to close was between Slate and America Online. Microsoft will pay AOL to put Slate on its newsstand channel. Slate will have a keyword on AOL, and the online service will occasionally feature Slate stories on its news channel. Microsoft will pay a one-year flat-rate fee for a guaranteed number of user impressions on AOL. Both companies will share monthly advertising revenue.
Distribution deals for other IMG properties are expected to be announced within the next two months. Each property is negotiating for as many outlets as possible. “Exclusivity isn’t a big thing any more,” said Rogers Weed, publisher of Slate. “It’s about achieving a scale.”
Other key targets for Microsoft distribution are content aggregators, most likely Yahoo!, Excite and Infoseek, sources said. “All the IMG properties are discussing different options,” Weed said. Snap!, CNET’s forthcoming online service, is expected to use MSNBC, Expedia and Investor to provide headlines for its news, travel and money categories.
Analysts said Microsoft has little choice but to turn to AOL and others to build a mass audience. The Microsoft Network, with roughly 2 million subscribers, trails far behind AOL’s 9 million. “They haven’t scaled MSN and promoted it as aggressively as AOL,” said Chris Stevens, an analyst at the Aberdeen Group. “AOL controls the consumer market.”
“We’re trying to build the businesses by building brand and having the brand exposed to more and more people,” commented Jeff Sanderson, IMG’s general manager.