Open Market and Lycos fired the first salvo in what is shaping up to be a major battle over Internet commerce. With the formation last week of a revenue-sharing agreement between the two companies, Lycos will integrate Open Market's Transact I-commerce software into Lycos' electronic marketplace. The companies will also offer Open Market's ShopSite store-building software to Lycos users.
The deal represents what analysts believe is the first of many between portal sites, commerce companies, and merchants.
"The key for any merchant going online is the ability to attract buyers to their site, and the Internet service providers and commerce service providers weren't attractive enough to fulfill that mission," said Vernon Keenan, an Internet analyst at KeenanVision, in San Francisco. "The portals, especially with the 'cyberhomesteading' partners, do have that ability to attract merchants."
As part of the agreement, Lycos and Open Market have entered into a profit-sharing model. The agreement also embodies what some analysts expect to be a new business model for service providers and portals: taking referral fees from merchants who use the portal to sell goods.
"Ultimately the portal is going to be able to collect referral fees for all those purchases that originate from their membership," said said Keith Lietzke, director of commerce service provider marketing at Open Market.
Another aspect of the agreement is that Lycos will invite Open Market's existing customers to join the Lycos portal.
"Right now we have a couple hundred merchant partners. What we are doing is looking to expand the depth of our partner brand," said Jeff Bennett, vice president of electronic commerce at Lycos.
The companies did not specify when the combined services would be available.