CNET Monday is officially unveiling Snap Online, a Web directory service the company calls a "portal" to the Internet. The service, developed under a shroud of secrecy at CNET, will be marketed and distributed through a series of partnerships with Internet service providers, PC makers and other retailers. It will compete head-to-head with similar services from bigger and better-funded Internet companies, including America Online, Microsoft, Yahoo, and Netscape.
CNET is touting Snap! Online as a Web-based, platform-independent consumer online service on the scale of AOL. Part Best of the Web, part Web directory, Snap will launch in September, featuring summaries and links to daily news compiled by more than 30 editors, and a database of more than 75,000 site descriptions and reviews. The service will closely resemble the Netscape Guide by Yahoo, with its aggregation of site reviews, headline news and event listings. But CNET executives see more than one competitor.
"Our goal is not to say we're the next Yahoo or Yahoo killer," CEO Halsey Minor told Wired News. "We want to build a complete package. We're going after AOL with a business model that creates lots and lots of distribution points."
CNET has lined up several large ISPs as initial partners, including AT&T WorldNet, MCI, Sprint, EarthLink, Mindspring, Bell South and Concentric. Earthlink will be the first to use Snap! Online as a personalized start page for its approximately 320,000 customers, and plans to distribute 10 million Snap CD-ROMs during the first year of service.
None of these deals are exclusive relationships, however, and the extent to which CNET will control or restrict its partners' third-party content relationships is still vague.
Minor and other CNET executives believe that Snap Online's distribution relationships will set the service apart from its more established competitors. As Wired News first reported last April, Snap - which was referred to by the codename "Gunsmoke" during its early development - will be licensed to partners through what the computer industry labels OEM relationships, allowing the partners to emphasize their own brand names in customized editions of Snap. By harnessing the brand power and marketing muscle of its high-profile partners, CNET hopes to save millions in marketing the service to consumers.
"The days are numbered for the current marketing model for online services, the economics don't work," said Minor. "You'll never see us spending $300 million a quarter selling this to consumers."
The company will generate revenues through banner advertising and licensing fees paid by partners. Snap! will require users to provide a zip code when they first log in, and the company will use the information to serve targeted advertising and regional content, such as sports scores, weather reports, and television listings. Minor refused to disclose specific fees, but said companies will pay a "six-figure fee" for the privilege of a one-year Snap! license.
Minor also refused to offer audience or financial projections, but said that in addition to the marketing from its partners, CNET will heavily promote the service through its own Web sites, email lists, and television programs. For example, copies of Netscape or Microsoft browsers from Download.com or Shareware.com will launch with Snap! Online as the default homepage.
CNET reported in its first quarter, 1997 results that it had spent US$2.2 million on Snap! during that quarter alone, and Minor said he expected that figure to increase during the second quarter. Analysts have estimated CNET will spend about $9 million developing the service in its first year. A staff of 110 full-time employees are assigned to work on the service.
