CNET's Snap Online, the four-month old Web-based service designed to compete with America Online and Yahoo, is bundling and partnering as fast as it can, aiming for the ultimate techie goal: ubiquity.
On Tuesday, Snap announced a new deal with Toshiba, like one it has with Compaq, to bundle software with computers and automatically direct new buyers to the Snap page. And the content navigation site is working on agreements with airlines to distribute disks that provide access to Web-based reservation sites.
But despite the frenzied deal-making, there are questions about Snap's long-term viability. Analysts say that by the end of 1997, CNET had spent some US$10 million on the project and could spend up to double that this year. But steady revenue is still a hazy prospect. As a result, some foresee cutbacks in Snap's 100-plus-person staff.
CNET spokespeople say they remain undaunted in their quest for ubiquity. "Snap's strategy is to be ubiquitous," says Karen Wood, CNET's vice president for public relations. "We want to be in front of as many consumers as possible."
So Snap has focused on cutting as many deals as possible, focusing on quantity over exclusivity. Their ISP partners seem to do the same, often making the service just one of many options on a homepage designed and managed by the ISPs themselves. AT&T WorldNet, for instance, points users to CompuServe, AOL, the Mining Company, Newspage, and Snap, in that order. Only one major ISP - Sprint - has made Snap the default homepage that users see when they start their browsers.
"ISPs want to be the first click," says Kirsten Kappos, an Earthlink spokeswoman. "That's the relationship you have with the customer."
Without a spot as the default homepage for more big ISPs, Snap could be facing a long slog toward profitability and widespread brand awareness. "Snap's Achilles heel is that they're not the default homepage on enough ISPs," says Jupiter Communications analyst Mark Mooradian.
There are also questions about Snap's bottom line. When the service debuted last September, news reports and analysts said that Snap partners would pay six-figure licensing fees for the privilege of funneling users to the site. But many of Snap's highest-profile partners, like EarthLink, MindSpring, MCI, Concentric Networks, and Sprint, say they don't pay any licensing fee. Instead, Snap pays them money, in the form of revenue-sharing deals based on the number of ads their subscribers view on the Snap site.
Wood at CNET says the company does receive licensing fees from some hardware manufacturers and other companies that distribute Snap's introductory CD-ROM, but that "major traffic drivers like a national ISP don't pay a fee." She declined to say what companies do pay licensing fees. Snap has deals with US Robotics, Compaq, and Hilton Hotels, among others.
Further uncertainty was introduced into Snap's outlook last week when its partner MCI announced a high-profile deal with Yahoo to create "Yahoo Online powered by MCI Internet." MCI marketing director David Trachtenberg said the arrangement won't bump Snap from the MCI 2000 homepage - where it shares screen space with WebTV, Yahoo Get Local, Who Where, the Microsoft Network, and Search.com, another CNET property.
But the MCI Yahoo promotion looks likely to overshadow Snap's 64-by-47-pixel space on the MCI homepage. Perhaps as a consolation, MCI will begin including Snap's Internet tutorial on its own access disks later this month.
"The biggest problem that Snap has is that Yahoo is gunning for their business," says Mooradian at Jupiter. "To Snap's credit, Yahoo sees them as a direct threat, and they responded accordingly with the MCI deal. They threw the weight of their brand behind it."
"Snap is not a household name," said another analyst. "And becoming a household name costs so much money. Snap's probably $100 million away from being that kind of brand, and CNET doesn't have $100 million to spend."
CNET's Wood sees things differently. "As competition among ISPs heats up, they'll put more of their effort into providing customer service, and it will become a burden to be maintaining their own homepages," she says. "[CNET CEO] Halsey [Minor] believes that more and more ISPs will start to outsource that job."
Then, it will be up to Snap to prove that it can make money at it.
