GeoCities and America Online Acquire New Companies to Enhance Internet Presence

Strategic Insights -

GeoCities, a leading provider of website hosting and community services, and America Online, a pioneer in online services, have made significant moves to acquire new companies and enhance their presence in the rapidly growing Internet market. Both companies have announced separate deals to acquire technology providers that will help them improve their services and expand their offerings.

GeoCities has signed an agreement to acquire Starseed Inc., a developer of ring technology that allows users to create affinity-based communities on the Web. This technology will enable GeoCities to provide its users with a more personalized and interactive experience, and to create new revenue streams through targeted advertising and commerce opportunities. Starseed's WebRing technology has already attracted 66,000 separate affinity-based rings and over 900,000 members, with an average monthly growth rate of over 8.5% in 1998.

Meanwhile, America Online has purchased PersonaLogic, a developer of decision-guide technology that helps consumers make informed decisions on a wide variety of products and services. PersonaLogic's guides use proprietary technology that mirrors real-life decision-making processes, and enable users to create personalized preference profiles that can be compared, saved or modified at a later date. AOL plans to make PersonaLogic's decision-guide technology available across its properties, including AOL.COM, Digital City, and CompuServe.

Key Takeaways:

  • GeoCities has agreed to acquire Starseed Inc. for $2 million in cash and up to 775,000 shares of GeoCities common stock.
  • Starseed's WebRing technology has attracted 66,000 separate affinity-based rings and over 900,000 members, with an average monthly growth rate of over 8.5% in 1998.
  • WebRing technology allows users to create affinity-based communities by linking Web sites of common interests, and enables individuals to invite other users to join their ring.
  • PersonaLogic's decision-guide technology mirrors real-life decision-making processes by prioritizing users' subtle preferences.
  • AOL plans to make PersonaLogic's decision-guide technology available across its properties, including AOL.COM, Digital City, and CompuServe.
  • Starseed will continue to operate as a wholly owned subsidiary of GeoCities, with its own brand identity and management team.
  • PersonaLogic will become a part of AOL's Interactive Services division, and will continue to develop and improve its technology.

Statistics:

  • GeoCities' stock price was down 5% to $40.25 on November 11, 1998.
  • AOL's stock price was down 3.4% to $139.563 on November 11, 1998.
  • Starseed's WebRing technology has 66,000 separate affinity-based rings and over 900,000 members.
  • WebRing technology has an average monthly growth rate of over 8.5% in 1998.
  • PersonaLogic's decision guides cover a wide variety of topics, including new and used automobiles, bicycles, cruises, mutual funds, computers, colleges, cities, camcorders, and dogs.

Sources:

  • Newsbytes News Network, "GeoCities to Buy Starseed Inc. for $2 Million" (19981111/WIRES ONLINE, BUSINESS/)
  • Newsbytes News Network, "America Online to Acquire PersonaLogic" (19981111/WIRES ONLINE, BUSINESS/)
  • GeoCities, "GeoCities to Acquire Starseed Inc." (press release)
  • AOL, "AOL to Acquire PersonaLogic" (press release)