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Albatross.com: How Not to Treat Dot-Coms

  |  February 16, 2001   |  Comments

A failing dot-com isn't like a failing TV series. You can't declare the genre dead and just cancel it. You need vision and long-term commitment. Because getting out of the game too soon may be worse than not getting into it at all.

Last month Disney announced that it will be shutting the doors on GO.com -- Disney's dot-com flagship formed through the integration of Infoseek and various Disney/ABC sites in the halcyon summer of '98.

To hear the Disney execs tell it, this is not a retreat from the Internet. As they see it, Internet advertising is a dead-end business model ("The advertising community has abandoned the Internet," said Disney CEO Michael Eisner), and the future of their Internet business is in pay-per-view, broadband delivery, and interactive television.

We're not sure who they think they are fooling. There's a certain irony that Disney's appointed successor to its brand analogue of the infamous Pathfinder.com (the legendary online white elephant of pre-AOL Time Warner) sounds a lot like Time Warner's pre-Pathfinder Full Service Network, which blew up on the launch pad in 1993.

When it comes to the evolution of traditional media, it looks like it's back to the cave wall drawing board.

Traditional Media Has Abandoned the Internet

Sure you could fault GO.com for choosing an unbranded name that harkens back to the Stone Age of CompuServe navigation. (Soon, we are convinced, uttering "CompuServe" will elicit the same nostalgic novelty that "punch cards" elicits today.) And then there's GO.com's costly mistake of infringing on GoTo.com's traffic light logo; Disney's copyright lawyers must have been out on a golf retreat, leaving the mailroom guy in charge of the copyright search.

No, chances are that Disney just didn't know what it was getting into. Through GO.com Disney tried to be all things to all people -- transposing its 2- to-90-year-old, mass-media demographic mindset from television and movies onto the Internet. And although Disney attempted to refashion (read: focus) GO.com as an entertainment portal, there's little evidence that it progressed further than the press release before pulling the plug on the entire operation.

If NBC Drove Off a Cliff, Would You?

Of course, Disney's formation of GO.com was announced on the heels of NBC's own announcement of a portal strategy -- through the acquisition of Snap.com (since refashioned as NBCi). Although NBCi hasn't announced a complete shutdown, regular waves of announced and unannounced layoffs at the company have raised more than a few suspicions.

NBC approached the Internet with a sort of "Johnny Appleseed" investment style -- a joint venture with Microsoft to form MSNBC for news and sports, an investment in an online women's site (iVillage), the independent launch of financial information and news site CNBC.com, and so on. With as many times as the word "synergy" appears in boardroom presentations these days, you'd think that at least someone holding an NBC checkbook could have cobbled together a cohesive strategy.

Yet unlike GO.com, NBCi received little management support from its parent company. Instead NBC created an environment of online Balkan states that produced "synergies" such as NBCx.com -- a competing Gen-X/Gen-Y entertainment site born of infighting between NBC and NBCi execs. Hogtied by competing brands with little incentive to cooperate, NBCi became defined more by what it wasn't than what it was.

Like Disney with its initial approach to GO.com, NBC is finally showing signs of achieving some domain-name consistency in its online leads from television programming (i.e., nbci.com instead of nbc.com, snap.com, msnbc.com, etc.) -- although GO.com achieved this in its first six months of operation. NBC even appears to have put the kibosh on NBCx. But also like GO.com's chances, NBCi's chances for survival continue to be undermined by a nagging lack of strategic focus -- even purpose.

If at First You Don't Succeed, Blame the System

Sorry, Mr. Eisner. Blaming the medium for your business failures is a cop-out. Traditional media may have learned a little from its mistakes with cable television -- this time acknowledging the threat and backing up its "won't get caught sleeping again" resolutions with real money. But we've witnessed its MO countless times before.

How often have we seen traditional media companies, each afraid to be the last one in the pool, launch copycat programs of faddish hits such as "Who Wants to Be a Millionaire?" and "Survivor"? Invariably they slap together a poor imitation; soon after they pull the plug when it fails to meet the expectations of the original ("Greed" or "21," anyone?). How much commitment can we expect from an industry that goes through programming executives like toilet paper?

The big difference here is that a failing TV series isn't the same as a failing dot-com business. The Internet isn't some lame knock-off show such as "It's Like, You Know..." A better comparison would be CBS when it lost patience and prematurely pulled the plug on its financial news cable network. Not long after this move, similar investments by competitors -- for example, CNBC.com -- grew to become a huge chunk of their parent companies' operating income.

By thinking it can merely "cancel" GO.com, Disney is trivializing the need to respond to a disruptive technology and develop a successful online strategy.

It's one error not to get into the game, and yet another to get out too soon. The financial community has a name for people without the vision and long-term commitment to see things through. They're called momentum investors, and their mantra is "buy high, sell low."


Greg Sherwin and Emily Avila

Emily Avila and

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