Can AOL keep Netscape.com from fading away?

AOL needs all the Internet traffic it can get, but it is struggling with the fading popularity of Netscape.com, for many years one of the Web’s most popular destinations.

AOL doesn’t break out how much Netscape.com contributes to its revenue, but calls the property a valuable one. “Netscape has a loyal community of users and is an important part of the AOL Network,” an AOL spokeswoman said via e-mail.

Soon, AOL will restore Netscape.com to a traditional Web portal format, 15 months after turning it into a social news site, a change that, instead of boosting the site’s popularity, hurt it.

Still, one can’t blame AOL for the attempt to give Netscape.com a new lease on life as a Web 2.0 site. Traffic to the site had been on a years-long slide. This begs the question: Will switching Netscape.com back into a portal turn the tide?

With AOL fighting tooth and nail for every online ad dollar, the performance of the once mighty Netscape.com matters.

“If you have a brand that has some cachet or currency and carries recognition, it’s logical to use it,” said James Goss, a financial analyst with Barrington Research.

Still, Netscape.com’s past glories will not magically draw people back to it. “It’s probably not worthwhile to invest heavily on the site unless they have a coherent strategic plan for it,” said industry analyst Greg Sterling of Sterling Market Intelligence.

AOL has bet the farm on online advertising as it sheds its old subscription-fee business model. It’s a years-long process that continues full-speed ahead with this week’s announcement of AOL’s plan to move its headquarters to Manhattan and the integration of its ad networks into a single platform.

But with its online ad revenue growth a disappointing 16 percent in the second quarter, AOL could sure use the traffic that Netscape.com used to draw even several years ago.

An examination of Netscape.com’s traffic patterns since AOL acquired Netscape Communications in March 1999 for US$4.2 billion tells a story of consistent decline.

As critics have pointed out over the years, this is true not only for the Netscape.com portal but also for the company’s other products, in particular its browser.

“AOL has never known what to do with Netscape. They squandered that asset,” Sterling said. “Eventually, the bottom dropped out.”

In November 1999, Netscape.com had 20.8 million unique visitors in the U.S., reaching close to a third of the country’s Internet users, according to comScore.

By December 2003, Netscape.com’s unique visitors had dropped to 18.8 million, and its reach had plummeted to 12.4 percent of the U.S.’s Internet users, according to comScore.

Things kept deteriorating and by January 2005, Netscape.com had little over 17.5 million unique visitors and a reach of 11 percent.

In the next nine months, Netscape.com suffered a massive drop in unique visitors. In October 2005, the portal had 12.9 million unique visitors, and its reach among all Internet users in the U.S. — 169 million at that point — had fallen to 8 percent.

This page-view graph, based on data compiled by Alexa Internet Inc. shows the erosion in Netscape.com’s traffic between early 2002 and today.

“It’s an interesting illustration of the waning of a very strong Internet brand,” Sterling said.

As tragic as 2005’s traffic numbers look compared with what Netscape.com had been, they would probably elicit tears of joy from AOL officials today. In August 2007, Netscape.com drew 6.1 million unique visitors, down from 10 million in August 2006, according to comScore.

The AOL spokeswoman said part of the traffic erosion of the past year is due to the fact that starting in the third quarter of 2006, Netscape Mail was migrated to AIM Mail so Netscape.com lost those visits.

Also, in October 2006, the site lost the traffic from the Netscape Connect dial-up access service, which was broken out into its own property.

She couldn’t quantify how many unique visits the loss of those two components cost Netscape.com, but it’s probably fair to say that AOL had much higher expectations for the site’s traffic after its social news transformation.

Netscape.com drew 61 percent fewer visits in August of this year than in August of last year, a period when visits to social news rival Digg.com increased 142 percent, according to Hitwise Pty. Ltd.

In other words, the problem hasn’t been the social news format, which lets readers submit and share links to stories, as well as vote on, comment on and rank those articles. Netscape.com simply didn’t gain the expected traction with people who frequent these sites.

AOL acknowledged this when it announced the plan to turn Netscape.com into a portal again.

AOL isn’t giving up on the social news site now housed at Netscape.com. Last week, AOL announced that the social news site will be rebaptized Propeller and moved to Propeller.com.

However, Propeller could face an uphill branding battle, considering the history of its Web address.

According to cached pages found at the Internet Archive, Propeller.com belonged to PropHead Development Inc., which specialized in digital set-top boxes.

PropHead was acquired by AOL Time Warner — now known as Time Warner Inc., parent company of AOL — in 2000. Archive.org’s last cached snapshot for the Propeller.com address dates from January 2002. At press time, Propeller.com is empty of content.

As a portal, Netscape.com will feature news articles handpicked by its editors instead of visitors, along with a search engine and links to AOL and Netscape services and content. Netscape.com’s forthcoming format is at an alternate address.

Basically, it looks a lot like it did before its social news transformation. One change: AOL plans to establish links between Netscape.com and Propeller.com.

It remains to be seen if the latest plan to revitalize the once mighty Netscape.com will propel it to new heights or see it sputter into oblivion.

What’s clear is that AOL once had a portal jewel in its hands.

“AOL really wasted an opportunity when they bought Netscape. They didn’t do enough to leverage the site’s traffic and brand. They basically sat on it. It was a strategic blunder,” Sterling said.

This story, "Can AOL keep Netscape.com from fading away?" was originally published by PCWorld.

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