RealNames' Mission: Simple Words to Surf the Web
The firm's technology would do away with awkward URLs,
but its controversial business plan melds online, offline ads.
In November 1998, RealNames CEO Keith Teare planned to
have Microsoft (MSFT) and Netscape announce on the same
day that they would be integrating his company's technology
into their Web browsers. Microsoft Senior VP Brad Chase had
already committed when Teare reached an agreement with
Mike Homer, Netscape's executive VP of sales and marketing.
The next week, America Online (AOL) bought Netscape, and the
Netscape deal was off.
Eighteen months later, AOL remains a holdout. Microsoft,
however, is more committed than ever, and that might be
enough to ensure that RealNames will change how people
navigate the Internet.
RealNames, based in San Carlos, Calif., markets a technology
for using common words instead of URLs to navigate the
Web. After a deal in March that gave Microsoft 20 percent of
RealNames, the software giant will integrate the company's
keywords more deeply into both its Internet Explorer browser
and MSN service. With the RealNames address system built
into every PC that ships, the current domain-name system of
URLs could become invisible to surfers, buried beneath
a more user-friendly layer of common name addresses.
Beyond the friendliness, though, is a controversial am
bition. RealNames' business plan hinges on the convergence of
online and offline advertising; it focuses less on everyday language
than on branding. In Teare's vision, common names will
be bought. Last weekend, for instance, in movie theaters
across the U.S., the trailer for 15 Minutes, an upcoming movi
e from Time Warner (TWX) (whose merger with AOL is pending)
quoted the RealNames Internet keyword for the movie's
Web site, not a URL.
If the branding of cyberspace raises hackles among die
-hard
Web idealists, consider the implications of a private
company achieving near-monopoly control of Web navigation. Teare,
who filed in October to take RealNames public, does not rule
out a future in which a surfer who types "books" will
be taken straight to Amazon.com (AMZN) .
"Monopolies are not bad things unless they are abused,"
he says. A standard address system, less cumbersome than
the current "www.whatever.com," would undoubtedly be a
blessing. The question is, would RealNames own that
standard?
When someone types a keyword or phrase into the browser
address field of Internet Explorer, the request is routed
through a RealNames server database and then directly
to the URL linked to that keyword. Although RealNames
allocates free keywords for a few small personal sites,
most keywords
will be sold on a yearly subscription basis at the low
end ($100
per keyword per year) or licensed to major-brand
customers
at several hundred thousand dollars per keyword.
On top of the keyword fees, RealNames will get a
processing fee for each visitor delivered via its
routers. The per-visitor fee will range from 1 cent to
60 cents. Each time Internet Explorer delivers a
page to a user who types a keyword, both RealNames and
Microsoft will get a cut.
The upshot: For the first time, Microsoft is
getting direct, nonadvertising revenue from its
expensively developed browser.
Teare says RealNames' commercial focus is simple: meet
ing the needs of marketers. "We're giving
brand managers a way to spend money really wisely," he
says. The Holy Grail for brand marketers is
"convergence," in which an offline brand, established
in traditional broadcast and print media,
transfers online, unmodified. Until now, that's been
nearly impossible, hence the plethora of awkward
URLs in offline ads.
Arguably, this issue has held back advertising dollars
from the Web. Teare plans to tap into a reservoir of unspent ad
money, sharing the revenue with his partners, including,
along with Microsoft, such search services as AltaVista,
Google and Inktomi (INKT) . "There are no losers" in this
arrangement, he says.
Nevertheless, even Teare agrees that in an ideal world
the Internet keyword system should be a type of public
service, but not in the Internet economy.
"The Internet is not about to be governed as a public
service anytime soon," he says. "Not until there is such a thi
ng as a world government, anyway."
Instead, Teare positions his company as a trusted neutral
party, committed "not to treat Microsoft better than
you would treat Netscape, not to treat the United States
better than you would treat Libya" (or as general manager of
MSN Search Bill Bliss puts it, a "Switzerland of the Internet").
To that end, the company has established an independent
"policy advisory board" to administer the allocation of
keywords. The guiding principle will be "user expectations," and
unlike in the current domain system, cyber squatting will not be
possible.
But can RealNames remain neutral without AOL on board?
AOL has its own proprietary keyword system similar to
RealNames' except that it covers only its own network.
RealNames says it has nearly 2 million keywords already linked
to URLs; AOL's universe only contains 15,000. (That movie
trailer for 15 Minutes also featured an AOL keyword, in larger
type.) In addition, AOL/Netscape's Navigator browser has an
address-line keyword system called "smart browsing." The
major difference with RealNames is that the Netscape system
is free. No one can buy a Navigator keyword.
"It comes down to a difference of money," says Darius
Paczuski, director of worldwide search and navigation
for Netscape. "It's very hard to do the right thing by the
user and make money." While it sounds ideal - user-friendly, ye
t not for sale - the failure to build in direct
revenue is simply naive as far as Teare is concerned,
proof that Netscape's system would never
challenge RealNames'. It's too expensive, he says, to
maintain a service that's both comprehensive
and free.
Despite Microsoft's 20 percent stake in his company,
Teare declares his independence from the
Redmond, Wash., behemoth and says he expects AOL to
sign a deal with RealNames eventually. "I do
feel there is an egotistical 'not invented here'
reason behind Netscape not currently partnering with
us, rather than a rational business reason," he says.
If Teare is right, cyberspace increasingly will become
a branded universe. Even though RealNames
does not yet sell generic keywords such as "books" or
"music," that's next on Teare's agenda. "We're
committed to getting there eventually," he says.
"We just think it's good citizenship not to do it yet."
He points out that no one objects to the ownership of
the number 1-800-Flowers. So why should
the Internet keyword "flowers" be any different? If
Amazon.com were to fill the airwaves with ads
that concluded with "Internet keyword: books,"
that could justify giving Amazon the word under the
"user expectation" criterion.
Shep Bostin, COO of Gaithersburg, Md.-based Netword,
which has a technology that rivals
RealNames', derisively suggests that with generic
keywords for Internet Explorer, Microsoft might
need to change its slogan to "Where do we want to tell
you to go today?"
To make the system useful to consumers, RealNames seed
s its database with well-known brand
names, many of which aren't paid for yet. For example,
the most-used keyword in the database:
Yahoo.com. Millions of users get to Yahoo through Real
Names servers even though Yahoo doesn't
pay a cent to RealNames. What can Teare, heading a
company with about 260 employees and $1
million in revenue for the last six months of 1999, do
about that? "We try really hard not to have to,"
he says, "but ultimately you do get to a point where
we switch the free ones off."
Welcome to the future of e-marketing. The losers in
this future are not yet clear, but Teare is playing
to win.
By Dominic Gates