Lycos lukewarm over Poland
By : Roseanne Gerin
Netherlands-based Internet portal Lycos Europe will complete an assessment for business prospects in Polish cyberspace before launching a local version of its service, a company official said last week.
"The Polish market in our opinion is not as profitable as variations (in the market) have shown," said Kai Bolik, the director of development of Lycos Europe and a member of the board of directors of Lycos Poland. He denied previous local news reports that Lycos Europe, which is listed on Germany's Neuer Markt exchange, could enter Poland by the end of the first quarter of this year.
"We must take into account the prospects of entering into profitable undertakings for the company's shareholders," Bolik said. "It's important to become profitable. We are looking at the growing market climate, business opportunities and prospective partners (in Poland)."
In recent months, several ad-revenue dependent portals in Poland have had difficulty securing additional investments to finance their operations since negligible online ad sales cannot generate enough cash to cover their costs. As a result, they have had to scale back their operations, lay off employees, or even close or sell their portals.
Lycos Europe, whose main shareholders are Spanish portal Terra Lycos and German publisher Bertelsmann, has a team in Poland to evaluate the current conditions for starting a Polish version of Lycos and set a possible launch date. The firm is holding talks with small Polish vortals specialty portals devoted to one topic and technology companies as possible partners, Bolik said. However, he declined to name the firms.
Bolik said that Lycos' strategy in Poland would be to accumulate content from different sources and sell advertising space rather than acquiring Polish Internet portals. "I didn't find anything reasonable to acquire," he said.
Last year, Lycos was interested in purchasing stakes in the Polish portals Interia and Arena, but no transactions were finalized. The Polish Internet services company Link System currently runs the Lycos.pl domain name. The site automatically flips users to Lycos' German site (www.lycos.de).
Bolik denied Polish press reports that Lycos Europe would spend about $40 million on Internet investments in Poland. He said the amount the company would spend depended on its ongoing evaluation.
Dorota Ubysz, an information technology analyst at the Warsaw office of SG Securities, said international portals, including Lycos Europe, were not likely to establish Polish versions now due to the limited revenue from online ad and e-commerce sales. "It doesn't matter whether it's a global or local (portal) because the revenue from advertising and business-to-consumer commerce cannot support another portal," she said.
Online advertising revenue in Poland last year, including barter, or online ad exchanges, totaled about zl. 40 million ($10 million), while advertising paid for in cash accounted for half that amount, Ubysz said. She said the country's total online ad spending was not enough to cover the operating costs of Wirtualna Polska, Poland's second largest portal, which reached about zl. 50 million ($12 million) in 2000.
