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From...
Industry Standard

Yahoo to offer Web-based invitations

January 21, 2000
Web posted at: 10:18 a.m. EST (1518 GMT)

by Dan Goodin

(IDG) -- A prime tenet of public relations holds that when a formidable foe moves into a startup's territory, the younger company should declare it's good news for the industry.

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That's exactly what online events planners like Mambo.com and Evite did last week when Yahoo announced it was adding Web-based invitations to its offerings.

"Yahoo's move just validates that this is a serious category and that it's large enough to accommodate lots of players," says Madeline Schroeder, Mambo's chief executive. But Yahoo's move has also sent online events services, which help users send invitations and manage RSVP lists, scrambling for ways to remain relevant.

One of a raft of such services, Mambo today upped the ante by adding a new payment feature that allows a host to recoup costs of throwing an event from participants. Mambo will impose a $1 flat fee plus a 4.75 percent transaction charge for the service and becomes first online events planner to add the feature. And TimeDance today said it was forming an alliance with NBCi's to be the "primary" online invitations service on the Snap portal. TimeDance declined to say whether the deal was exclusive, however, or whether it was paying NBCi as part of the deal.

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Yahoo's largely expected entry in the events category begs the question: Will the dozen or so players competing in the crowded space dry up the same way that independent free e-mail and calendar services evaporated a few years ago when major portals jumped in? There are powerful reasons for predicting a shake-out.

Yahoo is among the most visible brands of any Internet company. Last month, more than 120 million unique visitors used such Yahoo services as search, address book, calendar and e-mail. By integrating those features with Yahoo invitations, "we can make a complete invitations product," says Thad White, producer for the new service.

And as with free e-mail and calendars, it's hard to make money by offering online invitations. To be competitive, the service has to be free, meaning that revenues come mainly from partnerships with party suppliers, restaurants and other businesses that cater to people throwing splashy events. Yahoo, with its wide network of partners, is in a far better position to strike those types of relationships than is a single upstart that's only beginning to build partnerships.

Another sign that points to consolidation is MP3.com's acquisition last month of SeeUthere.com, one of the better-known events planners that helps corporations and non-profits throw large parties and gala fund-raisers. MP3.com, a site that promotes and sells music from unknown bands, plans to use the service to help musicians sell tickets to fans.

Other sites will likely follow the moves by Yahoo and MP3.com in their efforts to increase "stickiness," Net parlance for features that bring users to a site often and keep them there longer. It's only a matter of time before Excite, AOL and others make online invitations as common as free e-mail and calendars.

Stand-alone invitation services, however, say they've got a leg up on the bigger players that might move onto their turf. "We think that winning in this space requires understanding the user really well and [offering] a lot of subtleties that [Yahoo] is not going to get," says Josh Silverman, CEO of Evite, which has been operating since October 1998.

Evite, which boasts partnerships with CitySearch, EarthLink and Go.com, might be an attractive takeover candidate, but the future may not be so bright for such players as Event411.com, Invitemetoo.com and TimeDance, which have yet to register on most people's radar. While MP3.com's acquisition of SeeUthere a leader in the space was valued at $150 million, most invitation services are likely to fetch a much lower price since they are relatively inexpensive to build.

No company feels the heat more than Mambo. The startup is expected to announce a deal with a major portal soon.

But adding nifty features this late in the game might not be enough. "You're going to see consolidation occur really quickly," predicts John Chang, president of SeeUthere. "The weaker players will die on the vine."



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