The economics of the new economy are not exactly evident. Internet portals like Yahoo! and AOL, for example, had to invent whole new business models, finding revenue streams among the variety of free services they provide. In essence this has been the Holy Grail for portals: how to get people to pay for services that others are giving away and how to capitalize on the huge number of eyeballs streaming through ones portal.
In this Case Study, Theodoros Evgeniou, Assistant Professor of Information Systems, looks at Terra Lycos, considered by some to be a second-tier Internet portal, as it tries to compete with the big three AOL-Time Warner, Microsoft/MSN, and Yahoo! by finding new revenue streams.
Terra Lycos was born in October 2000 out of a merger between Terra Networks, a subsidiary of Spanish telecommunications giant Telefónica and US-based Lycos, an Internet portal and service provider. The merger also included a strong role for German media giant Bertelsmann, which agreed to a five-year US$1 billion deal to buy advertising and services from Terra Lycos and offered Terra Lycos exclusive access to its content.