Netscape OKs $70M Excite Deal

Excite has struck a $70 million deal that will make it the Internet search engine on Netscape's popular home page.

Excite is paying Netscape the money upfront in exchange for getting strong visibility on the Web site and a share of ad revenue from Netcenter, which is the second most popular site on the Web. The new site will be called Netscape Search Powered by Excite.

As part of the two-year deal, Netscape will buy a small stake in Excite. The two companies will also develop other information and entertainment services.

The partnership ended speculation that Netscape would strike a deal with Infoseek, a top competitor of Excite.

One unusual aspect of the deal is that both Netscape and Excite compete as "portals," or doorways Web surfers use to get to the Internet. Both companies are also the direct link to the advertising that brings in the bulk of their revenues. When the two-year deal ends, the companies could become fierce competitors.

Although critics have speculated that the deal between the two competitors will leave Excite on the losing end, both companies stand to benefit from the agreement.

Excite has already sold Netscape a license to its search engine software. The companies are among the five most trafficked sites on the Internet. Excite hopes that the Netscape deal will help it knock Yahoo from the top.

And Netscape - which has come upon difficult times since competition from Microsoft forced it to give away its Navigator browser - is reestablishing itself as a major media company that earns money from its own advertising revenues.