Lycos Unleashes New Deals

On the heels of Lycos’ strong third quarter financial results, which drove its stock up more than $8 to $120 per share (and rising) in less than a day, the online search engine company announced several new deals designed to keep that momentum going.

Lycos (Nasdaq: LCOS) said today it will launch a marketing and promotional campaign with West Coast Entertainment Corp., and yesterday the company agreed to acquire a minority stake in online auction service creator FairMarket, Inc.

The agreements with FairMarket and West Coast Video follow a prolific third quarter for Lycos, in which the company announced a cross-promotional deal with USA Networks and Ticketmaster Online-CitySearch, to salvage the failure of their planned merger, and deals worth a total of $200 million (US$) with companies such as Audio Book Club, Electronic Newsstand, Auto Connect, Web MD and Online Retail Group.

Video Give and Take

West Coast Entertaiment’s 400 West Coast Video stores will include Lycos in some of its in-store promotions, show Lycos commercials on the TVs in its stores and give away various Lycos promotional items to store visitors. West Coast Video stores will also carry Lycos’ “Beginner’s Guide to the Internet,” a free video rental starring acclaimed actor John Turturro.

In return, Lycos will provide links on its Lycos Entertainment Guide and from advertisements on its site, directing visitors to West Coast Entertainment’s Web site, Westcoastvideo.com.

Westcoastvideo.com sells videos, DVDs and movie soundtracks and provides an online database of movie information and reviews. Despite its name, West Coast Video’s stores are located primarily in the northeastern and midwestern United States and Canada.

Entering the Auction Market

In exchange for Lycos’ investment, which the companies did not specify, FairMarket will create an auction service on the Lycos Web site. Lycos has an option to acquire up to 9 percent of FairMarket, which has created auction sites for 11 other Web companies including Outpost.com, ZDNet, Zones.com and Auction Power.

FairMarket offers two standard auction service products — Community AuctionPlace and Merchant AuctionPlace — designed to offer customized online auction platforms operated by FairMarket.

Few details were available at press time about what Lycos’ new site will look like. The Lycos agreement marks FairMarket’s first deal with a major Internet search engine. While Lycos leads search engines in the race to attract online visitors, it was not first to the auction block.

Close number two search engine Yahoo! has been operating online auction services since last September and has built the U.S. site up to 2,000 different buying and selling categories. Yahoo! also recently launched auction sites targeting Australia and New Zealand, Canada, and the United Kingdom and Ireland.