Microsoft To Hawk Online Service At U.S. Malls

According to published reports, Microsoft Corp. has forged an alliance with the largest mall owner and operator in the United States to advertise and sell its MSN online service.

The deal, which will be announced today, comes on the heels of a number of partnerships formed last week by huge brick-and-mortar retailers and Internet companies in attempt to expand their markets on and offline.

Starting January 2nd, Indianapolis, Indiana-based Simon Property Group will allow Microsoft to promote its MSN Internet service in 120 of its more than 190 large malls — including Roosevelt Field in Garden City, New York and Lenox Square in Atlanta, Georgia.

Special Gift Certificates

The only malls that are not included in the pact are those where local Internet access is not currently available or the cost of the service is still prohibitive.

Under the agreement, Simon will promote MSN in its malls and in its S Magazine, which is distributed in its shopping centers. Those signing up for a six-month prepaid subscription with MSN will receive a $50 (US$) gift certificate that can be used at any store in any Simon mall, including shopping centers not participating in the promotion.

Shoppers agreeing to prepay a $180 annual MSN subscription will be given a $100 mall certificate. The discounted renewal rates will remain the same for consumers — less the gift certificates. MSN service usually costs $21.95 a month or about $263 annually.

Expand Internet Presence

The promotion is scheduled to run through February and is viewed by industry observers as yet another move by Microsoft to keep up with rival America Online, which just cut a similar marketing deal with Wal-Mart Stores last week.

As part of this new alliance, Microsoft will train Simon staff to demonstrate the MSN service and answer questions about it.

Both Simon and Microsoft stand to increase their Internet presence as a result of the deal. Microsoft has already linked itself with Tandy’s RadioShack and electronics chain Best Buy to promote its products in their stores.

Meanwhile, Simon has recently created a new unit, clix ‘n mortar, to implement its Web strategy. It plans to begin wiring its malls next year with high-speed Internet access that will make it possible for its tenant stores to add Web-enabled kiosks to their sales floors.

About Simon Property Group

Simon (NYSE: SPG) is North America’s largest owner of malls. The real estate investment trust owns, develops, or manages more than 240 properties — primarily shopping malls, community shopping centers, and other locations — in 35 U.S. states and Poland.

The company holds large concentrations of properties in Florida, New York, Texas and the Midwestern U.S., but also has developed such tourist destinations as the Mall of America in Minnesota and Forum Shops in Las Vegas, Nevada. SPG gained paired-share status after buying Corporate Property Investors in 1998.

In its fiscal year ending December 1998, Simon earned about $243 million on revenue of $1.43 billion.