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Online directories beginning to charge

But some say `sea change' raises credibility questions
By Erik Espe
 –  Business Journal Staff Writer

Updated

So you want to register your Web site?

Well, reach for your wallet.

It used to be free to have your site listed in a search engine. Now, some online directories are beginning to charge for that privilege.

An e-commerce site that wants speedy inclusion in Yahoo Inc.'s lucrative, online directory can expect to shell out $199--or wait months to find out whether they will be included.

Web sites that want prime placement in Palo Alto-based AltaVista Co.'s directory were asked to bid as part of a "key word search" auction held this month by AltaVista and New York-based ad agency DoubleClick Inc.

"Some people are wondering if we're seeing the sea change," said Danny Sullivan, editor of Search Engine Watch, a Britain-based online publication.

The "sea change" has sparked the formation of at least one Silicon Valley search service--Mountain View-based online Open Directory Project (formerly NewHoo)--which promises to offer an unbiased list of Web sites without ever accepting payment from the sites themselves.

Some observers, such as Mr. Sullivan and ODP founder Chris Tolles, believe the auctioning of key words or charging fees for speedy registration bring up credibility questions. It's as if a newspaper charged a company or person to be placed on its front page, Mr. Tolles said.

But Yahoo editor in chief Srinija Srinivasan said the company's new "Business Express" service is misunderstood and doesn't infringe on Yahoo's integrity as an unbiased Internet guide.

"The structure of the service was specifically chosen and very carefully planned so as not to compromise the editorial integrity of the service," she said. "That's one thing we hold near and dear. We could not sleep well at night if our editorial integrity was not intact."

The express service doesn't guarantee that companies will be accepted, Ms. Srinivasan said, only that they'll find out sooner.

Companies that pay the $199 Business Express fee find out in one week if they'll be included in the Yahoo directory. By contrast, those that don't use the express service may have to wait months.

In addition, only e-commerce sites with the capability of conducting online financial transactions can qualify for the service.

She said Yahoo doesn't have time to look at every site submitted to it for consideration, but the express service at least guarantees consideration.

"To the extent it increases their chances of getting looked at, it increases their chances of getting in," she said.

Mr. Sullivan said that at the very least directories should let users know which sites paid and which didn't.

"People are concerned about what's happening," he said.

He points to Pasadena-based Goto.com Inc., which offers a similar directory, and lists paid advertisers first. He applauds Goto.com's site, because each listing tells the user how much the advertiser paid for the placement.

AltaVista plans to distinguish paid sites as such.

He also questions the integrity of a new "universal shopping cart" service being promoted by Redwood City-based Inktomi Inc., a software firm that powers the search engines run by Yahoo and other portal sites.

Inktomi's universal shopping cart, expected to be made available this year, will enable online shoppers to search for the lowest-priced items on the Internet.

The hitch is that only merchants that agree to give a portion of their sales to Inktomi will be included.

Mr. Sullivan points out that the directory can't be considered comprehensive or unbiased because "if a service doesn't pay to participate and it has the cheapest prices, then you wouldn't find it using such an engine."

Last year, a group of area programmers created NewHoo, an online directory that they believed conveyed the spirit of the original, once not-for-profit Yahoo.

They believed that Web sites and online merchants should never have to pay for speedy placement in a directory.

That directory, however, has changed its name. Its now known as the Open Directory Project and was purchased by Netscape Communications Corp. late last year.

Mr. Tolles, a NewHoo co-founder and now a senior product manager at Netscape in charge of the ODP, believes that Yahoo's decision to charge sites for "express" service relates to a problem all search directories are confronted with--the awesome growth of the Internet.

Ms. Srinivasan said Yahoo receives tens of thousands of submissions for inclusion in its directory every week.

"We have finite resources and there's more than we can handle," she acknowledged.

"Yahoo's model would not scale," Mr. Tolles said. "This is typical of economics. They don't have enough people to staff it. To make up for that, you pay for placement."

ODP's model has been to hire volunteer editors from around the world to search for Web sites. The firm has 9,000 editors, all of whom work for free surfing the Web and collecting Web sites.

Because ODP is bringing new volunteer editors on board every month, the company is the only one that can scale to the size of the Internet, Mr. Tolles said.

The concept has impressed Lycos Networks Inc., which on April 16 announced it would incorporate ODP into its two search engines, Lycos.com and Hotbot.com. When users conduct searches on those sites, they'll be accessing the ODP directory.

The ODP directory can also be accessed at http://www.newhoo.com.