Web portals: here today, gone tomorrow?

Web publishing is well known as an industry of trial and error, but its first coherent business model has just emerged from the haze: Web portals.

Web portals aim to be a 'one-stop-shop' from which you can access entertainment, news and other services. But what appears to be the Web's first enduring moneymaker could turn out to be just another passing fad.

Compiling content is not a new concept - Yahoo has been doing it for years - but recently, companies like Yellow Pages and Netscape have found that it solves a number of business problems, and takes them one step closer to making serious money.

Web sites that try to reap dividends from retail have a payment problem. Often the amounts charged on a credit card are so small that the potential profit on each transaction is wiped out by bank charges. But on a portal site, which hosts a selection of retail front ends, multiple payments can be made in a single transaction and ecommerce becomes a far more viable option.

Likewise, Web publishers are jumping on the portal bandwagon as part of a shift towards a pay-per-view model. Subscription-based payments are unpopular among surfers who do not visit a site regularly, but on a portal site, micropayments for reading magazines can be tallied with other purchases, such as animated birthday cards.

Content providers are responsible for driving the portal phenomenon as much as the hosts. A well branded service can expect visitors to come looking for it but for an unknown Internet start-up, joining forces with a big name such as Yahoo could be the only way to boost profile.

With both supplier and host benefiting from portals, the million dollar question - and the most closely guarded secret - is who pays whom? Portal developers are unwilling to disclose this information, but Yahoo and Yellow Pages agreed that specialist content is always the most valuable.

"Normally, the providers pay us for being their host, but if a service leverages other content, we are prepared to pay for it," said Yahoo UK's senior producer, Ralph Everbach.

Eddie Cheng, director of new media services for Yellow Pages, agreed and added: "There is no magic formula any more."

Despite all of this, portals may be just a short-term solution for Web business. As the infrastructure behind the Internet develops, credit cards - or smartcards - will start handling micropayments. More sophisticated ad server technology will allow companies to reach their target audience across a range of Web sites without huge overheads. The main purpose of portals will be gone, and business models will develop to address new needs.

But until these problems are solved, Web portals look like the best way to make money online.