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eRelevant: And Now For The $115.98 Dollar Question

All things being average, which they never are, you'd be worth about $116 to the Web site that can claim you as being its "user." It's the new game of Web traffic cop as we crunch the numbers of RelevantKnowledge's raw user data and take it into the realm of investordom. Bean counting meets bean eaters.

Holy frijole: RelevantKnowledge released its user data for December which showed the top Web sites and number of users. We took that raw data and combined it with the market capitalization of public Internet companies and/or estimated private market value for these firms which are not public. Then divided by number of users. It revealed an average value per user in the neighborhood of $116. Which, by the way, looks like a 7% discount to your average user self. Take a look at the numbers jumping out here:

Top 10 Web Sites & Value Per User

December Web Site/ December Market cap Value Imputed Value Percent
Rank Web Brand Users or PMV * Per User @ Avg. Difference
    (millions) (millions) User (millions) Premium
1 Yahoo/Four11 17.3 $ 2,794 $ 161.50 $ 2,006 39%
2 Netscape 14.0 $ 1,626 $ 116.14 $ 1,624 0%
3 Excite/WebCrawler 10.8 $ 477 $ 44.17 $ 1,253 -62%
4 Microsoft 10.5 $ 2,000 $ 190.48 $ 1,218 64%
5 AOL.Com 9.4 $ 1,500 $ 159.57 $ 1,090 38%
6 GeoCities 7.9 $ 400 $ 50.63 $ 916 -56%
7 Infoseek 6.8 $ 275 $ 40.40 $ 789 -65%
8 Lycos 5.5 $ 489 $ 88.87 $ 638 -23%
9 MSN 4.9 $ 750 $ 153.06 $ 568 32%
10 AltaVista 4.6 $ 325 $ 70.65 $ 534 -39%
  TOTAL 91.7 $ 10,636 $ 115.98    
  AVERAGE 9.2 $ 1,064 $ 115.98   -7%
user data: RelevantKnowledge. All other numbers, Internet Stock Report estimates & analysis

Do you want to know the value of a brand, one vs. another? One angle may be to take Yahoo (NASDAQ:YHOO), which tops the list of users and overall value at $2.7 billion, and apply it as template for the peers shown. It appears to be valued at more than 3x its next nearest "navigation" neighbor, Excite (NASDAQ:XCIT), which boasts 10.8 million users but just $44 per user.

I don't know; in the TV world was ABC worth $19 billion while CBS about $6 billion? Perhaps.

Similarly, with the new Web-based media networks (as we refer to them), is a Yahoo worth 3x Excite? Or is closer cousin Lycos (NASDAQ:LCOS) worth 2x Excite users? We think something's got to be out of whack here one way or another. ABC, CBS, and NBC, give or take management (which can count for a lot), are basically networks. And here are the Web networks as motley crew with value splayed all over the place like a Jackson Pollack painting at a comic book convention.

In our humble opine, Infoseek (NASDAQ:SEEK) could be the real underdog story. It keeps posting the numbers of users according to RelevantKnowledge yet lacks the ooompha to move. Makes little sense, but where's the brand? Notably, we think its peers have done a superior job of branding and positioning. Clearly so.

If Infoseek has more users than Lycos, why is it lagging on value? Our analysis estimates Infoseek at a 65% discount to the group shown.

While the Microsoft (NASDAQ:MSFT) and AOL (NYSE:AOL) services are not publicly broken out in company financials, we allocate an appropriate value per user according to the following: brand, comparable values in the top tier, and ability to support that brand and effort over time.

In particular we estimate Microsoft may be in a position to convert its entire Web site(s) into a de facto MSN. If you're watching Fox TV Network and view its various shows, you're still watching Fox. If you're using Microsoft for software downloads or stock quotes it's still "use," it's still an "experience." It's still your eyeballs and wallet not far behind.

Coincidentally, our number crunching shows Netscape on a per user value at the average. Said another way, if Netscape was only an online "service" right now, investors would be carrying it at an imputed $116 per user. Hmmm. That leaves the server software (majority of sales) and browser (minority of sales) basically unaccounted for, although they do drive brand and traffic to Netscape.com.

But we suspect that when the beans are all counted the average only serves one purpose: to highlight the difference between "currencies." For just like dollars, yen, marks, pounds, and even quan, the gap exists in these value per user exchanges.

It all depends on what we define as "user." Over time, quality (buyers and sellers) will likely be much more important than quantity (browsers and passersby). Now that would be more than relevant knowledge. Relevant dollars.



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