Less Here Than Meets The Eye

Last week I wrote about rumors that three Internet companies – CMGI Inc.
, eToys (ETYS) (ETYS) and [email protected] (ATHM) — were vying to buy online
greeting card site Blue Mountain Arts.

Sources had told The Wall Street Journal that Web retailer eToys had the
inside track, but I argued that CMGI could emerge as the top bidder for
bluemountainarts.com, one of the most popular sites on the Web.

Turns out that the dark horse, [email protected], is the winner. The company
announced Monday that it plans to buy the cyber greeting card site for
$780 million in cash and stock.

But what exactly did [email protected] win?

An opportunity to pitch its residential broadband services to the 9
million ‘Net users who visit Blue Mountain Arts’ Web site each month,
according to [email protected] President George Bell.

An enticing prospect at first glance. Still, I’m not sure how many
typical visitors to the Blue Mountain Arts Web site will easily be
converted into paying cable modem customers. After all, the vast
majority of visitors go to bluemountainarts.com to send or look at free
e-mail greeting cards.

Further, Blue Mountain has carved out a niche reflective of its
founders, Stephen Schutz and Susan Polis, a married couple straight out
of the Woodstock era who began the company in the early ’70s “with the
goal of helping people communicate their feelings through poetry and
art.” (Monetize that!) It is this niche that helps Blue Mountain Arts
maintain its lead in the greeting card market over a host of new
competitors, including Amazon.com, AOL and, as of Tuesday, Lycos.

It’s entirely likely that Blue Mountain Arts’ customers will be turned
off by heavy-handed efforts to pry money from them, such as including
e-commerce pitches with each free e-mail greeting card, as [email protected]
has said it plans to do.

Also, the notion that some Blue Mountain Arts visitors will be enticed
into buying [email protected]’s cable access to enjoy the full benefits of
“rich media” greeting cards strikes me as a stretch. It’s the recipients
of the cards that need the extra bandwidth, not the senders, who are the
Bluemountainarts.com regulars.

There’s no doubt that a Web site which is No. 13 in terms of traffic has
great potential value as an acquisition. But the fit has to be right,
and I have my doubts that this one is.

The market appears equally unenthused, with ATHM shares rising only 1.9%
Monday to close at 39 13/16. That’s a small bump for a company that just
bought a top-ranked Web site.

Maybe I’ll be proven wrong, but for now I’ll hold off on sending
[email protected] a “congratulations” greeting card.

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