Overture, MSN Extend Search Pane Deal

In the latest development for the embattled leader of the
pay-for-performance search space, Overture Systems has
extended its distribution deal with Microsoft’s MSN for
90 days, as they discuss renewal terms for the inclusion of listings in the
MSN Search Pane — a module for the Internet Explorer browser.

In a statement, Overture characterized the extension as an opportunity to
“give the companies time to discuss a longer-term contract.”

“We have been extremely pleased with the quality of Overture’s search
product, and we are working toward a longer-term commitment for our MSN
Search Pane,” said John Krass, product unit manager for MSN at Microsoft.
“We look forward to deepening our overall strategic relationship with
Overture.”

The original search pane contract between Overture and MSN began in July
2001 and were set to expire at the end of this month. In the meantime, the
two entities have expanded their relationship, with a deal that puts
Overture’s search listings on MSN’s search pages. That deal is to expire in
December 2003.

Overture’s relationship with Microsoft at large, however, has been somewhat
less positive. Overture’s listings were distributed through the Internet
Explorer 4 and 5 browsers through January 2002, but that deal expired
without much fanfare. Another deal, with Microsoft’s small business site,
bCentral, was struck in August 2000 and was set to run for two years, but it
appears to no longer be in effect. Neither representatives from Overture nor
from Microsoft replied to requests for interviews by press time.

Because Overture relies so heavily on the distribution of its listings by
other, well-trafficked sites, renewals of its deals with these players are
critical for its continued success. The company established an early lead in
the pay-for-performance space, but lately has been usurped by Google in its
relationships with Earthlink and with America Online. The loss of those
deals, however, had little impact on Overture’s revenue projections.

Even if it successfully lands the MSN Search Pane, Overture still has some
battles ahead of it in the coming months. The company’s deal with Freeserve,
a UK-based ISP, expires in November, and agreements with Infoseek and Ask
Jeeves are up for renewal in early 2003.

In recent months, though, Overture has set its sights on overseas markets.
Just yesterday, the company announced its expansion to Japan and France.
Previously, it had established beachheads in Germany and the United Kingdom.
In Europe, it distributes search results through AOL Europe, MSN Europe,
Lycos Europe, and AltaVista Germany.