Shopping, home pages, shares, personalised what-have-you for a few pennies, free e-mail, competitiveness, specials, news, directories, entertainment and a little advertising on the side - this is the characteristic pile of services that has been assigned the buzz-word designation of "portal". A slippery notion is "portal", but it has a place of honour in Wall Street’s mad, inflationary Internet shares race.
As in similar instances of mass network hysteria (from the notorious push technology to the Java, slowly being consigned to oblivion), everyone is eager to board the trendy bandwagon and cut themselves a juicy slice of the current fad: regardless of whether you are marketing breakfast cereals or building destroyers, if you don’t have a portal, you don’t exist on the Internet, and your shares will be scorned and doomed to plummet.
"The term ‘portal’ has undoubtedly been prostituted", said Ido Amin, possibly Israel's most veteran Internet journalist and editor of the Israeli ‘semi-portal’ site Dapei Reshet (‘Network Pages’). "Every Labrador dog site introduces a free e-mail option and a couple of links and calls itself a portal. This is sheer nonsense, but everybody is doing it".
Nonsense or not, portals are starting to converge on Israel en masse, in the hope of winning the lottery and being purchased for millions of dollars by a nimble venture capital investor, or a large content supplier, or, at least to come out with an IPO worthy of its name on the Tel Aviv Stock Exchange. Press communiqués, sundry leaks and rumours proliferate.
There’s no such thing as a portal
Zvika Ellenbogen, an economist specialising in the Internet and providing consultation for networked content companies, claims that definition is pointless: "There is no such thing as a portal. There is no one model. The terminology is dynamic, active and modular. What is true of some companies, for example, a large network of information and original content, plus a very extensive index, in other words, Yahoo! and the like, is simply not true of others, such as Snap.com, which specialises in information on entertainment proper, and most of whose services are satellites orbiting around the planet known as entertainment. The bottom line is - we all need a portal".
Why do we all need a portal? "It’s very simple. Contrary to what is generally thought, people do not surf the Internet today", insists Amir Shachar, manager of public relations firm Koteret High-Tech. "After the initial excitement, everyone focuses on three to four principal sites, which he will visit and with whose aid he will get updated almost every time he goes into the network. These are the true portals".
But where does that leave the Israeli Internet swamp? And what is "dynamic, active and modular" about it? According to Ofer Shani of NetKing: "Plus or minus, there are hardly any significant differences between the large Israeli portals, and I include myself in that definition. Where will you find something new and different, that is not completely hackneyed?"
The general manager of a large Internet site construction company accuses large companies of wrongheaded business thinking and utter contempt for users’ intelligence and for the very notion of the ‘portal’. "There is no lack of companies that construct a portal offhandedly, with the sole object of selling it to an investor captivated by the buzz-word", he claims. By way of example, he points to what he regards as the hasty, superficial structure of Internet Gold’s new portal. "You can immediately see that the entire site is a sort of skeleton that is supposed to look attractive to investors, yet has no real capability of attracting a large quantity of users".
Dror Feuer, who edits "Captain Internet", the computer supplement of "Ha’aretz", says there is no doubt that "One of the main problems of portals in Israel is the slipshod approach, Israeli amateurism. It starts with the most basic things such as "dead" links in the large sites, or pages loaded onto the Internet with the apology "still under construction", which is an act of incredible effrontery and gall, especially in commercial sites, and this is seen in the biggest sites".
There’s no such thing as a profitable Israeli portal
But, amateurish or not, the Israeli portal’s bottom line is written in the very same red ink as that of almost all the world’s portals. "Today, no portal has any economic justification", Feuer claims. Economist Ellenbogen concurs: "There is virtually no such animal as a profitable Israeli portal. The ones that do enjoy a slightly more optimistic cash flow do not do it with the aid of original content and sponsored advertising, but by constructing sites for business clients. That is how it is with NetKing, with IOL, and Walla - the losses stem for the investment in the portal, and the profits from site construction business".
The spare income (possibly even certain profits?) dribbling in from advertising is not due so much to net advertising benefit as to "hype": Advertisers want a cool, with-it image, and that is something the Internet can provide. But to many people, the pure advertising benefit still looks dubious, and the average Israeli advertiser still does not regard the local Internet as a significant market segment".
The question is whether, in the almost anorectic Israeli Internet, a portal type of thing has any chance of economic survival, which, before all else, requires large masses of people. "No", says Itai Schweitzer of Kintika, "because the Israeli portal is built on services designed to attract the general public, in order to create market share. The portal proceeds on the assumption that it will have market share, it can start selling products and services to the surfing community that drops in on it. The problem is that, in the short term, the percentage of users in Israel is small compared to the profit margins deriving from e-commerce activity. With the number of surfers there are in Israel, it is hard for a portal to survive with low profit margins".
Losing but looking ahead
Feuer "All Israeli portals without exception are pouring out money and sustaining cumulative losses, in the hope that the future public will bring a rosier hue into the cash flow. Correct to the present, there is no economic justification for any Hebrew portal".
Walla, according to the best available statistics, is the most popular portal site (followed, apparently, in second place by IOL or Tapuz, depending which set of statistics you choose to believe). Even Walla editor Gadi Shimshon, somewhat uncomfortable about it, agrees with the assessment: "Nobody builds a portal just for today’s public. Tomorrow’s surfers are the real, economic thing".
So the real question is not what is happening at the moment in the Israeli portals market, which, as even its most enthusiastic advocates admit, is economically most problematic, but what will happen tomorrow.
Speaking of that abstract tomorrow, when the Internet becomes a well-loved daughter in every Israeli home, happily ensconced on every Israeli computer, television set and Pele-Phone, the eyes of the portal editors and general managers take on a romantic glow.
"The portal", says Shimshon, "is a concept very well suited to Israeli society, and will gather tremendous momentum the minute the Internet becomes mainstream. The polarity existing in Israeli society, which appears to be a drawback, may become a business advantage: the Israeli public is divided into numerous tribes, and each tribe can find its own bonfire, which will be one of many, in its own portal".
The portal-poppers’ little problem
There is thus an abundance of merry, optimistic forecasts regarding the economic future of portals, which are seemingly to become increasingly assimilated among all strata of the population, while enjoying ever larger advertising budgets. Just one small cloud darkens this bright picture: the advent of the paper titans, the great, dastardly-plotting powers of the old media, the media kings, ranging from the Second Channel to the big newspapers.
An executive of one such newspaper, who refused to be named, maintained that "Even at the present moment, there is very fierce competition between the media giants as to going into the Internet rapidly, and, most importantly, in the proper manner. Even though this competition has still not surfaced, it is certainly roiling and boiling down there, and will definitely become more public in the very near future". He goes on to say that, for large entities, effecting a serious, massive entry into the Internet is of total and absolute significance. "It amounts to a definite change of the game rules and the game board. The moment large media entities go into the network, and they will, in the final analysis, muster all their divisions to storm the network, the balance between the portals will change completely. Those who were kings of the swamp, if, indeed, they manage to survive, will find their standing undermined. The newspapers will establish a very massive Internet presence, possibly even at the expense of the existing leaders, by virtue of the money the press will pour into the Internet, and also by virtue of the fact that the western world has nothing to parallel the huge percentage of Israelis who are exposed to newspapers and read newspapers".
Neither is the executive worried about the experience already garnered by the existing portals. "Experience can be bought for money", he asserts. "People who have gained experience in any one of the large portals will move to the Internet sites of the large newspapers in return for the prestige and the higher salary".
Walla general manager Gadi Hadar, ostensibly the man who should be most seriously worried over the advent of the media giants into his territory, sounds wondrously calm: "Global experience shows that no newspaper has managed to set up a portal that has won true dominance", he claims. "We are a portal, not a newspaper, and when I, or, equally, the average surfer, want to read the full article, we will go to the newspaper. When I want portal content, I’ll go to a portal".
Grey, balding office worker
Hadar also maintains that the McDonalds versus Burger Ranch and Burger King fight will be back. The hamburger eaters’ market, that is to say, or, in this case, the surfers’ market, will become broader and more flexible, and competitors will not steal the crumbs of one another’s sales pie or surfers. "There will be room for everybody", he assures us. "Altogether, the Internet is completely different from the paper and television market. There is no lack of examples: Barnes & Noble versus Amazon, for example. Barnes & Noble had much better connections with suppliers, an enormous initial budget, tremendous goodwill, huge advertising budgets, and yet, who won in the end? A grey, balding bank clerk by the name of Jeff Bezos. The secret is that Internet switching, by its very definition, is not extra-Internet switching. It is a totally different world. And the name "Yediot" or "Ma’ariv", in and of itself, will not suffice. Economic adviser Ellenbogen agrees that a great deal will be decided in the near future: "Serious content suppliers will be going into the Internet this year, and there will be a free-for-all bytes war".
One portal, a little less famous that the others and quite a long way from declaring a bytes war, is Proprosa, a small, quite intimate portal, for literature lovers. The approach of site editor Yariv Habut is much more relaxed: "It should not be forgotten that the number of persons hooked up to the Internet here is far lower than in a medium size town in the United States. I see the advertising campaigns of the large portals, the publicity, the shrieking colours, and I say: a little modesty, let’s not forget where we are living. I propose an alternative, a modest site, without a lot of nonsensical talk of e-commerce and banners. A small portal for a small nation".
Published by Israel's Business Arena April 22, 1999