Can AOL Keep Netscape.com From Fading Away?

Changes at AOL

AOL has bet the farm on online advertising as it sheds its old subscription-fee business model. It's a years-long process that continues full-speed ahead with this week's announcement of AOL's plan to move its headquarters to Manhattan and the integration of its ad networks into a single platform.

But with its online ad revenue growth a disappointing 16 percent in the second quarter, AOL could sure use the traffic that Netscape.com used to draw even several years ago.

An examination of Netscape.com's traffic patterns since AOL acquired Netscape Communications in March 1999 for $4.2 billion tells a story of consistent decline.

As critics have pointed out over the years, this is true not only for the Netscape.com portal but also for the company's other products, in particular its browser.

"AOL has never known what to do with Netscape. They squandered that asset," Sterling said. "Eventually, the bottom dropped out."

In November 1999, Netscape.com had 20.8 million unique visitors in the U.S., reaching close to a third of the country's Internet users, according to comScore.

By December 2003, Netscape.com's unique visitors had dropped to 18.8 million, and its reach had plummeted to 12.4 percent of the U.S.'s Internet users, according to comScore.

Things kept deteriorating and by January 2005, Netscape.com had little over 17.5 million unique visitors and a reach of 11 percent.

In the next nine months, Netscape.com suffered a massive drop in unique visitors. In October 2005, the portal had 12.9 million unique visitors, and its reach among all Internet users in the U.S. -- 169 million at that point -- had fallen to 8 percent.

This page-view graph, based on data compiled by Alexa Internet shows the erosion in Netscape.com's traffic between early 2002 and today.

"It's an interesting illustration of the waning of a very strong Internet brand," Sterling said.

As tragic as 2005's traffic numbers look compared with what Netscape.com had been, they would probably elicit tears of joy from AOL officials today. In August 2007, Netscape.com drew 6.1 million unique visitors, down from 10 million in August 2006, according to comScore.

The AOL spokeswoman said part of the traffic erosion of the past year is due to the fact that starting in the third quarter of 2006, Netscape Mail was migrated to AIM Mail so Netscape.com lost those visits.

Also, in October 2006, the site lost the traffic from the Netscape Connect dial-up access service, which was broken out into its own property.

She couldn't quantify how many unique visits the loss of those two components cost Netscape.com, but it's probably fair to say that AOL had much higher expectations for the site's traffic after its social news transformation.

Netscape.com drew 61 percent fewer visits in August of this year than in August of last year, a period when visits to social news rival Digg.com increased 142 percent, according to Hitwise Pty.

In other words, the problem hasn't been the social news format, which lets readers submit and share links to stories, as well as vote on, comment on and rank those articles. Netscape.com simply didn't gain the expected traction with people who frequent these sites.

AOL acknowledged this when it announced the plan to turn Netscape.com into a portal again.