Lycos Europe Expands Overture Pact

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Portal network Lycos Europe said yesterday that it would expand its agreement with paid search provider Overture Services, despite the ongoing legal fight between Lycos Inc. and Overture in the U.S.

The multi-year deal builds on the companies' 18-month-old agreement to display Overture paid listings on Lycos Europe sites in the United Kingdom, Germany and France. They subsequently expanded the deal to include seven of the 11 Lycos Europe country portals.

Overture listings will appear on Lycos sites in Sweden and Denmark on Jan. 1. Overture operates in 11 markets worldwide. It plans to add Australia in early 2004.

The expansion of the Lycos Europe deal is a triumph for Overture, Pasadena, CA, in its quest to keep its distribution network intact following its merger with Yahoo. Some Overture portal partners -- including Lycos in the U.S. and T-Online in Germany -- have been skittish about continuing their distribution agreements with Overture now that a competing portal owns it.

Lycos Europe is a joint venture between Terra Lycos and Bertelsmann. It operates separately from Lycos in the U.S.

In October, Lycos swapped Overture's listings for rival Google's and filed suit against Overture in federal court, alleging Overture breached its contract through its merger with Yahoo. Lycos alleged its Overture service agreement required Overture to get its consent to continue their relationship if Overture was acquired by a Lycos competitor, such as Yahoo.

The suit asks for $800,000 in back revenue that Lycos claimed Overture still owes it. Overture denies Lycos has the right to remove its listings. The lawsuit is pending in U.S. District Court in Boston.

Lycos was the second Overture partner to express unease after the Yahoo acquisition, which officially closed Oct. 7. In September, T-Online switched its paid listings from Overture to Google, citing Yahoo's ownership of Overture as the reason.

Christoph Mohn, chief executive of Lycos Europe, however, called Overture and Yahoo "ideal partners" in a statement. Lycos Europe said it would cooperate with Overture parent company Yahoo on e-commerce initiatives and community products.

Despite the problems it encountered with Lycos and T-Online, Overture has managed to keep nearly all of its distribution partners, including its largest and most important, Microsoft's MSN. Most industry analysts predict that MSN will replace Overture with another paid listings provider, or its own service, when the deal expires in June 2005.

Lycos Europe has several paid listings partners. It displays Google's contextual paid listings on member-generated Web pages for eight Lycos portals. Lycos Europe also has a deal with British paid search company Espotting to display its paid listings channel and directory pages across its network.

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