Two years ago, an analyst with Forrester Research told Salon that he foresaw "a shakeout in 1998 or 1999" for the online city guide business. "I'd be surprised," said Bill Bass, "if anyone but Sidewalk and maybe one other survives. The rest will either die or be bought up."
Bass was right about the shakeout, but dead wrong on the survivor. But we shouldn't pick on the poor analyst. Monday's news that Microsoft has sold Sidewalk for a 9 percent stake in Ticketmaster Online-CitySearch probably caught many people by surprise. Although CitySearch started first, in 1996, Sidewalk seemed like a sure bet for a company with unlimited cash and a driving ambition to make a dent in online commerce. And who is going to bet against Microsoft, anyway?
But David and Goliath, this is not. Barry Diller, the CEO of USA Networks, which owns Ticketmaster Online-CitySearch, doesn't quite fit the underdog profile. Ever since Ticketmaster merged with CitySearch in August 1998, the struggle over city guide turf has clearly been a battle of equals.
The most interesting question to ask is what does this mean for Microsoft? Is Sidewalk another online gaffe to be hung up with the Microsoft Network as a shining example of how even one of the best-run corporations in the world can bungle it all up? Or is it proof that Microsoft has decided that it just isn't very good at projects that require editorial content?
The content argument isn't too compelling. Microsoft still has other high-traffic sites -- Moneycentral comes to mind -- that feature oodles of content, as well as such projects as its CD-ROM interactive encyclopedias and its content flagship, Slate. The more likely answer to why Microsoft sold Sidewalk is simply that it didn't see much potential for revenue in a niche that is being hit hard by not only CitySearch and America Online, but also by the countless newspapers and alternative weeklies that have long made local listings their bread and butter. Microsoft respects nothing more than the bottom line -- as its strong quarterly earnings report, announced on Monday, once again demonstrates. In an odd way then, Microsoft's admission of defeat -- the sale of Sidewalk -- is a strong reminder of why the company is so often victorious.