RealNames Closes, Cites Keyword: Microsoft

RealNames CEO Keith Teare was not shy about naming the company he holds responsible for shuttering his business. He cited Microsoft's (Nasdaq: MSFT) refusal to renew its contract with RealNames as the catalyst for the firm's closure.

The RealNames service allowed companies to buy keywords, which, when typed into a Web browser's address bar, would take users to a particular site.

On his Web site, the RealNames' founder provided an explanation of why he and 79 other employees packed up their desks Friday.

"I am sure that Microsoft will do an excellent job of misinforming the public about the reasons for this decision," Teare wrote, "and so I want to put the record straight."

Real Friction

According to Teare, Microsoft was given 20 percent of RealNames stock and US$15 million in cash guarantees from 2000 to 2001, and RealNames was due to pay another $25 million in guarantees from 2001 to 2002. But the dot-com bubble popped, and RealNames could not pay.

The note came due May 2nd, and when RealNames showed up with empty pockets, Microsoft decided not to renew its contract with the service. Since Microsoft was the company's key distributor, RealNames could not continue without the software behemoth's support.

Microsoft said its decision was not about the money. A Microsoft spokesperson told the E-Commerce Times that the decision to pull up stakes was a tough one for the team that worked with RealNames -- though Teare may believe the plug was thoughtlessly pulled.

Not Genuine

"We're working to make MSN more useful every day for our customers," the spokesperson said. "It was becoming difficult to do that with the user experience provided by the RealNames service."

Specifically, Microsoft cited its dissatisfaction with how RealNames handled generic keywords, such as "realtor," which might take users to a loan site.

"Microsoft is not being genuine in saying this," Teare told the E-Commerce Times. "RealNames gave Microsoft the right to rescind any keyword they want, and in the past nine months, they have not rescinded a single one." The company also had a policy against selling generics, he said.

Name Calling

Although Teare claimed that his company had three quarters of growth, broke even in the first quarter of 2002 and saw its usage growing, it faced stiff competition from companies that provided a similar service. It also had been shedding employees over the last 18 months, eventually winnowing a 200-person staff down to 80.

Still, the company believed in the value of its service, and that faith may not have been misplaced, according to Lisa Allen, a principal analyst in Forrester's media research group.

"I think search is one of the most highly used pieces of functionality when a user goes online," Allen told the E-Commerce Times. "That makes it a good investment for marketers."

Foggy Clarity

However, definitions should first be applied to items like "generic" keywords. "If a company is contracting for placement [in a search]," Allen said, "then the contract should be clear about what page is going to come up when a user types in a specific term."

That kind of clarity is what Teare thought he had with Microsoft. Now, all he seems to have is a burning desire to make sure users know that the Redmond giant is behind the shutdown.

The short statement on the RealNames site ends simply: "Thank you for buying and using Keywords. We apologize for the impact Microsoft's decision will have on your business."