Back in 1999, Scott Rifkin was kind of a big deal back during the era of AOL and Dot-Com:
A Texas-based online health-care advice service struck an expensive blow at the very core of a competing local service this week.
drkoop.com, the Internet medical information company chaired by former U.S. Surgeon General C. Everett Koop, forked over $89 million to be featured on a variety of America Online-related websites.
Until now, AmericasDoctor.com had been the sole medical advice site featured on America Online, having paid $2 million to appear once on AOL’s anchor page.
“The deal is we are the sole health care [information] provider across all the AOL brands,” said Dennis Upah, chief operating officer for Austin, Texas-based drkoop.com.
Where that leaves AmericasDoctor, which has pinned much of its hopes for future revenue and its bid to sell $60 million in stock on its unique AOL relationship, is an open question.
For its par, drkoop.com is making a much bigger bet on one source of customers, and thus is depending on AOL for more of its revenue than is AmericasDoctor.
By paying $89 million over four years to become a tenant on all of the Internet provider’s websites, drkoop.com is pushing its name brand to America Online’s captive audience of nearly 20 million users, said Laurie Orlov, a senior analyst with Forrester Research Inc., a technology-oriented equity research company in Cambridge, Mass.
“$89 million doesn’t surprise me,” Orlov said. “People are paying a ridiculous amount of money to be on a space.”
For most Internet-based health care information companies like drkoop.com, attracting patient visits and potential advertisers to their websites is very important, Orlov said. Aside from venture capital and stock investors, advertising is the only proven source for revenue, said Orlov.
Meanwhile, though silent about his company’s anticipated initial public offering later this summer, Dr. Scott Rifkin, chief executive of AmericasDoctor.com said he was very much aware of what his company’s competitors are doing.
“In any of these deals, it is essential that companies understand their return on investment on a media deal,” Rifkin said.
Rifkin declined to comment about what he thought of the added health-care information competition on America Online.