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New Profit Stream for Internet Search Engines

When an online surfer types a key word into the Google search engine, among others, to find products and services, he or she probably doesn't realize that the resulting list has been carefully planned and often paid for.

Web users queries are becoming increasingly valuable to companies and it is pertinent that they receive a prime spot on the resulting lists in order to possibly attract greater business opportunities.

As it is, the competition is getting fierce as more people take to the Web and more search engines proliferate.

Microsoft corp for one, the most recognized software company on the planet, recently said that it is developing new search-related technologies. The new offerings will help its customers find nearly anything on the Internet, including digital photos, in its aim to surpass Google Inc.

Currently, the top three in the search-engine industry are Google, Yahoo! Inc and the Microsoft-based MSN division.

Ibm corp, one of the world's top technology companies which few consumers connect with online searching, recently introduced a searching technology called WebFountain.

It is easy to see why IBM was interested as the international online searching market is expected to jump more than 20 percent to US$2 billion this year, according to the US-based research institute Bancorp Piper Jaffray.

The Chinese market, undoubtedly, also represents an attractive opportunity for online search firms.

Among all services on the Internet, 62.7 percent of online Chinese surfers used a search engine service. The figure was second to e-mail services at 92.2 percent, according to the China Internet Network Information Center.

Industry insiders said that the country's total market's revenue reached about 500 million yuan (US$60.24 million) last year and is expected to reach 2 billion yuan in the next three years.

At present, domestic companies have provided different payment services to attract more clients.

Baidu.com Inc, the industry leader in the Chinese search result advertisement market, has adopted a "pay-for-click" system. Clients bid for the best positions and have to pay Baidu 0.3 yuan when one user clicks on the client's link in the results list.

"Our customers pay for a real click and that's our advantage," said Bi Sheng, Baidu's spokesman.

This past summer Huicong International Information elbowed into the market with a different payment system. The Beijing-based company's corporate customers pay a fixed monthly fee to attach their link and name to a results page.

The company has clinched one-year contracts with some major portals, such as Sohu.com Inc and Sina.com Inc.

"The prospects are bright and the competition in the market will become more and more heated," said Chen Jie, an Analysis Consulting Co Ltd analyst.

Chen added that Baidu will float an initial public offering on the Nasdaq exchange in future. The proceeds will help it to remain in the leading position in the market.

There has also been talk that Google is planning to win more share in the Chinese market.

"To homegrown companies, Google's expansion is a big threat," Chen added.

(Shanghai Daily October 13, 2003)

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