Yahoo, Lycos pool chat, IM services in Europe

Yahoo Inc.’s European division and rival Web portal company Lycos Europe NV will begin sharing Web chat and instant messaging (IM) technologies in an effort to cut costs and reach out to a broader customer base.

The reciprocal distribution agreement for the communication products, Yahoo Instant Messenger and Lycos Chat, saw its first product launch Thursday in Italy with a new cobranded service based on the chat product by Lycos, according to Sue Jackson, a spokeswoman for Yahoo Europe. The service will be rolled out across Europe over the next few months, she said on Friday.

The agreement, which is an extension of the business alliance between Yahoo Europe and Lycos Europe announced late last December, will have two stages, Jackson said. In the first stage, Yahoo Europe will replace its Web chat service in Italy, the U.K., France, Germany and Spain with a cobranded service that will be provided and maintained by Lycos. Yahoo, based in Sunnyvale, California, will continue to provide a group communication service through its Yahoo IM service, she said.

In the second stage, Lycos Europe will then replace its IM service in the same European countries with a cobranded service provided and maintained by Yahoo. This new service, which should be fully available throughout Europe by the end of the year, will be based on Yahoo’s updated Messenger program launched in the U.S. on April 26, Jackson said.

Users will not find activating the new services complicated, she said. Yahoo chat users will be able to keep their e-mail addresses and registration information, but will have to reapply for a new chat nickname, she said. Yahoo estimates it has aroundone million European Web chat users.

The two companies are still determining what features will make up the service, according to Jackson, but multimedia is the focus of the new Yahoo Messenger program. Features in the U.S. release of the program include a larger Web video window for Super Webcam, support for up to 20 frames per second with a broadband connection and the use of animated figures called “Audibles” that play recorded messages and can be dropped into an instant message. It also provides improved integration with other Yahoo features, for example allowing IM users to access Yahoo’s Internet radio music service, Launchcast Radio.

“Our research shows that customers want more Web-based chat and more multimedia. Lycos has a Web-based client that is quite strong and we are strong on the IM side,” Jackson said. “We believe that it makes sense for us to pool our resources and it will offer a better experience for the consumer.”

Financial arrangements between Yahoo and Lycos were not disclosed and Jackson declined to give figures for expected cost savings for the two companies.

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