A-Z of the digital world

N is for Netscape. If the Internet has done just one thing, it has proved that it is possible to make a fortune by giving your product away. In the case of Netscape, the product is its Web browser, Navigator, which you can download from its Web site for nothing, to run on your PC or Macintosh.

The licence does ask you to pay if you continue to use it, but this is probably one of the most ignored requests on the Net. As a result, from its launch in April 1994 Netscape rapidly built up an estimated 75 per cent share of the browser market. That's the nice thing about the Internet for companies selling software: the cost of distribution is almost zero.

What's the advantage of a big market share, though, if nobody pays you for your product? The trick Netscape used is that Navigator is not its only product. It also sells "server" programs that run the Web sites that people visit.

Now, if you're a business setting up a Web site, would you go with the Netscape server program, knowing that three out of four people visiting your site are likely to be using its complement, or would you go for something else? And businesses, of course, pay for things.

The result is that Netscape is the biggest success story ever on the Internet. Sixteen months after it was set up, it was floated on Wall Street, where in its first day it was valued at $2.8bn - making one co-founder, Marc Andreessen, worth $58m at once, and his co-founder Jim Clark (also Netscape's chairman) worth a cool $563m.

At that stage Netscape hadn't ever made a profit, though last month it did, for the first time: $4.7m on sales of $55m.

The question now is whether it can keep that going.

CHARLES ARTHUR

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