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                           THE STANDARD'S
                         M E D I A  G R O K
           A Commentary on What the Press Is Reporting and Why
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                                        | http://www.thestandard.com |


Wednesday, May 30, 2001

TOP GROKS:
* Oh, Lucent, You Tease
* Here Comes MyPlay the Bride
* Switch Behemoths, Save $1.95

MORE NEWS:
* Lucent and Alcatel Call It Off
* Sun's Outlook Doesn't Look Bright
* For Lucky Few, DoCoMo's 3G Makes Japan Debut
* Battle of the Acronyms: MSN vs. AOL


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TOP GROKS
~~~~~~~~~
Oh, Lucent, You Tease

After keeping coy for weeks, Lucent and Alcatel finally confessed that
they've been talking about a merger. But in the same breath, they said
the deal was off. And after AT&T and Agere already bought their
bridesmaid outfits ...

Not 24 hours before the companies bailed out, respectable news outlets
worldwide ran headlines like "Alcatel purchase of Lucent seen near."
What happened? The most common explanation - given by anonymous but
talkative sources to just about every journalist who asked - was that
Lucent wanted a "merger of equals," not a takeover.

"The two sides had made significant progress after a weekend of
negotiating at a chateau outside Paris," said the Wall Street Journal.
(The New York Times added that the talks "extended into the nights
over dinner and bottles of excellent wine" - tough life.) Alcatel and
Lucent appeared to have ironed out every possible merger issue except
the composition of the post-merger board of directors. Lucent chair
Henry Schacht wanted an even 8-8 split of directors; Alcatel wanted to
give itself 8 and Lucent 6. "So the sticking point for what was to be
a $23 billion deal comes down to vanity," said The Register, adding that
Alcatel deserved the upper hand, "considering the cash-crunching
mess-up on the pavement created by Lucent's management."

Investors gave a cheer as the deal was canceled, and shares of both
firms rose. That "reversed the slide of recent weeks as talk
increasingly cast Lucent as a sinking ship and Alcatel as a reckless
savior," said TheStreet.com. Telecom competitors probably aren't as
psyched, said CBS MarketWatch, since a long Alcatel-Lucent merger
hassle might have given rivals a chance to convert some customers.

The non-merger probably won't put the hurt on Alcatel, but it doesn't
look good for Lucent and its debts, predicted the New York Times and
the Chicago Tribune. "Alcatel was by no means the only prospective
merger partner Lucent courted," explained the Times. "But it was
apparently the only company that expressed a real interest." Sorry,
Agere, you'd better hope you can return the dress. - Jen Muehlbauer

Lucent and Alcatel Call It Off
http://www.thestandard.com/article/0,1902,26746,00.html?nl=mg

Why Rivals Rue Alcatel-Lucent Outcome
http://cbs.marketwatch.com/news/story.asp?guid=%7BD3A3D62E%2D920A%2D4B00%2DBA30%2DA1CBE68DEE1A%7D

Alcatel, Lucent End Discussions For $22.8 Billion Telecom Merger
http://interactive.wsj.com/articles/SB991157931659734175.htm
(Paid subscription required.)

Alcatel and Lucent Call Off Negotiations Toward a Merger
http://www.nytimes.com/2001/05/30/technology/30LUCE.html
(Registration required.)

Lucent, Alcatel Merger Fizzles
http://www.chicagotribune.com/tech/news/article/0,2669,ART-52092,FF.html

Lucent's Hits and Misses
http://news.cnet.com/news/0-1004-200-6078084.html

Scuttling of Alcatel Deal Puts Spotlight Back on Lucent's Turnaround
http://www.thestreet.com/tech/scottmoritz/1444604.html

Lucent Merger Talks Collapse
http://www.washingtonpost.com/wp-dyn/articles/A93580-2001May29.html

Lucent Jilts Alcatel at the Altar
http://www.theregister.co.uk/content/7/19282.html


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Here Comes MyPlay the Bride

Everyone's a little weepy as MyPlay heads to the altar with rich
German sugar daddy Bertelsmann. Sure, the two companies let it slip to
the media that Bertelsmann is buying MyPlay for $30 million, and the
news took off like a pair of honeymoon pajamas. But a report in Los
Angeles Times makes you wonder whether MyPlay is really marrying up.

Bertelsmann has big plans for its new division, to be launched July 1
and called BeMusic. According to outlets, BeMusic would include
MyPlay, CDNow, BMG Music Service and eventually Napster - if Napster
can go legit and Bertelsmann can convert its loan to the company into
an ownership stake, the New York Times added.

After leaking the deal to the media, Bertelsmann and MyPlay officials
went mute, apparently saving their sound bites for today's official
confab. That left most reporters dusting off the well-worn template,
"this is the latest example of," to serve as analysis. (The
fill-in-the-blank answer, by the way, is that the deal is the latest
in a string of unions between the major labels and online music
companies.) News.com, however, offered the fullest explanation,
pegging the recent shotgun marriages as examples of the music labels'
submit-or-die tactics. "More critical minds in the startup and analyst
community have speculated that the labels deliberately starved the
online companies of music to minimize the potential competition,"
wrote Jim Hu and John Borland. Then again, given the collapse of the
Net music market, startups and analysts have an ax to grind, no?

And what of MyPlay? Most reporters seemed to know little of it, other
than the vague notion that the $30 million sale price made it a poor
man's MP3.com. Several outlets reported that Bertelsmann had
considered buying MP3.com but passed because of that deal's $372
million price tag. Webnoize recalled that a year ago, MyPlay, too, had
been in the nine-digit club when it was reportedly in talks to be
acquired by Yahoo for $200 million.

Maybe MyPlay just couldn't cut it in Internet time. While the
Financial Times quoted its Bertelsmann source as applauding MyPlay's
"proprietary technology," the Los Angeles Times pegged it as the
company's main problem, requiring a glacial 20 minutes or so per song
on the average dial-up modem to transfer a home's music collection
into a locker. Even MyPlay threw up its hands, according to the L.A.
Times, having changed its focus in March away from consumers and into
developing online music-distribution services for other companies.

If MyPlay is feeling emotionally unavailable, that's probably just as
well. Its new partner isn't one for sharing, according to the L.A.
Times. On Tuesday, Bertelsmann finally agreed - listen closely and you
can hear its arm being twisted - to share some of its $20 million in
proceeds from its MP3.com lawsuit with the artists on its record
labels. - Deborah Asbrand

Bertelsmann in Deal to Buy Music Start-Up
http://www.nytimes.com/2001/05/30/technology/30MUSI.html
(Registration required.)

Bertelsmann to Buy MyPlay.com for $30m
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3WTO70CNC&live=true&tagid=IXL5PIPSW8C

Bertelsmann's eCommerce Group Acquires Web-Music Firm MyPlay
http://interactive.wsj.com/articles/SB991184696712205889.htm
(Paid subscription required.)

Bertelsmann to Buy MyPlay
http://news.cnet.com/news/0-1005-200-6093589.html

Bertlesmann to Acquire Locker Service MyPlay
http://news.webnoize.com/item.rs?ID=13201

Bertelsmann Buying Net Service MyPlay
http://www.latimes.com/business/20010530/t000045121.html

Bertelsmann to Share Award in Online Suit With Artists
http://www.latimes.com/business/20010530/t000045119.html


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Switch Behemoths, Save $1.95

If you have anything to say about the following information, you're
doing better than most journalists: Microsoft is launching a $50
million campaign to lure AOL customers to MSN. Maybe reporters were
still hung over from Memorial Day barbecues; most of them phoned in
this one.

MSN's selling point is AOL's upcoming price increase from $21.95 to
$23.90 for a month of unlimited access. Microsoft will offer AOL
converts three months of free MSN access and a locked-in $21.95 per
month rate until Jan. 1, 2003 - but only if you're a new subscriber.
We wonder if that means existing MSN users might see a price hike of
their own in 2002, but apparently we're the only ones.

As of Grok's press time, few writers seemed to remember that ISPs
other than AOL and MSN even exist. The AP and the Washington Post did
mention third-place provider EarthLink. (The Post's Alec Klein
provided further much-needed context by describing the "long-standing
rivalry" between Microsoft and AOL.) Nobody seemed to recall
EarthLink's 1998 "Get Out of AOL Free" campaign, which targeted AOL
members the last time AOL raised its price.

It took a confessed Microsoft shareholder, Rex Moore of the Motley
Fool, to blow MSN's free media ride. MSN's rate "is no bargain," said
Moore, since AT&T's WorldNet service costs the same, EarthLink is
cheaper, and "there are ISPs that offer dial-up access in every state
for less than $15 a month." Picky, picky. - Jen Muehlbauer

Battle of the Acronyms: MSN vs. AOL
http://www.thestandard.com/article/0,1902,26752,00.html?nl=mg

How Sweet Is Microsoft's Counteroffer?
http://www.fool.com/news/2001/msft010529.htm?ref=foolwatch

Microsoft Tries to Woo AOL Users (AP)
http://www.austin360.com/shared/news/technology/ap_story.html/Technology/AP.V0500.AP-Microsoft-AOL.html

Microsoft Seeks to Profit From AOL Hike
http://www.washingtonpost.com/wp-dyn/articles/A94434-2001May29.html

EarthLink Offers Online Users A Chance To 'Get Out Of AOL Free'
http://www.earthlink.net/about/pr/aol.html


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MORE NEWS AT THESTANDARD.COM
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Lucent and Alcatel Call It Off
By Jason Krause
Dreams of a trans-Atlantic telecom powerhouse fade when the companies
kill merger talks, after more than a week of rumors.
http://www.thestandard.com/article/0,1902,26746,00.html?nl=mg

Sun's Outlook Doesn't Look Bright
By Mark Boslet
The computer maker says it will miss 4th-quarter expectations because
demand in the U.S. and Europe is still sluggish.
http://www.thestandard.com/article/0,1902,26748,00.html?nl=mg

For Lucky Few, DoCoMo's 3G Makes Japan Debut
By Reed Stevenson - Reuters
Despite delays, the Japanese wireless giant's new service gets an
enthusiastic reception.
http://www.thestandard.com/article/0,1902,26756,00.html?nl=mg

Battle of the Acronyms: MSN vs. AOL
By Terry Lefton
Microsoft is spending a cool $50 million to market its ISP in hopes of
luring America Online customers faced with higher prices.
http://www.thestandard.com/article/0,1902,26752,00.html?nl=mg


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MORE LINKS
~~~~~~~~~~
Blair Under Fire After Microsoft Presentation
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3SQPU7CNC

Sun Reduces Expectations on Earnings
http://www.nytimes.com/2001/05/30/technology/30SUN.html
(Registration required.)

Hormel Is Resigned to Use of 'Spam' in Net Slang (St. Paul Pioneer
Press)
http://www.siliconvalley.com/docs/news/svfront/026425.htm

Amazon Likely Made Deceptive Statements On Privacy Policy, Federal
Regulators Say
http://interactive.wsj.com/articles/SB99117466275010670.htm
(Paid subscription required.)

Terra Lycos' Davis Says Company Won't Buy EarthLink or CNET
http://www.inside.com/jcs/Story?article_id=31861&pod_id=13

Insurer Drops Web Service
http://www.jsonline.com/bym/tech/news/may01/wausau30052901.asp

Tax Bill Has Provision for Computer Writeoffs
http://www0.mercurycenter.com/business/top/007362.htm

Laid Off - Got Mail?
http://www.wired.com/news/infostructure/0,1377,43873,00.html

Disney Setting a Mousetrap to Lure Buyers to Its Castoffs
http://www.latimes.com/business/20010530/t000045086.html


STAFF
~~~~~
Written by Deborah Asbrand (dasbrand@world.std.com), Michaela
Cavallaro (mcavalla@maine.rr.com), Keith Dawson
(dawson@world.std.com), Jen Muehlbauer (jen@englishmajor.com), Lori
Patel (loripatel@hotmail.com) and David Sims (davesims@sonic.net).

Edited by Jimmy Guterman (guterman@vineyard.com).

Copyedited by Jim Duffy (jduffy@thestandard.com).

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