Relational.com analyst Dixon Jones had this to say:

"Yahoo and AltaVista may be happy to ignore a young upstart like Goto when the going is good, but not when they start to take market share.

"The only way that the big boys can combat this is to change the nature of their partnerships. Portals will expect to get paid by the search engines from here on in, which means the search engines need to charge somebody for the search! Of course - it is easy to see the hole in the business model in hindsight, but it took a few years to realise how much more important search engine listings were than online banner advertising as the research wasn't available then. First-to-market models are filled with risks, aren't they?

"So - it is going to be an inevitable consequence of market forces that paid for placement listings will become the norm in the end, even though web users may go out of their way to find searches that are NOT paid listings. However, there are still massive holes in the equation..."

Thus we find Yahoo! announcing that it is changing its model to focus on the business services side of its offerings --- a major departure from the advert-based model which it has used since its inception. This move means becoming akin to an ASP and could put Yahoo! in direct competition with Loudcloud, for example.

What about the other search engines-cum-portals?

Disney dropped out of the game at the end of February this year when it closed it's Go.com search engine. CMGI, the owner of AltaVista, continues to look for the right mix.

Danny Sullivan, Editor of SearchEngineWatch.com reports that "...Network Solutions is now offering guaranteed inclusion in the Inktomi web index through its web site.

"Inktomi has two other self-serve paid inclusion partners: US-based Position Technologies, which began offering the service in November, and Europe-based WebGravity, which began its inclusion program in January.

"All offer the same basic service: inclusion of submitted URLs into the Inktomi web index within two days and revisiting those URLs on a weekly basis, for up to a year."

What we are seeing among the search engines is the move to a revenue stream via inclusion. The advertising model is being supplanted by a new model based on infrastructure services. And that changes the nature of the game for the Web in ways that "information wants to be free" advocates don't like.

As the search engines redefine themselves and adjust their business models to adapt to the changing nature of the marketplace, what can businesses and consumers expect? To find the answer to this question, G21 went to David Krane of critically acclaimed search engine Google.com.

"Google's model has not changed significantly since we launched the company in the Fall of 1998," Krane told us. "We derive revenue from two sources - text only online advertising, and OEM services that we provide to companies like Yahoo!, Cisco and Vizzavi.

"Our alliance with Vizzavi, the multi-access portal for the European market, as well as that with Yahoo! are examples of the search services revenue that we expect to be very strong a year from now.

"Vizzavi today operates portals in the United Kingdom, France and the Netherlands. Vizzavi is the rapidly growing joint venture between Vodafone Group plc and Vivendi Universal. Google is the preferred search engine provider, offering its advanced web search engine , web directory, and WAP search as a complement to Vizzavi's comprehensive suite-range of personalized services and multimedia portal content, accessible to users via desktop PCs and mobile devices across a range of different platforms including standard, WAP, GPRS and UMTS enabled handsets, PDAs (Personal Digital Assistants, iTV (interactive TV) and personal computers.

"If you look at how most analysts view Google, we are a pure-play search engine, where as sites like Yahoo! are portals who outsource their search function. That's the difference."

Anecdotally, Mr. Krane shared with us that when Google founders went to the major search engines (Lycos, Excite, etc.) before their launch they were told, "What you've accomplished is great. But if our search is 80% as good as the next guy's, we're happy." The major trend three years ago was toward "portalization." How things have changed.

Looking at the new dot-com future, the pure-play engines like Google are positioned to be the outsource resource of choice, while AltaVista and Yahoo! move more to being business service companies as the nature of the portals mature.

What this means for that sector of the Web proudly classified as search engines is a new divide: portals on one side, players with advanced search algorithms on the other. The latter will most likely have the former as their clients. The portals will move closer to being ASPs for Internet business. Search engines based on solid technology will succeed based on their sophistication and sticking to the knitting. And we shall finally see whether the portalization model is viable for the rest.