Mercata Emerges as Vulcan Content Play

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Paul Allen's Vulcan Ventures Inc. is bankrolling a
broadband-enhanced e-commerce component to his growing "Wired World" empire,
with plans to deliver Internet shopping to TV sets, as well as personal computers.

Bellevue, Wash.-based Mercata Inc. is preparing for launch
very shortly, hoping to build a name by offering products that aren't currently
associated with big-name e-commerce sites, such as consumer electronics, home-improvement
tools, watches, sporting goods and gift items, CEO Tom Van Horn said.

Through the year, the firm will add advanced technologies,
with plans to move into the cable space starting next year. "We're especially
excited about two technologies that we can add over time," Van Horn added.

"One involves personalization, where we design the
site for each customer as that person's store, highlighting the types of products
that they're interested in, rather than everything that can be purchased through
Mercata," he explained.

"If you're not interested in buying groceries
online, the option won't be one of the first things that you see," Van Horn
added.

A second innovation that Mercata hopes to quickly add to
its domain this year is the use of 3-D viewing technology, which allows shoppers to
maneuver around an item 360 degrees or go inside it for closer looks. @Home Network has
already been working with car advertisers in testing this type of technology.

While Mercata will operate as a stand-alone e-commerce
"mall," it will also be positioned to exploit emerging "Webtop"
connections between the Internet and TV over high-speed cable-data networks, officials
said.

Van Horn declined to discuss plans in this area in any
detail, saying that his primary concern now is making Mercata a success in the Internet
space.

With broadband, new capabilities will be possible, such as
the addition of voice and video-telephony connections that allow users to speak directly
to customer-service representatives while online, Van Horn noted.

"Customer support is one of the weak areas in
e-commerce, which we think that we can improve on in significant ways," he added,
noting that chat and instant-messaging techniques can be added in the current narrowband
domain to greatly improve the user's shopping experience.

"A recent study showed that more than 50 percent of
e-mail from customers to e-commerce sites is never responded to," Van Horn said.
"A lot of new technologies will make the experience better for shoppers, but I'd
rather start out at 100 percent with e-mail and expand from there."

Van Horn described the TV side of Mercata's strategy
as a long-range plan that depends on a much broader base of TV access to data than exists
today or will exist anytime soon. But he acknowledged that the company is working with
WorldGate Communications Inc. and with cable entities such as Charter Communications.

Charter was recently acquired by Allen, and it is the first
MSO to put WorldGate's service into commercial operation.

Allen, cofounder of Microsoft Corp., now controls a cable
empire totaling about 2.5 million subscribers. As part of his self-described Wired World
broadband strategy, he also recently invested $20 million in High Speed Access Corp., a
competitor to @Home and Road Runner.

WorldGate CEO Hal Krisbergh said his team was cooperating
with the Allen forces in bringing together the service and technical components that will
be used when the WorldGate system moves to high-speed delivery over digital-cable-TV
channels later this year.

WorldGate, which is now serving four Charter cable systems,
currently delivers a 192-kilobit-per-second analog feed through set-top boxes without
requiring a PC or other special hardware.

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