Medscape -- The First 5 Years

Peter Frishauf

Disclosures

Medscape. 2005;7(2):5 

Medscape Year 2: May 1996-April 1997 -- Medscape, Inc.

On April 1, 1996, Medscape, Inc. was formed, and with interim financing from SCP set out to raise its own money. Medscape soon occupied a separate half-floor in SCP's 29th Street building in Chelsea, and expanded its work staff to 15. (Two of its first hires, Leah Wang and Ted Singer, remain with Medscape/WebMD today.) Its Board of Directors included well-known experts in finance, new media, and technology, such as Esther Dyson, editor of the highly regarded technology newsletter, Release 1.0 , who The New York Times described that year as "the most influential woman in all the computer world." I was chief executive officer (CEO), and passed management of SCP to Tim Fallon, one of Medscape's original SCP skunks who was also elected a Medscape director, and remained active with its sales efforts for years. Within short order:

  • We aggressively expanded content and search functionality. The site was updated daily -- hardly novel today, but unusual in 1996.

  • In June, Medscape introduced the first free, unlimited Web-based MEDLINE searching. Traffic soared.

When Medscape became the first Web site to offer free, unrestricted access to MEDLINE in June 1996, both registration and search traffic soared. The sharp increase in traffic shown on the graph coincided with MEDLINE on Medscape's introduction. At the time, MEDLINE was not freely available on the Web, except through universities and libraries where the public could not access it.

  • Important new features and services were introduced, including online Continuing Medical Education, a Women's Health topic area (created under contract with SCP, and underwritten by Pfizer Pharmaceuticals, the first significant commercial supporter of the site), a meeting coverage service called Conference News Online, and several quizzes in addition to PicTours, including The Exam Room, Brainscape, and "Question of the Day," a quiz linked to a featured article. We introduced enhanced keyword searching on the site and created the Medscape Academy, an Internet training course that pharmaceutical companies could sponsor at conventions to teach doctors how to use the Web.

The Medscape Academy created courses offered at major conferences. Illustrated here is the course book developed in 1997 for sessions offered at the American Psychiatric Association. (Note: Figure 5b is continued in Figure 5c)

The Medscape Academy created courses offered at major conferences. Illustrated here is the course book developed in 1997 for sessions offered at the American Psychiatric Association. (Note: Figure 5b is continued in Figure 5c)

The Medscape Academy created courses offered at major conferences. Illustrated here is the course book developed in 1997 for sessions offered at the American Psychiatric Association. (Note: Figure 5b is continued in Figure 5c)

A year 2000 version of the Medscape Academy training program for orthopaedic surgeons.

A year 2000 version of the Medscape Academy training program for orthopaedic surgeons.

A year 2000 version of the Medscape Academy training program for orthopaedic surgeons.

  • For the 30% of Medscape users who were not healthcare professionals, consumer-level content was introduced in July, with 150 articles in 21 health and disease topics for patients or for physicians to download, print, and distribute -- a move that would foreshadow much larger efforts in years to come.

  • To help healthcare professionals get on the Internet and Medscape, we began production, sales, and distribution of a Medscape Access Kit (MAK) so that clinicians could get a Netscape Web browser and telephone dial-up access to the Web through an Internet service provider.

  • By the end of the year, The Medscape Bookstore was also to debut on the site.

  • A "Medscape Remote" tool was created that could be placed on other sites, and permitted searching of Medscape from those sites.

Financial objectives were more elusive, and technical challenges were also mounting. Most pharmaceutical companies still had no Web sites promoting products or programs. (Now, it's hard to even imagine a Web devoid of pharmaceutical promotion!) There was immense pressure on the small staff of 18, yet few resources were available to hire additional help or buy new technologies. Medscape's boot-strapped Macintosh computers were running out of steam to support the skyrocketing traffic, and preparations were made to replace them.

In May 1996, a well-known Wall Street firm was hired to help raise money for Medscape, but the effort faltered, and the relationship with the company terminated before the end of the year. Ironically, obtaining an investment was complicated by the chairman of Medscape's Board of Directors, Alan Patricof, a pioneer in venture capital. Patricof's fund, APAX partners, had also been the lead investor in SCP in 1982, and he was a proud and articulate advocate for Medscape. Nevertheless, Patricof resisted his company's making an investment in the site because of an obscure conflict-of-interest rule that prevented a firm from supporting a firm that may be competitive to another company in which the fund had previously been invested. It was a state of affairs that greatly complicated obtaining Medscape funding by Patricof's peers in the venture capital community who interpreted his reluctance as a reticence about Medscape itself.While Medscape was pumping out articles on its desktop Macintosh computers, on the West Coast, Jim Clark, the man who brought Mark Andreessen's Web browser to the commercial world by forming Netscape Communications in 1995 -- and presided over its spectacular IPO -- was developing another Internet healthcare solution. While Medscape was going to use content and information to attract an audience, Clark, a wealthy computer scientist who founded supercomputer company Silicon Graphics in 1982, was going to use technology to "fix the US healthcare system."

In the late 1990s, after a stint in a hospital, Clark sat down with a piece of paper and drew a diagram with the 4 healthcare players: payers, doctors, providers, and consumers, according to The New New Thing , a book by industry chronicler Michael Lewis. In the middle of this "magic diamond," he placed a new company, Healthscape, which, following a legal dispute with a prior owner of the name, became Healtheon. No one at Medscape gave Healtheon much notice: They were in the technology business; we were in the information business. Little did we know how our lives would intersect in the years to come.[18]

By August 1996, when Medscape released its second advertisers' rate card, there were nearly 70,000 articles viewed per week and nearly 100,000 members -- a figure that would double to 200,000 by December, just 4 months later.

More than 700 visitors signed into Medscape daily by April 1, 1996, reading an average of 9 articles/visit. In the print world, a "high reader" of a magazine reads 4 articles/issue, less than half the intensity experienced at Medscape in its first year. Some 32.4 million articles were read on the site in 1996. By August 1996, there were nearly 70,000 articles viewed by members per week, and nearly 100,000 members -- a figure that would double to 200,000 just 4 months later. More than 120,000 searches were conducted every month.

More than 120,000 searches were conducted every month. Most users (56%) were between 26 and 44, but a substantial number (23%) were older, contrary to the conventional wisdom that the Web was only for those under 30. Nearly 40% came from overseas, with Canadian usage predominating. In little more than a year and a half, Medscape had almost as many members as The New England Journal of Medicine had subscribers -- and their brand had been around since 1812.

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