Medscape -- The First 5 Years

Peter Frishauf

Disclosures

Medscape. 2005;7(2):5 

Medscape Year 3: April 1997-May 1998 -- The Money Hunt

The Web in 1997 and 1998 was much like New York City in the 19th century: The population was exploding with new immigrants landing on its docks. There was conviction about the opportunity, and an outpouring of hard work and creativity. But life was a struggle; there was little clean drinking water or food to sustain the population; and many people had difficulty in finding their way around the unfamiliar new territory.

At Medscape, our content, audience, and features continued to bloom. But our sustenance -- money -- was in short supply. Prescription drugs, with the exception of a single product, dronabinol ( Marinol ), had no Web presence, as companies feared sanctions from the US Food and Drug Administration (FDA) (a groundless concern fueled by conservative company lawyers who finally relented in the coming years). Most health products that advertised were folk remedies or medical practices pitching unscientific weight-loss services -- a clear conflict with Medscape's ethics.

Complicating the problem, few decision makers in the pharmaceutical industry used the Internet or the Web. Even if they understood the importance of the new media on an intellectual level, they didn't incorporate it into their daily lives, and so it was foreign. The challenge was captured vividly in a conversation with Abbott Laboratories, manufacturers of the antibiotic clarithromycin ( Biaxin ), which in 1996 was heavily promoted in medical journals but had no Web presence because company lawyers feared the FDA. A Yahoo! Search of " Biaxin " brought up several sites that mentioned the drug, most prominently one from a weight-loss clinic that was touting the drug's occasional adverse gastrointestinal side effect as an appetite suppressant! Although there was lots of content on the Web about Biaxin , none of it was from the manufacturer, Abbott. Although the product manager was horrified at some of the information he saw about his drug on the Web, it took a year or 2 for Abbott to finally post its own information about Biaxin , and purchase links to it on Medscape.

Meanwhile at Medscape, we struggled to find the right people to sell our services at salaries that we could afford, offering stock options to sweeten the deal. If we made it big, so would they.

By the summer of 1997, some staffing progress had been made. We hired a Web-savvy vice president (VP) of sales, Alex Martin, a former product manager at SmithKline, whose other credentials included a Harvard MBA, a sense of humor, and the ability to sing perfected in an acapella chorus as a Cornell University (Ithaca, New York) undergraduate. Our parent company, SCP, continued to be our lifeline, lending us money to make payroll, and supporting Medscape's infrastructure and sales efforts. SCP even helped by facilitating the transfer of one of its star salespeople, Mike Collins, to Medscape (where today he is a VP). On the editorial front, SCP continued to produce Medscape Women's Health , which also became one of the first Internet eJournals to be listed in Index Medicus .

In the fall of 1997, Medscape began a series of meetings with its non-Internet-based online rival, POL, whose CEO, Steven Zatz, is now executive vice president and chief medical officer of WebMD/Medscape. The purpose was to discuss a possible merger -- and to weigh the relative values of each business strategy.

Zatz articulated the POL vision as one that provided trusted services from peers consistent with its "for physicians, by physicians" tagline. A key and popular POL service was discussion groups on clinical topics, moderated by skilled and dedicated physicians. These highly technical electronic discussions, Zatz said, could only be conducted honestly and productively among physician-peers, and would not be possible in a Web environment like Medscape's that allowed nonphysicians to witness or participate in the conversation. The very presence of patients in the mix would end the enthusiasm of physicians who would not want to scare consumers with the harsh but honest clinical reality of describing a surgical procedure, or to have their words misunderstood. And without the participation of American physicians, an online business model dependent on pharmaceutical companies and other likely sponsors could not succeed.

I maintained that physicians as well as others would continue to be drawn to Medscape's more open environment, if only because its content was the best. I also believed that the presence of nonphysicians would not be a deterrent to MDs visiting Medscape as long as the content was trustworthy. Moreover, multidisciplinary teaching was the norm at teaching hospitals. I pointed out that I had just returned from a Grand Rounds at Cornell with physicians, nurses, pharmacists, students, and patients all discussing their cases in the same room. No one seemed upset.

In reality, physicians went to POL and Medscape for different reasons. Medscape had a far larger content offering, which emphasized free access to full-text articles and searching. And anyone with an Internet connection could get to it. POL had a popular free email service, free MEDLINE searching, and robust and useful discussion groups for physicians, but they weren't on the Web. POL was ahead of Medscape in revenues and believed it was worth much more than Medscape. We believed that we were worth more because our audience and audience potential were much larger and our Internet-based cost structure was much lower. We continued to coexist as friendly competitors.

Another robust competitor was of greater interest than POL: in the HIV area a Web site called Clinical Care Options , owned by Healthcare Communications Group (HCG).

HCG had HIV content and features second to none, and a successful business model. Its founder, medical entrepreneur Dr. Jeffrey Drezner worked with a network of HIV experts who wrote summaries of topics at HIV conferences – many run by HCG – and then put the summaries on the web in CME format. The HCG web site also provided tools focused on HIV for physicians such as databases, textbooks, and a sophisticated and highly useful HIV drug interaction tool and a drug scheduler. Moreover, Drezner was managing to sell sponsorship of his services for more than what Medscape charged. HCG also rejected the POL strategy of a physician-only network: it was open to all, and not even registration was required to use it.

Encouraged by HCG's success we started to correspond by email. One year later Medscape's business model was to be transformed when it acquired HCG and gave Drezner a major role and a Board seat ( Clinical Care Options , now an independent medical education company, continues to offer free access to continuing medical education at www.clinicaloptions.com ).

In early 1998, the editorial, design, production, and technical groups at Medscape introduced the first of a series of major improvements to the site: In addition to a bold new logo and article design, 19 different "specialty Medscapes" (ie, Medscape Cardiology , Medscape Surgery , etc) were created in different specialty areas, along with companion MedPulse eNewsletters for each. Using newly-introduced technology and specialized software, advertisers could now display messages by the context of searches and the profiles of users; therefore, hip replacement ads would be displayed to those interested in orthopaedics, and antidepressant banners to those interested in mental health.

1997 featured the original 1995 logo and a system of tab navigation. Topic areas were listed from top to bottom.

The 1998 redesign of Medscape featured a new look and logo developed by Vincent Keane, Stephen Smith, and Leah Wang. Also illustrated here is a snapshot of comments from new users in the Medscape registration page, in answer to the question, "How did you find Medscape?" Figure taken from a slide as part of a talk given by Peter Frishauf to the TEDMED2 Conference, 1998.

Advertisers could also selectively target an audience within Medscape --physicians, PAs, or consumers within a specific zip code, for example. A major initiative was launched to make US physicians aware of the site through journal advertising, mail, and convention brochures featuring "Medscape Kids" asking rhetorical questions, such as, "You mean all the answers are free?"

1998 Medscape promotion designed to interest clinicians in Medscape Women's Health .

This brochure in the 1998 "Medscape Kids" series was designed to interest clinicians in the site's extensive oncology offering.

Medscape ended its third year with another major announcement: Paul Sheils, a 17-year veteran from Dow Jones, and one of the key architects of The Wall Street Journal Online, had just been hired as CEO. (I stepped aside to become chairman and advisor to Sheils.) With our first financing round behind us, we had money in the bank, and were starting to realize revenue from our sales efforts.

While Sheils, a lawyer, did not have a medical background, he combined a deep understanding of and respect for the editorial process with a strong sense of ethics and excellent business presentation skills. When he told his long-time secretary that he was leaving The Wall Street Journal , she was upset, he recalled, and proceeded to check out Medscape to make sure that he was leaving for a reputable site. While reviewing the site, she saw a disturbing picture of a nose lesion that looked like something that she had spotted in the mirror that morning. It turned out to be early-stage melanoma. The power of information as medicine further motivated Sheils to join Medscape, and the potential of the site to do good stayed with him throughout his tenure.

In his first few weeks on the job, I arranged opportunities for Sheils to shadow physicians at Bellevue Hospital as well as upscale New York Weill Cornell Medical Center, New York, NY. For Sheils it was like visiting "two different countries, one rich one poor," and we speculated about how much difference it might make if Internet access and Medscape could be put in the emergency services of hospitals. But further exposure to the audience was put off indefinitely as the competitive landscape was changing at breakneck speed. Medscape ended the year with membership at a half million, 35 employees, a new CEO, and money in the bank.

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