27 September 1999: It has been an interesting few weeks for the automobile industry. Microsoft announced that it was spinning off its popular CarPoint site. Ford, which remains a minority partner, said it will use the site to gather data from customers. (The automaker could eventually sell directly to customers via the site.)

Other car-shopping services were also busy. Autoweb.com agreed to buy the automotive-data unit of Canada's Thomson. What they got for their money -- about $20 million in cash and stock -- was, of all things, simply data. Autoweb.com wants to use the Canadian company's information to improve its site's value to customers, for example by offering repair guides and ratings. Note that Autoweb.com's move follows purchase of the publisher of Chilton auto-repair manuals by rival Autobytel.com for $17.5 million in July.

What gives? The net, of course. Some 2 million new-car buyers, accounting for 13 percent of all new cars sold, tapped the net for information in 1998. By 2003, that figure will grow to more than 50 percent, according to Forrester Research. By then, half a million cars could be purchased over the net.

After undergoing several years of runaway growth, competition among the automobile broker-sites is heating up. Here's how it works: automotive shopping sites attract prospective buyers by walking them through the research process and permitting them to comparison shop among makes and models. When a potential customer is close to making a purchase, the broker-site alerts a local dealer who contacts the customer and, hopefully, completes the deal. In return for these leads, the dealers pay either a referral charge (usually $20 to $30) or a flat monthly fee. (Auto-by-Tel dealers reportedly pay an average of $1000 a month.) Of course, broker-sites can make money from promotions, advertising, and referrals for things like insurance. But the vast majority of their revenues comes from the cars themselves.

Trouble is, since all the broker-sites start with essentially the same information, companies like Auto-by-Tel and Autoweb.com are finding it increasingly hard to differentiate themselves. The broker-sites become vulnerable to price-shopping -- not by the consumer, who has received the information for free all along -- but by the dealer, who can work with competitors to get lower commissions. For a while, some of the sites offered their visitors discussion groups, classified ads, financing and insurance information, even home pages where members could record their service records. But most consumers went for information and in any case, such bells and whistles add little in the way of revenue. Moreover, they are be easily copied by competitors. Not so the latest round of alliances. Watch this space.