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After the Web · Era 4 · Dot-coms and the crash

1993–2009shut down · 2009

Encarta

Encarta was Microsoft's encyclopedia on CD-ROM: it came out in 1993 at $395, quickly fell in price to $99, and shipped bundled with computers, thereby speeding up the decline of the print Britannica, which had begun even before its release. In 2009 Microsoft shut it down; according to Hitwise, at that time Wikipedia had 97% of visits to online encyclopedias and Encarta 1.27%.

Founders —
Domains encarta.msn.com
contentsubscriptionbundling

In brief

Encarta was Microsoft's encyclopedia on CD-ROM, released in 1993. Microsoft did not write the text itself but licensed it from Funk & Wagnalls, after failing to reach an agreement with Britannica and World Book. The disc cost $395, fell to $99 by the end of 1993, and shipped bundled with computers. Britannica's revenue fell from $650 million to $325 million over 1990–1996, and in 1996 the company was sold to Jacob Safra for a fraction of its book value. In 2009 Microsoft shut Encarta down; in the week before 2009-01-23, Hitwise counted 97% of Americans' visits to online encyclopedias for Wikipedia and 1.27% for Encarta. The shutdown statement does not name Wikipedia. For 2026, the story matters as an example of paid corporate content that lost to free, open content.

How it started (the founders)

Encarta had no founders in the usual sense: it was a product of Microsoft's reference publishing division. According to Britannica's retelling, people at Microsoft were already talking about a digital encyclopedia in 1985 estimate. Microsoft tried without success to license the text of Britannica, then of World Book, and in the end found a willing partner in Funk & Wagnalls; the year of the talks with Britannica and the reason for the refusal are not named in the sources collected unverified.

Sources give the year of the license differently: 1989 (a contract for nonexclusive rights to the 29-volume encyclopedia) and 1992. The project, code-named "Gandalf," was put on hold in 1990 over doubts about its commercial sense and resumed in 1991 estimate. There is no primary document on the deal unverified.

The idea was a bet on an expensive product: Microsoft counted on $1,000–2,000 per disc, but by launch the market had settled at $395, and Encarta came out at that price in March 1993. Interestingly, Britannica stayed with the print model all the while: in 1993 it merely sold its own Compton's division for $57 million and released a corporate CD version at $2,100 for a three-year license for two workstations, while changing nothing for consumers.

Year-by-year timeline

Lesser-known but significant facts

  1. Britannica's decline began before Encarta. Britannica's revenue in the table of the Dartmouth case: $650 million (1990), $627 million, $586 million, $540 million (1993), $453 million, $405 million, $325 million (1996). Over 1990–1992, before Encarta came out, it fell by 10%, and by the end of 1993 by 17% estimate.
  2. In 1994 Britannica sold the disc separately for $995, and gave it away free with the print set. The print set cost the company $200–300, the CD $1.50. The company was protecting the expensive set, while Microsoft sold the disc as a mass-market product estimate.
  3. Encarta was made not by enthusiasts but by a team of 1,200 people. In 1997 Microsoft wrote of a team of 1,200 local editors and authors, five languages, and sales in 30 countries.
  4. The licensed text was weaker than the brand, but it did not get in the way of sales. The Dartmouth case states plainly that Encarta became the best-selling multimedia encyclopedia even though Funk & Wagnalls did not have a reputation like Britannica's.

Legend vs. the record

The first growth lever

The main lever was price and channel. Microsoft launched at $395, but Compton's cut its price right away, and by the end of 1993 Encarta was selling for $99, 75% lower. According to retellings, bundling mattered even more: the disc was sold to computer makers below the retail price and put in the box with the computer estimate. The result, as Dartmouth describes it: Encarta soon became the best seller. For 1996 Microsoft claimed 59.1% of retail dollars in the US electronic encyclopedia market, per PC Data. The number of copies sold is not reliably known: 350,000 for 1993 is only a retelling with no source rumor.

The paired story

The pair is Wikipedia (history-wikipedia): a corporation's paid encyclopedia and a free volunteer one.

Parallels today (projects from the catalog)

What a builder can take from this in 2026

  1. If your content comes down to reference, a free open competitor will win on reach. In 2009 Encarta had 1.27% of visits against 97%. Sell not reference material but what cannot be copied: data, a cut for your segment, a ready-made conclusion.
  2. A free slice is not enough if the competitor is free in its entirety. Encarta gave away 16,000 articles, and Wikipedia everything. The free layer should lead to the paid one, not compete with it on the same content.
  3. Distribution through partners. Encarta shipped in the box with PCs estimate, and for 1996 Microsoft claimed 59.1% of retail dollars in the US electronic encyclopedia market. Look for a channel where your product ships in someone else's box.
  4. A license for someone else's content speeds up the launch but builds no moat. Funk & Wagnalls gave Encarta its text without Encarta having authors of its own, and the rights, according to Britannica's retelling, were nonexclusive estimate. Anything you license without exclusivity a competitor can buy too.
  5. A cheap digital product breaks the price of an expensive physical one. Britannica's standalone disc cost $995 in 1994, about $200 in 1995, and $200 in 1996, while the print set kept losing sales. If your price is an order of magnitude lower, the competitor is left with a choice: lose the market or move to your price.

Discrepancies and what we could not verify

Sources (primary first)

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