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THE CUTTING EDGE

Doing the Local Motion

Online Info Guides Are the Internet's Latest Gold Rush

July 29, 1996|LESLIE HELM | TIMES STAFF WRITER

Ever since moving to New York a decade ago from his native England, Mark Davies has been frustrated by the big city's lack of a comprehensive entertainment guide. So when the Cambridge University graduate discovered the Internet last year, he got to work.

Cadging money from his friends and stretching his credit cards to the max, Davies began building Metrobeat, an online service featuring all the movie, theater, restaurant, museum and other listings available in local print publications--and more.

By December 1995, Davies was buried in debt and missing payments to his landlord. But he knew he had hit the jackpot when companies like AT&T, America Online and Microsoft started calling, looking to cut a deal.

Whether by luck or foresight, Davies has put himself in the path of the latest Internet gold rush: the frantic push by companies big and small to build online information services aimed at local or regional audiences.

Some companies, like Microsoft and Pacific Telesis, have ambitious plans to establish broad franchises encompassing everything from entertainment listings to shopping guides. Others are more narrowly focused on niche markets such as apartment rentals, personal ads or yellow page directories.

What they all have in common is the desire to build a following of local users who will enable them to tap some of the $20 billion spent annually on classified and yellow page advertising. Computer systems, after all, are in principle a perfect medium for listings of every stripe: They can store a lot of information, sort it efficiently and make it readily accessible through keyword searches.

Says Peter Appert, an analyst at Alex Brown & Sons: "[Online companies] look at the classifieds as the golden goose."

It could take quite a while before any of these upstarts develop into serious rivals to the venerable printed classifieds of the Sunday paper or the ubiquitous yellow pages of local telephone companies. At the moment, most online services remain clumsy and sparse in content and advertisers still spend only minuscule sums online.

And with locally based services requiring start-up investments as high as that of a national or international service, while targeting a much narrower audience, observers say many of the dozens of new services will fail before any emerge triumphant.

"The Internet is such a jumble, nobody has a good grasp on it," acknowledges J.B. Pritzker, president of his wealthy family's New World Equity Fund, a venture capital fund that has invested in AdOne, an online classified service. "Competition is fierce. Picking your niche is vital."

Eventually, though, computerized listings packed with thousands of pages of pictures, maps, menus and text could emerge as a major force in the way people hunt for jobs, look for apartments or plan an evening on the town.

Microsoft is rumored to be betting anywhere from $200 million to $500 million that such a day is near. The software giant plans to build local entertainment and shopping guides with extensive listings and editorial information in major metropolitan areas nationwide.

The business plan for the service, code-named "Cityscape," was originally coauthored by Melinda French, wife of Microsoft Chairman Bill Gates. And it's now staffing up as fast as it can find the people, hiring not only at the Redmond, Wash., headquarters but also in San Diego, San Francisco, Seattle and New York--the cities where it hopes to launch late this year or early next.

"People tend to build communities around geographic localities and specific things they are interested in," explains Richard Tait, head of marketing and business development for Cityscape.

Others hope to win local followings by offering different kinds of information.

La Crescenta-based CitySearch, started by Knowledge Adventure founder Bill Gross and former McKinsey consultant Charles Conn, offered free Web pages to local community groups, including schools and nonprofits, as part of its first service in the Research Triangle area of North Carolina.

"We are creating a lot of information that didn't exist before," says Conn, the 34-year-old CitySearch chief executive. He says newspapers do a poor job of collecting local information, such as sports scores of community teams.

The company, which recently raised $10 million in venture financing from AT&T Ventures, Goldman Sachs and others, plans to add services in 30 more cities, including Pasadena, by the end of next year. To help finance its expansion, the company may also sell equity shares in its regional operations to local newspaper or television partners.

To jump-start its New York operation, CitySearch purchased Davies' Metrobeat, which will soon be reborn as a CitySearch site complete with community and shopping information.

Other start-ups are trying to take advantage of the Internet's strength at building vertical niche markets to win advertisers.

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