Web locally, profit globally?

In the latest Internet gold rush, media companies are scrambling to build unique regional Web guides -- right in (your city name here).


Tom Mcnichol
April 6, 1997 11:00PM (UTC)

What's there to do around town this weekend, you ask?

There's never been a better time to pose that question. Just make sure you're not in a hurry for an answer.

To begin, you may want to climb online and consult Yahoo, which currently has local sites in eight U.S. cities, plus a "Get Local" feature pegged to 40,000 zip codes nationwide. This will help you learn that "The Empire Strikes Back" is playing continuously at every multiplex in town.

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Next, click over to DigitalCity, America Online's arts and entertainment offering -- now in 13 cities, expanding to about 20 by the end of the year, and rolling out a Web version. Oh boy -- another new Thai restaurant with a 20-minute waiting list!

Then shuffle over to Citysearch, which offers local guides for five cities and plans to be in as many as 30 medium-sized towns by year's end. Hey, I didn't know Bob Seger was still touring -- guess he's already blown the dough from those "Like a Rock" truck ads.

In a few months, you'll be able to consult Sidewalk, the new local arts and entertainment guide from Microsoft, which debuts in Seattle next month and expands to 10-12 cities by year's end. Then you can dash over to Cox Interactive, which recently announced plans to launch local guides in about 30 cities. Cross-reference that info with the data you gather from CityWeb, Warner Brothers' network of city sites tied to local TV stations, which is debuting this summer.

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Collate all the information into a swollen data base and settle back in your chair -- you've solved the problem of what to do this weekend. Only it's now Monday.

Few people are likely to have the time or patience to consult more than one of the rapidly proliferating online city guides. But that hasn't stopped them from multiplying across the Web. Overnight, the Net has gone loco for local.

"It's all a recognition that local is important," says DigitalCity's chief executive, Paul DeBenedictis. "Local is going to be THE place to be over the next five to 10 years."

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It wasn't long ago that the Internet was being hawked as your global passport to far-flung communities, an opportunity to interact in real time with Tibetan monks, Falkland Island sheep farmers and swollen-bellied !Kung warriors speaking their native click language. But lately, the Net seems content simply to tell you what's going on within five miles of your house.

Like most online gold rushes, the spurt of local city sites is being fueled by the promise of riches rather than their actual discovery. Talk to anyone backing an online city guide these days and the conversation quickly turns to the $66 billion spent annually on local advertising, primarily in newspapers, Yellow Pages and broadcast media.

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"They all sit there and say, 'We only need to capture a tiny fraction of the local advertising market to make a lot of money,'" says Bill Bass, an analyst with Forrester Research. "It's all about greed, pure and simple. The problem is, the market can't sustain that many players."

The digital city guides are invading markets long dominated by print publications. Most of the online offerings feature indexed business and professional listings, a digital competitor to the Yellow Pages. Many offer local classified ads, a franchise traditionally dominated by daily newspapers. And all of them promise expansive listings of local restaurants, clubs, movie openings, stage shows, sports and outdoor events -- the bailiwick of weekly alternative newspapers such as the Village Voice, the Boston Phoenix and the Seattle Weekly. The alternative weeklies, a $300-million-a-year industry built on the strength of comprehensive local arts and entertainment listings, are particularly wary of the new digital city guides elbowing into their territory.

"This is the first really powerful threat the alternatives have seen," says Jon Maples, director of new media at the San Francisco Bay Guardian.

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Many alternative papers are choosing to become partners with one or more digital city guides rather than be left out in the cold. The Bay Guardian, for example, provides some local content for Yahoo's San Francisco site. The Seattle Weekly and the Village Voice have signed licensing deals with Sidewalk. The Boston Phoenix provides content for both DigitalCity and Yahoo and is talking to Microsoft about a deal with Sidewalk. It's clearly a new paradigm when alternative newspapers, for decades reliably left-of-center and distrustful of big business, start selling out to The Man -- especially the one from Redmond.

"We're intrigued by the possibility of partnering with Microsoft, but on the other hand, we have concerns about maintaining our unique position in the marketplace," says Boston Phoenix editor Peter Kadzis.

Many alternatives figure that the online guides -- particularly Microsoft's -- will gain a toehold whether they cooperate or not, so they may as well get something out of the deal. But some choose to keep the relationship at arm's length. The Village Voice's agreement with Sidewalk, for example, calls for the paper simply to provide raw listings data -- the name of the event, the venue and the telephone number -- with no mention of the Voice on the Sidewalk New York site. That way, Sidewalk gets the local listings it needs more cheaply than compiling them itself, the Voice gets technical assistance from Microsoft to enhance its own listings -- and longtime Voice fans don't have to ponder the implications of their favorite paper shacking up with the world's largest software company.

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Of all the online city guides, Sidewalk, by virtue of its deep-pocket owners, is generating the most buzz. Over the past six months, Microsoft recruiters have swooped down on local media outlets hoping to pick off writers and editors to hire as members of the local Sidewalk "team." Money doesn't seem to be a problem. The two top slots at each Sidewalk site (known as general manager and executive producer) are paying $125,000 a year and up, salaries even the dailies have a hard time matching. In the media world, credibility is a hard thing to buy, but a six-figure salary usually makes a nice down payment.

"They're recruiting like hell," says Gina Maniscalco, executive director of Boston.com, a regional Web site anchored by the Boston Globe. "I think I'm the only one here who hasn't gotten a call from Sidewalk. I'm kind of bummed."

Microsoft is keeping mum about exactly what Sidewalk will look and feel like, but already, the site's mantra has emerged: local, local, local.

"We will not succeed unless we're a city guide written by people who live in the city and really know it," says Cella Irvine, general manager of Sidewalk New York. "Otherwise, we won't pass the sniff test."

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A promotional teaser for Sidewalk currently posted on Microsoft's Web site advises, "Think of Sidewalk as your knowledgeable friend who can recommend fresh and new discoveries." In this case, your knowledgeable friend will be brimming with arts and entertainment suggestions and offering opinionated descriptions of local events along with chat and feedback forums. Your online pal will also offer personalizing features so you can receive information and updates about particular interests, such as a favorite band, restaurant, movie or author. Your digital amigo will let you buy loads of stuff online, such as concert tickets, CDs, furniture, travel packages, software and cars. And, naturally, he'll be relentlessly positive about what a great place (your city here) is to live.

But most of all, your knowledgeable friend will be really, really local. In fact, he'll be more local than anyone who's lived in the city awhile; he'll be more like a newcomer trying to fit in by impressing you with his local knowledge.

Sidewalk New York promises to be your personal tour guide "whether you're searching for the right movie at the right time or exploring for a new Italian place in the East Village." Sidewalk DC vows to be your local scout for "restaurants from Mexico to Ethiopia, music from political satire to all that jazz." Sidewalk San Francisco will track down "the best Thai food, mai tai or tie-dye." Sidewalk Sydney, the first international Sidewalk site, will tell you what's "the best Thai restaurant in Newtown." Thus, by changing a few details, and making sure everyone doesn't get sent to the same Thai restaurant, the Sidewalk template can be adapted to dozens of cities.

Sidewalk will enter the market with distinct advantages -- solid funding, experienced local staffs and a big advertising and promotional push from Redmond. But the field is already crowded with competitors, all of whom insist that their service is uniquely positioned to capture the market.

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Certainly, there are differences among the various services. Yahoo, unlike the other city guides, doesn't provide any original editorial matter of its own, preferring to join with content-provider partners from the local print and broadcast world and add tools such as classified ads (which it gives away free as a traffic builder), message boards, chat rooms and directional maps.

"Just as there are multiple radio stations in a market, I think you'll have multiple local city guides," says Ellen Siminoff, director of Yahoo Communications. "But at the same time, you probably can't have 10 of them covering the same area. Not everyone will be a survivor."

DigitalCity, owned 80 percent by America Online and 20 percent by the Tribune Company, is only available to AOL members right now but is expected to announce a move onto the Web as early as this month. DigitalCity has the advantage of a built-in user base of 6 million AOL customers. Its chief weakness is being owned by a company with way too much on its plate already -- like desperately trying to beef up its infrastructure to keep its existing customers from being enraged by busy signals.

Citysearch, an independent start-up backed by heavyweights such as Goldman Sachs and AT&T, has raised about $35 million in investment capital. Although the service started in New York, Citysearch is targeting medium-sized towns such as Raleigh-Durham, N.C., Salt Lake City and Austin, Texas. Rather than sell banner ads like other city guides, Citysearch sells pages within its Web sites to local businesses and charges them a monthly fee.

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"We're not a collage of hypertext links like Yahoo or DigitalCity," says Citysearch CEO Charles Conn. "And rather than just covering arts and entertainment like Sidewalk, we build relationships with local community groups, nonprofits, hospitals and government. That gives us a more local feel."

More local than Sidewalk? If these city guides get any more local, they'll be serving Web pages from inside your pants.

Cox Interactive has the clout of the country's 14th largest media company supporting one of the most aggressive rollouts ever on the Web. By year's end Cox expects to have 30 products online, most of them city-oriented, but a few focusing on specialized subjects such as baseball. CityWeb from Warner Brothers is a different beast altogether -- an online city guide branded as the digital offshoot of a local television station. Stations will provide local headlines, weather and sports, while CityWeb shovels in content from the Time-Warner media stable -- including CNN and People magazine -- and mixes in the obligatory classifieds, online shopping, chats and polling.

Despite surface differences, all of the city guides are chasing roughly the same market, competing not only against each other but the local dailies and alternative newspapers, most of which have existing local sites of their own. Going into the battle, the online guides have a distinct advantage with any information that can be searched, sorted or personalized -- online classified ads are an almost certain slam-dunk. But arts and entertainment listings -- the backbone of many city guide services -- are more often surfed rather than searched. In the quest to find something to do this weekend, people occasionally hunt for a specific band, restaurant or event, but usually they pore over many listings until something strikes their fancy -- a task done more easily, at least for now, with a print product.

The online guides also lack the ready-made credibility that papers such as the Village Voice have built up over the years with muckraking editorial and sophisticated arts coverage. City guides, at their heart, want to be arbiters of cool, and it remains to be seen if legions of post-punk cocktail nation hipsters will look to Microsoft or America Online for guidance in this department.

"I think Microsoft has a lot to overcome in making Sidewalk successful," says Linda Nelson, vice president of new media for Stern Publishing, owners of the Village Voice. "There's a different level of loyalty on the Web than there is in print. People are clicking around and not always aware of where they are."

While online guide boosters admit the competition is stiffening, they insist they're backing a winner.

"Those who say this can't work haven't looked very hard at the economics," says Citysearch's Conn. "There's no way we could have raised the money we have if we couldn't demonstrate that this is a profitable market."

Of course, the mere fact that large companies are funding an online venture is no guarantee of its success -- just ask IBM and Sears, which lost millions on Prodigy. And some analysts predict that the $66 billion in local advertising that everyone is lusting after may not be there when they arrive.

"Right now, classified ads and directories are dominated by monopolies -- daily newspapers and Yellow Pages -- and they're priced at monopoly prices," says Forrester's Bill Bass. "We estimate that increased competition will result in a 70 percent reduction in prices. So instead of $66 billion in local advertising, you're talking more like $24 billion. With the online city guides, I think you'll see a shake-out in 1998 or 1999, and I'd be surprised if anyone but Sidewalk and maybe one other survives. The rest will either die or be bought up."

But, hey, that's a year or two down the road, a virtual lifetime on the Web. Until then it's local-a-go-go online -- an endless summer of independent movie houses, cigar-friendly cocktail bars, killer lattes, romantic getaways and, of course, great new Thai restaurants. The global village has shrunk to a tiny hamlet, an utterly unique place known as (your town here).


Tom Mcnichol

Tom McNichol is a San Francisco writer whose work has appeared in the New York Times Magazine, the Washington Post, and on public radio's "Marketplace" and "All Things Considered." He is a contributing editor for Wired magazine.

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