KOZ.com FILES FOR BANKRUPTCY

By: Staff Reports

Half Of Workforce Laid Off


KOZ.com of the Research Triangle, N.C., has filed for Chapter 11
bankruptcy and laid off half of its staff, leaving 38 employees
to maintain the online community and commerce network.

“The reduction in force was recommended to us as part of our
strategy in going forward,” said Sam Whitt, chief operating
officer.

KOZ plans to continue hosting its clients’ community sections and
will maintain service to its current clients; however, a
reduction in support will occur, making the support team
available only during regular work hours.

Whitt said that KOZ’s investors were considering further
investment as long as the company’s burn-rate was decreased
through the restructuring. KOZ is still pursuing its latest round
of financing, which should total $5 million, he said.

Brian Monroe, chief technology officer and executive vice
president, said that part of the restructuring involved looking
at different pricing models for their products, which include
community-building software, but ultimately they couldn’t raise
their rates since “customers were taking a step back.” IChat, a
former subsidiary of KOZ.com, is not affected by the bankruptcy.

Whitt said that the Internet Tradeline/KOZ merger last year had a
negative impact on the company’s financial standing. “We absorbed
some debt with that,” he said. But KOZ did complete integrating
ITI’s Point & Shop technology into its current software
offerings.

Joe Michaud, who has been using KOZ.com at MaineToday.com since
1998, said that Koz’s affiliate representative notified him
Monday of the bankruptcy filing. “They have a chance to get going
now,” said Michaud, president of MaineToday.com.

Although Michaud said the bankruptcy was in KOZ’s favor, he
wasn’t completely sold on its business of providing free
community Web sites. More than 1,400 community groups in Maine
use the software, yet it represents less than 10% of
MaineToday.com’s overall traffic. Also, Michaud said, “We’ve had
a lot of trouble finding advertisers for those spots.”

Michaud believes there are still some kinks for KOZ to work out,
such as community groups’ aversion to co-branding and the lack of
integration between user-generated content and editorial content.
“We fully believe in the user-generated concept,” Michaud said.
“But we’re actively looking for something to integrate more fully
user-generated content with editorial content.” Michaud tried
iChat and Point & Shop, but found they didn’t work for
MaineToday.com.

KOZ.com in recent months has been targeting radio companies in
particular with their model. Both Whitt and Monroe believe the
radio companies will generate enough revenue to get them to
profitability.

Linda McCutcheon, who was CEO of ITI until the KOZ/ITI merger,
left her position as CEO of KOZ.com on April 5. She remains
chairman of the board.

KOZ’s Community Publishing System is used by newspaper clients
such as Blethen Maine Newspapers, MediaNews Group, and Advance
Internet. KOZ is a privately held company, owned by Tribune
Interactive, BancBoston Ventures, a European family group advised
by Barnard & Co., The Bergen Record, The CIT Group, CMGI
@Ventures, Donrey Media Group, EnCompass Group Inc., Media
General, Pulitzer Publishing, SG Capital Partners, Southeast
Interactive Technology Funds, and other private
investors.



Related story:
KOZ.com SHUFFLES TOP MANAGEMENT (04/05/01)



Copyright 2001, Editor & Publisher.

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