Yet Another Community Guide Venture to Worry About: CitySearch

By: Steve Outing

If you're a newspaper publisher you might view CitySearch with some anxiety, and rightfully so. This California start-up company plans to enter many metropolitan markets (in the U.S. and overseas) and set up local online community guides which will serve the functions that many newspapers hope to fulfill with their own online services, offering content-deep community information, entertainment listings and news.

CitySearch is the third major online community guide venture to be gearing up this year. The others, which I have written about in this column before, are America Online's Digital Cities effort (now on AOL's legacy service but coming to the World Wide Web soon) and Microsoft's ambitious venture code-named "CityScape." There are others eyeing this same business opportunity -- and several telephone company projects have similar qualities and aspirations -- but these three ventures are ones to watch.

CitySearch is off to a good start, with more than $10 million raised from Goldman Sachs and AT&T Ventures. (It's also rumored that celebrity Hollywood director Steven Speilberg has sunk a modest amount of money into the project, but CitySearch officials won't confirm it.) And it has its first online city project up and running in the "Triangle" metro area of North Carolina (Raleigh, Durham and Chapel Hill). Other cities, in the U.S. and overseas, are under development. Next up within the month is Pasadena, California, followed by two other unidentified cities that are close to launch. The company has said it will be operating in 30 cities worldwide by the end of 1997.

Moving in quickly

The company's move into the Triangle, which is home to the News & Observer in Raleigh and its well-known NandO online service, raised a few eyebrows. CitySearch's Triangle office quickly hired more than 20 people, including a sales team that went out into the community to sign up businesses for enhanced listings and advertisements on the service. If you visit the site, you'll see, for example, extensive Web pages for stores and restaurants. A pizza restaurant page that I stumbled upon had its own mini Web site, with lots of graphics, an online menu, prices, etc.

The basic concept, says CEO Charles Conn, is to go into a city and hire a staff picked from local people who know the market, then partner with local organizations, government and media. Local CitySearch ventures are viewed as "community projects," says Conn, and are built with input and help from the community. Through partnerships with the sources of local information -- such as government agencies, community groups, chambers of commerce, TV stations, newspapers, etc. -- the service is able to acquire such content as school lunch menus, sports scores, etc.

CitySearch chose in the Triangle market to work with a weekly arts and entertainment newspaper, The Independent in Durham, which provides content such as movie guides and community calendar listings. Conn says he likes to partner with local media, and especially likes working with newspapers. "I love newspapers and have a lot of respect for them," he says.

Thus far, smaller papers like The Independent have been more willing to work out deals with CitySearch, whereas many major dailies have been more guarded, Conn says. (He reports that those "self-confident dailies" that have more experience with new media and "have thought about it longer" are more open to partnerships, whereas less experienced publishers are leery of establishing relationships with him.) TV stations also are proving receptive to the CitySearch pitch, Conn says.

While many CitySearch local ventures will be modeled after the Triangle, with large local staffs, and media partners playing a minor role, other city ventures will have the local media partner in the dominant position, with CitySearch playing primarily a technology role. This is to be the case in three European cities (which Conn won't name yet) where CitySearch is a minority partner in a joint venture with the dominant metro dailies.

Terms of the deals with media partners aren't available, but Conn says they cover a wide range, from formal joint ventures (such as the European newspaper deals mentioned above) to co-marketing arrangements where no cash changes hands. He claims to be making good offers to potential newspaper partners. (In a previous column, I reported that some newspapers approached by CitySearch competitor Digital Cities have complained that the terms of its offer are inadequate.)

Not looking for a fight

Conn says that moving in to the Triangle area first was "a bit deliberate." This is an area with many high technology companies and high computer usage among the population, as well as the well-entrenched NandO/News & Observer online efforts. But what CitySearch is doing is quite different from newspapers' online efforts, Conn suggests, and there's minimal overlap. Newspaper online services are more geared for consumer browsing, whereas CitySearch is a database-driven service where users can find specific information about their community, he says. "We're not coming in (to local communities in an) arrogant manner, looking to pick a fight (with local newspapers)," but prefer to cooperate with them.

Certainly where there is overlap is in the entertainment guide category, so the News & Observer, the region's dominant daily, clearly must take CitySearch as a formidable competitor; it's a threat not only to the paper's online service, but also to its print product's role as the primary guide to local entertainment. By allying with CitySearch, the alternative Independent newspaper is able to compete more effectively in cyberspace with the News & Observer.

Conn also says that in some markets CitySearch will add news components, so in fact a local CitySearch could compete more directly with non-affiliated local media online ventures.

Where Conn really wants to do business with newspapers is in putting their local classified ads online in a "next generation" presentation. For now, he's staying out of the local classifieds business, choosing not to create his own classifieds section on local CitySearch sites but hoping to make deals with newspapers. The majority of newspaper classifieds Web sites are unimpressive, he says, so he's counting on publishers wanting to ally to gain access to a superior technology.

CitySearch is demonstrating its commitment to working on the "bleeding edge" by embracing Sun Microsystems' Java language. A Java version of each CitySearch site is available for those with Java-enabled browsers, as well as an HTML version. The sites' search engine was developed by the CitySearch team.

This is not Microsoft

CitySearch currently has 120 employees, which Conn expects to double "soon." But "this is not a Redmond-like corporation," he says, referring to Microsoft's CityScape venture, which is rumored to be a hundreds of millions of dollars project. He believes that the entrepreneurial flavor of his company will endear publishers to what it has to offer. "I'd rather be me than Microsoft," he says, because "we don't carry the baggage that Microsoft does."

The company also is hiring aggressively for many cities, though Conn would not identify which ones for fear of tipping off America Online and Microsoft.

Should CitySearch come to your town (or for that matter, Digital Cities or CityScape), you'll want to have a strategy ready to respond.

Contact: Charles Conn,

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American Reporter struggling

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