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Chat is talk of Internet World

Internet World Online chat is the buzz at this spring's Internet World.

Internet World LOS ANGELES--Online chat has become the buzz at this spring's Internet World.

Tomorrow, two leading players, The Palace and LiveWorld Productions, will announce major expansions in the fast-growing and potentially lucrative market.

The Palace, launched in 1995, will announce partnerships with U.S. Robotics, Compaq Computer, and NEC Computer Systems Division to bundle the online community software with their products.

NEC, for example, will bundle The Palace with PCs shipped for the home market. The Palace also will demonstrate a new feature--dubbed "auditorium"--that lets online moderators include voice and multimedia in their presentations using Microsoft's NetShow 2.0 technology.

LiveWorld Productions, formed more recently by a group of Apple Computer expatriates, will announce affiliations with 11 Web sites to create a network of online communities. Newcomers to the group include CBS SportsLine, a joint venture formed last week by CBS Sports and SportsLine USA, and Worldview Systems, cocreator of Travelocity, a Web site focused on travel.

LiveWorld also will announce a technology and marketing alliance with Microsoft. The company's "TalkCity" online chat service will be listed as one of the "best of the Web" sites on Microsoft's site. On the technology side, LiveWorld has selected Microsoft's chat server technology.

Both companies' announcements signal the rapid expansion of online chat, following similar upgrades by giants such as America Online. They see chat as one of the biggest future moneymakers on the Web because it attracts so many Netizens and, in turn, advertisers.

"The Internet is all about distributed online media," said Peter Friedman, a former Apple executive who now heads LiveWorld Productions. "By building a series of relationships with other Internet sites, we are able to create a distributed yet integrated network of communities." (Former Apple CEO John Sculley also is an investor in LiveWorld.)

The company's partners include @Home Network, @Music, Auto On-Ramp, Legal Pad, NetNoir, Religions & Spiritualities, SpaceCorps, Transformations, and Women Online Worldwide.

Not only marketing partnerships, but also the use of more cutting-edge technologies will be key to success in the budding market.

"In time, text-based Web sites will be as rare as DOS PCs," said Mike Maerz, chief executive of The Palace.

The Palace's "auditorium" feature is now in beta and will be available for downloading next Tuesday. The final version is expected to be ready next month.

Lead investors in The Palace include Intel, Time Warner, and Softbank.