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N.Y. Internet Week: All in the same boat

The mood at the annual digital-culture confab was one of cautious optimism and camaraderie--except when it was clear there are still lots of unknowns.

IAC chair Barry Diller at last week's Founders Club party. Alexander Porter/New York Founders Club

NEW YORK--From a seventh-floor roof deck at Rockefeller Center, Barry Diller, head of digital-media conglomerate IAC/InterActiveCorp, was addressing the well-dressed crowd at Thursday evening's Founders Club cocktail party.

"There was a time when 'network' was all the buildings on Sixth Avenue," Diller said, gesturing to the west, home to the midtown office buildings that have housed New York's once-unflappable broadcast and print media powerhouses for decades, "and of course now it means something totally different."

The Founders Club, with a watertight guest list, drinks courtesy of Patron tequila, and a decorative pool filled with miniature sailboats bearing the logos of New York's most talked-about start-ups (perhaps a nod to host Diller, an avid yachtsman), was one of the more highbrow events at the second annual Internet Week New York, which culminates Monday night with the Webby Awards gala.

"I think the financial meltdown might be the best thing that ever happened to the New York start-up scene."
--Chris Dixon, co-founder, Hunch

In spite of how rough things have been for the industry over the past year, energy levels were high and there was no shortage of things to do. Internet Week attendees could fill their week up with panels, networking breakfasts, ad industry conferences, start-up expos, and loads of parties. ("It's miraculous that you are all standing up, because all I hear about are these parties!" Diller exclaimed at Founders Club.)

One thing's for sure: New York's tech and digital-media community has been humbled and chastened, and it's ready to get back on its feet. Unfortunately, now there's a whole new problem: what next?

On the bright side, there seemed to be near-universal agreement at Internet Week that changing times present opportunities to explore new territory. A handful of people noted throughout the week that online video-related events had especially high rates of attendance, as traditional media and advertising companies sent marketers and business-development types out to figure out just how they can make a buck or two off it.

There are legitimate reasons for some of this optimism, especially for smaller companies that haven't exactly had the easiest time in New York to begin with. Rents are cheaper now. Prospective employees are willing to work for lower salaries. And once-dominant New York industries have been brought down a few notches, leaving scrappy start-ups in a position that's far from undesirable--especially since big media and finance companies, short on ideas for how to stay afloat, have finally started to listen to them.

"On behalf of the crippled United States economy and the crippled New York City economy, I'd like to thank you for doing what you do," Business Insider founder and former Wall Street analyst Henry Blodget said to an audience of entrepreneurs and venture capital types at the blog's "Startup 2009" pitch competition Wednesday. "When you hear people talking about green shoots in this environment, this is what they're talking about."

Even the big companies seem to think the little guys are doing something right, or at least, in difficult times, they can make it seem a little sunnier by putting an entrepreneurial spin on things. New AOL CEO Tim Armstrong, for example, referred to AOL as "the world's largest start-up-slash-turnaround." He's not entirely off base. In New York, anything digital has historically been a bootstrapping industry in and of itself.

"I think the financial meltdown might be the best thing that ever happened to the New York start-up scene," Chris Dixon, co-founder of the fledgling Hunch, told CNET News at the Founders Club event. Dixon, who sold his previous company, SiteAdvisor, to McAfee in 2006, believes that in the Web 2.0 boom, New York's tech scene was even more upstaged by the San Francisco Bay Area's than it had been in the first dot-com gold rush. "(There were) hedge funds sucking up all the talent like they didn't in the '90s," he said.

But the excitement about the potential for innovation is tinged with plenty of confusion that can descend into downright cluelessness, brilliantly parodied in a YouTube-hosted music video called "Mad Avenue Blues" that was making the rounds last week and was the subject of many an Internet Week cocktail party conversation. Set to the tune of Don McLean's "American Pie," the video details the panic that one of New York's biggest industries went through in "the year the media died," and its lyrics full of marketing jargon are uncomfortably spot-on.

All joking aside, Internet Week made it clear that across the industry, nobody seems to be really sure what direction to take, and this can lead to major friction. In his opening address at Digitas' Digital Content NewFronts event on Wednesday, the ad agency's chief creative officer Mark Beeching gave an impassioned speech that included, among other things, the insistence that media companies give up on the fight against digital piracy because it's just not worth it.

"I can name a half dozen media executives who will have something to say about that," somebody remarked to me about Beeching's talk the following day, where even more digital-advertising types had gathered for cocktails and a presentation from ad agency Crispin Porter and Bogusky, which has gained serious geek street cred for edgy campaigns like the Burger King "Whopper Sacrifice" stunt.

At least they can agree on Twitter
Then there was the back-and-forth banter in the highly anticipated I Want Media panel on Wednesday, where it seemed like the only thing the panelists--who came from both print and digital media--could agree on was that the industry's more or less enamored with Twitter. Alan Murray of the Wall Street Journal, a firm advocate of media outlets charging for online content, sparred onstage with Nick Denton, founder of entertainment and gossip blog network Gawker Media, who stands staunchly in favor of advertising.

"There's not enough advertising out there to support us," Murray insisted. "The model, digitally, in part because it's so easy to move from place to place, just doesn't work."

Denton retorted, "That is so not true," claiming that "most newspapers, apart from The Wall Street Journal and maybe the Financial Times, they have nothing that people are going to pay for."

But over the past year, as the crisis in the media industry grew worse, Denton didn't sound quite as unflappable. Over the winter, he had been predicting a near total collapse for advertising-based content, and the company spent months trimming away the fat, casting aside unnecessary cargo. Gawker Media consolidated two blogs, sold several others, and laid off a number of writers and editors. It's probably turned into a far more efficient operation.

But things turned out better than he expected, and on Thursday night Gawker partnered with the Interactive Advertising Bureau (IAB) for a party on the roof of the blog network's downtown headquarters--the latest in a parade of Gawker roof parties that started popping up as soon as the weather began to warm. There was, of course, an open bar. Waiters brought around trays of appetizers that were certainly several notches up from the fare at Gawker parties of yore, where the catering typically involved ordering pork dumplings en masse from somewhere in nearby Chinatown.

Guests weren't quite sure what was being offered to them. One of the appetizers, they learned upon asking, was pheasant. Another consisted of shot glasses of spicy tomato juice with oysters at the bottom. It was more "Mad Men" than media meltdown.

But ideally, that pheasant was eaten with the knowledge that the industry is still in a grave situation, and it's still not clear how or when it will end.