Snapping up content sites
WP studios' Total New York becomes the latest content site to be gobbled up by voracious online media giants.
And media giants are spending nowadays as they try make their Web sites stand out, or even survive, in an increasingly competitive market.
In the latest example, one of New York's leading Web start-ups today was snapped up by Digital City --a venture of America Online and Tribune Co.--in a marriage of hot content and capital.
Digital City, which produces local Web sites for 13 cities nationwide, today took over WP Studios' Web sites: Total New York, ada 'web and Spanker, for an undisclosed sum. The buyout of the successful Total New York site is in line with Digital City's launch of a New York city site this year.
Digital City is beefing up to compete in a market that includes: CitySearch, Microsoft's Sidewalk, and Warner Bros.' City Web. All are building nationwide "city guides" in hopes of roping in local advertising dollars.
While independents such as WP Studios often hook up with deep pockets to keep their creations alive, online barons may not have enough staying power to keep local-based sites afloat either, analysts warn.
"There's not enough ad dollars right now to support online-only [content] operations," claimed Bill Bass, a senior analyst for Forrester Research who authored a report about the future of local online content.
"If your content is really good, you have to cut a deal with somebody or you're not going to survive. However, sites like City Search and AOL's Digital City also won't be able to survive because of the negative cash flow. AOL, for example, has too many things it has to invest in right now."
Some major players will likely get a return on their investment, however, he said.
"Microsoft can afford to loose money for three or four years and build a franchise," Bass said. "WebCity will also be very successful because they're building local television stations launching turn-key Web sites in exchange for TV ad time."
Digital City is not discouraged. The company has been around since 1995 and is rolling out not only the site in New York, but also one in Minneapolis next year. It also gets 125 million page views a month for its combined 13 cities.
The buyout of WP Studio is just another example of its viability, said Paul De Benedictis, president and CEO Digital City.
"We?re looking to produce more and more original content for Digital City," he said. "Overall this business is being driven by advertising, but we're also the largest provider of local content for AOL, which has 8 million subscribers."