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Talk City chats up growth plan

Chat network Talk City holds a coming-out party in Atlanta.

ATLANTA--Talk City, the chat network founded and funded by some ex-Apple Computer executives, is holding a coming-out party at Spring Comdex here today to introduce new products and features to help spur its next phase of growth.

Having just raised $9 million from a fund run by financier George Soros, as well as investments by Softbank and venture capitalist Petricof & Company, Talk City is announcing a new channel structure, upgraded chat software, and free chat for other Web sites.

"Now we're going to take the venture capital money we raised and spend it," said Peter Friedman, chief executive of Talk City and parent Live World Productions.

The details include:

  • A channel structure that will segment community programming into topics, such as "arts & entertainment," "news & politics," and "home & family." The company plans to roll out the new format in early to midsummer.

  • Chat @ Talk City, a program that offers free chat rooms to anyone on the Net, including businesses. Participants apply for their room with a simple form available on the Talk City Web site.

  • An upgraded version of the company's EZ chat software that is more user friendly. EZ Talk 2.0, a Java-based, real-time Internet Relay Chat client, is offered for free.

    In addition, Microsoft has agreed to feature Talk City in its "best of the best" area on its Internet Explorer browser starting this month.

    Talk City was formed last year by a group that included some Apple executives, such as Friedman, the company's former vice president for online services. It also received $1 million in start-up capital from a group that included ex-Apple CEO John Sculley and a former chief financial officer, Joe Graziano.

    The company bills itself as providing a "clean, well lighted" community for chat. Last summer Talk City was logging 20,000 hours per month in chat time, but that has grown to 900,000 hours monthly since then. The core audience of users has grown from 5,000 to between 200,000 and 300,000, according to Friedman.

    Chat has big moneymaking potential: An estimated 35 percent to 50 percent of user's online time is spent on chat or in discussion groups, he said. That makes chat a big draw with such advertisers as large consumer companies, as well as technology stalwarts like Microsoft and Intel.

    But competition is intense. Giants with household names such as Walt Disney are expected to weigh in with their own chat offerings later this year, while Web Chat, Yahoo, The Palace, Electric Minds, and online services such as America Online, and CompuServe continue to add new features.

    The Palace, for example, this week will announce three new features including PalacePresents, a new online auditorium for live events; PalaceLobby, a feature for multiplayer games on the Net; and a software upgrade that will expose more Net users to The Palace platform and make it easier to create Palace virtual reality worlds.

    Despite the competition, Friedman remains confident that Talk City will succeed, largely by offering users a clean, friendly chat community. "It's like going to Disneyland, and the chat is the ride," he said.

    The company is also striking deals with others, including CBS SportsLine, Travelocity, and @Home.

    The company will need more money to expand, however, and is not ruling out the possibility of an initial public offering, Friedman said.