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Infoseek buys chat company

The search firm's shares soar a day after the company says it is acquiring WebChat Broadcasting System for about $6.7 million.

In its bid to become the home page for as many Web surfers as possible, Infoseek (SEEK) announced yesterday that it is acquiring the WebChat Broadcasting System.

The company's shares rose more than 34 percent on news of the acquisition, climbing 8-7/8 in today's trading to reach a new high of 34-1/2.

Infoseek, whose stock has been flying high along with other search engine companies, will purchase the chat company for about $6.7 million, or about 350,000 shares of its stock.

The move comes amid a rapidly expanding market of companies racing to grab the best real estate on the Net: the "start" page.

Among the battle's main combatants are companies that began as search engines such as Yahoo, Excite, and Lycos, as well as online and software companies such as America Online and Microsoft.

In following this trend, Infoseek is not the first search engine site to acquire a community. Lycos recently purchased Tripod, a community that, like WBS, attracts a younger crowd. WBS's community is composed of 12- to 34-year-olds, a demographic that advertisers are constantly trying to reach.

Competition is sure to expand even further. Every time a company adds a features, such as free email or business sites or a bevy of other products, it increases the likelihood that a surfer will stay on the site, use its services, and view advertising, as well as buy products.

Chat is one commodity proving to be increasingly valuable, said online analyst Andrea Williams of Volpe, Brown, Whelan. If a company can develop a sense of community, the more likely users will be to come back and to stay loyal.

"Community clearly has been one of the main areas of focus for Infoseek and its competitors," Williams said. "Chat is at the core of community."

"They're trying and are succeeding in becoming a destination site," she added. "One of the keys is to offer community, to provide the tools that enable community formation."

Although making money through chat has proved an elusive goal, Williams noted it is only a matter of time before companies figure out how to get more bang for their talk.

AOL, for instance, now advertises in chat rooms. But some advertisers are reluctant to post ads for fear that their content will be associated with the sometimes crude or sexually oriented conversations that take place online. That, however, can be dealt with by moderating chats or by making it clear that advertisements don't have anything to do with the conversations taking place within the rooms.

"People spend a considerable amount of time in those chats," Williams said.

The WebChat Broadcasting System already has 2.7 million members, according to Infoseek.

"We chose WBS because their total integration of community distinguishes their services among competitors," said Harry Motro, president and CEO of Infoseek, in a statement. "Because this approach ultimately gives the customer a superior experience, it drives page views and customer loyalty."

Courtney Macavinta contributed to this report.