Red Hat to add news to Linux site

The software maker plans to create a full-fledged news site as part of its effort to increase the appeal and potential profitability of its Linux portal.

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Stephen Shankland
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Red Hat plans to create a full-fledged Linux news service as part of its effort to increase market appeal and potential profitability.

Judging by the Linux seller's job openings and filings with the Securities and Exchange Commission, the company intends to set up a news site based in San Francisco, complete with an editor-in-chief and a staff of journalists writing news, features, tutorials, and other original content. The portal effort would compete with other prominent Linux-related Web sites such as Slashdot and VA Linux Systems's Linux.com site.

Red Hat declined to comment on any news site plans, because the company is in a "quiet period" prior to its initial public offering.

The transformation of Red Hat from the dominant seller of the "open-source" Linux operating system into a software developer/media company would be a key part of its effort to expand its sources of revenue. With the site, Red Hat would be able to seek advertising and sponsorship deals.

Several companies are angling to benefit from the open-source software movement, but Red Hat is probably the most aggressive. Its IPO will likely take place during the week of August 9--the same week as the Linux Conference and Expo in San Jose, California, according to sources.

Red Hat has hired 20 Web site developers from San Francisco-based Atomic Vision, including Matthew Butterick, who founded Atomic in 1994, according to the company's SEC filing. Cofounder Marc Ewing is in charge of the company's Web group, said spokeswoman Melissa London.

In the quarter ended May 31, 3 percent of Red Hat's $2.8 million in revenue came from Web advertising, the company said.

A Linux site's potential for success is seemingly great, judging by the amounts and energy invested into these projects thus far. Several bidders, including Red Hat, submitted bids for the URL Linux.com, according to the former owner. Some bids totaled into the millions.

Additionally, Slashdot, with a huge and loyal readership, was acquired in June by programmer site Andover.net.

Separately, one of Red Hat's competitors, Caldera Systems, also plans a Linux portal, though executives have declined to state when it would be ready. Caldera is aiming its version of Linux at newcomers, said Benoy Tanang, vice president of marketing, in an interview today.

"We're going to do something comparable" to Red Hat's portal site, Tanang said. "It seems like portals and portal strategies are very important."

"We're adding real content creators, and we've talked to some journalists," Tanang said. The focus will include "Linux for mere mortals" as well as help for businesses and software distributors.

Caldera already got its feet wet with its Linux reseller site, which offers tantalizing tidbits such as Linux history and support help.

Like Red Hat, Caldera hopes generate revenue from the site, Tanang said. Caldera is planning an IPO, he added, but the company hasn't yet begun approaching institutional investors in the traditional "road show" that precedes a first-time offering.

The Red Hat Web site currently offers repackaged news from Linux sites including Slashdot, Freshmeat, and Linux Weekly News.

Original content is on the way. Red Hat's job posting site lists several news-related jobs up for grabs. For example, an editor-in-chief is needed to "direct the creation and organization of editorial, educational, and technical content for Redhat.com and supervise a team of journalists, technical, and educational writers in creating news summaries, feature stories, white papers, tutorials, newsletters, and other content for Redhat.com."

Red Hat opened its West Coast office last year, London said. In addition, the company announced a European office today, putting more pressure on SuSE, a Linux seller based in Germany. Geographic expansion is part of Red Hat's plans for the tens of millions it hopes to raise in its IPO.

In its filing with the SEC, Red Hat emphasized the importance of its Linux portal both to readers and to advertisers. "We are continuing to enhance our Web site in an effort to create the definitive online destination for open source software products, software updates, news, and other information related to Linux-based operating systems and other open source projects, and to provide advertisers with a large and technically sophisticated audience," the company said.

The company is adding new features to its Web site, including automatic notification of software updates, catalogs of open-source programming efforts, classified ads for open-source projects and developers, calendars of events, and "virtual trade shows."

"Our Web site had 265,000 unique visitors and approximately 2.5 million page views during March 1999," Red Hat said in its filing.

In another connection to the media business, Red Hat disclosed an investment by a board member, Frank Batten, chairman of privately owned media company Landmark Communications, which operates the Weather Channel, the Virginian-Pilot newspaper, and other media companies.