The Matrix: MEME 2.10

MEME 2.10


"We have always known that Microsoft was going to come in with big guns. That is one of the reasons we came up with this early Web presence," Gena Maniscalo says. "Timing is everything, and we are ahead." Maniscalo, Executive Director of Boston.Com, a Web site built by the Boston Globe newspaper, is on the front-lines of an escalating info-war in cyberspace. I recently spoke with Maniscalo, along with interactive media directors at The Washington Post, Dallas Morning News and Sacramento Bee, along with representatives of AOL, AT&T and Microsoft, all of whom now find themselves in the same business. This fall, a war for our eyes and mice is poised to go public, arriving at a Web site near you.

With surprisingly little fanfare, a who's-who of media and communications in the United States has simultaneously decided that the "killer app" that will morph the Web from a novelty to a necessity is a simple metaphor, what some call "digital cities." Each player comes to the Web with a particular strategy, however all are vying for the same goal: to be the online resource for information about your city. AOL, AT&T, Microsoft, the Boston Globe, New York Times, Washington Post, over 300 daily newspapers to date, television stations, and radio stations are all online building variations on this go-local theme. At stake, according to the players, is the $66 billion spent annually on local advertising in the United States -- money that now goes to the "old" media -- television, radio and newspapers.

The money invested in these sites is huge -- a billion or so. Microsoft's project, code-named "Cityscape" is estimated to have a US $500M budget. America Online's "Digital Cites" project has $100M in capital. AT&T's "Hometown Network" has an undisclosed budget, which, according to industry analysts, falls somewhere close to AOL's budget. Tack on the 300 odd newspapers, with 5 to 10 new ones coming online weekly, each with budgets ranging from $100,000 to millions, along with local televisionand radio stations, and it's clear that an awful lot is being wagered on this city concept.


Newspapers are caught in the middle of this stampede -- damned-if-they-do, damned-if-they-don't. At the heart of these city strategies is a simple calculation. A lot of money is spent on advertising for local products. If people became accustomed to getting local information online, a portion of these ad budgets will migrate from the "old" media to the "new" media. U.S. Newspapers received approximately $36 billion in advertising last year, and 80% of that was placed by local vendors, as opposed to national advertisers. These local ads are sometimes referred to as "the newspaper's franchise." Consequently, newspaper publishers see these online ventures as a threat. They also recognize that computer networks are not a passing fad. They are here to stay.

The logical choice, at first glance, is for newspapers to jump into the Web, build a local site there, cross-fingers, and hope that somehow, someway whatever ad revenue is siphoned off into cyberspace will remain within their corporate balance-sheet. Newspapers, however, don't have particularly deep-pockets, and going online in style is expensive. According to Forrester Research, a Cambridge, Massachusetts, market-research firm, typical Web sites will lose $3.9 million beyond their initial investment before turning profitable. Worse, the average site is expected to continue bleeding money until at least the year 2000 or later when, if you follow the number of people going online, 20% of the U.S. adult population will have Web access.

So the newspapers could opt out, hanging on the sidelines. But what if they're wrong? What if, after all, these city-sites are the "killer app"? Then they've blown it. Ad dollars will flow out of the newspaper to a new competitor. This is their dilemma, and either way all but the best-financed papers are vulnerable, eyeing a deep and dark money-pit. They cannot afford to lose big money online. If they do, it could drive some of them into the red, and from there it's a dangerous game whose price could be the existence of their newspaper.

The "new" media players -- AOL, AT&T, Microsoft -- understand this dynamic, and it is playing in their favor. They can afford to spend big money, be wrong, and lose it (at least AT&T and Microsoft can). For instance, in Microsoft's last fiscal year, the average employee generated $108,103 in profits. The average newspaper employee produced $6,781. While this in part reflects the very different nature of these industries -- Microsoft's is less labor intensive, while newspapers require an armada of personnel, from truck drivers to editors -- it underscores the financial risk Microsoft can take.

What's disturbing, however, is how untested this city metaphor is, and how convinced everyone is that this is the right way to go. Ultimately, these ideas devolve towards shopping guides -- best movie, best clothing sale, best play, best restaurant, best hotel. It is unclear that this alone can anchor people's interest by bringing essential repeat visits. Another option is to deliver news online. This is attractive, but the odds of several hundred news sites thriving is counter-intuitive -- perhaps a dozen could, but hundreds? How many versions of a national or international story can people stand to read? Delivering super-specific local news is one option, whether this can lead to a thriving online business is a highly speculative assumption. I find all these options oddly anachronistic, in quasi-denial of what's new with computer networks. Interestingly, the one option that might work is rarely mentioned, what I call "taking the pulse" of a city.


Imagine, briefly, that your city is an organism with people as cells, cells forming organs, which in turn form the whole. These organs are our civic institutions, businesses, and cultural gatherings. As large groups, we create events moment by moment -- traffic snarls here, subway delays there, hospitals with overflow here, ticket-sales blooming across town. In turn, these movements have history, called patterns. Some hospitals are slower at delivering emergency care than others, some intersections are notoriously clogged. Some city offices deliver certain services faster than others, at different times. Add in volume of financial transactions at movie theaters, automatic teller machines and restaurants, for instance. Toss in reported crime by type and location. Pretty soon you have an accurate reflection of your city which could be useful in a way that does not replicate the existing "old" media.

Cyberspace is exciting partly because it offers new forms of expression and widens our ability to reach each other devoid of an intermediary. The shame with these city ideas is that they could wind up silencing sections of the "old" media, forcing a round of consolidation in the newspaper industry as the cost of these new ventures forces weaker players to seek financial salvation. It's doubly upsetting if these city metaphors turn out to be unappealing, destined to be categorized as yet another high-tech boondoggle with a nasty side-effect. In the United States where freedom of the press was explicitly established as a bulwark of democracy it's a bitter irony that the Net, a medium celebrated as a means of supporting the free-flow of ideas, may contribute to the contraction of ideas offline.

A list of interesting city-based Web sites:

The Boston Globe, with their Boston city-guide:

Citysearch, acquired by AT&T, and their guide:

The Dallas Morning News and its publisher have many cities:

An interesting, AT&T affiliated, guide to Minneapolis:

Future home of AOL's Digital Cities, Inc.:

The Sacramento Bee newspaper does Sacramento, California:

MEME and its contents copyright by David S. Bennahum. Duplication for non-commerical use is permitted. Contact me if you have questions. Direct comments, bugs and so on to me at