Talk City raises $34 mil, signs marketing pacts

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Showing the power of chat, Talk City last week cemented multiyear marketing agreements with NBC, Hearst Corp. and Cox Interactive Media.

Talk City also raised $34 million in financing from the major partners as well as investors that include Intel Corp., CSK Japan and Media Technology Ventures.

"It reinforces our business model by raising our profile with mainstream advertisers," said Peter Friedman, chairman-CEO of Talk City, Campbell, Calif., which last week renamed itself after its online community and dropped its LiveWorld Productions moniker.

While the site is growing, Mr. Friedman added, "we need a lot more leverage to succeed."

"Talk City has partnered with three of the largest media companies in the world," said Patrick Keane, analyst at Jupiter Communications. "I think it's going to be crucial for them as they move forward."

Talk City, which also owns events guide On Now, will co-brand and co-sell all the chat areas it provides for Cox, Hearst and NBC. The three partners will co-market the services in their media outlets, which include magazines, radio, TV and newspapers.

On the Web, Hearst has a foothold in the women's online arena with Hearst HomeArts Network; Cox and NBC have extensive networks of local city guides.

"Talk City is a clean, well-lit community," said Kenneth Bronfin, senior VP-deputy group head of Hearst New Media. "We looked at other sites, which were more Gen-X orientated," but they didn't fit as well with Hearst's properties, he said.


Mr. Friedman said the three media investors represent half of the total investment, contributing "several millions" apiece in cash as well as ad space on their various media properties.

NBC, which took a minority investment in March, now is Talk City's largest investor.

Previously, Talk City hosted chats for NBC's Teen site and NBC Interactive Neighborhoods, a network of local-affiliate station sites. Now Talk City will moderate chats and bulletin boards for all of, including celebrity chats.

In the past year, Talk City has allowed users to create their own home pages on the service, expecting to hit 2 million registered home pages by yearend. Hearst and Cox will tap Talk City for its chat, bulletin board and home page services; NBC said it's signed a separate deal with another home page provider, which it will announce shortly.


To promote the co-marketing agreements, Reinvent Communications, formerly U.S. Web Corp., Sausalito, Calif., created a print and Internet campaign for Talk City and On Now. It created a sweepstakes vacation to Brazil for On Now. A Talk City home page sweepstakes launches in October with a grand prize of $40,000 to be used for rent or a down payment on a house.

Half of Talk City's revenue comes from advertising, 10% from electronic commerce and the rest from corporate community sites it creates and moderates.

Christopher Escher, VP-marketing at Talk City, said it expects to spend $3 million in marketing by yearend.

Jupiter's Mr. Keane still has questions about the business model. "I think a lot of players in this space are finding it hard to monetize community traffic," he said. "Community as a standalone hasn't been proven to me yet. Do brands want to put themselves on top of amateur content?"

Copyright September 1998, Crain Communications Inc.

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