Zip2, the Palo Alto, Calif., technology firm that works with newspapers on on-line development, is about to announce a new product called Arts & Entertainment. The on-line cultural guide, to focus on movies, restaurants and music, will be a direct competitor for local ad dollars with CitySearch, Microsoft's Sidewalk and America Online's Digital City.
The local advertising market is a key battleground between Web and newspaper publishers. Local ad revenues in 1996 totaled about $60 billion, according to Forrester Research. By the year 2000, about $1.5 billion is expected to gravitate to on-line sites. Knight-Ridder's San Jose Mercury News and Contra Costa Newspapers will be the first papers to sign on with Zip2 for a Bay Area on-line guide. Other major metro markets for Knight-Ridder, including Miami and Philadelphia, are expected to launch Arts & Entertainment guides soon, with publishers in other cities expected to follow.
Richard Sorkin, president and ceo of Zip2, said the company will receive an annual license fee from newspapers 'between seven and eight figures,' depending on the size of the city. Zip2 also will share in ad revenue generated by the papers. Sorkin projected the cost to launch a Zip2 Arts & Entertainment guide at only 5-10 percent of the cost to start an on-line guide from scratch.
'These other companies are playing catch-up with the newspapers,' said Randy Bennett, vice president of new media for the Newspaper Association of America. 'They're moving into markets the newspapers own and are trying to steal revenue newspapers already have.' --AS