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The Download, Shannon Henry

New Start-Ups Aim to Build Content Capital

By Shannon Henry
Thursday, March 10, 2005; Page E01

The future of technology in Washington may well be within the digital operations of some big, old players in our backyard: Discovery, National Geographic, The Washington Post, AOL, and Gannett.

Together, they create a sweet spot of new-fashioned media opportunity and a pocket of technology expertise akin to software or telecom. It's a natural evolution: Washington is not only a government town, but a city of information-junkies. The presence of these dominant players is giving some techies hope for a new wave of start-ups and another niche -- a content capital -- to call their own.

_____Live Discussion_____
Transcript: Shannon was online to discuss her last Download column and the future of the local tech community.
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"We have existing assets and massive employers," says Mark A. Frantz, a principal with venture capital firm Carlyle Group in Washington, who says as an investor this is the most important local trend he's seeing. "We're not just a telecom, government, biotech town."

Big media aims to stake its claim in two ways: Acquisition and innovation. The first is easier, of course, providing the merger goes smoothly and the company cultures mesh well. Dow Jones & Co., which publishes The Wall Street Journal, earlier this year bought online financial news site MarketWatch. The Washington Post also recently purchased webzine Slate from Microsoft, hoping to boost its online presence. USA Today, published by Gannett, has added to its online job search section by buying Careerbuilder.com. AOL has snapped up little companies specializing in search engines and mapping, among others.

For companies like The Washington Post, the value is in using the Web to distribute its journalistic content -- and leveraging ad sales from it. What a company like Discovery gets is an efficient way to promote its 14 brands, which range from the "Animal Planet" show to brick-and-mortar Discovery stores. But digital prowess can also add directly to the bottom line. In December, Discovery signed a year-long, multimillion-dollar agreement with PepsiCo that gives the soft drink maker advertising space on several of its network shows and directly on the Discovery.com site.

But true innovation is hard, moving beyond well-designed home pages with hyperlinks and good photos. Newspapers are launching online-only columns, updating news 24/7, some with new staffs, and hosting live chats with writers and industry experts. Some are attempting versions of Good Morning Silicon Valley, a daily e-mail Web log launched in 1996 by the San Jose Mercury News. Discovery and National Geographic are branching out with interactive video and games and online shopping. AOL and others are experimenting with instant messaging and texting.

Yet just because the big guys have brand names and cash doesn't mean they will beat the start-ups who can move faster on smaller budgets. The competition is not only about growth, but survival. Traditional media operations are seeing their audiences dwindle, just as younger customers are demanding real-time news and information.

Washington-based bloggers are building an audience for political gossip, while local start-ups such as Digital Media Wire have claimed technology news as their dominion. Paul Sherman, founder of Digital Media Wire, which produces the local Potomac Tech Wire and eight other blogs for other geographical areas and industries, found the subject so interesting he's putting on the second annual Washington Digital Media Conference in June, a confab of powerful communicators and content providers in the region. Other local players not yet in the big leagues but worth watching include XM Satellite Radio and iBiquity, both in the radio industry.

Other start-ups are emerging. Susan DeFife, founder of Womenconnect.com, a Web site for women that was shut down several years ago, and Mark Potts, a local journalist and former staffer for The Washington Post and Washingtonpost.com, plan to begin publishing Backfence.com this year. Backfence is part of a new category of "open source" journalism that includes blogs and list servs. It will be entirely written by neighbors, for neighbors, eschewing the need for professional journalists. One thing missing from a digital media movement in Washington is a group that can give voice to the industry and link people together. Todd Tweedy, former president of the Washington New Media Society, says he'd like to get the organization started again after it "paused" in 2003. During advertising slowdowns and company shutdowns, the society couldn't draw members. Tweedy, president of online marketing firm Tweedy Group in Washington, does most of his networking now online, through instant messages, and says that the local digital media community is fairly disjointed. There is a group called the Digital Media Association, although it focuses mainly on radio issues and lobbying.

Frantz says for the region to really flourish in digital media, it needs the big companies to spawn the start-ups, which in turn will be acquired by other big companies, creating a lucrative cycle for all. He says we'll know it's happening when the local venture fairs start featuring new digital media companies and out-of-town venture capitalists flock here to find investments. It's good, Frantz says, for the area to have future prospects rather than just relying on the staples of the past. "The more horizons this area has the more likely we are to overtake Boston and compete with the Valley," he says.

Goodbye

I'll be watching to see if and how this new future takes hold, but I won't be writing about it in these pages. After seven years, this is my last Download column. I'll be working on my second book and be mom to a young child. I will still write occasionally for The Washington Post. You can continue to read about the local tech scene by following the work of my colleague Ellen McCarthy. What I'll miss most is the day-to-day interaction with readers. I've enjoyed a great conversation with all of you about Washington's high-tech culture, and I thank you enormously for being part of it.

Shannon Henry can be reached at henrys@washpost.comfor a few more days. She will be online at washingtonpost.comat 11 a.m. today for a live chat about this column and the local tech scene.


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