WHY NEW YORK COULD RULE NEW MEDIA

BY DONNA LADD

The receptionist at Inside.com's front desk is color-coordinated to the online magazine's spacious northern Chelsea loft. Her teeny, bright sea-green halter top conveniently shows off a prominent tattoo on her right shoulder, and it is a near-perfect match to a turquoise floor-to-ceiling tube-shaped room that is about twice as wide as her desk. What is it? "Oh, that's the conference room," she responds, between ladylike gum smacks.

This is not The New York Times. Its ambience is more typical of the new-media publishing ventures that sprouted in the Bay Area in the 1990s, back when the dot-com industry was still booming. But Inside.com is in New York, and thus far surviving, in the old-media capital of the world. Can Manhattan possibly become the twenty-first century new-media capital?

That's a question worthy of heated debate. But surprisingly, and to the chagrin of Internet purists, the answer could be yes. The reason is not because a plethora of independent new-media companies will choose Manhattan as their base. Rather, the corporate media already in place are primed to take over new media by virtue of their strengths in technology, content tradition, marketing skills, and deep pockets. Robert W. McChesney, a media critic and author of Rich Media, Poor Democracy, predicts that online news soon will belong to the "usual suspects," the media powerhouses. "The big boys have tremendous advantages. Only a fool would try to compete on the Internet at this point."

For example, because The Wall Street Journal is able to charge for access to most of its brand name reports, it has provided a second revenue stream that isn't dependent on a weak advertising market. ABC, meanwhile, can market its Web site by having Peter Jennings point to it every evening on World News Tonight. And increasingly, the Goliaths can afford to buy up -- or at least outlast -- struggling Davids. "Bluntly, the existing media giants are making it virtually impossible for newcomers to use the Internet to get into the system," McChesney says.

McChesney views the merger of AOL and Time Warner as the final blow for small entrepreneurial news operations. "AOL is paying for market dominance. The power is in existing markets. It's a smart deal by AOL," he says. AOL, of course, is relocating from Virginia to . . . New York.

Sitting in his round turquoise conference room and wearing a turtleneck sweater and tortoise-shell glasses, Kurt Andersen defends the chances of the little guys like himself. He and Michael Hirschorn launched Inside.com last spring and its print counterpart in December.

They still believe the Internet has changed the journalistic landscape forever. Hirschorn says antiquated media models are increasingly irrelevant in the 24/7 world. News must be immediate and interactive (and corrected instantaneously), and it can ignore geographic boundaries. "In order to compete as a brand, you now have to get your stuff to people the way they want to get it," he says. The problem is that having readers with more sophisticated interactive appetites doesn't always pay the bills, a pattern intensified by the dot-com slide. Still, Inside.com may do better than New York-based news ventures like APBNews.com and Pseudo.com, now archival shells of their former ambitions.

The parent company of Feed magazine (feedmag.com), Automatic Media, is one New York company publishing cutting-edge content online. In January, funded by Advance Publications, it launched Plastic.com, a pop culture site drawing content from Wired News, Spin, Inside.com, The New Republic, and others. It's creating a buzz, although the Pseudo founders well know that buzz doesn't cover the rent.

The New York landscape can also be hard ground for Internet trade magazines. Two homegrown glossies covering the Silicon Alley dot-com industry, Silicon Alley Reporter and the more cheerleader-ish AlleyCat News, are both still afloat, although Alley ads are now a harder sell. Interestingly, neither has bothered with a strong online presence. "The Web just doesn't make money," says Silicon Alley Reporter's publisher, Jason McCabe Calacanis.

And then there are the giants, lurking everywhere. Finalists for the first Online Journalism Awards last November included ABCNews.com, MSNBC.com, and WSJ.com. "By and large, it's the same big boys who dominate offline media who are dominating online as well," says Salon founder David Talbot. Salon and MSNBC.com won the "general excellence" awards in their respective categories -- "original to the Web" and "in collaboration with another medium."

Salon was an obvious choice. Indeed, there's something magical about its successful beat-Goliath journalism, and it draws respect for surviving last year's Nasdaq crash, even if it had to cut its staff 20 percent. "I launched Salon for $2 million in 1995," says Talbot, who still predicts profitability for the company. "It would take five or six times that now. At some point the revolutionary rhetoric is eclipsed by the harsh light of reality, often by economic forces. Distribution, production, and labor costs were higher than projected. And aggressive marketing is imperative. Just cutting through the noise on the Internet and in the media in general takes marketing clout." Showing up and looking irreverent isn't enough. And "you need a talented editorial staff making headlines, not two or three amateurs."

Who can pay for that talent and expertise? Media powerhouses, whether we like it or not. And they're in New York.

Donna Ladd, who writes for The Village Voice, Salon, and other publications, is a student at Columbia's Graduate School of Journalism.