With little fanfare, Microsoft Corp. signed a lease recently for 7,500 square feet of office space on Chicago's North Wells Street. The move was both real and symbolic, because the software behemoth is simultaneously moving in on some of the hottest new real estate in cyberspace: the raft of city information guides coming to the World Wide Web in the next few months. The Microsoft project -- named "CityScape" and targeting Seattle, San Francisco, New York, and Boston in the first wave before expanding to ten to fifteen sites (including Chicago) by the end of 1997 -- will include Web sites that feature local news, maps, and restaurant and entertainment reviews and listings.

Microsoft is far from alone. Many other major players are betting that, as Internet usage increases, local markets, with their lucrative classified and local retail advertising, will be the real cash cows on the Web. Everyone from AT&T (backer of the California-based Hometown Network) to Goldman, Sachs & Co. to the Yahoo! Internet directory are getting in on the city guide business. And print journalism is sitting up and taking notice.

 Even before Microsoft turns itself on in Chicago, the city is already home to some of the new local competition that characterizes the online world. The Chicago Tribune'sWebsites (http://www.chicago.tribune.com) already offer many of the services CityScape is promising, including entertainment listings, as well as job postings and classifieds. Also on a Tribune site is the recently launched Digital City Arlington Heights, the first in the Tribune'sseries of neighborhood guides, featuring transportation information, a community bulletin board, and police reports.

The Tribune's strategy is to "keep from being disintermediated," says Owen Youngman, director of interactive media for Tribune Company. "The newspaper industry was once the intermediary between readers and advertisers. The threat is that with the Internet, they can go around us to find one another." The strategy has pulled the company into a variety of relationships that also serve to illustrate the peculiar array of odd and often conflicting alliances that surround many of the new local online ventures.

For example:

 ¥ Nationally, Tribune Company is also part of America Online's network of city guides, also called Digital City. Tribune Company -- which owns 20 percent of Digital City and 5 percent of AOL -- has both print and broadcast news operations in Orlando, Fort Lauderdale, Newport News, Los Angeles, and New York that will contribute to those Digital Cities.

¥ The Chicago Tribune's news content, meanwhile, is parceled out not only to the Chicago Digital City on AOL (currently called Chicago Online), but also to the New Century Network, a partnership of nine major media companies, including The New York Times and The Washington Post.

¥ The New Century Network (http:// www.newcentury.net), in turn, compiles news from around the country and also operates a jobs network, Career Path (http://www.careerpath. com), that boasts a quarter of a million job postings, "none more than two weeks old," according to Youngman.

 ¥ To complicate matters further, Tribune Company has also forged an alliance with Knight-Ridder (which will have all thirty-one of its daily newspapers online by the end of the year) for a guide called Destination Florida, which would appear to be in direct competition with Digital City's efforts there.

Microsoft, the online world's 500-pound gorilla, has alliances of its own. Its CityScape will seek partnerships for news content such as the one recently announced with the Seattle Weekly. It is also likely to draw on its relationship with NBC by using local affiliates for news.

 CityScape began generating controversy last summer, months before it was officially announced. A July Wall Street Journal article claimed that the venture, with a budget reported to be "several hundred million dollars," was, as the headline said, putting newspapers in highanxiety.com by coming to them with offers they couldn't refuse: contribute news content for a share of revenues, or be stamped out. Microsoft executives dispute the article's ominous tone, and people from some of its competitors take issue with the Journal'svision of Microsoft as an unstoppable juggernaut. In an August Editor & Publisher article, Peter Winter, president of Cox Interactive Media and former head of the New Century Network, seemed almost to relish the challenge ahead: "I am on the record right now as saying to all the competition, 'Let's get it on.'"

"Microsoft views this as a long-haul proposition," says Frank Schott, who heads the CityScape project, "not a one- or two- or even three-year horizon to build a terrific service." But while the venture has invested heavily in bringing in top-flight editors, such as Out magazine founder Michael Goff, its initial focus will be on entertainment. An example of the kind of service CityScape will offer, according to Schott, is a software agent that will be on the lookout for coming events of interest to the user. A Rolling Stones fan, say, would be notified when concert tickets will go on sale and provided with stadium seating charts and the best traffic patterns to and from the concert, as well as reviews from previous shows on the tour.

At Tribune Company, Youngman believes that companies that have traditionally been in the business of newsgathering have an innate advantage over the newcomers: "Obviously the software companies have lots of free cash flow, but it strains credulity to suppose that they'll put 300 reporters and 300 advertising salespeople in Chicago, or a thousand in New York, et cetera." Still, he says, "Clearly, the competitive landscape is changing."

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