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When it comes to live online chats, Katie Baker keeps conversations popping. As a moderator on the Talk City chat site run by LiveWorld Productions Inc., she hosts a Youth Online chat three nights a week. Baker draws out participants, screens out bozos, and in the process forges a global community of teens. How does she know what they care about? Because she's one of them: a 13-year-old from Pennington, N.J.

Baker is just one of 90 moderators hosting 900 chats a week--all in an effort to establish Talk City ( as a ''clean, well-lighted place to chat,'' says Chief Executive Peter H. Friedman. He hopes to make the year-old site a more neighborly alternative to the sometimes rude chat sites on America Online and the Web. ''They understand what it takes to foster community,'' says Neil Monnens, a principal at WebRep, which places ads on Talk City and 15 other Web sites.

Friedman's company grew from the ashes of a defunct online community, eWorld, that Apple Computer Inc. shut down last year. The 12-year Apple veteran leaped at the chance to create a new community out of the 70 contract moderators. Since then, the voluble Friedman, a professional magician as a teen, has conjured up $1 million in funding from former Apple CEO John Sculley and former Apple CFO Joseph Graziano--who both sit on the board--plus $9 million from Softbank Ventures Inc., Quantum Industrial Partners, and others.

Friedman will need the money. Talk City's traffic trails that of two other large chat sites, WebGenesis Inc.'s The Globe and WebChat Broadcasting System Inc.--the latter with 1.4 million registered members, compared with Talk City's 190,000. And off the Web, there's the champion of chat: AOL, with its 14,000 chat rooms. Says Kate Doyle, an analyst at market researcher Jupiter Communications: ''There's going to be a huge shakeout.''

Doyle thinks Talk City has one big edge over the rest of the yak pack: It's starting to do chats for other sites, such as SportsLine USA Inc. and Travelocity, creating another source of revenue. Those sites will in turn promote the Talk City site, boosting traffic and ultimately, ad rates.

Friedman also hopes to leapfrog rivals with 3-D. With graphics technology from Seismic Entertainment and RealSpace Inc., he's creating ''chatzines''--interactive tours of places such as the ancient Mayan city of Palenque that users can meander through while chatting.

Still, at this stage, it's mostly talk. Talk City has just started taking ads, so Friedman says they're bringing in only ''tens of thousands'' of dollars a month so far, vs. $150,000 a month for The Globe. Friedman may have to work some of that old magic to make Talk City the talk of the Net.

By Robert D. Hof in San Francisco

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Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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