Budget shift marks end to EC2 incubator. (Up Front).

EC2, the new media business incubator at USC's Annenberg Center for Communications, will close its doors at the end of June after a seven-year run.

Jon Goodman, its executive director, said the decision to shut the incubator was partly the result of increasing demand on the resources of the $120 million Annenberg endowment at USC. Annenberg Center officials didn't return calls seeking comment.

A nonprofit business incubator and research facility, EC2 operated on a $1.5 million annual budget and brought in $4 million in revenues since its doors opened in 1995. It employs 11 people.

Goodman said the incubator simply had run its course. In light of budget constraints at USC and the fact EC2 was not generating much revenue, Goodman said, officials started unwinding things near the end of 2001.

The incubator was created to identify issues surrounding new media (Internet, CD-ROMs and DVDs), and Goodman said those media, if not fully evolved, at least have been exposed and placed on the table. "New media is now old media," Goodman said. "We've pretty much done what there is to do."

Goodman took credit for bringing an understanding the mainstream role of technology to entertainment businesses in Los Angeles. She said it was EC2 that warned the music industry -- now scrambling to address peer-to-peer file swapping -- it would have to pay attention to new media.

Goodman said she will return to the business world, but did not offer specifics.

"We had mixed success," said Steve Altman, president and chief operating officer of Medical Telecommunications Associates Inc., one of four remaining occupant companies. "The networking they enable was helpful, but there was disappointment there wasn't direct access to capital."

Goodman said successes included Women.com Network Inc., the former Women's Wire and now a part of the Hearst Corp. family of magazines and member site of iVillage. Verix Software, an e-commerce service, was bought in May 1999 by Inference Corp., which, in turn was bought by eGain Communications Corp. the following spring.