Entertainment in cyberspace: business opportunities and exciting options for fun await those who venture online.

Hollywood film studios along with the recording, publishing and video game industries, have all found a new toy. It's the Internet, and they're betting that sooner or later, you'll want to come out and play with it.

Over the last year, entertainment-based sites on the World Wide Web have multiplied at what seems like warp speed. Why? Because in their insatiable quest for your almighty dollars, the powers within the entertainment industry have decided to hit you where you live-literally. With the help of personal computers, they plan to use the Internet as a direct line into your home to promote their music, films, magazines, games and related products.

It's a high-stakes game of coaxing consumers away from traditional sources of entertainment onto what has proven to be an efficient and cost-effective distribution system that's available 24 hours a day. Consumers experience the luxury of viewing movies and CDs before their release and can purchase them from the privacy of their own homes. Or, they can access up-to-the-minute information about popular stars or recording artists. They can even play video games against multiple players in different states.

For entertainment companies, the sales generated from the on-demand availability of entertainment products and user fees for access to entertainment services make the development of such sites on the Internet a potentially lucrative gamble.

"If you include all the online services worldwide, revenues are a little over $2 billion," says Pick Spence of Dataquest, an organization that tracks computer usage and conducts surveys. Will these entertainment Web sites produce similar revenues? That will depend on how many people are ready for an entertainment experience in cyberspace.

WHY THE ONLINE RUSH?

"Everybody needs and wants to be entertained and informed," says Lee Bailey, president of Bailey Broadcasting Services in Los Angeles (www.trib.com/bbs/bailey.html). "People will come online looking for the same things that they look for off line." Bailey publishes the Electronic Urban Report (EUR), a free online newsletter/e-zine that provides inside news on black and urban celebrities and entertainers. The report is actually an electronic companion to Bailey's flagship Radioscope urban entertainment broadcasts, which air in three-and-a-half minute segments and for an hour on weekends over about 110 urban radio stations nationwide.

Much of what is published in the EUR is compiled from the news gathering efforts of the Radioscope staff. This access to a steady stream of exclusive content made it easier and cheaper for Bailey to create his online service. "I saw EUR as a way to get a foothold in the cyberspace arena and at the same time establish a vehicle to promote Radioscope," he says.

Bailey's use of the Internet as a promotional tool is representative of the approach of most industry players. For example, Warner Music Group has a major presence on the Internet, including Web sites for the Warner Bros. Records Black Music Division (www.wbr.com/black), Elektra Entertainment Group (www.elektra.com), WarnerActive CD-ROM games division (www.warneractive.com) and Radio Aahs (www.pathfinder. com), a children's music magazine.

"We see the online form as reaching a variety of consumers. It's not just the college kids surfing the Net. It's also older people who like a sense of community and who like to explore," says Camille Hackney, manager of New Media Market Development for Warner Music Group.

In addition to using the Internet to reach specifically targeted audiences, other companies, such as Walt Disney, look to use the Net for greater strategic purposes. "We're taking the long-term view, says Dennis Hightower, president of Walt Disney Television and Telecommunications. "The Internet can become a fruitful foothold strategy--to acquaint both children and parents to the Disney brand, and begin to build loyalty at an early age."

WHAT CONSUMERS SHOULD LOOK FOR

So what kind of entertainment offerings should you expect to see in cyberspace? Dataquest's Spence says consumers should anticipate having "the ability to interact with people in a more compelling manner, with better graphics as well as with real-time audio and video, versus having to download something. That makes for much richer experiences, because the entertainment business isn't based only on text, but on pictures and audio too."

The technology, that allows you to see pictures and hear sound immediately while online is called XING technology. It is especially important for record and film companies trying to sell CDs or videotapes. Short samples of music and videos are available through this technology on some Internet sites now.

Darrell Gunn, Web site director for Def Jam Records, explains how he's making good use of the XING technology: "We're going to have touring information files, artist bios, a newsletter with the latest in hip-hop, audio samples, video samples and screen savers." Def Jam Records is part of Rush Communications, No. 22 on the BE INDUSTRIAL/SERVICE 100.

Gunn also says that the Def Jam site (www.defjam.com), which was up and running in October, will serve a greater purpose as well. "We feel that if we provide this type of service, more kids will get into computers. It will be a way to get more of the community into computing."

Linking different communities with games that have high-quality audio and video capabilities is the goal of AT&T's ImagiNation, an online games and entertainment network. On ImagiNation (www.Imaginationner.com), up to four people at four different sites can play games interactively. Players can choose from 34 board games, sports games, casino games and fantasy role-playing games. Imagination President and CEO Dean DeBiase says his online service users are attracted to the fun and games. "People go into these big chat rooms on other services, and you're kind of lost," he says. "With ImagiNation, you migrate into something you want to do with other people right away-playing games and having fun."

Despite DeBiase's knock on chat rooms, they remain one of the Internet's most popular attractions. As Omar Wasow, president of New York Online (NYO), puts it, "The most entertaining thing online is communicating with other people."

Acting on the premise that social interaction is more interesting to people than information is, Wasow created NYO (www.nyo.com), what he describes as "a kind of cafe or party where people come and hang out." Wasow charges his 1,500 subscribers $5.95 a month plus an hourly fee, making NYO one of the largest African American-owned online services in the country. He is currently seeking investors to finance the addition of features, such as access to the World Wide web, as well as an expansion of the service nationwide.

In future years, you're likely to see even more types of entertainment offerings. Right now, technologies are being developed that may produce a convergence of media that will allow you to connect your PC's modem cable to your television for pay-per-view events like a Mike Tyson heavyweight fight, or to gain access to games on cable TV's Sega Channel from your PC.

PROSPECTS FOR OPPORTUNITY

Although there's a great deal of activity within this newest of entertainment industries, think twice before jumping in. Analysts caution that you must have financing to stay in for the long haul. It will be some time before people move from traditional media onto the Internet in sizable enough numbers to increase the prospects of profitability. "The Internet will be ready for the prime-time mass market within the next two to three years," says Hack-ney. "By then, PCs will be in two-thirds of all households, and it will be more of an entertainment or consumer electronic device--like your television set."

For those determined to start an online service, there are few barriers. However, start-up costs can run into the millions, depending on how elaborate a service you want to provide.

"If you want to [provide] an online service where you have to buy equipment, and people subscribe and dial specifically to that service, you could start off with $10,000 to $106,000," estimates David Ellington, president and CEO of NetNoir +www.netnoir.com). The online service digitizes, archives and distributes Afrocentric cultural information as part of its joint venture with America online. "If you re going to do a broad service like ours with 18 departments, where each department is humongous itself, you're going to need a couple million dollars," he says.

Once a service is up and running, there are significant hurdles to overcome. "If you have an online service but people don't know that it exists, then what's the point?" asks Lee Balley, one of the few service owners that would admit to turning a profit. "Marketing is everything," he asserts.

Balley markets his service during his RadioScope broadcasts and by posting notices about the service on other online services and bulletin boards on the Internet. Because his service targets a niche audience, he has been successful generating advertising mostly from record and film companies. But, he notes, "The rates we charge are a lot cheaper than radio rates, because we're not delivering the same kind of volume that we deliver with radio."

Most in the industry say Bailey's success at generating advertising is not yet the norm. "Right now nobody's really making any advertising revenue on the Internet because it's difficult to get advertisers," says John Gilstrap, senior director of new business development and strategy at Philips Media. "You don't really have any hard numbers on how many people visit a site and how long they visit, so it's hard to get a rate base for an advertiser."

Efforts to track Internet traffic more efficiently are under way. Internet Profiles Corp. in Palo Alto, Calif., recently formed a partnership with the A.C. Nielsen ratings service. But until such efforts are tested and approved, tracking visits to the World Wide Web will remain suspect.

Another issue that will affect entertainment offerings in cyberspace: copyrights. Web sites that offer music samples face the question of whether they should have to pay for those clips in much the same way artists pay to sample other artists' music. If you do have to pay, does the artist, the songwriter or the record company receive the payment? The answer may lie in whether you are using the clip to promote the artist or the web site.

"There's a fine line of distinction," says Gilstrip. "If you're using the sample to promote the artist, theoretically you shouldn't have to pay."

Gilstrap and others do say that there can be lucrative opportunities providing fledgling online services with everything from office supplies and computer disks to public relations services, graphic design work and Web site development. "I'm about to do a Web project for a major rap artist, and I'm going to use an outside developer," Gilstrap says.

And because this cyberspace-based entertainment industry is still evolving, there is industry-wide optimism that African Americans will have an opportunity to excel. "I caution anybody who thinks there's a gold mine waiting for them," says Wasow, "but because this is a new industry, there are opportunities to start a franckise that becomes a huge success, largely because you are early to market. There is still a kind of open frontier where you can stake out some land."