The Internet is increasingly becoming a no-play zone for advertising-driven content sites, which, surprisingly, is good news to Jake Winebaum. The co-founder of eCompanies LLC has taken the helm of the business content site Business.com, the portal with the $7.5 million name.

“The lunacy of having 10 competitors with tons of cash throwing money at these ridiculous deals goes away in a tough market like this one,” Winebaum said. “Now, the issue is, ‘Who has the right partners, the right product and the right management?’ I like those bets.”

For 37 employees of Business.com, however, all bets are off. The company, which was incubated at eCompanies, cut 26 percent of its staff on Feb. 9 in an effort to lower costs and preserve cash.

The 100 remaining workers are hunkered down behind locked doors in Santa Monica, evolving a Web site that Winebaum envisions as the be-all, end-all Web site for the business world.

One of the reasons the CEO likes his bets is because of Business.com’s generous offline publishing partners, who invested $61 million in September. The Financial Times Group led the round (two earlier rounds were provided by eCompanies) and was joined by Cahners Business Information, Primedia Inc. and McGraw-Hill Cos.

“I’ve got over 50 percent of the trade magazine industry represented in my investor base,” Winebaum said with his usual aplomb. “They are people who profoundly understand the media business and how much time it takes to build a media property.”

Business.com has $45 million in cash reserves and expects to break even by 2002 if revenue projections are met, he said. He also said he’s confident that the current investors will step up with more funding if those targets aren’t met.

The media property Winebaum envisions Business.com becoming is a search engine that targets business, a directory of businesses, industry profiles written and updated by experts, breaking news from an array of sources and the option to have personalized content.

It is also a property that everyone at Business.com, which paid a record $7.5 million for its URL, is hoping will entice advertisers. Advertising in the form of banner ads is currently the site’s only revenue source, and it’s dwindling. New forms of targeted rich media advertising are in the works and will be the site’s primary revenue source, along with e-commerce and paid subscriptions for premium content.

Several companies are in the race for those online ad dollars. Redwood City, Calif.-based Work.com LLC, which launched in October, is backed by Financial Times’ rival and powerhouse Dow Jones Co. Work.com is also marketing itself as the definitive Internet resource for the business world and, unlike Business.com, it offers business advice and guidance. Other players on the field include Yahoo Finance, Dow Jones Interactive and Hoover’s Inc.’s Hoover’s Online.

“I’m not sure if there is enough business advertising to go around for these Web sites,” said Jupiter Research analyst Tim Clark. “We’re in a slowdown, which tends to hit ad spending on new media harder than old media, but that doesn’t mean that Business.com won’t succeed.”

Clark said that Business.com’s offline partners are probably using Business.com as a “learning experience” to see what works and what doesn’t work online. “They will likely keep the funding coming if Business.com hits its internal milestones,” he said.

In terms of traffic milestones, Winebaum said Business.com is on target. According to Business.com’s internal measurement, the site attracted 1 million unique visitors in January and is on target to do the same this month. Nielsen NetRatings Inc.’s most recent data show that the site had 284,842 unique visitors at work and 222,453 at home in November.

When asked about revenue targets and the cash burn rate, Winebaum declined to get specific.

“We were not expecting when we built this that there would instantly be tons of business advertising and other revenue streams,” he said. “The key is to build a loyal, valuable, targetable audience and then work with advertisers to really invent this medium.”

Power Player

When it comes to news about Hollywood’s digital content providers, one company might be getting short shrift.

Houston-based Enron Corp., best known as a provider and marketer of energy-on-demand, is also emerging as a player in the nascent video-on-demand market.

As part of its effort to build its fiber-optic network for the distribution of media content, Enron joined other investors last month in a $30 million funding round for Woodland Hills based Lynx Photonic Networks.

Enron will use Lynx’s optical switching technology and that of others to build its own fiber-optic network, according to Enron spokeswoman Shelly Mansfield.

Enron executives have said previously that, within a few years, telecommunications could generate more profits than its core energy interests. The company plans to spend about $650 million a year over the next few years on the business, according to Mansfield.

“We’re creating a market for the buying and selling of bandwidth, much like we did the in the energy business,” Mansfield said. “We became the largest buyer and seller of natural gas and electricity in North America, and we’re taking the same formula and expertise and applying them to bandwidth capacity.”

Enron is laying a 15,000-mile fiber-optic network connecting the 40 largest cities in the United States, with pooling points at strategic locations to switch bandwidth from third parties on or off. L.A. is one of four pooling points. Nine more are on the way.

Enron also has signed deals with several content providers, including Viacom Inc.’s Blockbuster, in which Enron is responsible for encoding and storing Blockbuster’s movies and streaming them over its growing broadband network.

Enron’s foray into broadband comes against a backdrop of mergers and acquisitions in the entertainment and technology industries, as companies form alliances in preparation for the anticipated explosion of video-on-demand.

L.A. is a major hub for the buying and selling of bandwidth, Mansfield said, though she would not disclose what businesses have sold or bought bandwidth so far. Enron has completed more than 320 transactions with 45 different companies, she said.

Staff reporter Hans Ibold can be reached by phone at (323) 549-5225 ext. 230 or by e-mail at [email protected].