Friday, August 15, 2008

Websites for kids experiencing a spurt in business growth

By Christopher Calnan

Local tech companies are trying to prove that operating websites for children isn’t kid stuff.

One such company, B*tween Productions Inc., a Lexington-based publisher of the Beacon Street Girls books, is shifting from publishing conventional books to running a social networking website. Others are going the opposite direction: Building websites for kids to create their own books, which are then purchased, printed and mailed.

For example, Baby Online Networks Inc. in Cambridge launched a public beta test in June of TotSpot.com, designed to create children’s online photo albums. And Lexington-based Tikatok Inc. operates an online community for children to write and illustrate books that can be produced for $20 apiece.

The 14-person B*tween, founded in 2004, publishes a book series that feature the Beacon Street Girls, five fictional junior high school friends. In May, New York-based Simon & Schuster Inc. began publishing and marketing the Beacon Street Girls books, enabling B*tween to launch social networking tools on its website — a part of the business the company plans to grow, B*tween CEO Addie Swartz said.

“We are expressly focused on the online environment,” she said. The site will generate revenue by selling to girls between the ages of 9 and 13, Swartz said.

In 1992, Swartz founded Concord software maker BrightIdeas Inc. and sold it in 1996 to Addison-Wesley, which itself is now a brand under New Jersey-based Pearson Education Inc. Pearson’s Boston operation, which includes the Family Education Network, operates several children’s websites, like FunBrain.com.

The value of the children’s website market got a benchmark last year, when Club Penguin was purchased by the Walt Disney Co. in a deal reportedly worth up to $700 million, according to Larry Magid, co-director of ConnectSafely.org.
TotSpot turns the traditional baby book into an online version and makes revenue through the books and other merchandise, CEO Michael Broukhim said. The company, which employs 11 workers, also garners revenue through advertising and selling professional accounts that include video storage.

Two other Cambridge-based companies, Panraven Inc. and Tabblo Inc., employed a similar business model that was successful enough for Hewlett-Packard Co. to acquire Tabblo last year and for Panraven to attract investors including Castanea Partners, Dace Ventures, Draper Fisher Jurvetson.

Tikatok is CEO Sharon Kan’s fourth tech company, an online publishing tool for children 5 to 12 years old. “Parents are looking for something else beyond video games and TV,” Kan said.

Last winter, Tikatok collected an undisclosed amount of capital from members of several angel groups, including Boston- and New York-based Golden Seeds, Wellesley-based Launchpad Venture Group, as well as Boston Harbor Angels and Beacon Angels in Boston. Kan expects to complete a Series A round of investment later this year.