No laughing matter: a dot-com startup in this climate

With comedy, timing is everything.

So it's funny that a bunch of Hollywood humor headliners chose to launch their new Web site, Laugh.com , a good year after the Internet bubble had burst.

Laugh.com features the comedy of some of America's most famous humorists: George Carlin, Phyllis Diller, Red Skelton and Milton Berle. The site offers stand-up routines, videoclips and interactive features, like dressing Uncle Miltie, whose nephew Marshall is a co-founder of the site, in drag. Wireless device owners will be able to pay US$2 per month for a service that sends them new, funny clips each day.

Whether people will pay for humor when they won't pay for just about anything else is an open question. But it is one of the few areas people agree might work as entertainment on the Web. After all, joke e-mail messages get passed around by friends and many of the still-operating entertainment sites, Romp.com and Mondo Mini Shows, feature humor almost exclusively. Still, none has been a runaway smash, and in general, it's a weird time to be launching a dot-com.

Of course, since conventional wisdom prevails that the Web alone is no way to make money these days, Laugh.com will run a record label that produces CDs for young, unknown stand-up comics. While that might seem a small, niche market, consider that Laugh.com has also signed many older, established comics and has exclusive rights to their upcoming works. Prank phone call specialists, the Jerky Boys, for instance, will release their upcoming work on the Laugh.com label next month. Proving that there's a market for anything, the group's last five CDs have sold a total of 3.5 million copies.

But in general, humor records aren't big sellers. And Laugh.com faces stiff competition on the Web site front from Comedy World, which airs radio broadcasts from comics like Ahmet Zappa, Sandra Bernhard and MTV's Kennedy. Uproar Records, meanwhile, focuses on the same type of young, hip comics Laugh.com is trying to sign. Uproar has yet to release a hit CD.

Laugh.com founder Bob Kohn, who is also chairman of struggling EMusic.com (EMUS) , expects that CD sales of the established comics will fuel revenues for the company, which he hopes will reach profitability sometime this year. The company has raised $2.5 million in seed funding from angel investors, including Stewart Alsop of New Enterprise Associates. Kohn says Laugh.com won't seek further funding but expects to go public around the end of the year or beginning of 2002."The cycle will turn as it always does," he says. "We think that around the end of this year, beginning of next, there will be a demand for companies [to take public]."

Kohn's spin is no joke: He believes that because very few startups are being funded, there will be only a few - like Laugh.com - ready for banks to take public.

Assuming, of course, the last laugh isn't on them.

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