It's not just a virtual pickup bar anymore.

America Online's

(AOL)

Digital City

property, a network of locally oriented Web sites, is in a turnaround, says its president, Paul DeBenedictis, and is no longer a place where most of the activity is in personal ads and online chat.

In a further sign that Digital City is moving from its roots as an online hangout to become an online resource for local entertainment and commerce, the company said Tuesday it will launch next month a wireless version of the service that will let cell-phone users search for a restaurant, check movie schedules and get other local information through a text menu on their phones.

AOL's publicized Tuesday relaunch of Digital City, which serves 60 cities and will be expanding next month, spotlights the relatively small but theoretically large business of locally oriented Internet advertising on sites that are focused on specific geographical markets. Founded in 1995, Digital City competes with operations such as

Ticketmaster Online-CitySearch

(TMCS)

(which last year absorbed

Microsoft's

(MSFT) - Get Report

Sidewalk network),

Cox Interactive Media

, a subsidiary of the privately held

Cox Enterprises

and the Newhouse-controlled

Advance Internet

.

Over time, believers in local online advertising say they expect a majority of online advertising could come in the form of locally targeted ads (which don't necessarily have to run on sites with locally oriented content). That said, the local site networks have a long way to go. Digital City, which DeBenedictis says wins advertising contracts averaging over $25,000 per year apiece, doesn't break out revenue figures. But Cox Interactive Media says it had revenue of $16.2 million in 1999. Ticketmaster Online-CitySearch reported $40.5 million in advertising and sponsorship revenue for the year. By comparison, the online advertising market is estimated at about $4.4 billion for 1999, according to the

Internet Advertising Bureau

.

A year ago, says DeBenedictis, about 60% of the traffic on Digital City was devoted to chat and personals. But by building up other areas of the sites, he says, the company has reached the point where about 30% of user activity is devoted to those areas; another 30% is entertainment-oriented traffic and the balance is devoted to e-commerce. People's chatting and personals, says DeBenedictis, are "training wheels" for contributing to the rest of the service: "We've evolved people into interacting with content."

What that means is that AOL is trying to build up user-generated material on each of the city guides, encouraging people to rate restaurants and nominate themselves as online experts in different aspects of local life, such as food or parenting. "Anytime we get them to interact with the service," he says, "they become an owner."

One observer of the local Internet market says he thinks the relaunched Digital City has good prospects. "I think that Digital City stands out among the city guides, because it really does have AOL's social connectedness," says Peter Krasilovsky, vice president for local online commerce at the

Kelsey Group

consulting firm.

A Digital City competitor says part of him is gratified that AOL is paying attention to the service, because of the attention it's bringing to the market. "Local is really coming of age, and people haven't recognized it," Ticketmaster Online-CitySearch CEO Charles Conn says. But citing his own network's reach, he says that AOL's expansion into more cities isn't material. CitySearch itself had 282 million page views in February, up 28% from January, Conn says.