Manhattan Turns Into `Silicon Alley'

It's a warm January evening, and a hip gallery called Here is brimming over with creative minds from software, publishing, media, and the arts. The chatter centers on opportunities in "new media": using digital technology to create new forms of interactive "content" for CD-ROMs, film, or online delivery. Silicon Valley? Seattle? Hollywood? Guess again. This is Manhattan, and the cutting-edge crowd is here for "cybersuds," a monthly get-together hosted by the four-month-old, 500-member New York New Media Assn.

It's true: Manhattan is emerging as the gritty breeding ground for new media, earning it the dubious title of Silicon Alley. Sure, the rents are high, the subways harrowing, and the taxes crushing. But new-media businesses are flourishing. Why? "New York has the deepest and most diverse pool of intellectual capital anywhere," says Brian T. Horey, a general partner at the New York venture-capital firm of Lawrence, Smith & Horey. "That's the primary ingredient for new media."