We have previously suggested a model for the eukaryotic genome based on the structure of the bacterial nucleoid where active RNA polymerases cluster to loop the intervening DNA. This organization of polymerases into clusters--which we call transcription 'factories'--has important consequences. For example, in the nucleus of a HeLa cell the concentration of soluble RNA polymerase II is approximately 1 mM, but the local concentration in a factory is 1000-fold higher. Because a promoter can diffuse approximately 100 nm in 15 s, one lying near a factory is likely to initiate; moreover, when released at termination, it will still lie near a factory, and the movement and modifications (e.g. acetylation) accompanying elongation will leave it in an 'open' conformation. Another promoter out in a long loop is less likely to initiate, because the promoter concentration falls off with the cube of the distance from the factory. Moreover, a long tether will buffer it from transcription-induced movement, making it prone to deacetylation, deposition of HP1 (heterochromatin protein 1), and incorporation into heterochromatin. The context around a promoter will then be self-sustaining: productive collisions of an active promoter with the factory will attract factors increasing the frequency of initiation, and the longer an inactive promoter remains inactive, the more it becomes embedded in heterochromatin. We review here the evidence that different factories may specialize in the transcription of different groups of genes.