Rethinking Internet News as a Business Proposition

Article excerpt

The first era of newspaper experiments on the Internet, fueled in part by the fear that the Web would devour profits, is over. A new era of newspaper experiments on the Internet, fueled in part by the fear that the Web will not generate profits, has begun.

Where will it lead?

That is what is being asked after several months of bad news in the industry. Three of the nation's major newspaper companies -- the Tribune Co., Knight Ridder and The New York Times Co. -- have handed out pink slips to new-media employees. Net advertising revenue from the Internet in the third quarter of 2000 was up year over year, but down from the previous quarter -- a highly unusual sort of slippage. Revenue is expected to dip further in fourth-quarter reports and early this year, as ailing dot-com businesses worry more about survival than branding.

The mantra now is: Reach profitability soon -- by the end of 2002, if not before.

The Web sites' parent companies also suffer from anemic advertising revenue and have less leeway to underwrite losses if they are to meet the profit targets they have set for themselves and for Wall Street.

The most important revenue stream, newspapers' Internet executives agree, will be employment advertising -- which, for the moment at least, is no longer considered the most endangered revenue source in the newspaper business.

There are few other common threads in the plans of new-media executives around the newspaper business. Once inclined to listen and invest as a group -- in "fads," some executives said -- they are now concentrating on the special characteristics of their own properties and markets. The idea is to weave national and local revenue opportunities or cost savings into one-of-a-kind business models.

In Minneapolis, The Star Tribune, owned by McClatchy, is building Web sites for local businesses. The Washington Post has become partners with online retailers in a virtual mini-mall in a corner of the washingtonpost.com Web site. The Emporia Gazette in Kansas is selling a book of local history.

The Augusta, Ga., Chronicle and The Topeka, Kan., Capital- Journal, both owned by Morris Communications, offer Internet access. By contrast, in St. Louis, Pulitzer Inc.'s postnet.com L.L.C. sold its Internet service on Jan. 12, with 14,000 subscribers, to Earthlink.

Paid subscriptions -- anathema to most newspaper Web sites, except The Wall Street Journal's, which has sold 500,000 of them -- are back under discussion at companies like E.W. Scripps. One thought is to offer nonsubscribers wide access to news, but give paying subscribers a look at the classified ads a day early. Other companies, like McClatchy, are talking about selling to other businesses the software they have created to move news and ads from computers to cellular phones to palmtops.

Eric K. Meyer, a managing partner of NewsLink Associates, which conducts research into online and some other journalism, called this moment an important juncture because newspaper sites and their parent companies still need to experiment, but have less margin for error.

"This has been an industry that has been based on me-tooism and fads," he said. "Whenever someone did something, everyone else had to do it. When anyone spent money, even too much money, everyone else had to do it."

He added that newspaper companies originally "were afraid to get left out of something that could be a billion-dollar business for them. Now they're afraid to get left in something that could be an albatross."

This new era of experiments may well be less lemminglike, with companies buffeted less by the marketing panaceas urged on them by theorists who haunt the perpetual industry conferences: Join an online service. Ditch the online service. Go hyperlocal. Go regional. Create content and make your site unique. Use Java and make your site throb. …