Magazine article Editor & Publisher

Where's the Money?

Magazine article Editor & Publisher

Where's the Money?

Article excerpt

Newspapaer online services have been around since the early 1990s, yet the industry didn't get excited about online services until the end of 1994, when the Internet became a household word and subscribing to a service like America Online began to become mainstream. But while Internet providers and the big commercial online services were making money, the newspaper industry, in general, was not.

Now it's early 1996. Excitement about the opportunities presented by a mushrooming online marketplace has newspaper publishers falling over themselves to create online services, which now number nearly 590 worldwide, up from only 190 at the beginning of 1996.

All this activity must mean there's money being made at last, right? With a few exceptions, the answer remains no for most newspapers. And those that are turning a profit are not laughing all the way to the bank; the dollar figures remain modest.

EASY? NOT QUITE

Why is this still the case? The answer is three words: World Wide Web. The Web has mushroomed in popularity to become the primary venue for publishers in the online world, yet the Web is proving to be a difficult place in which to generate money.

Publishers' Web sites typically rely on advertising above all other revenue sources. But ad dollars spent on new media represent a tiny fraction of what is spent on traditional print and broadcast media. That is likely to change over time. But publishers will need to be patient. 1996 looks to be a good test of the Web's advertising potential, since many advertisers budgeted line items for placements in new media.

That is a positive development since just last year when buys in new media often had to be funded by money "borrowed" from other parts of the ad budget.

The second obvious online revenue source, subscriptions, also presents problems on the Web. Internet users already pay an online service or an Internet provider monthly fee, so they're often loathe to pay an additional $5 or $16 per month to access a publisher's site -- no matter how good it is. Also, there is so much free information on the Web that it's difficult to charge for content and get more than a few takers.

Charging for access to full content of a Web service is becoming a trend among newspaper publishers. Typical is the model being implemented by Knight-Ridder Newspapers as they launch Web sites: A good dose of valuable content is served up free to anyone who visits the site, from headlines to news summaries, but to read the full text of a story, search the newspaper archives, or partake of other premium services, a monthly subscription fee is required. …

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