Newspaper article The Evening Standard (London, England)

How to Turn Hits into Hard Cash; Last Year the Guardian Is Reckoned to Have Spent [Pound]20 Million on Its Websites. but Will Online Newspapers Ever See a Profit, Asks John Naughton

Newspaper article The Evening Standard (London, England)

How to Turn Hits into Hard Cash; Last Year the Guardian Is Reckoned to Have Spent [Pound]20 Million on Its Websites. but Will Online Newspapers Ever See a Profit, Asks John Naughton

Article excerpt

LIKE many hacks, I read the New York Times every day. I also read the Irish Times and the Washington Post, skim the Boston Globe and even dip into the Los Angeles Times, the Melbourne Age and the quaintly named Seattle Post-Intelligencer. I do not, of course, actually buy any of these publications because that would involve parting with my hard-earned cash.

I simply read them on the web, where they are published gratis.

I am a cheapskate, that is to say a typical internet user who has become so accustomed to getting wonderful stuff for nothing that he is reluctant to pay for news or comment. This explains why I do not read the online edition of the Wall Street Journal, for that is available only to subscribers who pay the requisite $59 annual subscription ($29 to those who also buy the print edition of the paper). It also explains why people like me are the despair of the men in suits who run the great publishing conglomerates.

For they are grimly aware that all this free "content" costs a fortune to provide. Sir Edward Heath once likened his favourite sport of yachting to standing under a running shower tearing up [pound]20 notes. By the same token, being the proprietor of a lavishly produced newspaper website must be like standing in front of a roaring furnace and feeding [pound]50 notes to the flames.

Take the Financial Times, whose FT.com site is one of the wonders of the world. When the results of its parent company, Pearson, came out a few months ago, they were severely depressed by the expenditure of [pound]113 million upon this marvel. And although the FT is keen to point out that this figure accounted for all Pearson's online ventures, nobody disputes that the lion's share of the [pound]113 million was swallowed by FT.com.

This is serious money by any standards. And although the FT spend stands at the lavish end of the spectrum, other newspaper and publishing groups have been burning comparable amounts of cash on websites which are freely available to all comers. Why? Originally, the answer was probably fear - fear that if they didn't do it then their competitors would. So potent was this terror that even newspapers far down the food chain - yea, even ye Daily Express - were moved eventually to create web-sites. (The Express site has been effectively shut down by its new proprietor, a man who did not get where he is today by giving away valuable content on the web.) After fear came the search for a viable business model for online news.

The first such model was a variation on the original dotcom doctrine which said that if one created a site that attracted lots of "eyeballs" (ie, virtual visitors), then one would be able to generate revenue streams from advertising, commissions on sales and other wheezes.

To attract large numbers of visitors it was necessary to have attractive content and a well-known brand, so it was worth burning quite a lot of cash to establish what the management consultants called "first mover advantage".

But it turned out that building a popular site was not enough. Visitors came in droves, enjoyed the free content, but then moved on to other things without leaving their credit-card numbers behind. Site owners were obliged to confront the awkward truth that the only people who make real money from eyeballs are ophthalmologists.

The central difficulty was how to turn millions of website "hits" into revenue. …

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