Zip2 Plays Up National Network Card

By: Steve Outing

Clearly, the emphasis these days is on local content, with a growing horde of companies establishing local information services on the Internet — from the local newspaper, to newspaper chains, to upstart online city guide companies like Digital City and CitySearch, to the telephone companies, to Microsoft with its Sidewalk venture.

In a variation of the old Realtors’ saw, it’s “local, local, local” that’s important.

But have you noticed the increasing importance of the “national” brand with many of these ventures? As some analysts have suggested, it’s the national brand name that really helps a local city guide service take off. In a recent column, I quoted Internet analyst Peter Krasilovsky as saying by way of example, “CitySearch San Francisco is less important than CitySearch the national brand.”

In this respect, newspaper companies lag behind their upstart cyber competitors, who are building what will become large U.S. national (and in some cases international) networks of local affiliate sites. Many newspapers are building their own online city guides, incorporating it into the local news Web site. But to the public, the local newspaper is the overarching visible brand, perhaps with a mostly invisible corporate name in the background.

That’s beginning to change. Earlier this week (as reported in this column), U.S. chain Knight-Ridder (KRI) launched its “Real Cities” national Web network brand. While largely aimed at gaining national advertising, it also slaps a national consumer brand on KRI’s network of 32 Web sites (which each includes online city guide features in addition to news) and plays up to consumers that the newspaper company already has a national presence.

Atlanta-based Cox (a newspaper and broadcast media company) also is building a network of online city guide sites around the U.S. Added to the line-up just this week are RealPittsburgh.com and SanDiegoInsider.com. Other major Cox city guides in operation include Atlanta, San Francisco and Austin, Texas.

Bragging rights?

Still, if you ask the average Internet consumer, “Who has the largest network of Web local information services?”, the answer you’ll get is likely to be Digital City, Sidewalk or CitySearch. Newspapers are still perceived as being competitors with each other, not allies in the cyber wars.

But wait a minute, says Elon Musk, chairman and chief technology officer of Zip2, who is trying to change that perception. Zip2 is a Silicon Valley company creating the same kind of technology as the online city guide companies. But its business model is to license its technology to other media companies, primarily newspapers, who operate online city guides with their own (local) brand names. Zip2 is primarily in the background as service bureau/technology provider. (A newspaper site using Zip2 technology typically runs a tag-line that says, “Powered by Zip2.”)

Musk says that Zip2 through its relationships with various media companies — including U.S. newspaper chains Knight-Ridder, the New York Times Co., Landmark Communications, Morris Communications, Central Newspapers, and McClatchy Newspapers — has now created a “network” of newspaper sites more than 130-strong, representing more than 20 of the largest U.S. metro markets. He thinks that gives the company bragging rights to the largest network of online local information services.

“This is essentially the newspaper industry’s response to Sidewalk,” et al, he says. “What we’ve achieved here I think is a great deal of consolidation.” One can now look at the local information services marketplace and say, “you have Sidewalk, Digital City and CitySearch, and now the newspaper industry with Zip2.”

Musk admits that the company is still working on creating its national strategy, to get the word out about this national presence — so that when a consumer visits a local newspaper Web site and uses the Zip2 technology elements on that site, a larger national brand name (a la “Sidewalk” or “Digital City”) is apparent.

This represents a change in Zip2’s strategy, which Musk describes as a “light brand” that for the most part was designed to be in the background. In the current system, if a Web visitor goes to www.zip2.com, he’ll get a generic Zip2-branded page with a search interface for Zip2’s online “yellow pages” and other directory services. Once the consumer identifies himself as being in a certain geographic area, Zip2 uses cookie files to “tag” that person and subsequently sends him to a Zip2 local newspaper affiliate in his location, so he sees the partner’s branding on the Zip2 services.

Musk says that in the coming days, the main generic Zip2 page will become more like a central Sidewalk or Digital City page, listing the Zip2 newspaper partners. Zip2 does some national promotion to drive traffic to local Zip2 sites, and that will continue, says Musk. It’s unclear at this point if the company will increase its marketing to keep up with the marketing effort being engaged by the likes of Microsoft Sidewalk and others. Much of the responsibility for marketing, of course, is on the shoulders of the local newspaper sites. Zip2 is not looking to be the sole brand, Musk emphasizes.

What NY Times deal means for Zip2

Another development that signifies a change in Zip2’s strategy is its deal with the New York Times Co. to create a separate online city guide service called New York Today, which was announced this week and is expected to launch early in 1998. NY Today is the NY Times Co.’s response to the numerous city guide sites now covering the New York market. It will not be part of the NYTimes.com site, but rather a separate entity designed to be “your city on the Web.” While NYTimes.com reports on what happened (news focus), NY Today looks at what’s going to happen (events focus).

The Times Co. is licensing Zip2’s integrated product line, which will make up the entire NY Today service. That includes an entertainment guide vertical, auto directory, real estate directory, community events guide, travel directory, business directory, and editorial front-end system for integrating articles and photos. (The latter uses technology that Zip2 acquired when it purchased Internet publishing tools provider Pantheon earlier this year.) In addition to providing the technology, Zip2 provides nationally licensed services such as new and used car prices, business listings and door-to-door directions. Partners pay a licensing fee plus a share of site advertising revenues to Zip2.

The key difference between NY Today and other newspaper partner deals done by Zip2 is that this site is a stand-alone entity. Other companies such as Knight-Ridder previously have taken the approach of integrating parts of Zip2’s product line into their own sites. Zip2’s arts and entertainment guide package, for instance, has been integrated into several KRI Web sites as the “JustGo” entertainment service.

Musk thinks that the model of creating separate city guides, as opposed to integrating city guide features into an overall news Web site, will be the dominant trend among publishers. It’s what consumers seem to want, he says. (Indeed, that’s the strategy with Cox and its growing network of independent city guides.) That said, the Zip2 founder is quick to say that he does not see a diminishing role for companies like Knight-Ridder, who take the different approach.

As with any Zip2 partner, NY Today ad sales will primarily be local, sold by the Times Co. with training and consulting assistance provided by Zip2. Zip2 does do some national ad sales, but Musk admits that that has not been a top priority for the company. That is expected to be expanded to bring more national advertising to partner sites, and Musk contends that there is no need for a partner to rely on a national ad network like New Century Network or Real Media to gain national ads. Nevertheless, this appears to be a weakness in the Zip2 model as it stands today compared to more ambitious national sales efforts by competitors like Sidewalk.

I took a look at the NY Today private demo using Zip2’s technology, and the site in its early incarnation looks to be quite competitive with what’s being offered by the online-only city guide companies, with valuable features like consumer notification when an advertisement that meets search criteria enters a local database.

Technology won’t be the factor that wins the battle with Sidewalk, et al. Zip2 and its news partners have an arsenal of tricks equal to that of Microsoft. It might rather be the need for a national brand that clicks with consumers. The thing to watch will be whether the newspapers can get past historical competitiveness amongst themselves to create consumer awareness that the newspaper industry has this great service to offer — and that people should choose it over similar offerings by Microsoft, America Online and others.

Steve

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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company

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Published: October 24, 1997

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