Gannett Buys Into InfiNet as Latest Media Partner

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By: Steve Outing

The Gannett Co. has bought a stake in InfiNet, the U.S. newspaper industry Internet service provider owned by Knight-Ridder Inc. and Landmark Communications. That seemingly indicates a ringing endorsement by the newspaper industry to the idea of newspapers becoming ISPs, since Gannett becoming part of this media company joint venture means that many of Gannett’s newspapers will become Internet access sellers soon.

InfiNet currently has around 60 media affiliates, the majority of them newspapers, and operates (or is the process of developing) ISP operations in the newspapers’ cities or regions. InfiNet also hosts many newspapers’ Web services and provides other Internet services and products for use by its affiliates — for example, Web-based applications for real estate, automotive, classified ads, etc. The company says it expects to have around 100 affiliates by this summer.

InfiNet has been working with Knight-Ridder’s New Media Center in San Jose, California, to put all of K-R’s newspapers online with Web sites and create local ISP operations branded under the papers’ names by this summer. Chris Kouba of InfiNet said yesterday that the expectation is that most of Gannett’s newspapers will work with InfiNet to publish on the World Wide Web. Many, but not all, of them are likely to become ISPs, he said. InfiNet only recently began working with newspapers in a strictly Web publishing support role where a publisher might opt not to become an ISP.

InfiNet previously had 2 Gannett publishers as affiliates: Gannett Suburban Newspapers in New York and Florida Today.

Knight-Ridder and Gannett both are part of New Century Network, and a statement yesterday by K-R vice president Bob Ingle indicated that the companies view the NCN and InfiNet deals as complementary. NCN is expected to make some long-awaited announcements about its plans at next week’s Interactive Newspapers conference in San Francisco, where interim CEO Peter Winter is scheduled to speak.

Despite Gannett’s move, the newspaper industry as a whole may not be as gung-ho on the Internet access business as InfiNet’s 3 partners. Many publishers view the access business as risky due to the coming onslaught of the regional telephone companies, cable TV companies, Microsoft, the commercial online services, etc. — all entering the access business in a big way in 1996. The coming competition is certain to lower prices and thus profit margins, just as major publishers like Gannett are entering the fray. Potentially worrisome to publishers should be @Home, the Will Hearst-TCI high-bandwidth cable Internet access venture that’s rolling out this year. It will offer super-fast connections to the Internet at consumer level-pricing.

InfiNet currently offers consumers Internet accounts at $9.95 per month for 10 hours and $24.95 for 100 hours. By comparison, CompuServe recently launched an Internet access service that offers unlimited time for $19.95 a month (with local dial-ups around the globe). I wonder if the U.S. newspaper industry can really compete with what’s coming down the pike from its many deep-pocketed competitors in the access business.

A consultant who helped the St. Louis Post-Dispatch become an ISP (independently, not partnered with an Internet company) recently wrote to me suggesting that the ISP business is where newspapers can expect to make the most revenue in new media. The telcos, he suggested, “are dumb as dirt” and newspapers can outmaneuver them in the Internet access business. I’m not at all convinced of that. Major newspaper companies’ investments in the access business are risky, and substantial profits if they accrue will likely be short term. That’s not meant to dissuade publishers from entering the access business, but they must be aware of the substantial risks.

I will attempt to get a response from InfiNet, Knight-Ridder and Gannett’s executives to the question of how they expect to compete in this business, and publish the results here if I’m successful.

Tallahassee Democrat goes online as ISP — with InfiNet

In a related development, the Tallahassee Democrat in Florida has officially gone online with a Web site, Tallahassee Democrat Online, and becomes the latest Knight-Ridder newspaper to become a local ISP. Internet access accounts are offered through InfiNet and co-branded with the newspaper’s name.

News Corp.’s iGuide

iGuide, from News Corp. Internet Ventures, is now up and running. It’s billed as one of the first Web sites “featuring extensive, original content built just for the Internet.” There’s a lot of good stuff on the site, and it’s clear that Rupert Murdoch has been spending some of his money on the editorial site of this operation. (The celebrated cutbacks in the organization have mostly affected other departments.)

Many people will use iGuide as a guidebook to the Web; it features rankings of the best sites in various categories, including reviews of many sites. For the News category, for example, iGuide has selected the key resources on the Web and ordered them by quality of content. If I may be permitted to toot my own horn here, I was pleased to see a favorable review of the Online Newspaper Services Resource Directory which I maintain for Editor & Publisher. Thanks, iGuide.

Contest comments: Part 2

I said in yesterday’s column that I would continue excerpting comments from judging in the 1996 Best Online Newspaper Service Competition. Look for this in Friday’s Stop The Presses! instead, as Gannett’s InfiNet move pre-empted further discussion of that topic.

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This column is written by Steve Outing and underwritten by Editor & Publisher magazine. Tips, letters and feedback can be sent to Steve at steve@planetarynews.com

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