Newspaper Search/Directory Strategy: Who Will Lead Charge?

By: Steve Outing

(This is the last of a two-part column about proposals for the newspaper industry to develop a deal with a Web search/directory company.)

With newspaper cyberspace consortium New Century Network apparently out of the picture in terms of a newspaper industry search engine/directory strategy, the big question now is who might take up this cudgel. It’s generally acknowledged that newspapers will need the clout of bargaining together to pull off a deal with a search engine company that would allow newspaper Web sites to include Web search and directory services.

Most newspaper new media executives that I interviewed for this column indicated that they would like to have such functionality on their sites, in order to increase their Web traffic levels substantially and give their Web visitors less reason to go elsewhere (Yahoo!, Excite, et al) to find information. While some are not waiting for an umbrella group to act and are negotiating on their own, much of the industry must rely on others to present them with an available Web search/directory offering.

The leading candidate for helping the newspaper industry with search/directory is Silicon Valley-based Zip2, a provider of Internet directory, classifieds and other tools and templates for newspaper Web sites. Zip2 counts among its major investors several large newspaper companies.

Michael Romaner, online services director of Morris Communications, a U.S. newspaper chain which is an investor in Zip2 and has a board seat, thinks that Zip2 is well positioned to be the key player in getting a search/directory service deal for newspapers. Indeed, it may be the only company in the right position to pull it off. And it has the advantage in this regard over NCN because it is an independent company that doesn’t have to answer to multiple owners (other than pleasing those newspaper executives that sit on its board).

Zip2 CEO Rich Sorkin acknowledges the importance of newspapers having a relationship with an Internet search/directory service. “To play in this game long term,” he says, you have to have a relationship with one of the big-traffic players like Yahoo! or Excite. Zip2 has been watching this strategy be laid out by NCN, with no intention of acting while NCN plied its initiative. Sorkin says that 1-1/2 years ago he advocated that NCN buy a Web search engine company.

With NCN floundering, there may be some clamoring by the industry to encourage Zip2 to step forward with some sort of newspaper Web search/directory offering — most likely done in partnership with an existing search company. But Zip2 is unlikely to move unless the newspaper industry demonstrates that it’s serious. If newspapers want to get in to the search engine game now, Sorkin says, given where the big players like Yahoo! are positioned today, newspapers need to go after it “with both feet and both hands.” Zip2 won’t be dragged into this game unless it’s done right, he says.

“Think of us as the bride waiting for the groom” to show up, Sorkin suggests. It better be a really fine groom. He says that he probably would be inclined to do a deal on behalf of newspapers with one of the three major players today — Yahoo!, Excite or America Online. Otherwise, newspapers need to pony up and buy an established search engine, but that’s going to be more costly at this late date.

The contrarian

The dangers of such a strategy are articulated by Zip2 co-founder Kimbal Musk, who is one of the voices arguing against newspapers doing battle with the dominant search engines. The major Web search engines have already won the battle for that space on the Internet, and newspapers simply can’t compete with companies that are that firmly entrenched and successful, he argues. “That position (Web search/directory) is already taken. If (newspapers) want to spend money on doing that, it would just make me ill,” he says.

What should newspapers do? Musk says concentrate on what is still up for grabs in the Internet marketplace — local content. “The local destination is not yet taken. Concentrate on that. … You can’t be everything. You just can’t,” he says.

Most of the newspaper executives interviewed for this column don’t agree with that sentiment, however. (And Sorkin expresses a more open-minded view of Zip2’s potential role in a newspaper search/directory play.) Ralph Terkowitz, vice president of technology for the Washington Post Co., says that it’s “premature” to say that the game is already won in Internet search and directory. “I don’t think we should cede any long-term ownership” of that market to today’s dominant players, he says. Newspapers have long been the dominant supplier of consumer eyeballs in their local markets, and the industry needs to figure out how to resume that place in the Internet environment.

Romaner also takes issue with Musk’s pessimistic view and thinks that the industry should press forward with a search/directory play. “The Web is very immature. It’s all too bloody new. To think that someone has a lock defies historical standards,” Romaner says. “Who’s to say that we can’t do it better than Yahoo!?”

NAA role

Another umbrella organization that potentially could play a role in this is the Newspaper Association of America, though most executives I interviewed for this column felt that the NAA probably should and will operate more in its traditional advisory and research role.

NAA vice president of new media Randy Bennett says he finds it unfortunate that NCN had to pull back. “I’m concerned about the message that sends to the naysayers who say that newspapers are slow to react and can’t get their act together,” he says. Newspapers operating in the new media space have shown a lot of innovation at the local level, he suggests, but it’s important too for the industry to go forward together. “There’s a strong benefit for newspapers to become the (Web) point of entry,” he says. But newspapers will need to set aside some of their provincial interests for this to happen.

Individual effort

While an industry-wide effort, such as that attempted by NCN, would be ideal, some newspaper executives aren’t waiting for an umbrella group to make it happen. At the Boston Globe, new media chief Lincoln Milstein says that he is currently in negotiations with companies that may lead down the road to a search/directory deal for his Boston.com regional Web site. He thinks this issue is too pressing for his own company to wait for an umbrella organization to get its act together. Yahoo! has the most Web traffic in Boston (and most other major U.S. cities), and the Globe needs to fight back aggressively, he says.

Milstein thinks that cutting a deal with one of the big search/directory companies probably isn’t the best strategy for the newspaper industry. Smaller outfits that are dwarfed by Yahoo! and Excite and probably struggling financially might be an appropriate newspaper industry acquisition. Some outstanding technology is out there, but such companies haven’t been able to compete effectively when the top two search/directory brands have such a huge lead. Zip2 should consider purchasing such a search engine/directory company, Milstein suggests.

Other initiatives in the search/directory space also are in their early stages. In Canada, Hollinger’s Southam Newspapers are trying to come up with a search engine/directory deal for the chain’s about-to-be-redesigned Canada.com national Web site.

At the Los Angeles Times, new business development director Harry Chandler will only hint at an effort by Times Mirror (the Times’ parent company) and unspecified other major newspapers to get into the Web search/directory game. That effort is separate from NCN and does not include Zip2, he says. Sources close to NCN say that at least two groups of companies among NCN’s owners are beginning to discuss their own Web search/directory initiatives now that NCN is out of the picture. (Times Mirror is one of NCN’s owners.)

The Los Angeles Times previously had a relationship with Excite, in which a “SoCal Excite” southern California regional directory/search site was run on LATimes.com. That effort was very successful in terms of user traffic, but Excite backed away because its executives weren’t interested in that particular business model long term.

Excite co-founder Joe Kraus says that the idea of partnering with content providers like newspapers is appealing and is consistent with the company’s model. “We don’t do content,” but partner with those that do. He does feel, however, that the best model is to “leverage the 20 million unique people per month” that visit Excite. He declined to talk about discussions with the newspaper industry, but says he’s always willing to discuss how to work with big partners.

Those close to the NCN search/directory initiative say they generally received strong interest from the search companies about doing a deal with the newspaper industry.

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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