Angst Online, Angst in Print

By: Steve Outing

Some interesting reading came in my postal mail box and on my computer screen last week. First, there was Don Clark's piece in the Wall Street Journal (and available on the WSJ Interactive Edition), "Too Many Web Publishers Vie for Too Few Customers." Then, in the print edition of Editor & Publisher magazine was a guest column by Jeff VonKaenel of the News & Review in Californa, entitled "Will the Big Dailies Be Extinct in 10 Years?"

Both pieces bear a response.

Great Web Wipeout '97

Clark's piece in the Journal came one year after a spoof in Wired magazine predicting the downfall of World Wide Web publishing. This factual article painted a gloomy yet realistic picture of Web-based publishing. Wrote Clark: "Hundreds of companies rushed to produce Internet-based information and entertainment ventures. They created Web magazines and newspapers, along with new forms of online content ... only to find fundamental flaws in the assumptions underlying their businesses. Most Web publishers face at least three years of losses, and many are beginning to scale back ventures or sharply modify them. Small start-ups, in particular, face a shakeout as deep-pocket rivals scoop up most of a limited pot of Web advertising dollars."

Clark pointed to a number of failures of Web ventures, and predicted that there will be many more in 1997. The basic point of his article is that the Web remains an immature landscape for publishing, and that business models are ill-defined. It will take a long term commitment to learn how to succeed in this new medium.

Judging from some of the online discussions that this article generated, a number of publishers are getting nervous about the commercial viability of Web publishing. Clark's piece exacerbated their fears. Since the (obvious) advertising and subscription models haven't worked successfully for most publishers on the Web, perhaps there's nothing that we can do to profitably survive publishing on the Internet, they fear.

I think it is a safe bet that a number of Web publishing ventures will fail this year. They won't be able to survive the long process of becoming profitable. Others will scale back; some will be transformed into something that just might make money. Smaller players who haven't worked out the right business model will fall away, while larger companies that also haven't figured out the business model will give it more time.

This points to a big "So what?" The fledgling online publishing industry is -- guess what? -- just like the traditional publishing business, where printed magazines, for instance, start and fail in their first years of operation. Consumers choose which magazines they like, and those publications prosper. The same thing is happening on the Web. That Web ventures are failing should be of little concern, except to note why it is that a site failed and learn from their experience.

Perhaps it's the "Internet years" phenomenon that has some publishers spooked. The Internet industry changes and morphs so fast (a year on the Internet is like a decade in any other industry) that expectations for success are similarly expected. But it isn't really working out that way. Like any other industry, a few companies rise to the stratosphere quickly. Yahoo! is probably the best example of this. For others -- say Time's Pathfinder, which Clark reports is losing $5-$10 million a year -- it's a long haul to profitability, just like in most other industries.

My point? Be realistic. Don't expect instant profits. Have faith. Through our industry's collective wisdom, we will figure out how to make a profit in what is the most significant technological advance in decades -- the Internet. But to pull out of the game now, for fear of losing money in the short term, would be a long-term blunder.

Dailies are dead meat

Kudos go to Editor & Publisher's print edition for running an opinion piece by VonKaenel, publisher of the News & Review chain of alternative newspapers in Sacramento and Chico, California, and Reno, Nevada, and president of the Association of Alternative Newsweeklies. His message: most big dailies will be out of business in 10 years. How's that for controversial?

VonKaenel's contention is that dailies' long and slow circulation decline will pick up speed in the coming years. The readership fall-off has already killed a lot of papers, and the survivors have stemmed circulation declines of their own by picking up readers from their deceased competitors. Now that there are no weak competitors to cannibalize, big dailies are in for some dark days, he predicts.

On top of readership declines, VonKaenel also predicts that dailies' achilles heel in the coming years will be classifieds. "During the next 10 years, the World Wide Web will effectively eliminate classifieds advertising as the most significant revenue source the dailies have," he writes.

A typical daily paper has long had a virtual monopoly on some types of classifieds, VonKaenel points out; employment, for instance. But the Internet has changed this, as numerous competitors enter the online recruitment business (which will be the subject of an upcoming Stop The Presses! column), pricing their electronic wares far, far below dailies' traditional prices for running employment ads.

"These events will increase the sense of overall crisis for dailies," he writes. "The loss of classified net revenue combined with the expected decline in advertising revenue based on readership loss will not only wipe out the profit, it will leave the company with a large revenue hole -- a hole that can't be filled."

While I think VonKaenel is overstating things in predicting the extinction of dailies, I concur on his comments about newspapers' classifieds. I recently completed the Online Classifieds Report for E&P, and I came to similar conclusions. Activity in electronic classifieds -- from classifieds start-ups, to Internet search and directory companies, to online city guides, to telephone and cable companies, to Web classifieds sites run by Realtors and employers themselves -- will force print newspaper classifieds down in price at the same time they slowly take away newspaper print classifieds readers. It's not a pretty picture.

VonKaenel's E&P column leaves on a pessimistic note. I would suggest rather that the picture is not entirely bleak for dailies, and there is much that can be done to hold on to the classifieds business. The trick, of course, is to go forth and make the transition to earning an increasing share of your classifieds revenue online. It's the only real option, or VonKaenel's dismal vision just might come true.

Writers' contracts watch

A hot topic among freelance writers in the Internet age is contract language between publisher and writer. The American Society of Journalists and Authors tracks contract language and works to protect writers' interests, particularly in the area of compensation for supplemental electronic rights. ASJA regularly sends out a "Contracts Watch" publication, which is available by e-mail. To receive Contracts Watch, send a message to asja-manager@silverquick.com; in the Subject: line type CONTRACTS WATCH; and in the body of the message type JOIN ASJACW-LIST.

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