AP Web Server Proposal; Report From Media Alliances Conference

By: Steve Outing

Associated Press management this week is seeking approval from its board to establish a World Wide Web site which would make AP news accessible to its member newspapers. The idea is that instead of newspapers having to process AP copy at their own Web sites, they could just refer users to the AP server. The announcement was made by AP online guru Mark Berns to the Northeast Associated Press News Executives annual meeting at Waterville Valley, N.H., last week.

TimesLink Bails Out From Prodigy Proprietary Platform

Some significant news about the Los Angeles' Times online service popped up late last week: Times Mirror's flagship newspaper announced that it is shifting its TimesLink service away from the Prodigy proprietary platform to focus solely on the World Wide Web -- and as a result, laying off half of its 44-person online staff. I was in San Diego at the Media Alliance conference last week (see below) and was unable to report the story then. I will analyze the significance of this development in a column later this week, after I have had a chance to speak with the key players.

Report From San Diego: Don't Do It Alone

The message from last week's Media Alliances conference was simple: In developing new media ventures, it's foolish to do it alone. Whether you're AT&T or the Podunk Daily News, you do not have all the skills and resources in-house that are required to do the best possible job, so go out and partner up with your friends or even your enemies. It's just too tough out in the electronic services marketplace to go it alone.

The conference, which drew about 200 executives from the publishing, telco, yellow pages, online services, software and related industries, was put on for the second year by The Kelsey Group and co-sponsored by Editor & Publisher (which sponsors this column and Web site) and Netscape. It was a chance for normally fierce competitors in the new media field to cozy up to each other and say nice things about cooperating with the enemy for the greater good -- i.e., making money.

Here's what some of the key speakers said:

John Kelsey, president, The Kelsey Group

Kelsey spoke about newspapers' declining advertising share and the need for the industry to create alternative profit centers in new media to make up for the loss. While newspapers remained the largest generator of advertising revenues of any media in 1994, their percentage share of ad revenues is dropping precipitously -- from 27.1% in 1980 to 22.6% in 1994. Newspapers are now the slowest growing media.

The problem for newspapers, of course, is the proliferation of media and the number of options for advertisers to spend their dollars. As newsprint prices climb and newspaper ad rates go up, advertisers are looking for less expensive options. New media ventures are taking advantage of this trend, Kelsey pointed out.

Print publishers will remain primarily in the content business, but tomorrow's successful publishers will create content services that are device independent. Publishing just for the newspaper is not enough today, especially with increasing pressure from investors to "go electronic."

Jeff Leibowitz, Interplay

Leibowitz sees the beginning of a realignment of how consumers spend their time and how advertisers spend their money. We don't know when it will happen, "but when it does it will be big," he said.

Online services are just another delivery mechanism for traditional media, he pointed out. "It's evolutionary, not revolutionary," and therefore thereis still much time to get into the game. Online services are the "shopping mall" of the future, so publishers must make sure their content is available on all the malls consumers may frequent. "We now realize that we as publishers must provide ubiquitous access," Leibowitz said.

To succeed in new media, you can't go it alone, he said. "Have a partnership with every one of your enemies. ... And leverage everything you have to the nth degree." As an example, a newspaper might ally with a small Web page design firm, outsourcing that slice of the business rather than trying to compete with the small company.

Jim Lussier, associate partner, Andersen Consulting

Lussier reported that Andersen's surveys of executives have found a significant trend toward more industry partnerships. Indeed, through partnerships big business is expected to retain its pre-eminance in the face of a rising tide of small entrepreneurial companies taking advantageof new technologies where big is not necessarily better. There are 3 times as many partnerships today as there were in 1990.

The majority of partnerships do not last longer than 4 years, however, Lussier pointed out. The successful media partnership will have "the speed, flexibility and focus of a small business made large by the information and resources of a large organization."

Leo Hindery, CEO, InterMedia Partners

Hindery, a former executive of the Chronicle Publishing Co. now involved in a cable concern, talked about the advantages of newspaper-cable TV alliances. The cable industry does not want to source news on its own, and is open to collaboration. But the 2 industries need to choose areas where collaboration makes sense. Cable and newspapers may be partners in one area, and fierce competitors in another, he said. An area where alliances do make sense is classified ads. "It's foolish" to make consumers place an ad with 2 companies, he said.

Hindery made the excellent point that print-broadcast rivalries must be broken down if more cross-industry collaboration is to take place. His experience at Chronicle Publishing -- which has newspaper, broadcast and cable properties -- demonstrated how ingrained are the biases of print and broadcast sides toward each other. The divisions seldom talked to each other and opportunities for synergies were often lost.

Gene Quinn, general manager, Tribune Interactive Network Services

Quinn cited Tribune Co.'s 5 years of serious investing in a strategic portfolio. Tribune has dozens of alliances -- including with America Online, Ticketmaster, Knight-Ridder Newspapers, Checkfree -- and intends to create many more. "We've learned a lot from that," he said, such as the need for partners to share in the "heavy lifting," meaning to share in the risks as well as the rewards.

Terry Hershey, president, Entertainment Division of Time Warner Interactive

Hershey said the market "will be unmerciful" to those publishing companies that do not enter the interactive services game and who try only to protecttheir core franchises. Even though the money is not there yet, it's vital to develop new products so that you can learn what it is that customers want. That's the motivation of Time Warner's Full Service Network interactive TV pilot project in Florida. "Orlando is not about being financially successful. It's about learning what the consumer wants," shesaid.

The FSN project includes a key partnership with the Orlando Sentinel newspaper. But FSN and similar future projects will ally with many local media properties, so newspapers may end up being one of many content providers on such interactive TV systems.

Andy Sutcliffe, president, Tele-Publishing Inc.

Sutcliffe talked about his company's voice personals products, which are evolving to marry online and audiotex components. An online personal ad today might include an audiotext phone number at the bottom, requiring the consumer to call a 900 number to hear a voice message from the prospective mate. Next up will be the ability to hear those voice messages via the Web. Prospective romantic partners can check each other out by exchanging anonymous email, which will cost 50 cents to $1 each. Tele-Publishing is one of several companies creating online classified ad systems that are being marketed to publishers. (Others include ClassiFACTS of Aurora, Colorado, and Electric Classifieds of San Francisco.)

Caroline Vanderlip, acting president, Consumer Interactive Services, AT&T Communications

Vanderlip spoke about her division's Internet-centric strategy and quoted futurist Faith Popcorn: "The future is a collective effort." No company can do it all alone, including AT&T, Vanderlip said, citing the recent headline-grabbing mergers between giant media corporations as evidence of executives' realization that developing futuristic communications technologies into viable businesses is a complex undertaking. Those companies see benefits in spreading the risk and sharing core competencies to better the odds of success.

(I will sum up other speakers' comments from the Media Alliances conference in tomorrow's column.)

Steve Got a tip? Let me know about it

If you have a newsworthy item about the newspaper new media business, please send me a note.

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