By: Wayne Robins Publishers Experiment With CDs, PDFs, Other Technologies
Home delivery has its advantages -- as well as some serious
flaws. A newspaper's arrival in proximity to your doorstep often
depends on the arm of a kid on a bicycle or an adult in a moving
car whose accuracy may be so poor they couldn't even pitch middle
relief for the Tampa Bay Devil Rays.
Add the possibility of breakdowns (from the press to the
distributors' distributor caps), factor in soaking rains that
return newspapers to their original wood pulp state, and it's a
wonder that the industry's noxious subscriber retention rate
isn't lower than it already is. And how has the newspaper
industry rewarded its loyal customer base these past few years?
By giving much of its content away free to any troll with a
computer, modem, and Internet service provider.
Folks, there's something terribly wrong with this picture. But
that may be all about to change. Coming soon to a computer screen
nearer, probably, than your front stoop is your daily newspaper,
in its entirety. Only difference: it'll be on screen, not on
paper.
It won't be an HTML (hypertext markup language) version of the
"Daily Bugle," nor a free hit-or-miss dot-com edition missing
many items, features, and photos. And don't look for those
beloved-by-so-few banner ads. It will be the "Daily Bugle"
itself: its entire contents, including advertising, the
classified section, and even headline bloopers if the copy desk's
overworked.
And oh yes: People will have to pay for it, and chances are they
will be counted as paid subscribers by the Audit Bureau of
Circulations (ABC).
The second act in the life of the online newspaper is about to
begin. Call it Digital Delivery Daily (Di De Da) -- and if it
works, you might be able to hum the tune right out of the
recession: Di De Da!
"It may be the missing link of newspaper circulation," Arthur O.
Sulzberger Jr., publisher of The New York Times and
chairman of the New York Times Co., said in his keynote address
at the E&P Interactive Newspapers Conference and Trade Show in
Dallas in February. A few days earlier, the Times Co. had
announced its purchase of a minority stake in NewsStand Inc., a
2-year-old company in Austin, Texas, that digitizes a newspaper
and distributes it via the Internet in tightly compressed files
for download to personal computers.
This fall, the Times, the same paper that's so hard to
fold on a subway train or a crowded airplane, will be available
to subscribers using NewsStand software. "We're targeting Oct. 30
as the official commercial launch," says Scott Heekin-Canedy, the
Times' senior vice president for circulation. "If the
planets align and we can do it earlier, we will."
'Times' for the change
When The New York Times scratches, the rest of the
newspaper business checks to see if it has poison ivy. So while
many companies are watching to see if the Times' NewsStand
product flies (off screen), many others are rolling out digital
replicas of their papers using different technologies and
formats.
Three weeks ago, NewsStand launched the digital replica of the
International Herald Tribune, the Paris-based daily co-
owned by the New York Times Co. and the Washington Post Co.
Smaller dailies are getting into the digital-delivery action as
well. The Sandusky (Ohio) Register, located in the
popular resort and manufacturing community, plans to have its
award-winning paper fully digitized Oct. 1, "and will begin
charging by December 1," according to Publisher Jim Hofmann.
"We developed our own software and are utilizing our existing
equipment," Hofmann says. "We always try to stay on the threshold
of new and upcoming things. Our concern is that we're wondering
what the criteria will be, what will satisfy the [ABC]. In the
absence of that, we're moving forward and anticipating we'll meet
that criteria."
Not coincidentally, this burgeoning technology will be on the
agendas of an ABC meeting this month in Pebble Beach, Calif., and
its annual conference in November in Bal Harbour, Fla. The ABC
board "will decide policy on how to audit electronic editions,"
says Laura Hagensick, corporate communications manager for the
Schaumburg, Ill.-based organization. "Since the board is made up
of our members and they make the decisions, we don't talk about
the decisions until they're final."
Hagensick did read aloud a statement that describes ABC
specifications as they stand at this moment, "Electronic editions
can be claimed as paid circulation and identified as electronic
editions in the reporting zone where copies are sold, providing
that ABC pricing rules are met."
The importance of paid circulation for this format is underlined
by the fact that at The New York Times, it is circulation chief
Heekin-Canedy driving the project -- not executives from the
digital or online division.
"I'm responsible for the circulation of The New York
Times, and this is another way for us to get subscribers and
readers," he says. "If they are countable for ABC purposes, then
they are of certified value to our advertisers."
Cost and subscription packages are yet to be determined. The
Sandusky Register's Hofmann believes print subscribers
will get the new digital edition free, and hopes to build
circulation by charging an ABC-appropriate fee to those who don't
currently get the paper.
Money for something
What this means for the future of current versions of newspapers
on the Web is up in the air. But if digital delivery clicks with
subscribers, it's hard to imagine newspapers continuing to offer
full content on revenue-draining free Web sites in the years to
come.
"It struck me that this could alter the business model for
newspapers and put them on a different plane altogether," says
Stuart Garner, chairman and CEO of NewsStand. He was first
approached by NewsStand founder Tracey Jones in January 1999 as a
potential customer. Garner, then CEO of Thomson Newspapers, was
immersed in that company's shocking endgame: the sad
responsibility for selling almost every single newspaper in what
was once one of North America's largest chains.
After the sale, Garner, who had started his career 30 years ago
covering bucket-of-blood crimes in the "Dodge City" atmosphere of
Newcastle upon Tyne, England, wasn't sure he wanted to run
another newspaper company. A venture capitalist intermediary set
up a meeting in New York between Garner and some NewsStand
executives for a demonstration.
"In about five minutes, I thought, 'This is the answer to the
maiden's prayer,''' Garner says. "It hit me between the eyes."
Here's how it works: Every day you get your newspaper downloaded
to your computer. Using the free proprietary NewsStand Reader
software to open the compressed file, the front page appears on
your screen. You can click to magnify text, click to turn pages
or go directly to a jump page, and click to move instantaneously
to different sections of the paper (say, from "Arts" to
"Sports").
What NewsStand and other digital-delivery systems also offer is
an element of interactivity with advertising. Print ads can be
linked to advertisers' Web sites. A print ad for Volkswagen, for
example, could offer a full-action video with one click, links to
local dealers, and even online transactions.
Looking at it through the eyes of a publisher, Garner saw
immediate advantages for a newspaper in three categories: cost
savings, customer service, and revenue growth. Here's the way he
spells it out.
Cost savings. "Newsprint is the second biggest item of
expenditure [after personnel]," Garner says. "And the cost of
delivery, given the size of the U.S., is a very big number. So
every new subscriber is a more profitable subscriber."
Customer service. "[Poor] customer service remains one of
the main reasons newspapers have 50% churn. ... That is a lot of
customers you are pissing off, and you can't afford it." Damaged
newspapers and delinquent deliveries cause reader rage.
Revenue growth. Garner says, "A lot of publishers just
can't get their newspapers to where their customers are." In the
last few years, many newspapers have curtailed distribution to
the more remote regions of their realms because the cost of
delivery wasn't justified by the circulation.
It may be easy to forget while driving on, say, New Jersey's
impossibly slow and crowded Interstate 80, but this is still a
big country with a lot of empty spaces outside the reach of
suburban gridlock. "There are 20,000 to 30,000 subscription
orders we can't fulfill because of geographic limitations,"
The New York Times' Heekin-Canedy says. "Home delivery is
the best example, but even retail, putting papers on a plane, to
a truck, to a dealer in a market in a timely fashion is very
difficult."
He cites as an example North Carolina's Research Triangle, with
its concentration of universities and high-tech businesses that
should have long been a circulation bull's-eye for the
Times' National Edition.
"Home delivery of The New York Times only became available
in the Research Triangle in February 2000,'' Heekin-Canedy says,
because of those logistical difficulties. "Inside a week's time,
we went from selling zero to 1,000 copies daily and 1,500 copies
on Sunday.''
Scratching the niche
How much circulation can digital delivery deliver? No one is
saying the wheel is being reinvented, or, more precisely, that
newsprint, ink, printing presses, trucks, delivery personnel, and
other remnants of this Industrial Age industry are going kaput.
"We don't have a target number," says Heekin-Canedy of the
Times. "Our expectation is that it will start out as a
niche product." The Times does have target demographics it
hopes to reach with its NewsStand product. "Business travelers,
mail subscribers, people who can't get the the paper easily," he
says. "And college students. Those are examples of the market
segments we think are prime targets for the NewsStand edition."
And yet the Times, in its continuing march to being a
full-saturation national newspaper, isn't putting all of its
circulation eggs in the NewsStand basket. On July 9, the paper
added Princeton, Minn., as a printing site for its National
Edition, allowing for seven-day delivery in Mankato and Sunday
home delivery in the burgs of St. Cloud and Fairbault. Within the
next year, the paper announced July 2, the Times will add
press runs in Ann Arbor, Mich., and Columbia, Mo., bringing to 18
the number of sites printing the National Edition, which will be
available for home delivery in 200 markets -- up from 58 four
years ago.
Among those who will still need the bulky print newspaper
delivered no matter what happens with digital delivery are the
legions of discerning, highly educated, media-savvy Apple
Macintosh computer users. NewsStand has only a Microsoft Windows
PC server in operation. Even the Akron (Ohio) Beacon
Journal's newspaper-on-CD-ROM requires Windows 9x/NT/2000.
Olive Software Inc. is a company with Israeli roots and a well-
regarded digital-delivery product that also has a compatibility
problem. At least temporarily, it requires Microsoft's Internet
Explorer Web browser: It won't work with AOL Time Warner Inc.'s
Netscape Communicator.
As for NewsStand and its Mac issue, Stuart Garner says: "We are
looking at that at the moment. ... We recognized the issue, and
like everything else you need to deal with it."
Specific technologies aside, curiosity about delivery of digital
dailies is such that companies with kindred technologies are
being brought into the competition. Cold North Wind,
headquartered in Ottawa, has grown quickly as a digitizer of
newspaper archives. In digitizing the archives of The Toronto
Star, dating back to 1892, and putting the New York
Post's 200 years of history online, Cold North Wind so far
has been more concerned with yesterday's news than today's.
According to Cold North Wind's founder and CEO Bob Huggins, his
company's technology -- the ability to offer up the pages of
newspaper without a lot of downloading, in very small file sizes,
and requiring a minimal amount of technological know-how on the
client's end -- has caused his archive customers, which now
include the National Newspaper Association, to discuss digitizing
their dailies for current consumption.
Though not yet in the fray, Huggins is among the many in the
industry carefully watching The New York Times/NewsStand
deal. "It's a bold move for the Times," he says, "and I
think it will fill some of a window that needs to be filled. I am
a proponent of evolution, not revolution. Does it change
newspapers, fundamentally, in terms of production and
distribution? No. But it appears to enable papers to have a much
broader reach than they do now.
"It won't be a matter of the entire business changing in six
months," he predicts. "It's just that we're monetizing assets
they didn't have before, and that's the business solution of what
we do: An image-based daily version of the newspaper is just that
solution, just that asset."
Wayne Robins (wrobins@editorandpublisher.com) is an associate editor covering new media for E&P.
Copyright 2001, Editor & Publisher.
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