Arizona Daily Star Learns the ISP Business

By: Steve Outing

The Arizona Daily Star in Tucson not only operates a Web online newspaper service called StarNet, it also is one of the top Internet service providers in town. Newspapers going into the ISP business are not that unusual any more, but the Star did it all in-house.

The Star, a Pulitzer Newspapers property, gets most of its online revenues from the access accounts it sells. Price is a reasonable $20 a month (if you pay automatically by credit card; higher for corporate customers) for unlimited hours. (There is a 3-hour time limit for a single modem session; but users can simply log back on after 3 hours.)

Online editor Walt Nett says the demand for access accounts has exceeded the paper's projections. It currently has 2,700 paying subscribers; when it launched last May the newspaper projected 1,500 subscribers by the end of 1995. The service is not profitable yet, but original projections put profitability at 3,000-3,200 accounts.

Those figures make the Daily Star one of the biggest commercial ISPs in town. PrimeNet and Internet Direct operate in Tucson, and last month Pipeline (a New York-based ISP) set up locally. Netcom, the largest ISP nationally, does not have a presence in Tucson. Thus, the Tucson market was not oversaturated and an opportunity existed for the newspaper to enter the ISP business.

Like any growing ISP, the newspaper is constantly scrambling to keep up with demand. It currently operates 288 modems and has several T-1 lines to connect to the Internet. Nett says they will soon switch over to a direct fiber optics connection to the Internet, which will save money over running the multiple, expensive T-1s.

The staff required to run the online operation is modest: 1 full-time person and 2 part-timers operate the ISP side; Nett (who is full-time) handles content, with the help of 4 part-timers; a director of new technologies (Bob Cauthorn) administers the department; an assistant system administrator is about to be hired; and -- most importantly -- 2 full-time staffers and 5-6 part-timers do customer service. Nett says the latter group is vitally important to the success of the operation, and customer service stays open late hours to serve subscribers -- something the Star's competitors in Tucson do not do, Nett says.

The Daily Star, like most ISPs, will eventually face a competitive environment, when industry giants like AT&T, the regional telcos, Microsoft, @Home and others all offer Internet access to the home. While many in the business worry that smaller operators will be shaken out of the ISP business or gobbled up by the giants, Nett says, "We're in it for the long haul."

The Daily Star's approach is to combine Internet access with intelligently organized information. "We feel we're melding the ISP business with information access to professionals," Nett says. A Daily Star ISP customer, for instance, might be able to utilize the online help of one of the newspaper's trained librarians to find information in the maze of the Internet. Nett doubts that an AT&T or Microsoft will be able to match that kind of service. Also, he believes that the respected name of the local newspaper will draw customers who look upon monoliths like Microsoft with skepticism.

The common wisdom in the ISP business would give the Daily Star 2-3 years of money-making potential before the rug is pulled out from under them by the larger players entering the ISP market. As I reported last week, @Home, the cable joint venture that seeks to bring super-fast Internet connections over cable television lines, is gearing up for a 1996 launch. If successful, that may be the Daily Star and other newspaper ISPs' greatest competitive threat.

6-newspaper help-wanted listings service

Six of the largest U.S. newspapers have combined their help-wanted listings in a World Wide Web database called The service, which is free to users, includes ads from the Boston Globe, Chicago Tribune, Los Angeles Times, New York Times, San Jose Mercury News and Washington Post. Visitors to the site can search for categories of jobs or enter a keyword, then search by newspaper. Results are returned showing the matching ads broken out for each individual newspaper. Upcoming features include a service that matches job-seekers and employers, a resume database, and company profiles.

Advertisers in the future will be able to place a listing on CareerPath without having to place a print ad. The newspapers have developed separate pricing for ads that appear electronically but not in print.

The site has gotten a lot of interest -- so much so that in its first few days the server it uses was overloaded. When I checked it out last week, I got numerous "busy signals" but was able to use the service. CareerPath's troubles can be a lesson to developers of new Web services: Be prepared to act quickly if demand exceeds your expectations. CareerPath says it expects to upgrade its system to accommodate the load quickly.

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

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