By: Steve Outing The Gannett Co. is the largest U.S. newspaper publisher, with more than 80 titles plus USA Today. But its stature does not extend to being a giant in the world of new media when you look outside of USA Today.
Many smaller newspaper chains have acted more aggressively in building online businesses. Second in line in terms of size is Knight Ridder, which has all of its 30-plus newspapers online and recently moved its corporate headquarters to California's Silicon Valley to be better plugged in to new media opportunities. By contrast, about 45 of Gannett's papers operate online ventures today; another 10 are close to launching Web sites; and another 10 are in the new media business planning stage. Knight Ridder operates a New Media Center in San Jose with 60 employees; Gannett's corporate new media staff, based in Arlington, Virginia, employs only four people.
"Quite honestly, we have taken a slower approach," says Jack Williams, vice president of business development for Gannett and the top new media executive for Gannett's newspaper division. (Williams' division does not include USA Today, which is a separate branch of the company, as is Gannett's broadcast group.) But Gannett's local newspapers probably have lost less money in new media than some of their industry colleagues, with a strategy that says, try new approaches out at a local site first, and only if it works implement it at other newspapers. "In a lot of cases, I think that's paid off," he says. "We've learned from our mistakes."
In the beginning
Gannett's local-newspaper division cannot be criticized for ignorning the Internet. Some of its newspapers were among the first wave a few years ago to start experimenting with online opportunities. Its Florida Today newspaper, positioned near the heart of the U.S. space industry, created the Space Online site, which has won numerous industry awards, has an international audience, and is profitable.
But what Gannett hasn't done is taken what it's learned and implemented a company-wide online strategy. Its biggest newspaper online sites (excluding USA Today) employ no more than about 10 people each. Williams says that at the heart, the idea is to take each newspaper within its newspaper group and treat is separately, leveraging what's been learned with Gannett Web sites that have launched previously and employing local site managers' knowledge of local market conditions.
For most of the new Gannett newspaper Web launches, the first area to be tackled is online classifieds services, particularly in real estate and employment. For most markets, this looks to be the best area of opportunity for creating a profitable cyber business -- creating a series of "high quality niche products," says Williams. That will be the initial strategy of the Fort Collins Coloradoan, for example, which is one of the last papers in the largest cities in Colorado to put up a serious Web site. It will start out with a local online real estate and employment service.
In some Gannett markets, Williams says that local activities, events or market conditions dictate the strategy. In Nashville, the strength of the country music industry made the choice of initially going with an online local entertainment service the appropriate first online step for the Tennessean, for example. The Journal and Courier in Lafayette, Indiana, created a site covering Purdue men's and women's basketball. And the Louisville Courier-Journal concentrated on its Web site covering the Kentucky Derby.
What Gannett's new media strategy is not about is "putting the newspaper online," says Williams. Putting the broad content of a newspaper onto the Web just isn't a good business proposition, where targeting potentially profitable niche markets is. Knight Ridder started out with the concept of putting its newspapers online, then later got into the business of creating niche products. Gannett, perhaps influenced by watching companies like Knight Ridder, rejects that approach. Where companies like Knight Ridder, Newhouse/Advance and Cox -- three companies in the top 10 owners of local newspapers in the U.S. -- have a fairly clearly defined corporate strategy that extends to their local market operations, at Gannett "we don't have a formula" that covers each local property, Williams says.
What you will see on Gannett newspaper sites is more emphasis on local news than what's on many other newspaper Web sites. Williams says he sees no reason to recreate at the local level what Associated Press and countless other national news sites can do better with national and international coverage. What his local papers can do better is provide the best coverage of city council meetings, and in time -- with the help of as-yet unimplemented "community publishing" procedures -- little league scores.
Some of Gannett's papers are positioned in state capitals, and Williams says that creating original online content for those markets does look like an interesting opportunity. Online classifieds products have a higher priority, but that sort of editorial online content probably is in the cards, he says.
Losing money overall
Like most media companies trying to figure out a way to make money online, Gannett's "significant" investments in its local-newspaper new media operations have lost money overall. However, Williams says that about half a dozen of Gannett's local newspaper sites are profitable today. And those are real revenues, not just money moved around within the organization by allotting advertising price hike revenues to the online division, he says.
The company keeps new media costs down by centrally hosting all its local newspapers' Web sites on the servers at InfiNet, the national Internet service provider and publishing services company co-owned by Gannett, Knight Ridder and Landmark Communications. For its papers' real estate niche services, InfiNet's Real Estate Web product is typically used as the core technology, though Williams says sites have the autonomy to use other vendors if they wish.
Williams' corporate new media staff of four people assists the local sites in developing online strategies. Two people are assigned to helping develop the local new media business plans; another person serves as a technical liaison and adviser; and the forth corporate staffer provides clerical support. In addition to assisting the 80-plus Gannett local papers, Williams' team also works with Army Times Publishing, which was acquired by Gannett last year and has a significant new media operation. Army Times publishes newspapers and online services for the U.S. armed forces.
Outside of USA Today, which is one of the busiest news sites on the Web, you don't hear as much about Gannett's online activities as you do about other companies'. Williams says that's by design, since he encourages his local newspapers not to announce their online ventures until they're ready to launch.
The view from outside
Eric Meyer, managing partner of Newslink Associates and an analyst who tracks the online news industry, says that Gannett's strategy for its local newspapers seems to be designed "almost as if Gannett doesn't want people to realize that (all its newspapers) are owned by Gannett." USA Today Online is the company's national cyber brand name, so local papers are allowed to stay local without a heavy national brand name. By contrast, No. 2 newspaper company Knight Ridder is embarking on a cyber effort to create a national brand for its newspapers on the Web, called "Real Cities."
Meyer says that Gannett appears to be "more concerned about making money (with new media) than most, but I don't necessarily fault them for that." He doesn't think that the company's go-slow approach will necessarily hurt them. If anything, there are advantages to entering existing markets this late because Gannett can benefit from the latest technology and the novelty factor when they launch a new product. Gannett simply "hasn't thrown all its irons in the fire yet," Meyer says.
Dominique Noth, a Milwaukee, Wisconsin-based online news industry consultant, says "I am not disturbed over Gannett's 'slow approach' if it is truly driven by the good reasons -- i.e., developing services that truly work for the various communities it serves, avoiding a cookie-cutter approach to both news and marketing. Now if the reasons turn out to be merely monetary caution, or a reluctance to put the pedal to the metal when a creative idea springs forward, that would be a downside in its corporate culture."
Noth points out that Gannett's newspaper properties represent two distinct creatures online, with USA Today taking an aggressive approach to building a business online, "but it may have set a standard of traffic and revenue expectations that work against local development." He wonders if the "other Gannett" -- the local newspapers -- remembers the USA Today experience of "10 years of hanging in there to truly establish a successful print vehicle." The same could be true of local newspapers establishing themselves with online services, Noth suggests.
Some of those who have worked inside Gannett criticize the company's go-slow approach to the Web for its local newspapers. I posted a query to the Online-Newspapers Internet discussion list asking current and former Gannett employees to give me their thoughts about how the company treats new media. Several off-the-record responses from former Gannett newspaper employees expressed frustration at getting local new media plans approved unless they could demonstrate a quick turn to profitability.
Contact: Eric Meyer, meyer@newslink.org
Dom Noth, milnews@aol.com
Jack Williams, jwilliam@gci1.gannett.com
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