Hendricks Steps in to Lead a Leaner NandO

By: Steve Outing

Chris Hendricks begins work in July as the new CEO of NandO, the Raleigh, North Carolina-based new media division of McClatchy Newspapers of Sacramento, California. He joins the pioneering newspaper online venture as it's gone through some tumultuous months.

Hendricks' appointment comes as the result of the departure in April of Frank Daniels III, NandO's CEO and publisher and former executive editor of the News & Observer in Raleigh, to start an Internet publishing tools company, KOZ Inc., and pursue other interests. Daniels is part of the family that owned the News & Observer for more than 100 years. (The Daniels family sold the News & Observer and NandO to McClatchy for $373 million last summer, but Frank Daniels III stayed on to lead NandO.)

The KOZ start-up hit NandO hard, with Daniels' No. 2 executive, George Schlukbier, and four or five other employees resigning and moving to KOZ. (For information about KOZ, see the lead item in my Wednesday/Thursday column. Click on the "Previous column" link at the bottom of this page.)

Hendricks, 33, will start his new job with a smaller NandO, since McClatchy has decided to sell off the Internet service provider (ISP) business. NandO has about 7,500 ISP customers in North Carolina. The sale will reduce NandO's staff from 60 to between 40 and 50. (The purchaser is to be announced next week.)

Hendricks says that the ISP business has lost "a lot of money" for the company, and it is no longer viewed as integral to NandO's core business, which is content creation. "It was a distraction," he says, although during the early development of NandO it was a necessary component of the business which served to build the audience for NandO's online content offerings.

NandO's remaining staff is editorially heavy, Hendricks says, and will focus on creating new online content. NandO stalwarts the NandO Times (an international online news service) and the Sports Server, which serve a general, free-access Internet audience and are supported by advertising, will continue to be supported and grow. Hendricks says NandO Times in particular is supplying a good revenue stream. NandO's servers experience about 7 million hits a week.

A new focus will be on developing proprietary content services for companies looking to add news content to their Internet offerings. Examples would be regional ISPs, Web search engine companies, and telephone companies looking to add an ongoing stream of news (especially technology news) to their Web sites. Hendricks expects this to be a lucrative business for NandO. Also, look for the company to develop "push" products such as digital delivery of news as well as "pull" services (represented by the existing Web sites).

Hendricks conceded that the NandO brand name, while well known in the newspaper industry, does not have a high enough profile among the public or advertising community. A public relations firm has been hired to give NandO added visibility.

NandO, founded in 1994, has not yet been profitable, but Hendricks says it does have a good revenue stream. And while developing revenue streams for the company is important, McClatchy is not operating with the expectation of a quick turn to profitability. "We realize we'll lose money" for a few years, the new CEO says, "but we're in it for the long haul."

In addition to its national Web sites and proprietary content services, NandO also serves as the Internet publishing department for McClatchy's 13 daily U.S. newspapers. Most of the papers' Web sites either operate or will be run off the NandO servers in Raleigh. NandO also develops Internet publishing tools for use by its newspapers.

McClatchy papers currently operating on the Web include the Anchorage Daily News (Alaska), Modesto Bee (California), News & Observer (Raleigh), Tacoma Morning News Tribune (Washington), and Tri-City Herald (Washington). McClatchy's flagship paper, the Sacramento Bee, will have its full-fledged Web service operational in July. The rest of the McClatchy dailies will be on the Web by the end of the year, Hendricks says. There are no immediate plans for McClatchy's 15 non-daily papers to go online. (The company also operates a Web site for its Legi-tech legislative vote-tracking service in California, and has a corporate Web site.)

Hendricks also is on the operating committee of PAFET (Partners Affiliated for Exploring Technology), a new media consortium of six medium-sized U.S. newspaper chains, including McClatchy, that has been quiet about its activities. Stay tuned through the end of the summer, Hendricks says. "We're up to stuff."

Hendricks leaves his most recent McClatchy position in Sacramento, where he was manager of technology.

Washington Post, Star Tribune debut on the Web

This week saw the official launch of the World Wide Web services of both the Washington Post and the Star Tribune (Minneapolis-St. Paul, Minnesota). These are both expansive offerings with lots of flashy features. The two ventures are particularly notable because both papers started out with their online services tied to the AT&T Interchange network, and made hasty moves to the Web when AT&T killed the proprietary online network a few months ago.

While it could be argued that these newspapers made an unfortunate decision in buying into the Interchange proprietary platform in the first place, the experience they gained has served them well in building for the Web. Like the Los Angeles Times' Web service, which came about after the West Coast daily dumped its relationship with Prodigy, the Post and Star Tribune sites reflect a wealth of experience in learning what makes a good newspaper online site.

Oddly, both papers' services suffer from a similar compulsion to put a lot of information -- and graphics -- on their home pages (especially the Star Tribune). Viewing these sites on a 28.8 modem connection, I had to wait 1-2 minutes for the pages to draw. Site visitors coming in at slower speeds are likely to turn graphics off or, worse, go elsewhere.

Information should (not) be free

David Hakala of Boardwatch Magazine has some interesting opinions on revenue models being formulated by Internet publishers. He writes:

"I'm reading your May 10 column, 'E&P Members Network Exemplifies Mixed Revenue Model,' and going, 'yeah... yeah... YEAH!' I've been preaching the gospel of Adam Smith to online users and service providers since 1986. Bulletin board system operators finally got the message and user fees became de rigueur by 1991. Prior to that time, it was normal to spend 100 phone calls to find a board worth a second call -- and it went out of business a week later due to lack of income.

"Publishers (including but not at all limited to newspapers) have been intimidated by the so-called 'Internet community' and its 'information should be free or we'll boycott you' screed. It's a bluff that BBS operators successfully called many years ago, made by the same people who now pay for access to AOL, CIS and the Roadkill Cafe BBS.

"The Internet community is not a bunch of impoverished freeloaders; they are just normal people. If they can get something for free, they'll take it. But if they can't, they WILL buy it if it's worth something to them.

"Online technology makes it possible to deliver valuable information at a fraction of the cost of paper media, but that possibility does not create an obligation to do so. Nor does it decrease the considerable cost of creating valuable information. I would gladly give my writing to anyone, free of charge, if all my readers would give me the fruits of their labors -- housing, food, clothing, beer, etc. -- at the same price, in whatever quantities I desire (especially the beer).

"I'm also encouraged to see your emphasis on multiple revenue streams. I believe the term 'multimedia' has been misinterpreted to mean just ONE delivery medium (the Web) bearing text, sound, graphics and eventually Smell-O-Vision. To me, 'multimedia' means offering information delivery via multiple channels, each of which is paid for by someone.

"If you want news free via the Web, you accept banner ads. If you want it ad-free and delivered via email, give me your credit card number. If you want a second, third or 1000th opinion instead of just mine, you can pay to join the discussion list I moderate. If you want yesterday's news, you can pay the storage charges.

"'You can have it, as long as I can afford it.' My mother used to say that, and I say it to my 5-year-old son. It's high time publishers spoke the same common sense to their readers."

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