Interactive Newspapers Attendees Ask, Where's the Money?

By: Steve Outing

Hello from the Interactive Newspapers conference in San Francisco, where about 700 people are gathered to mull over strategies for making money in the online world. Money is definitely at the heart of this gathering, since all the exciting and compelling online services that publishers are creating -- with the help of a growing array of technology partners -- are not yet, in most cases, making for a lucrative business. Many of the publishers attending this gathering, which is run by The Kelsey Group and Editor & Publisher, hope to find some answers here.

I attended this conference in 1995, and it's changed considerably. While about the same size as last year's, this event seems to have attracted more "suits"; I'm meeting more senior managers and executives, whereas last year there were more people working in the "trenches" building online services. The difference may be that more newspapers have invested serious money and more staff into interactive ventures in the last year, so senior managers are here so that they can stay on top of a field that is now a significant investment.

Last year, while online was hot, audiotex was still a major part of this conference. This year, audiotex seems almost entirely eclipsed by the online juggernaut. But, as Kelsey Group president John Kelsey said in his opening remarks, "The money is in audiotex, but the publicity and growth is in online services." Online also is different, he suggested, in representing a potential long-term replacement for the print product, whereas audiotex will always be a supplemental service.

Like last year, there were some fascinating presentations during the first day of the conference, which runs through Saturday. Here are a couple snippets from yesterday's sessions. I will be following up with additional coverage of the entire conference next week.

Dyson: Intellectual property is dead!

"Intellectual property is dead! Long live intellectual process!" pronounced Esther Dyson, president of EDventure Holdings, in her keynote address. Meaning, interactive publishing is not so much about content as it is about involving your customers in the experience -- and thus giving them a reason to come back again and again.

It's not unlike running a restaurant, where the food (read, content) alone is not what makes repeat customers, but also the waiters, presentation, ambiance, etc. In fact, she suggests, the people you should be hiring to run your online services should be, in effect, online "bartenders," tending to the needs and desires of your customers.

Publishers must learn to give up some control to succeed in the online medium. Dyson related an amusing experience of a few years back on a Southwest Airlines jet, as an example of how allowing customers to participate is good business. The plane she was on was about to be delayed because the crew had not received its normal shipment of peanuts. The head stewardess got on the microphone and told the passengers that they could wait 5 extra minutes and the peanuts would arrive, or leave on time and skip the peanuts snack for the flight. What would the passengers like to do, they were asked. They voted to leave on time, and no one complained when there were no peanuts along with their in-flight drink. That stewardess was brilliant, Dyson says.

Publishers must learn in operating online services to "control it gently," she says. Involve your customers and let them use their voices, and they'll return again and again. In many ways, operating a successful online service is like running an industry conference; you get everyone together and "manage the process." This is the mindset that publishers must embrace to succeed online, which can be very difficult for executives used to the old newspaper model.

Boston.com's partnership model

Dave Margulius of the The Boston Globe described its Boston.com partnership model, which is fairly unusual among newspapers operating online services. Boston.com, which is billed as a "mega Web site" for New England, seeks to establish as many content partnerships as possible for the common goal of collecting a huge number of viewers. The site includes content of several TV and radio stations, for example; Boston.com thus becomes the one "front door" where a World Wide Web user comes to view any media outlet in the Boston area.

While each partner deal is different, generally there is no sharing of ad revenues, Margulius explained. Partners benefit by receiving increased traffic from people coming through the Boston.com front door; they can sell their own advertising, keeping those revenues. The Boston Globe, as the "anchor tenant" and operator of Boston.com, benefits by partners' sites bringing in more viewers, who see "front page" advertising (revenues of which the Globe keeps) on their way through the front door to other content partners' material. Exclusive deals are not part of the program.

Partners also benefit by leveraging the resources of the Boston.com organization, and its 20 staff members. Many of the smaller partners can afford only 1 or 2 people devoted to their online sites, so partnering with Boston.com can allow them to take their sites a step higher.

More next week

As I sit down to write this column after a busy day, it's already late in the evening. Next week I will take more time to summarize more of the sessions of this conference. See you then.

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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