Microsoft Muscles In On Auto Show Coverage

By: Steve Outing

The North American International Auto Show is a BIG deal. Held in Detroit in January, it attracts hundreds of thousands of attendees -- last year's count was 726,000. And the international press focuses on the event, since many new models and prototypes are unveiled during press days before the public show.

It's a big deal to the hometown Detroit Free Press and Detroit News, which long have provided extensive coverage of the event, resulting in considerable amounts of advertising revenue. They typically have booths at the show, sometimes in trade for newspaper advertising. Indeed, the papers long have taken auto shows seriously -- including sending reporters to cover other major auto shows around the world.

But this year, the Detroit newspapers -- which operate under a joint operating agreement and both operate Web sites -- have some competition in their coverage of the Detroit Auto Show. Microsoft.

Deep-pocketed competition

The software giant has paid the show's organizers $55,000 in order for its CarPoint automobile Web site to be the "Official Web Site of the 1998 Detroit Auto Show," according to the show's organizers, in hopes of becoming the central news source on the show for Internet users.

That doesn't thrill the Web site directors at the Detroit papers, as you can imagine. According to the Freep's new media director, Laurie Bennett, she was not given the opportunity to bid for the "Official Web Site" designation -- though she doubts that she would have been able to outspend Microsoft anyway. The Freep operates an automobile vertical site called Auto.com, which features year-round coverage of Detroit's favorite industry, tapping the resources of the paper's automotive editors and writers as well as those from other Knight-Ridder newspapers, and which is directly competitive with CarPoint. At auto show time, the site goes all out to provide deep coverage of the 2-week event.

The Freep hasn't had to face this kind of direct editorial assault before, Bennett notes, and the "Official Web Site" move by Microsoft brings up some issues that newspapers need to be aware of and attend to. Such as:

The intrusion of Microsoft (from a news coverage angle) not only into a vertical, but into an event that has great significance as a local news story. The willingness of Microsoft to spend large sums of money to promote its Web news coverage, "and its ability to override longstanding newspaper relationships," Bennett says. "Newspapers have to learn from that." Nancy Malitz, general director of the Internet project at the Detroit News, says that Microsoft's auto show Web strategy demonstrates that the company's "aggressiveness is the thing that newspapers are respectful of and were afraid of from the beginning."

Both newspapers' Web sites are now planning for the big show, and both Web managers say that they plan to fight Microsoft by providing editorial coverage of depth and quality that CarPoint cannot match. People can trust the papers' coverage because of their length of coverage and understanding of the industry, and a solid reputation as being objective observers of the auto industry. Can Microsoft really boast that?, says Bennett.

The Freep is launching a humorous promotional campaign for its Auto.com site, which it designates with an animated GIF logo as "Not... the Official Web Site of the Detroit Auto Show." Bennett says that the site will be heavily promoted in the newspaper, leveraging the paper's resources where it cannot keep up with Microsoft in direct promotional spending.

At the News site, Malitz also plays up the depth of coverage planned for the show. Last year, the News had reporters as well as enthusiasts covering the show; it ran photos of all concept cars unveiled; and it created a "virtual walkthrough" of the show floor.

Neither newspaper Web site has a lot in the way of resources, so competing with CarPoint will be difficult. Another impediment is the newspapers' joint operating agreement (JOA), which has the two editorial staffs operating independently but sharing advertising, circulation and printing. In any JOA environment, getting as much in-paper promotion as either party would like can be difficult.

Bennett admits that she'd like more promotional resources to push the Auto.com site during the auto show period. Newspapers need to understand that Microsoft is not afraid to spend a lot of money to promote new products like CarPoint, she says, and publishers must respond in kind.

Would you buy from this company?

This story gets interesting when you consider that Microsoft is trying to market to newspapers the technology behind CarPoint. While CarPoint is a legitimate contender in the new online automotive information and buying services industry, it is designed in large part to showcase Microsoft's technology -- which is of course for sale to those who would create services competitive to CarPoint. Microsoft is aggressively seeking newspapers to licenses its online automotive vertical applications.

While on the surface that might seem like a funny strategy, it's central to Microsoft's main business strategy with Internet products. According to Alex Simons, product manager for Microsoft CarPoint, "We believe that for a (new) market to succeed, it has to have a certain critical amount of momentum behind it, and that Microsoft alone cannot create this kind of momentum."

In the case of CarPoint, Microsoft is taking this "split approach" of licensing the underlying technology -- "for instance, our classifieds database technology which updates itself from dealer inventories automatically every night," says Simons -- and hosting its own "retail" site, CarPoint. "We will make it easier for competitors to launch great automotive Web sites of their own -- with their own brand, not ours -- at a lower cost than would be required to build these themselves. And we expect to make money doing it."

Simons admits that "we will have a harder row to hoe in the newspaper industry than we have had in others. We will have to significantly out-innovate Zip2 (a newspaper-friendly and -owned company that offers similar vertical publishing products) before we'll look like an acceptable alternative." And anti-Microsoft rhetoric from newspaper executives like Knight-Ridder's Bob Ingle and Cox's Peter Winter "are making it harder every day," Simons says.

The News' Malitz says if Microsoft "is going to dip into our classifieds business (as it is doing with CarPoint), most newspapers will think twice about other cooperative ventures with Microsoft." Newspapers will turn to other vendors (like Zip2) in a balance of power strategy, she says.

Malitz admits to running Windows95 on her PC, "but we're not using any Windows NT servers yet!" The News' Web site does not currently use any vendors' online automotive vertial product, but she doesn't rule it out for the future.

The Freep's Bennett says that she of course wants the best equipment to run her operation. But as to the strategy of putting up models that show how a software system works, and then expecting newspapers to buy it, "That seems like a real ruse to me," she says.

Heated rhetoric

In what is certain to become even more heated competition between newspapers and Microsoft, expect the rhetoric to heat up. Bennett says the battle over the auto Web sites "is over quality of content. We believe we whipped their butts in 1997, despite their having greater technology and vast resources. We intend to do even better in '98."

Steve

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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company