More NCN Layoffs; Failed Search Engine Strategy to Blame?

By: Steve Outing New Century Network, the U.S. newspaper industry's star collaborative cyberspace venture, has suffered another heavy blow. Only a few weeks after the New York-based company laid off 10% of its staff and repositioned its mission, it announced late Wednesday that it is immediately laying off about 20 more employees, which will leave just over 40 employees and gut (but not entirely kill off) NCN's most visible project to date, the NewsWorks multi-newspaper search engine and aggregated news site.

Officially, NCN executives, who were speaking only through their public relations firm on Wednesday, were saying that NCN "will curtail its original content development activities and re-assign or eliminate approximately 20 staff positions currently involved in those content areas."

The focus of NCN will now be on the Web banner ad network, which sells national advertising into its 140 affiliate newspaper sites; a recently completed HTML e-mail service designed for affiliate sites; and other Web services and tools being developed for use by individual sites. NCN will continue to have a gateway site leading to its affiliates' Web sites, and NewsWorks will continue to exist as a search engine for the newspapers -- but it won't have its current line-up of NCN-editor-selected news presentations.

The ad network, managed by vice president of advertising Tom Bates, seems to be the component that is keeping NCN together. At an affiliates meeting held in Seattle earlier this month, attendees reported they were told that the NCN ad network placed close to $1 million in banner ads last year. Projections for 1998 were said to be three times that.

The killing off of the NCN editorial operation is the culmination of disputes among the venture's owners about how much of a national brand NCN should create. NewsWorks was seen by some affiliate newspapers as competing with their local brands and their own chain network brands. The first round of layoffs several weeks ago -- affecting about 10% of NCN's once 70-member staff -- emasculated NewsWorks. This second round of 20 layoffs leaves nothing but the core news search engine technology intact.

While NCN executives weren't talking yesterday, some of those close to and inside NCN, talking on background, reported that NCN's trouble this time around rested partly on a failed attempt to do a deal with an Internet search engine, which would allow NCN affiliate newspapers to offer a co-branded Web search engine interface on the newspaper sites' home pages.

Many newspaper executives believe that in order to succeed, newspaper services on the Web must offer the type of services that Internet consumers rely on regularly -- and that includes Web search engine services. The Internet search engines and directory services -- especially the largest ones like Yahoo!, Excite, Infoseek and Lycos -- have a huge lead in Web traffic over newspapers, and thus get the lion's share of Web advertising dollars. For newspaper sites to compete, they ultimately have to offer their visitors Internet search features. Wouldn't it be great if consumers didn't have to go to Yahoo! or Excite to search the Web, then go to their favorite newspaper site for news -- if the news site could be the single portal through which loyal local customers experience all of the Web.

The notion that an umbrella organization like NCN might offer newspapers the type of deal to give them access to a Web search engine for their sites was enough to keep many newspapers loyal to NCN even during recent weeks when the organization's future has been in doubt, according to insiders. Even some publishers who have been bearish about NCN's future reportedly were interested in the search engine strategy.

Apparently, NCN executives have been unable to come up with such a deal, and time may have run out to find such a "killer app" for newspaper Web sites that would keep publishers loyal to the NCN cause. Hence, the most recent layoffs and cost cutting. Reportedly, NCN president Lee deBoer and his team have been in unsuccessful discussions with Infoseek and Excite, as well as ongoing discussions with CNET (which has the Snap! Web directory service). The CNET deal may still be alive. NCN executives were not available yesterday to comment on these reports.

Absent an NCN search engine deal, some large newspaper companies are trying to do search engine deals on their own. The Boston Globe's Boston.com Web site is negotiating with a search engine, as is Hollinger/Southam of Canada for its Canada.com Web site, which is due for a major relaunch soon. The Globe's Lincoln Milstein, who heads up the new media division, says he would be happy to have an umbrella organization come up with a search engine deal that he could tap in to -- but he can't wait the year or more it might take to happen so he's doing it on his own.

New Century Network is a consortium of nine major U.S. media companies: Advance Publications, Cox, Gannett Co., Hearst Corp., Knight Ridder, New York Times Co., Times Mirror, Tribune Co. and the Washington Post Co.

Steve

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This column is written by Steve Outing for Editor & Publisher Interactive. Tips, letters and feedback can be sent to Steve at steve@planetarynews.com

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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