Pulls Further Away From the Newsroom

By: Steve Outing

It began as the online service of the Raleigh News & Observer in North Carolina. But today, is no longer a formal part of that medium-sized daily newspaper, having grown into a multi-faceted Internet publishing company. Separation from the N&O newsroom became formalized this week, when the paper's executive editor, Frank Daniels III, stepped down from that position to become president and publisher of

That move follows acquisition of the family owned News & Observer Co. by Sacramento, California-based McClatchy newspapers last month. will become an Internet publishing classroom/research unit for McClatchy and its 13 papers, according to Daniels.

NandO's Web publishing pursuits have been focusing on a national audience for some time. The NandO Times is a national/international Web-based news source (free and supported by advertising), and NandO's Sports Server is a competitor to the national sports online services like SportsLink USA and ESPNet.

NandO also operates as an Internet service provider (ISP) in 5 counties surrounding Raleigh; it is developing its own software, such as PageBuilder, to help publishers do business online; and it is going into the consulting business, teaching newspapers in Latin America and elsewhere how to publish on the Internet.

Out of the ordinary

"NandO remains the most different service there is," says Daniels. While the strategy may appear to a "schizophrenic, chaotic model" to outsiders, he says there's method to the madness. There are many businesses for newspaper publishers to experiment with online, and NandO hopes to learn what works and what doesn't by trying them all. "We want to get bloodied in as many ways as we can," says Daniels. "We know we'll heal."

Operating as an ISP, NandO is trying to understand how customers struggle with getting online -- with the goal of creating ways to make getting on the Internet as simple as signing up for America Online. Despite the looming threat of giant telephone, cable and software companies offering home Internet access and making the market extremely competitive, Daniels believes there is still a place for -- and money to be made by -- newspaper companies. "The ISP market is not even close to being saturated," he says.

An area that has been untapped by newspaper companies until now is consulting to other publishers, especially those outside the U.S. NandO has created a NandO International division, operated out of New York by Rafael Bonnelly, a former newspaper editor in the Dominican Republic. The consulting unit initially is focusing on the Spanish-speaking, Latin America publishing market, teaching them Internet publishing skills so that they can experiment with reaching readers outside of their home markets via the online medium.

Bonnelly says that NandO looked at the model it had developed and realized that it could be exported around the world. The Internet "is very young in this (U.S.) market. It's younger still there (in Latin America)," he says. VP George Schlukbier says many of the newspapers in Latin America are family owned, so NandO's roots as a family owned publishing company help it in devising solutions for its foreign clients. Also, Latin American publishers seem to be embracing new technologies very quickly.

NandO International already has helped El Panama America in Panama City, La Nacion in Costa Rica and Revista Mercado in the Dominican Republic online. It is beginning to organize brief, intense workshops for publishers, bringing in NandO and outside experts to teach the basics of Internet publishing.

The Web news publishing operations continue to evolve, but probably won't make money any time soon. Daniels expects the content side of the Internet publishing business to be one of the last areas to turn a profit. Schlukbier says NandO's online advertisers have been sticking around, but attracting new ones is challenging.

Daniels says he expects the entire operation to continue to lose money in 1996, probably going into the black by 1997 -- unless some major advertising accounts appear. The News & Observer has sunk about $1 million in capital investment into NandO, and about $2.5 million into operating expenses this year. The operation will bring in about $1.5 million in revenues in 1995, and 1996 is expected to be significantly better. Daniels expects the ISP business to break even in 1996.

On the bleeding edge

Asked why the decision was made to separate from the newspaper publishing company, Daniels says he believes that for an Internet publishing operation to be successful, "it needs to be on the periphery of the newspaper. Change has to come from the leading edge." Also, it's important to keep the books separate, so you know how much money you have to lose to get an online publishing business running successfully. That's difficult when the online operation is subsidized by assistance from the newsroom staff.

NandO continues to push the edge, and along with the San Jose Mercury News' Mercury Center operation, NandO is considered by most observers to be leading the newspaper industry in Internet publishing innovation. is the only online newspaper service that is currently publishing everything on its Web pages in Sun Microsystems' Java format. Users of the HotJava browser will see a different NandO than those using Netscape and other Web browsers.

Another innovative aspect of the NandO publishing strategy is a commitment to being original publishers of online information. On NandO's Web pages, you typically will not find links to other sites. NandO's policy is to be the originator of information, not to refer users to other sites. NandO did not offer links to sites that housed the Unabomber's manifesto last week; rather, it waited until it acquired its own copy, then made it available to NandO users on the NandO server.

Expect to see more experiments from the NandO crew. Daniels says the recent merger with McClatchy has caused "a pretty intense rethinking about what NandO's opportunities are." He expects NandO to remain in Raleigh, but work in cooperation with the home office in Sacramento. Daniels as head of reports to McClatchy CEO Gary Pruitt. As noted in this column a couple weeks ago, Howard Weaver, editor of the Anchorage Daily News, has been appointed as McClatchy's assistant to the president for new media strategies. It is not clear yet what role Weaver will play in's operations.

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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


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