Newspapers on the Internet: Lessons They Are Learning

By: Steve Outing

Today I'm reporting from New Media World, a 2-day opener for the America East newspaper operations and technology conference in Hershey, Pennsylvania. In the next couple days, I will be reporting on some of the presentations.

I gave a talk yesterday, as part of a panel called "Newspapers on the Internet: What Lessons Are They Learning?" For the benefit of those not at this conference, and for those who asked if I would publish the text of my comments on the Internet, please read on. I'll be back tomorrow with others' presetations.

Lessons learned

With more than 1,000 newspapers now online -- and about 90% of those on the World Wide Web, some of them in operation for 1 or 2 years -- we now have a wealth of industry experience to help us chart the future course of newspapers' Internet ventures. Based on my readings of some of this experience, I have come up with 11 key lessons that newspapers are learning about cyberspace publishing:

1) Information should be free (mostly)

The Web is an incredibly competitive environment. Publishers need to do everything they can to encourage people to visit their sites, and charging an entrance fee is a barrier that they can't afford to erect. Charging a subscription fee to access a newspaper Web site sounds nice -- and most publishers feel that the content they produce is valuable enough to warrant a price -- but quite simply, it turns people away.

If, for example, I go to the San Jose Mercury Center's Mercury Center Web site and click on one of its news digest items expecting to see the full text of the linked article, I will get asked for a password. If I don't want to pay their monthly subscription fee, then I'll go to my Bookmarks list in my Web browser and visit some other news site where what I want is free. And the Mercury has lost me.

I think that we are learning that some content can successfully carry a price. But we have to be very careful about where we draw the line between what's free and what carries a price tag.

The key, I think we are learning, is to make your site look like it's free, and just charge for the premium services. Ideally, a visitor should be able to interact with your site, and only on rare occasions stumble on a toll booth. And that toll booth should be for something that causes the customer to say, "Sure, I can understand why they want me to pay for this. This is worth paying for."

I have come to believe that in most cases a newspaper Web site cannot charge for news. Try to charge for it, and your visitors will scatter to other sites.

Where news can garner a fee is if you can offer a customized news filtering service. Newshound and the upcoming Clipper from the New York Times are good examples of this. Charging for access to a searchable archive of the newspaper is another obvious candidate for having a price.

The electronic publishing manager of the Christian Science Monitor told me recently that the online crossword puzzle would be free on his Web site, but to get the answers you'll have to be a premium paid subscriber.

Other papers will give you all the news you can eat for free, but to see the comics online you'll have to be a subscriber.

There are many approaches, and many places to draw the line about what's free and what carries a price. We still have to figure out where it's appropriate to draw the line, but I would argue that you should give away much more than you charge for.

Newspapers' experience 1-2 years ago with the commercial online services -- notably Prodigy, where several papers tried to charge a monthly fee and failed miserably -- demonstrates that the concept of charging for Web news content won't fly. It didn't work on Prodigy and it won't work on the Web, either.

2) Disclaimer: Never say never

There are, of course, some instances where a subscription fee for an online newspaper service can work. The New York Times, for instance, is charging a fee for people outside of the U.S. to access its Web site. The Times has such a strong product, which is not available in print in many parts of the world, that I do believe it will find foreign readers willing to pay for its content on the Web. (In the Times' case, however, I think that they have overpriced it -- at $35 per month -- and will have to adjust that downward.)

Some email news services can get away with charging a fee -- but this primarily pertains to papers targeting the expatriate and foreign markets. Both the Irish Times and the Christian Science Monitor, for instance, are launching subscription-fee based email editions targeting readers outside of their home countries -- and I expect those efforts to succeed. They may not make tons of money, but they likely will attract good numbers of readers and be profitable.

3) Advertising is (still) the holy grail; For now, multiple revenue streams

Just as in print, I think that we are finding that advertising is going to be the primary revenue source for our industry's online ventures. This doesn't mean that we should concentrate all of our efforts on advertising, however.

As everyone surely knows, selling advertising in the online medium is very challenging. Advertisers are slow to free up dollars for online placements, and they want to see results for their placements. Obviously, there have not been large sums of money flowing into online newspaper services. This is going to take some time to build.

In the meantime, then, we've learned that we have to develop a balanced electronic publishing strategy with multiple revenue streams.

There are many to choose from: Selling Internet access accounts; charging a subscription fee; charging for premium services; building Web sites for other companies; providing consulting services to other publishers; charging extra for online classifieds; and so on.

I don't have time here to list them all, but there are a couple dozen revenue streams that you can tap for your online services. Most likely, none of them will solely support your venture, but together they can make a nice business.

In a couple years, I think that advertising online will far outweigh any other revenue source. But we're going to have to wait for that day to arrive.

4) You'll need a dedicated ad sales staff

Most publishers have learned that having your print ad sales staff double up and sell online ads does not work. Even one sales person dedicated to new media will have a greater impact than 10 print sales people trying to sell online as an add-on.

5) We need to offer advertisers options

We've learned that advertisers want quantifiable results, so we have to develop better systems to satisfy them. And because this is a new medium, I think it makes sense to offer them different options for paying for online placement.

I like the way the Christian Science Monitor is approaching online advertising. An advertiser of its new Web site can pay:
* A straight monthly fee.
* Per impression (which is the number of times that a page that an ad is on is accessed).
* Per click (when a Web user actually clicks on an advertiser's icon that resides on a newspaper's page).
* For exclusive sponsorship of a section of an online service (e.g., the Sports section, comics, crossword puzzle).

That first option, the straight monthly fee, has proven to be a difficult sell, so it makes sense to offer the advertiser results-oriented billing. An increasing number of them are taking this latter option.

6) Advertising: There's power in numbers

Again, online advertising is proving to be a tough sell. We're learning that as an industry we need to join forces and offer advertisers placements in multiple sites. I think that what Dave Morgan is doing with his new company, Real Media, is the right direction. Advertisers can come to Real Media and the company will place their ad on multiple newspaper sites reaching a specific geographic area. This type of strategy can bring publishers advertising that they would not be able to get by themselves.

7) Don't go it alone

In an ocean of Web sites, it's too difficult for a single news organization to get noticed and succeed, or even stay afloat. We've learned that newspaper companies generally do not have all the skills and resources necessary to succeed in new media. They need to partner and ally with other companies, other media.

Even the New York Times or the Washington Post can't do it alone; even they do not have sufficient scale to compete with the Microsofts, America Onlines and AT&Ts of the world -- as those companies begin entering the content/publishing business.

I see evidence of this lesson learned in sites like ElectionLine, a free political Web site operated by the Washington Post, Newsweek magazine and ABC TV News. Or, the Boston Globe-originated Web service that brings all competing New England media together under one roof.

And then there's New Century Network, which while not yet off the ground exists as a joint venture of 9 of the largest U.S. newspaper companies, its aim to combine the industry's considerable strength to do battle with America Online, et al.

The lesson learned in cyberspace publishing is to learn to love your former enemies, because you may need them to succeed online.

8) Online is a young person's medium*

I do not mean this as an absolute statement, hence the asterick. But it is true that young people are far more agreeable to getting news, information and entertainment on a computer screen than are those of the Baby Boom and older generations.

We have learned that it is through our new media efforts that we stand the best chance of attracting young people, since in large numbers they have abandoned printed newspapers.

We have learned that we cannot design online newspaper services that mimmick the print newspapers, or young people will stay away from the online edition, too.

We have learned that we can't just guess what young people want; we have to ask them. And we have to make sure that young people are on our new media staffs -- and most certainly on our boards of advisors.

We know that young people -- especially college students and those in their early 20s -- do not want to pay for our online services. So we have to create services designed for them that are advertiser-supported.

And we know that we have to get school-age kids involved with our organizations now -- through the medium of online -- if we expect them to be with us as they get older. We need to establish the habits of news consumption and instill our news brand names while they're young.

9) Shovelware is bad; shovelware is good

We've learned that simply porting the newspaper's content online is not enough -- that we need to offer more in order to entice people to come online and come back again and again. They have to find stuff online that they can't find simply by picking up the newspaper.

But we also know now that shovelware is a good thing, too. Newspapers that have chosen to create niche Web sites, or offer just part of the content of the whole newspaper, invariably are asked by their customers, "Why don't you have the news online? Where are the comics? Where's the crossword?" Clearly, consumers expect the full contents of the paper to be online, and are disappointed when it's not.

So, don't rely on shovelware to drive your site, but make sure that your news content is available.

10) New media is two-way

This point is so obvious that I almost didn't include it, but it's worth reinforcing that if a newspaper is to succeed in new media, it must recognize that the communication flows in both directions.

I mentioned above that shovelware is not enough; you have to provide more. But remember that some of that "original content" that is necessary to succeed online will be created by your customers, not by your staff.

It's important for the success of any online operation to facilitate your customers raising their voices and voicing their opinions. Your reporters need to learn not only how to be excellent writers, but how to interact with their readers and facilitate or moderate discussion among those readers. They need to be not only reporters, but "virtual bartenders," as Esther Dyson phrases it when speaking to publishers.

This is a new mindset for many publishers and their staffs, obviously, but we have learned that this is absolutely vital if our new media ventures are to succeed.

11) Change is the only constant

Here's one final -- obvious -- point, but it's very true and, again, worth repeating. In new media, change is the only constant. So, stay up to date, be prepared, and don't panic.

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