Tribune Deal Helps Digital Cities Acquire Newspaper Cooperation

By: Steve Outing

America Online plans to spin off its Digital Cities venture as a separate company, and the Tribune Co. will have a minority stake in the new venture. Digital Cities plans to bring local news and information to 88 U.S. cities, and a major part of its strategy, as previously reported in this column, is to partner with local media. Local Digital Cities initially will be available on AOL's proprietary service, but eventually will be on the World Wide Web as well.

The Wall Street Journal reported this week that the new company is expected to require a $100 million investment. That sounds reasonable, since AT&T is reported to be budgeting about that amount for a project it's quietly working on called the Hometown Network. And Microsoft is rumored to be spending several hundred million dollars on its "CityScape" local online community guide venture.

Tribune will help launch Digital City ventures in each of its newspaper markets. Announced this week as a Digital City partner is Tribune's The Daily Press in Newport News, Virginia. The Daily Press will help launch Digital City Hampton Roads around Labor Day. (The newspaper previously has operated a BBS and a Web service.) Tribune papers in Chicago, Fort Lauderdale, Florida, and Orlando, Florida, also will be part of upcoming Digital City local ventures.

Local Digital City affiliates are currently operating in Washington, D.C., Boston and San Francisco. The company is currently setting up offices in several other major U.S. cities and has hired "Mayors" who are in the process of hiring local staff and recruiting media partners.

This development comes on the heels of the San Jose Mercury News dumping its relationship with America Online, in part because it viewed AOL's evolving Digital Cities effort as directly competing with the paper's AOL online presence. I speculated that Digital Cities might have trouble signing up significant newspapers as content partners. The Tribune deals seems to have proved me wrong, though it remains to be seen if large publishers who don't own a stake in the new company will buy Digital Cities' partnership pitch.

Is anyone else going to charge subscriptions?

The San Jose Mercury News in California and its Mercury Center Web service is one of the few online newspaper ventures that's actually charging a subscription fee for Web users to access full content of the site. (Much of the site is open to anyone who visits, with selected premium content "behind the curtain.") Paying subscribers number around 10,000, who pay either $2.95 or $4.95 per month (the lesser amount for print Mercury News subscribers).

Kevin Cooke, Mercury Center's software development manager, posted a message to the online-news Internet list earlier this week, asking: "Are any other (non Knight-Ridder) newspapers going to follow our lead and actually charge for subscriptions? Does it bother anyone on this list that so many Web sites have made vague references to future charging but not acted on it?"

Says Cooke of the Mercury's pricing strategy, "It hasn't hurt our other traffic too much, though it's remained a bit static recently. I think we strike a good balance between offering lots of free stuff (the classifieds, lots of special news packages, and abstracts of all other news) and offering real value for paid subscribers."

If you'd like to see what Mercury Center puts behind the subscription wall, you can try out the full site for free through August.

Contact: Kevin Cooke, kevin@sjmercury.com

New York Post fights for its Net name

The New York Post is reported to be going to court to take nypost.com away from a former Post freelancer who registered the name with InterNIC, the official administrator of Internet domain names. Farhan Memon, who wrote about technology for the New York tabloid, reportedly won't give up the name. Said the Post's lawyer who filed the suit, "He's trying to extort the company to buy back its property." The Post has a Web site under construction at http://nypostonline.com/.

Movin' On

Arne Krumsvik, online editor at Norway's largest newspaper, Verdens Gang (VG), becomes editor at Schibsted Nett, an Internet based online service owned by Norway's largest media group. VG launched its Internet edition in October 1995, and "the paper is dominating the Norwegian 'Top 10 on the Net' with 1.5 million non-image-requests monthly in a country with only 4 million inhabitants," reports Krumsvik.

Contact: Arne Krumsvik, arnehk@a.sn.no

What is Cox up to?

A reader suggested that my Monday column about Cox Enterprises creating a new Internet company left the meaning behind the move obscure. He wrote:

"I have to complain about the vagueness of Monday's lead story about Cox Interactive. You mention the significance of this step, and I couldn't determine what this group planned to do. What you said about it amounted to, 'CIM begins life with a staff of 90 people.' The rest of the commentary focuses on the organizational structure. I still don't know the product!"

Actually, it's the organizational structure that I found most newsworthy. To the best of my knowledge, this is the first time that a media conglomerate has taken all the new media ventures and personnel from its various media (print, TV, radio and cable) and assembled them under the umbrella of a separate Internet company. The Internet is being treated as a separate business, rather than an adjunct to existing media -- as is the case at most media companies. To my mind, that's indicative of the Internet maturing as a legitimate commercial medium. (But yes, you can argue that very few media companies are making money in this new medium. It's far from "mature.")

As for the product, Cox appears to be embarking on a strategy of creating local online services that sound somewhat like the local city online guides being created by Microsoft's "CityScape," Digital Cities and CitySearch. By combining its corporate forces (print, broadcast and other), Cox intends to create online city services in the metro markets it "owns." Only by combining the company's existing media resources to create compelling city Web sites can it create local-market services that will stand the test of some serious competition from Microsoft, et al. My apologies if I was unclear in my earlier column about Cox's product plans.

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