Utne Reader Web Cutback: Beginning of a Trend?

By: Steve Outing

Last week it was reported that Utne Reader magazine had laid off most of the staff of its Utne Lens Web service. The site, though only 4 months old, was scaled back because it did not attract sufficient advertising to support itself. Utne Lens operated with a small in-house staff and contracted with a network of freelancers to create original material published only online.

"People don't need more content online," said president Eric Utne in an interview with the Star Tribune in Minneapolis, Minnesota. "They need a filter and a way to engage each other in conversation. That's the way we're redirecting it and that's not going to take as big a staff. ... It was very ambitious for the size of our little company." The venture cost "hundreds of thousands of dollars" to run, Utne said. "We just couldn't continue spending at that rate to create original content."

This development is not at all surprising. Newspapers and magazines have been putting up Web sites by the hundreds this year. There are nearly 450 newspapers on the Web worldwide. It is inevitable that some of these new ventures will fail -- some because of lack of advertiser and/or consumer interest, some because of poorly conceived business plans, some because of financial hardships at their parent companies, some because of poor management, and so on.

Does this spell the beginning of a shaking-out period for online publishing services? Probably, but that's not necessarily a bad thing for this fledgling industry. Some business models conceived by publishers are destined to fail. The weaker online publishing services will either modify their strategies, join forces with other companies to create more compelling services, or wither away.

You can certainly argue that Utne pulled the plug too soon; that given a few more months Utne Lens might have made it in its original form. But as Utne explained to the Star Tribune, though there may indeed be an audience for online magazines, his company did not have the resources to market it properly.

In a volatile industry like online publishing, going into an ambitious Web venture you will have to allow a considerable amount of time and resources before breaking even. The business models being sold to newspaper publishers by Prodigy and AT&T Interchange last year called for a 2-4 year turn-around period, for example. This business is not for the faint of heart, and it takes a certain amount of faith that ultimately online/Web publishing ventures will be a viable business.

I'm not terribly concerned by Utne's move; I expect to see similar announcements in the next year. But this does not change the continued positive long-term outlook for the online publishing industry. It's merely a blip on the radar screen, not a building storm.

Another staff trimming: Milwaukee Journal-Sentinel's On Wisconsin

Closely tied to the above story, the Milwaukee Journal-Sentinel is trimming the staff of its On Wisconsin online service on the Prodigy network from 17 to 9 (plus 2 part-timers). On Wisconsin, which launched in June this year, reports fewer than 1,400 subscribers -- not enough to justify the higher staffing level. Like the Los Angeles Times, which recently trimmed its Prodigy online newspaper staff by half, the Journal-Sentinel is transferring most of the online positions to other departments.

Unlike the LA Times' TimesLink service, On Wisconsin is not a "Custom Choice" newspaper service; regular Prodigy subscribers can view On Wisconsin without paying extra. (Custom Choice publishers ask for $4.95 per month on top of regular Prodigy fees to access their newspaper; some also offer a $6.95 per month option to receive only the newspaper service, not the rest of Prodigy's content. Most Prodigy papers have shifted or will shift to the no-extra-charge model.)

On Wisconsin editor Dan Patrinos says the staff cuts can be made because the ongoing operation is being heavily automated. As with many other Prodigy newspaper operations, it has taken a lot of manual work to port material to the Prodigy system. The newspapers do not at this time have plans to create a World Wide Web version of On Wisconsin -- a strategy being taken by several other Prodigy newspaper partners. The Milwaukee newspapers say they remain committed to online publishing.

I don't read too much into the recent staff cutbacks by the Los Angeles Times and the Milwaukee papers. Both newspapers launched ambitious projects with sizable (for the online publishing industry) staffs. The costs of those operations outstripped the usage the services were seeing. These recent moves merely indicate an adjustment to a staffing level that can be supported by the demand for these services. Prodigy is the No. 3 U.S. online service, and its subscriber base has not been growing at the rate of America Online. The newspapers' troubles partly reflect Prodigy's slow growth.

@Home's URL

In last week's item about @Home, the joint venture that will bring super-fast Internet access to your home via cable wires, I neglected to mention the address for its Web site. Check out http://www.home.net for information about @Home's ambitious plans.

Steve Got a tip? Let me know about it

If you have a newsworthy item about the newspaper new media business, please send me a note.

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

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