How can you go wrong? Well ... a couple of issues do spring to mind. Currently, print-media excursions into cyberspace aren't making money, by and large.

How could this be?

This attitude is changing as competition among the services heats up for "features," which brings us to the next point: Newspapers aren't really a good match for the new medium.

It's easy to get information from a printed newspaper. Readers can scan headlines and get just what they want quickly. Indeed, print newspapers have been developing their technology, news presentation, for more than 100 years.

By comparison, reading a newspaper on-line is a tedious experience. Try this: Read a paper that also has an on-line presence, say, over coffee. Then, read the same stories on-line, and note how much more time it takes.

In addition, chances are you'd already heard most news, albeit in less detail, on radio or TV the previous evening, before you read it in the morning paper. Are users really interested in logging in to a computer system to get yesterday's news?

There's also the issue that an on-line newspaper tends to have the same personality as the on-line service. Most on-line service software offers few options for presentation (proposed new interfaces from Ziff Interchange and Delphi are the exceptions). The paper must bend to fit the windows offered by the on-line software, which is the same space that serves, say, the Fast Food Forum.

For their part, the on-line companies can't just throw out their interface to accommodate newspapers' desire for rich authoring tools. Getting a million people to all change over to new software takes a long time.

This translates to a need to have people re-format print news content to fit cyberspatial layouts. Different space requires different news decisions.

Mercury Center is said to have 20 people, Access Atlanta 30 and Media Link 100. These people do not mainly create content, they take existing stuff and change it to fit a different viewing space.

Consider the revenue necessary to recover the cost of 100 full-time employees. Then, consider that the value they add to the content is probably zero. Then, consider that the on-line company wants to keep at least half of the revenue, which may not be stellar to begin with.

Hmmm. ...

Sound familiar? One difference on the Internet is that, until recently, no fast-talking teams of well-dressed reps were likely to show up with a multimedia demo in hand. Another difference is that no one can be said to have figured out how to make any money by putting a newspaper on the Internet.

Fees for Internet service are paid separately, to service companies who see no reason to divvy them up with newspapers who happen to want to be on the 'Net. Indeed, those same companies are happy to charge newspapers money to be on the 'Net (see "well-dressed rep," above).

So why pay someone to give your product away free? This would be a difficult question if it weren't for some mitigating circumstances.

While no newspaper may be making money from the Internet, some businesses are. Sun Microsystems conducts virtually all of its business with customers and suppliers on the Internet. Sun's growth and profitability should be instructive for those oriented toward the bottom line.

Giving things away free on the Internet has been a successful strategy for a number of companies, mainly software producers. Companies spend money to promote products, which results in sales. In effect, the companies have to buy customers. The lower the cost of promotion-per-sale, the more customers the company can buy for a given budget.

The Internet represents an unheard-of, low-cost way to promote a product. For example, the makers of the Doom computer game built a user base of hundreds of thousands by giving away the first installment of the game free on the Internet. Paying customers lined up to buy the second installment, as well as tip books, support, et al.

For the Examiner, the cost is low and the potential audience is large. The Electric Examiner has a staff of one, and has had as many as 93,000 accesses in a single day. Compared with the usual on-line formula, the cost per user is very low.

At the same time, a user is a user: advertising should sell for the same premium on the Internet as on-line, albeit at a much lower cost to the publisher.

The door is open to make The Electric Examiner whatever its owners want. Since the World-Wide Web allows rich text and graphics, newspapers are free to create whatever personality they choose.

While currently more limited than PostScript, HTML supports links to video and audio as well as pictures and text, and is far richer than any current on-line service. In addition, computer-produced content like graphics readily converts to use on the Web.

Users will pay for service, advertisers will pay for a presence and the whole magillah can be repackaged and sold to others, a la Turner Broadcasting's Wtbs, which is over-the-air Channel 17 in Atlanta but Superstation TBS to millions of cable subscribers.

In the World-Wide Web, for example, Apple Computer might want its employees to be greeted each day with a screen of news about Apple and its competitors, thus creating an opportunity for an existing WWW publisher.

Although the WWW market tends to be global, newspapers should be able to learn to court companies interested in low-cost access to computer users. The demographics of the Internet (mainly well-to-do, computer-literate people) represent the kind of focused niche in search of which advertisers have deserted general-circulation media.

As the Internet base grows in demographic breadth, it will come to resemble newspapers' traditional market and, presumably, marketing expertise.

The real potential probably will be realized when (or if) newspapers learn to take advantage of the new medium. Agent services and on-demand information retrieval probably offer the best short-term opportunities for newspapers to garner an enduring user base analogous to their current subscribers.

-- Chris Gulker

Netscape Communications Corp.,
(800) 638-7483

From THE COLE PAPERS, December 1994, Copyright (c) 1994, All Rights Reserved.