On-line only: The American Reporter (far left) covers the world with a band of free-lance journalists; The Cape Cod Journal (middle) was started by an Internet Service Provider; the Orem Daily Journal started life as a print publication and then went on-line only.

On-line-only pubs click away, hoping to access pot of gold

Interested in making a few quick bucks?

Of course you are. That's why newspapers are in business.

A more difficult question is, can you make those bucks on-line? How about an on-line-only newspaper, unsupported by print?

That question gains relevance in light of the ongoing challenges to the continued viability of ink-on-paper that emerge in almost every casual conversation over brunch, martinis or fusion cuisine -- especially if you happen to live within 5000 miles of either the Silicon Valley or the Silicon Alley.

A well-reasoned, informed response may be the only way to hold your own with the cyber-geek-wannabe sitting across the table who has turned minimal information about the subject into an officious indictment of the future of newspapers, or maybe you just want to be able to speak knowledgably on the topic with your publisher.

On your behalf, we bypassed the cyber-prognosticators and went straight to the people who are exploring the on-line question in the riskiest way possible: through first-hand experience.

Money follows money
The bad news is that there are mixed reviews on whether there currently exists the potential for amassing huge piles of cash this way. Brooks McCarty, publisher of the on-line-only Cape Cod Journal (http://www.capecodjournal.com/), offers a qualified "yes." Qualified, because McCarty owns both the Journal and Cape Internet, the local Internet service provider. So while in the hard-copy world McCarty's competitor, the 48,000-circulation Cape Cod Times of Hyannis, Mass., McCarty "had the eyeballs. Every time a person would log on to the Internet they would see the CCJ headlines on the homepage of Cape Internet."

Furthermore, noted McCarty, advertising and promotion are coordinated between the Journal and Cape Internet (http://www.capecod.net/), which are separately owned and incorporated -- both by McCarty. Despite a small budget for CCJ, Cape Internet had the deep pockets that allowed the CCJ to build brand, readership and reputation, he said.

But there's hope even if your pockets are virtually empty, according to Joseph Farah, editor and CEO of the Internet newspaper WorldNetDaily.com. "There's no question about it," he said, when asked if a newspaper can survive in an on-line-only form. His "paper" was begun on-line, and "managed to attract a vast audience with no financial investment in branding -- only goodwill promotion from radio talk-show hosts and thousands of Internet links."

Investors have been encouraged by the popular success of the site and consider it a worthwhile risk, said Farah, so much that the purse strings have loosened up enough for him to expand his editorial resources, start an aggressive marketing campaign, and develop new profit centers in other media.

A subscriber to the why-survive-when-you-can-thrive philosophy, Farah remarked, "Could we have survived as an Internet-only news site? Yes. But there is no reason to limit our horizons."

Joe Shea started the on-line-only American Reporter after an electronic discussion that took place on a Society of Professional Journalists (SPJ) listserv, "owned" by the SPJ though it has no affiliation with the organization. A week later the newspaper was on-line, with content provided by enthusiastic and committed journalists who e-mailed reports from around the world. Soon after its debut, the Reporter obtained an injunction against the government which prevented enforcement of the Communications Decency Act. More recently, it broke a story epitomizing the controversy over trademark versus domain name: the battle of Swiss art group etoy against eToys Inc., the on-line retailer (http://www.etoys.com/).

Initially, the Reporter sent an e-mail edition to subscribers, but now publishes only from its web site (http://www.American-Reporter.com/). Its articles are picked up and republished in other on-line and print publications, with reprint payments set at either a per-article price or monthly or annual blanket rates. For example, money.net has access to between four and eight pieces at a flat rate of $100. Ninety percent of profits go to the reporters, while Shea retains 10 percent as the paper's editor.

For now, the Reporter has neither a circulation nor a marketing department, only Editor-in-chief Shea, who is based in Hollywood, Calif. (Shea hopes a pending grant application will succeed in supplying the resources to fund those departments.) The web site is currently hosted by The McClatchy Co.'s Nando Media of Raleigh, N.C., in exchange for a content partnership.

"Reporters are not getting returns now," said Shea, "but it contributes to their fortunes," explaining that one of the problems for the site is that its reporters are so good that they end up going away to major print newspapers. But that also provides incentive for new reporters to contribute to the site.

So although the paper's financial status is the least element of its collateral, Shea is optimistic. "Advertisers prefer to be in an atmosphere of credibility, authenticity and solidity," he said, adding that an on-line-only newspaper "can make money if it has a model that will survive the test of time and reputation." Shea expects the Reporter to survive by virtue of its writers who produce "excellent work consistently."

Survival vs. success?
In sharp contrast to the enthusiasm of Farah, McCarty and Shea, Levor Oldham is still far from pessimistic.

Oldham, who is publisher of Journal Publications of Springville, Utah, does believe publishers can and must expect to make money on-line, though not for the next few years or so for those independent of "some partnering with traditional media." His on-line daily, the Orem Daily Journal (http://www.ucjournal.com/), is marketed in conjunction with a weekly Total Market Coverage (TMC) ink-on-paper publication, the Utah County Journal.

A newspaper cannot succeed only in on-line form, said Oldham, because "the franchise of a newspaper is its ability to gather information. Currently, there is not a large enough financial base for a web-only newspaper to fund even a small news-gathering component."

This points to the distinction Farah made between survival and long-term success. "An on-line newspaper can survive for a long time because it does not require as much expense as a traditional newspaper ... the Internet has at least temporarily solved the distribution problem," Farah pointed out. Success, on the other hand, he said, requires an understanding that news is, was and always will be a product.

Despite the lower cost of maintaining an on-line publication, the financial burden of keeping any news product updated must be shouldered by someone. Shea estimated a minimum of $2500 per month for the American Reporter, where reporters are paid in sweat equity at the rate if a penny per word. At the Reporter, that burden is carried by Shea, those who have provided for electronic distribution of the newspaper and the many correspondents who have submitted content over the paper's five years.

William Densmore Jr., is founder and president of the Internet's first news brokerage, Newshare Corp., which hosted the Reporter web site for almost three years and has "a teeny-tiny stake" in the paper. "I think Joe's effort is principled, cutting-edge and noble, and that it will eventually be seen as such by the news industry," he said, referring to Shea. "If his product were supported by a million-dollar ad budget, it would be read by millions of people every day."

And a million dollars is no wild exaggeration. "We spent a lot of money to build awareness of our product in addition to the Internet exposure provided by our affiliate company," said McCarty. Most of that money went to radio and TV ads; ironic, one might think, except for the fact that the only newspaper available for advertising is the Journal's competitor, the Cape Cod Times. Little wonder that the Journal just couldn't resist adopting a slogan that alludes both to its leading-edge technology and its competitive position: "We're the Cape Cod Journal, ahead of the times."

McCarty confided, "I'm told that it kills the [Cape Cod] Times every time that phrase is repeated in public."

A thriving on-line-only newspaper, then, is one that takes advantage of the technology that makes it different from its traditional form, is heavily promoted and "has a financial commitment to stay with it as more and more people get on-line and as advertisers wake up to the fact that the Internet is a serious media vehicle," said McCarty.

Eloquent efforts essential
That observation leads into why there are so few on-line-only newspapers. While the words "editorial" and "entrepreneur" may form a loosely constructed alliteration, there seems to be little else connecting them as adjective and subject -- Farah, Shea and associates being notable exceptions.

As to why this is the case, there are varied opinions. Farah believes "there are few editor-entrepreneurs who have anything original to say, who are willing to shake things up, challenge the establishment, challenge convention and break free from old forms. That's what it takes," he said. "There are few toiling away in America's corporate media world," as Farah himself once did, "who have the vision or the courage to take the risks with their own ideas."

McCarty's explanation points to a different obstacle that might slow the growth of enterprises similar to his. "In the words of Paul Newman in Butch Cassidy and the Sundance Kid, 'I have vision and the whole world needs bifocals,'" said McCarty. "I take it that there are not that many entrepreneurs willing to make the investment in building brand and readership while waiting for advertisers and advertising revenues to catch up to the reality that this is a great opportunity. Real news will be made when the first hard-copy newspaper drops its printed version and opts for an on-line-only version."

McCarty expects such "real" news within the next three years. In the meantime, his paper is dedicated to making the Journal a fun, informative and unique experience so that readers will keep coming back. But it is the concept of local content, he believes, that provides the link between the features of a good print newspaper and a good on-line-only newspaper.

"With news services and syndicated features, opinion, astrology and comics, newspapers in noncompetitive markets get lazy about what people really care about -- things that are going on in their community," something for which McCarty feels an on-line newspaper is particularly well-suited. Traditional newspapers have discovered this as they've moved forward with their own on-line editions, or when they've conducted marketing surveys or focus groups.

On the sensual side
On-line-only newspapers also must overcome the same challenges as on-line versions of print counterparts: they have to be easy to use and they have to satisfy their users.

The tactile satisfaction of a print newspaper is something no on-line newspaper has matched, and it's the favored response to cyber-geeks who say newspapers are dying. Newspaper reading -- for those who are not saddled with the responsibility of putting one together on deadline -- is a sensual pleasure, and people continue to be willing to pay for pleasure in its many forms. How else could upscale stationery boutiques charge an arm and a leg for a fountain pen or inkwell, when the now-ubiquitous office supply warehouses will sell you a year's worth of plastic ballpoints for under $5?

Perusing a collection of news put together by expert hands, something designed to delight the mind and senses in a manner not really so different from a complexly blended coffee or tea, implies an intention not to be rushed and pushed by the rhythms around you but, to borrow a time-worn phrase, to march to the beat of your own drum.

Those features of traditional newspapers that would survive the ordered chaos of the on-line world, and whose very logic is a rejection of the sensual, are ease of use and a look and feel that capture a reader's tacit knowledge of the logical layout of a newspaper. The on-line newspaper must also share a commonality of philosophy and purpose with its print predecessor, and the message it proffers must be presented in a recognizably journalistic form.

Densmore is banking on one idea that would boost the survival rate of all on-line information/news products. On-line newspapers are not economically viable at present, he argues, because their audiences remain too small to develop serious advertising and because news is generally viewed as free on the Internet, making people reluctant to pay subscription fees.

His solution is Clickshare, which at full bloom would present the market with a "per-click" payment mechanism that allows consumers to purchase information from anywhere on the Web with one-account simplicity.

If the idea takes off, newspapers will have a profitable revenue-sharing scheme that could reach Ponzi proportions, with none of the unpleasant side effects.

-- L. Carol Christopher

From THE COLE PAPERS, February 2000, Copyright © 2000, All Rights Reserved.