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THESE ARE CRITICAL TIMES for newspapers. The future world of online communications is being shaped around us, and it isn't clear what role the newspaper will play. None of its key functions of the past appear secure. Even its function as a daily source of information -- not only local and international news, but also advertising -- is being challenged. Perhaps the most critical issue of the moment is its role in online advertising, where it has never been clear that the newspaper's presence in print can be converted into something similar online.
These were some of the areas of focus at the seventh annual Interactive Newspaper Conference organized by The Kelsey Group and held in San Francisco at the end of February.
The event. The roots of this event are in the audiotex services of newspapers, although the past few years have seen the emphasis shift to online newspapers, and in particular the use of the Internet. The event is cosponsored by key organizations in the newspaper field: Editor & Publisher magazine, INMA (International Newspaper Marketing Associates), NNA (the National Newspaper Association) and the SNA (Suburban Newspapers Association).
The participants appeared to come predominantly from the small and medium- size North American newspapers, but many people from Europe, South America, South Africa, Australia and the Far East also attended.
Besides a full set of conference programs, there was an associated exhibit area in which a group of companies demonstrated their online products. Unfortunately, it had relatively short hours of operation so we were unable to spend sufficient time there to do our usual roundup of exhibits. We expect to have a chance to get caught up in that area at Nexpo in June.
The program ran the gamut of issues relating to online newspapers, but the areas of heaviest focus were probably how newspapers should approach the Internet as a publishing medium, where it was pointed out that they need to have a significant element of uniqueness, and, how they might try to make money, where the role of advertising was discussed in great detail. The event also had its own awards for the best newspapers on the Web, which we will cover on p. 9.
As observers, though, we left with the overall perception that the industry is still very confused at what the Internet means for it. While there are numerous examples of excellent publications on the Web, hardly anyone we heard or spoke to appeared to have a real vision of how to make money and how to differentiate newspapers from other providers of online information services.
Advertising's future. In one key development, near the end of the event, Hunter Madsen from J. Walter Thompson Interactive could be viewed as having spoiled the party by pouring cold water on the idea that newspapers would be the recipients of millions of dollars of ad revenue from the major advertisers.
Madsen reported that major advertisers have grown unhappy with the newspapers' use of click-through banners and buttons as part of their online advertising. As a result, many of these advertisers have concluded that they will do better by hosting their own Web sites as places for prospective customers to visit. The key requirement would be to add content to their ads at their own sites.
The value of content. Much of the discussion centered on defining what information is important and where newspapers can add value. One part of the answer is that they both provide content and filter content through their editorial process. In a comment that we have been hearing more and more of late, it was stated that surveys have shown that the newspaper's traditional editorial content isn't so important in the online environment as it is in printed newspapers. Rather, readers of online newspapers are more interested in local items -- entertainment, community events, services, local sports results, etc. Apart from targeted local news, readers don't view general news as a key ingredient of an online news service.
Ad Revenue Distribution: The Changing Face
outlets% of totalAd revenues% of total
Direct mail14.2%$32.9 billion20.4%
Cable TV0not available2.2%
Other media15.2%not available18.7%
Uniqueness. Many newspapers perceive themselves as contributing significantly to its readers through the uniqueness of their editorial process, although this belief is held less reverently by observers. Madsen helped to debunk that idea by pointing out that similar content is found in many online sites, so such content isn't unique to any particular newspaper, which decreases the level of interest.
Changing market: ads and online services
John Kelsey opened the event by addressing the issues of the size of the market, how many newspapers had started to provide online Internet service, and the changing allocation of advertising revenues.
Kelsey's statistics (see table) showed that newspapers continue to realize more advertising revenue than TV or direct mail, but that their lead is dissipating rapidly and their percentage of the pot has dropped from 27.6% in 1980 to 22.5% in 1995. In fact, Kelsey said, on a year-by-year basis, the share of advertising revenues coming to newspapers has been dropping since 1988.
Online effort prospers. Meanwhile, however, in a different realm, the movement toward interactive presentation of newspaper content is growing like gangbusters. Its origin logically can be traced to 1989, with the introduction of audiotex services and voice personals, which were carried by 42 newspapers worldwide. This total increased to 1,200 by 1992 and, Kelsey estimated, there now are 3,850 newspapers worldwide offering …