Report: Print Pubs Need To Better Use Web Sites

by Gavin O'Malley, Mar 25, 2009, 5:47 PM

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As seemingly trivial as celebrity news is, established publishers have for years made the potentially fatal mistake of not taking its online coverage more seriously.

That's according to a new report from media investment bank DeSilva + Phillips, which credits the larger economic downturn for exposing media companies' failure to effectively recreate their print franchises online.

"Magazines, who have until now viewed the Web either as a threat or a distraction, are now being crushed by the stupendous decline in ad pages," said Ken Sonenclar, managing director at DeSilva + Phillips and author of the new report. "Using the Internet simply as a subscription tool or even as a digital version of the magazine are failed strategies."

That, according to Sonenclar, is with the exception of Time, Inc. -- which has successfully dominated the celebrity news space online with its two star properties, People.com and Entertainment Weekly's EW.com.

"Unlike many publishers, People and Entertainment Weekly both understood early on the opportunity to build and expand their franchises online," Sonenclar said. People.com, in particular, saw revenue grow 48% in 2008.

Still, on the digital side, even though overall spending appears to be ticking upward, a glut of inventory and consequently crumbling CPMs are slicing many publishers' revenues, the report finds.

Indeed, from startup blogs to well-funded franchises, Sonenclar said he was struck by the sheer number of celebrity news resources online. "It's over a 1,000, which is a credit to its popularity and the medium's low barriers to entry."

What's more, the rate at which new properties are popping up doesn't appear to be slowing. Last month alone, News Corp. debuted an imposing gossip and entertainment news site, Daily Fill, while Microsoft -- in partnership with production company BermanBraun -- launched a similar destination site dubbed WonderWall.

That presents the added challenge for publishers to effectively differentiate themselves in a crowded space. "There's not a lot to distinguish one property from another," Sonenclar said.

What options does that leave for flailing media brands? Even in a recession, Sonenclar noted, acquisitions remain an option for resource-rich media companies. Late last year, America Media Inc. -- owner of Star and National Enquirer -- bought RadarOnline.com.

Also, media companies that have so far failed to stake their claim online have another opportunity to distinguish themselves in the still-forming mobile universe.

Some of the leading celebrity Web sites are recording enormous traffic soon after mobilizing, according to the report. 3G networks and devices like the iPhone will hasten the spread of richer video content, while even standard SMS messaging is an ideal medium for gossip.

Presently, the celebrity space online is dominated by OMG, which was launched by Yahoo in mid-2007 --and, thanks to its parent company's mammoth traffic flow, rapidly grew to attract over 15 million unique visitors in December, according to comScore.

In second and third place, TMZ.com -- the result of collaboration between AOL and Telepictures Productions, a division of Warner Bros --attracted over 10 million unique visitors in December, followed by People.com with over 9 million unique visitors, according to comScore.

Each attracting less than 4 million unique visitors in December, the rest of the field includes TVGuide.com, E Online, EW.com, and the one-man operation PerezHilton.com.

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