Online Newspapers Face Money Woes

  • by February 26, 2001
(AP) - The way Gordon Borrell sees it, now that many of the bad dot-coms have gone bust, the Internet and interactive media will only get stronger.

As the VP of new media for Norfolk, Va.-based Landmark Communications Inc., Borrell said he came to Editor & Publisher magazine's conference on interactive newspapers to see whether the leading thinkers in the industry share his optimism.

"It's refreshing to see that they have not been shaken enough to change their vision," he said. "They are more committed than ever to making it happen."

A few years ago, the rapid growth of the Internet and a burst of new online media companies put newspapers on the defensive. Fearing being left behind, many responded by putting up their own Web sites.

But many sites have struggled to make a profit; several media companies, including The New York Times Co. and Knight Ridder, have cut jobs in their online units in recent months.

The financial woes faced by Internet news sites have forced newspapers to rethink their approach to interactive media.

"I think the real theme we're seeing is that the shake-up with dot-coms has reinforced to newspapers the value of having bricks with clicks in addition to holding on to the brand they've built in their local markets," said Marsha Stoltman, vice president and general manager of conferences for Editor & Publisher. "Everybody was running fast on high, but we're saying let's slow down and re-evaluate on profitability."

Stoltman said online versions could increase revenue by offering special sections or charging for archive searches.

The New York Times announced this week that it will join Austin-based NewsStand Inc. to offer Internet users an online publication that looks the same as the print edition, including advertisements. The paper will charge a subscription for the service, and the number of subscribers will be used in determining the Times' overall circulation, on which advertising rates are based.

The Times' Web site, which carries many of the print edition's articles, has 16 million registered users and generates revenue with classified advertising, banner ads, and online marketing of print-version subscriptions.

Arthur Sulzberger Jr., chairman of The New York Times Co. and the keynote speaker at the conference, said creating separate Internet and newspaper divisions requires a change in newspaper culture.

"I believe we successfully created a constitutional framework that allows New York Times Digital to absorb our paper's traditional wisdom about journalism while enabling our newspapers to learn about the new digital world," he said.

Media executives also debated Thursday whether online and print versions of the same newspaper should be separate entities. Panelists didn't resolve the question, but they agreed that both sides of the business need to work together to find moneymaking opportunities.

Some participants said they came away from the conference up

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