Toronto: Charge for Online News

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Canoe

Monday, April 30, 2001

Charge for online news, expert says Give up on advertising, sell subscriptions, newspapers advised By PAULA ARAB-- The Canadian Press

TORONTO (CP) -- Newspapers have a future on the Internet despite the "death of the dot-com" and the failure of publishers so far to make Web sites profitable, a media conference was told Monday.

To make a Web site work, it has to be seen as an extension of the paper with exclusive content that can be sold by subscription, said Mike Blinder, a marketing consultant with Advanced Interactive Media Group of Maine.

"Advertising didn't work" as a means of sustaining online operations, he told a full house of publishers and marketing executives at a conference of the Canadian Newspaper Association and the Newspaper Association of America.

"Here's my advice: You line up your content, find out what's competitive and what's not. What do you have exclusively? That's what you monetize. Find out what they'll go for."

The Wall Street Journal is already selling online subscriptions, offering the service free for 14 days and then at an annual rate of $59 US, or $29 for subscribers to the printed paper.

Blinder said other American newspapers intend to sell Internet subscriptions, and publishers in Canada should do the same.

"There's no research to say it's going to benefit or not, but what have you got to lose? If you're not making money on the banner sales or on the page views, what have you got to lose?"

Newspapers across North America have created distinct Internet divisions with their own sales forces and content, such as columns that run online but not in the paper. This has proven to be a mistake, which has led to a retrenchment by major media companies in the online area, said Blinder.

"They built these Web sites as separate entities with separate profits and losses -- and they're not profitable," he said after his standing-room-only workshop.

"Even if they say they're profitable, they're lying, because they're not paying for the news," he said, referring to content generated by the print operation's newsroom.

"Now they're realizing that was stupid. It should be an extension of the newspaper, it should not be separate."

In recent months, the New York Times Co. has cut 17 per cent of its online staff and sold most of its stake in financial-news provider TheStreet.com; Rupert Murdoch's News Corp. eliminated 200 jobs and shut down its online division; Knight Ridder Inc. slashed about 16 per cent of its Internet workforce.

Closer to home, Quebecor Inc., which owns the Sun Media group, including Canoe.ca, axed 30 per cent of its online employees last fall.

Others have partnered with the competition, such as the Toronto Star and the Globe and Mail co-operating on the Workopolis.com. employment site.

Said John Honderich, publisher of the Toronto Star, "I think all of us are still trying to figure out where the business model is."

Dave Ellis, an Internet analyst for Omnia Communications of Toronto, said newspapers face the same challenge as other Web content providers: "They have to find a way to make their customers pay for the content. And they will."

While the advertising industry continues to "twist themselves into a pretzel" trying to make banners and other ads work online, "Advertising is a dead duck on the Web -- you can kiss it goodbye," Ellis stated.

"The money will have to come from transactional revenues.... They have to learn how to offer subscribers something on a tiered, pay-per-use subscription basis, that isn't just charging them online for the newspapers."

-- Rachel Gibson (rgibson@hotmail.com), April 30, 2001


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