SURVEY - CREATIVE BUSINESS - Do online
divisions have any value or future ?
A year ago, as the dot.com investment
frenzy reached its precarious peak, newspapers were debating whether print would
be dead in a matter of years, displaced by electronic publishing on the world
wide web. Today, they question whether their online divisions have any value or
future. Some are licking their wounds. Major news organisations including News
International, Mirror Group and Express Newspapers have retrenched since the
beginning of the year, scaling back or closing online divisions. So how will
newspapers evolve in the post-dotcom digital age? Newspaper production is
already a highly digital process right up to the point where the physical papers
are printed and distributed - sometimes vast distances - to the breakfast tables
of their readers. Why, then, does it not make sense to go the last yard and send
news to readers on their computer screens? Of course, this is precisely what
newspaper websites do. However, reading news online remains a minority activity
that doesn't appear to provide the best experience for the reader, nor an
economically sustainable business for the news publisher. Electronic publishing
offers news organisations many advantages, including instant global reach,
freedom from space restrictions, eradication of the hours of delay between
publication and reading and instantaneous updates throughout the day. News can
be personalised or filtered for niche groups, and readers can search and access
further information. Interactivity means that readers' reactions can be taken by
e-mail, and their opinions sought through online questionnaires. And
unnervingly, from the point of view of newspapers, their competitors are only a
click away. On the face of it, electronic publishing looks attractive in
commercial terms. Newspapers shouldn't need to charge a subscription, since they
are largely freed of the costs of printing and distribution that are typically
only just covered by the selling price. The hole in this logic lies in the fact
that, even at the height of the investment frenzy, the nascent online
advertising revenues never looked likely to support the vast number of dotcoms
whose often paltry business plans depended on them to fund the content. The
situation is still less tenable now that paid advertising on the internet has
all but disappeared. John Birkenshaw, a director of the Print Industry Research
Association (Pira) draws a distinction between dotcoms which have failed to make
a success of transacting business online and electronic media publishing, which
he says is viable. "There are examples of newspapers making money from online
publishing - notably in Scandinavia - typically based on classified advertising
or subscriptions," he says. But he concedes that it has all been dragged down by
the dotcom malaise. Printed newspapers, meanwhile, have compelling strengths of
their own. Reading print is rapid and retention rates are high. It is easy to
scan a double page of headlines and decide what to read. You always know where
you are - and when you have got through a story or the whole newspaper. A
newspaper is light, portable, doesn't run out of batteries or need to be plugged
in, won't break and can be thrown away - and it doesn't matter very much if you
lose it. Above all, they are viable businesses. By comparison, subscriptions to
online news services remain a difficult sell. Levels of online advertising spend
have never reached a level sufficient to support newspapers on the internet, and
e-commerce is fraught with problems as a revenue stream for newspapers.
Arguably, the best route forward for newspapers is to treat their online
operations as a marketing cost giving widespread exposure to the name and brand,
and using them for cross-promotional purposes like attracting readers to buy the
real (i.e. printed) product. Evidence suggests that giving news away online does
not cannibalise sales of the newspaper. Meanwhile, other digital
technologies promise to shake newspapers up more than the world wide web has
managed to do. Digital presses are available today, and promise to revolutionise
book publishing by making short print runs viable, and enabling books to be
printed individually while-you-wait in bookshops. This will ease many
publishers' headaches that include adequate stocking, over-production and risk.
As an added bonus, "out-of-print" should become a thing of the past. Digital
presses are much simpler than conventional newspaper presses, more limited in
capability and production capacity, and require much less capital outlay. They
range from glorified office printers to larger web-fed machines. Pages are sent
straight to the press, avoiding the need for plate-making and press
configuration. Each page can contain different information, leading to many
opportunities such as personalisation and targeted advertising. Very short print
runs, and even individually printed copies, are more cost effective, but each
copy is an order of magnitude more expensive than copies produced on long runs
on conventional presses. For newspapers, the look and feel of the real thing -
that is, large format, folded pages on light grade newsprint - remains elusive
on digital presses and production speeds are underwhelming. But if these
limitations can be overcome, newspapers could be produced much more widely, more
flexibly and far closer to the reader. This translates into much better
geographical coverage of readers who can receive a printed newspaper at
breakfast time. Since each copy printed on a digital press can be different,
newspapers can be printed on demand in self-service kiosks, or as services
provided by hotels or on airlines. Other advantages ensue. You may one day be
able to get your local Remotesville Gazette while on business in Sydney or
Tokyo, or newspapers might be able to provide frequently updated editions so
that you get the latest cut of news printed for you at whatever time of day you
buy it. The idea of a morning or evening paper would then vanish. News could
even be personalised to your profile of interests. Looking further ahead,
"digital paper", currently under development separately at MIT in Boston and at
Xerox's PARC research labs in California, may provide the convergence point for
print and new media. The race is on to develop a thin, flexible paper-like
material that is capable of displaying a clear image like print, but one that
can be updated. But it will take several years to reach a viable quality. The
current state of the art is suitable for shop signs with updateable prices or
special offers, but not for a legible book or newspaper. Both technical
solutions involve suspending small visible components - capsules of charged ink
in MIT's case, charged beads that can be made to rotate in Xerox's solution -
between transparent plastified surfaces that contain thousands of transistors.
Every point on the "page" can be individually made to display black or white, or
perhaps a shade of grey. The day's news may then be delivered over the airwaves,
presumably through tomorrow's 3G mobile networks, and effectively "printed" in
the reader's hands. Pira's Birkenshaw says: "I don't know what the e-newspaper
will be, but we haven't seen one yet. Digital paper may possibly be it."
Newspapers, it seems, face an increasingly digital future, but this will be used
first and foremost to make printed newspapers more flexible and more widely
available. If you are waiting for a time when we will all read the news on a
screen, don't hold your breath. See Alan Cane, page 10, and tomorrow's FT-IT for
more on the technologies and applications ) julian.perkin@ft.com
9www.pira.co.uk.
(c) Copyright Financial Times Ltd. All
rights reserved. http://www.ft.com.
By JULIAN
PERKIN.
04/03/2001
Financial Times
Copyright (c) 2001 Dow Jones
Reuters Business Interactive Ltd., trading as Factiva.
Copyright © 2000 Dow Jones &
Company, Inc. All Rights Reserved.