Chapter V

Conclusions, Implications,

Recommendations and Summary

Conclusions

With the development of the Web, more than 4,000 electronic publishers have created Web sites, and are now in competition, not only with each other, but also with traditional media industries such as newspaper, magazine, radio and television. Due to a variety of factors, including advertisers expanding into Web markets, newspaper publishers perceive this new competition to be not only the most immediate, but also the most serious, systemic, long-term threat to traditional newspaper publishing to date.

The goal of this dissertation was to study the development of electronic newspapers, to ascertain how newspapers are currently using the World Wide Web, to suggest how new technologies, such as the Web, might be used by newspaper companies in the future to keep their share of the information dissemination marketplace, and to draw conclusions as to the importance of the Web to newspapers, now, and in the future.

The study found that millions of dollars have been spent by newspapers to get their product on the Web, and millions more will be spent to keep their presence on the Web. However, few publishers are making money on the Web, and some have ceased Web operations, almost as quickly as they started. Through the implementation of a survey, questions on topics such as: profitability, staffing, pricing, promotion, and subscriptions were answered. Ultimately, 58 questions were answered, providing information that can be used in a variety of ways by newspaper companies, to help them in the decision making process when moving forward in the on-line world.

The outcome of this project was based on the literature review, the results of the survey, and the final analysis, which has put into perspective where the electronic publishing industry is today, and what newspaper publishers need to do in the future to remain competitive, while maintaining their share of the market. Although the literature contained much hype about the Web, the final results of this paper show that the newspaper industry, as a whole, is not in as much danger as most publishers fear. And because most newspapers have created Web sites, they have positioned themselves well to fight off competition.

The eight objectives of the survey were met as follows:

1.) to gain a better understanding of the driving force behind Web publishing activities.

A better understanding of the driving force behind Web publishing activities was found to be that traditional newspaper publishers are afraid of the potential competition of the Web. This has proven to be a benefit to newspapers because publishers have put up the financial backing required to develop a Web site for the local franchise. And because most newspapers have created a Web site, they have positioned themselves to easily defend their market. It has also benefited the consumer, providing them with thousands of newspaper Web sites to search. On the downside, many publishers have invested too much into this new technology, and as a result, they will not see profits any time soon.

2.) to measure the level of interest in the Internet among the four media groups, newspapers, magazines, radio, and television.

The level of interest in the Internet among the four media groups was found to be quite high. Although newspapers generally led the way in most categories throughout the survey, it should be noted that radio and television are making great strides with the on-line endeavors, and they should be taken as a serious competitor to the newspaper’s core product, as well as the on-line product.

3.) to understand who survey participants consider to be their major competitors.

Survey participants consider others within their industry to be their major competitors (Figure 112). For example, newspapers consider other newspapers, magazines consider other magazines, radio stations consider other radio stations, and television stations consider other television stations to be their biggest competitors. These media groups, especially newspapers, should realize that strong competition can easily come from outside their industry.

4.)   to report how survey participants measure consumer activity within their Web site.

Survey participants do little to measure consumer activity within their Web site (Figure 68). Although many sites provide internal auditing, few sites employ outside companies to provide verified audit reports on consumer activity. If the newspaper industry did not supply verified audit reports, advertisers would go elsewhere. Why should on-line be any different?

5.) to understand if Web products are helping or competing against core products.

Web products are generally helping the core product, and in most cases are not competing against the core product. In fact, by the end of 1997, newspapers saw little if any affect from the Web in their core products (Figure 111).

6.)  to report the staffing sizes of various media, and to identify any trends with regard to staffing size.

Staffing sizes of various media were found to be higher for those with more outside content, averaging 8.5 persons per site (Figure 51). It was also found that Web staffs are generally integrated with the staff of the core product (Figure 33), and that staff sizes increase with the increase of page views on the Web site (Figure 80).

7.) to ascertain if Web publishing is profitable.

The survey determined that by the end of 1997, Web publishing in general, is not profitable (Figures 97-102). Most media Web sites are losing money and will continue to lose money in 1998.

8.) to provide a comprehensive analysis of the survey data.

                From the survey data 58 questions were analyzed, providing a comprehensive analysis of the survey data.

The projected outcomes presented in the Methodology chapter of this dissertation were answered through the literature review, or through the survey results. Those predictions, along with the findings are as follows:

                1.) Most U.S. newspapers, certainly those of medium to large size, are on the Web.

Through the literature research, this was found to be true.

2.)  Newspaper Web sites are far ahead of their competitors (magazines, radio, television) in terms of archives, page views, staffing, content, and profitability.

Results of the survey found this to be generally, not true. Magazines had more Web sites (2,577 versus 2,544) than newspapers at the end of 1997 (Philips, 1998). Profitability among the four media groups is negligible (Figures 97-102), but magazines and television actually show higher average profits (Figure 100). Staffing among the four groups is similar (Figure 79).

3.)  Those Web sites with less content have a smaller audience (less page views), and thus lower pricing of banner ads, and, less profitability.

True. The survey found that sites with more content replication from the core product have, more page views (Figure 42), higher pricing of banner ads (Figure 41), and more revenue. Due to a variety of factors including equipment costs, promotion, and newness, profitability is not yet forthcoming.

4.) Few companies in the media industry provide Internet services. Those that do will have a larger technical staff, and should have more revenue.

Not true. Survey results found 44.2% of all media provide Internet services for other companies (Figure 23). Staff sizes of Internet providers are slightly higher for all media (Figure 81), with newspapers having the largest spread (8.4 for providers, 5.4 for non providers). Revenue of Internet providers was similar to non providers.

                5.) A large percentage will have had their Web site on-line less than two years.

True. On average, 65.2% of the respondents have been on-line less than 2 years (Figure 13).

6.) Many Web sites operate their own server and require a larger technical staff to support the in-house technology.

Not true. Figure 21 shows that on average, only 34.3% of all media operate their own Web site.

                7.) The size of banner ads is standardizing as the industry moves forward.

Not true. Of all media, 60.7% indicated that they have standard banner sizes (Figure 59). When asked what that size was, it was determined that only 15.5% actually had a common (standard) banner size. This was found to be 468x60 pixcels.

8.) The use of "Push Technologies" by the media industry as a whole is minimal. However, those that do use this technology are seeing a high rate of page views.

True. Figure 20 shows that only 12.6% of all media use push technology. Those that do, however, see five times as many page views as those who do not.

                9.) The Web product is having no effect on the core product.

The intent of this question was to ask if the Web product was having any negative effects on the core product. Survey respondents indicated that the Web has actually helped the core product obtain more advertising dollars (Figure 111).

10.) Few Web sites are doing "shovelware" (putting their core product content on-line) and are instead opting to produce original content.

Not true. Figure 38 shows that both newspapers and magazines replicate 50% of their core product to the on-line product, while television and radio replicate 40% and 20% respectively.

11.) Web sites with large archives available are getting the most page views, are spending more to provide archives, and are making more money in the process.

Inconclusive. Overall, 62.4% of the respondents indicated that they provide archival information (Figure 54). It can not be concluded that they are receiving the most page views, spending more to provide archives, or making money in the process.

        12.) Newspapers have more content than magazines, radio and television.

True. Although this could not be determined by the survey results, by performing the literature review as well as the Web site comparisons, it was found that newspapers have much more content and archive material available than the three other media groups.

13.) Very little, if any, outside measurement data are being provided to advertisers by these Web publishers.

True. Overall, only 15.4% indicated that they provide outside measurement data (Figure 68).

14.) Few Web sites offer on-line classifieds. Those that do have more expenses and should have higher revenue.

Not true. Overall, 52.8% offer on-line classifieds (Figure 69). Newspapers have the highest incidence with 71.3%. There is no correlation to expense and revenue.

15.) Outside of their core product, most Web sites do little promotion and have relatively small promotional budgets.

True. More than 77% of the respondents have promotions budgets of only $10,000 or less (Figure 76). They typically promote within their own media group (Figure 74).

16.) Newspapers have a larger overall staff size as compared to magazine, radio, and television, and the size will stay about the same in 1998.

Not true. Staff sizes are similar among the four media groups (Figure 79), and change dramatically relative to page views (Figure 80).

17.) Few Web sites charge for access or to retrieve archival information. Those that do charge will have lower page views resulting in lower banner rates.

Overall, only 7.9% of all media charge for access to their Web site (Figure 85). Those that do charge see more than double the page views, on average, than those who do not charge. However, this is probably skewed due to the low (24) number of sites that charge.

18.) Few sites require registration, yet many sites are in some way capturing user demographics, and will sell this information to third parties.

Most Web sites (94.5%) do not require registration (Figure 88). Many, however, capture user information and will use it for their own internal purposes (Figure 115). Few (4.9%) have plans to sell this information to outside companies.

19.) The average Web site will spend $50,000 - $100,000 per year for equipment and services (not including salaries).

True. Figures 91 through 96 support this prediction.

        20.) Overall, there is little, if any, profit among the four groups.

True. Most media companies lost money on their Web sites in 1997 (Figures 97, 98, 99). Thirty-five newspapers averaged profits of $29,285, and six newspapers averaged profits of $895,833 (Figures 100, 102).

21.) Competition on the Web (newspaper versus television for example) will be similar to the competition they normally have outside the Web, which may be true due to a high rate of local users.

True. Although media companies in general do not acknowledge competition (Figure 112), the literature review found competition to currently be about the same on the Web as it is outside of the Web.

                22.) Few Web sites give the user an ability to customize their content.

True. Only 6.2% of the respondents give their users the ability to customize their content.

 

Implications

 

In accessing the findings in the literature review as well as the survey, the first, and most important finding is the realization that newspapers are not in as grave danger with on-line competition as pundits would have them believe. In fact, television is much more vulnerable to subscriber erosion. This is indeed good news for the newspaper industry, which is rapidly finding that the Web may be more of a benefit than a hindrance to the core product.

The project above all else proved that groundwork in this new field has just barely been laid. Many publications have rapidly set up Web sites without considering the consequences. This rationale is a reflex action and one that is not conducive to newspaper’s survival into the next century. Millions of dollars are being spent on newspaper Web sites, yet few are able to show profitability. At this stage, continuation of an electronic publication is not economically feasible for many newspapers, and will not be for some time to come, if ever.

The one overriding implication of this study is that as a communications medium, the Web can be viewed potentially, as an equalizer among the large and the small, the powerful and the weak. The reality, however, is that most newspapers have successfully defended their market by producing an on-line product, and will easily fight off competition with the huge resources they have available. The ability to provide a blanket of news and information, relevant to the local community, is best served by the newspaper that has its roots in the community. This has proven to be a major deterrent to new competition.

 

Areas for further study

 

One of the conclusions likely to be drawn by publishers is that because consumers spend only 5% of their Web access time looking at Web newspaper’s sites, there must be something wrong with the electronic edition. This may well be faulty reasoning. Studies need to be conducted on how the Web affects traditional newspaper reading habits such as:

Do consumers read the Web edition as well as the print version?

Have consumers stopped reading the print version in favor of the on-line version?

What are the habits of Web users, specifically as they relate to visiting newspaper Web sites.

Another relevant study would be in the area of the "haves" and the "have-nots" which are those people who will be left uninformed on a daily basis as a result of not using this new technology. Along this same line, a study on market fragmentation is necessary to determine, if in fact the Web will become so fragmented, that no one in the media business will be able to profit.

Certainly another area for study is within the newsroom itself. For example, how does the newsroom of the print product interact with that of the on-line product? Will "shovelware" be the future, or will on-line media have to create new stories on a daily basis? Newspapers operating strictly with an eye on the bottom line might be persuaded to drop certain kinds of news coverage if computer tracking indicated that those stories were not heavily read. This could have very serious implications for the traditional watchdog role of the press in a democracy.

Finally, a study similar to this research should yield interesting results in several years. A number of items to pay particular attention to are: push technologies, content, staff integration, archival information, standardization of banners, partnering, outside measurement, classifieds, promotion, staffing, profitability, and registration requirements.

 

Recommendations

 

Four areas of recommendations are presented:

Portable electronic display devices

Shovelware

Web site creation and continuation, with minimal expense outlay

Generating profits

Portable electronic display devices

What if newspapers could use their existing print production process to drive an array of news, information, advertising and electronic shopping services that are both portable and personal? Timeliness and portability dramatically increase the value of advertising content in both the print and the electronic publication.

Fidler (1997) is convinced that to eliminate printed newspapers, a highly portable, simple to use device capable of displaying hypertext and audio/video clips, while allowing the user interactivity, is needed. The solution that Fidler (1997) proposed is what he calls a portable tablet, which at about the size of a thin notebook can be carried just about anywhere (Figure 132).

Figure 132. An electronic tablet, similar to what Fidler (1997) has proposed. Note. From "Where are we going," by C. Robinson, 1997, TechNews, The NAA Magazine of Newspaper Operations, p.32. Copyright 1997 by the Newspaper Association of America. Reprinted with permission.

Fidler's (1997) proposed tablet does not use the traditional LCD panels for display, which are usually hard to read, especially in bright light. Instead, he is working with Kent State University in developing a new technology called cholesteric liquid crystals. There are many unique features to these crystals but the most interesting is that they display like a newspaper, black type on a white background.

With the use of personal computer memory cards, (similar to the concept of a phone card) Fidler (1997) believed that consumers would be able to read comfortably on a train, plane, bus, at a coffee shop or in the comfort of their homes. By using memory cards, subscribers to the tablet edition could get information anywhere, anytime, through a global network of electronic newsstands similar to automated teller machines. Fidler (1997) believed that by the year 2010, electronic newsstands may be routinely found in airports, train stations, hotels, shopping malls, and bookstores, as well as in homes and offices. Another possibility is to use cellular technology to update these devices all day long.

Fidler (1997) contended that although the Web provides publishers with an opportunity to develop an electronic outlet for their content, the Web is not likely to emerge as the digital successor to mechanical printing presses. His reasoning was that the Web, like early Videotex services, lacks several important attributes which are traits of the document domain; portability, portrait-oriented pages, and the ability to be easily browsed. The tablet, as proposed by Fidler (1997), has the greatest potential to fulfill these traits.

Users of the tablet, for instance, will not have to leave their homes nor hotel rooms to locate a newsstand or wait for delivery. Newspapers will not pile up on doorsteps and magazines will not fill up mailboxes when subscribers are out of town. Instead, credit-card-size memory cards containing 600 megabytes of information (as much or more than a typical CD-ROM) will give subscribers the ability to conveniently read the news whenever and wherever they want. Frequent travelers, for example, will have the ability to pack several newspapers, magazines, and books, as well as personal papers, reports and speeches into just one memory card.

Others have discussed the use of portable computers to read the newspaper as well. Elderkin (1996) for example, described an ultra light, ultra thin tablet (similar to Fidler's) with two viewing screens connected by a hinge. This system would display color pages as well as full motion video. Elderkin contended that these devices should be sold in drug stores for around $10-$20. Certainly, a great many people would use the electronic newspaper at that price, however pricing that low is not foreseeable in the near future. Newspaper publishers should realize that society is nowhere near this level of sophistication. There is no doubt, however, that when a portable computer starts to be used by a large number of people, the newspaper industry will be radically changed (Elderkin, 1996).

Shovelware

Survey results found that 50% of the newspapers replicate their core product to the on-line product (Figure 38). Additionally, 39.5% indicated that they replicate 75-100% of their core product. Because newspapers that replicate core product content are seeing a greater incidence of page views (Figure 42), they are able to charge more for banner advertising (Figure 40). The recommendation therefore is to continue this practice for those who are doing so, and to greatly increase core product replication for those who are not.

Web site creation and continuation, with minimal expense outlay

Most newspaper companies have developed Web sites throughout the country and, as a result, have greatly halted any potential threat to their core product. In fact, because most newspapers have created Web sites, competitors will have a difficult time trying to start-up a new operation in the newspapers market. As a result, the threat of competition to most newspapers today, is much the same as it was before the Web. Start-up operations simply do not have the listings, the information, the credibility, the name recognition, nor the clout in the community to compete against the local newspaper. However, publishers need to balance the amount of investment in their Web sites to revenues, generating profits or at minimum, a break-even point.

Generating profits

This researcher supports Robinson (1997) who stated that generating profits will be possible if publishers focus on the following:

Be market-driven.

Do not attempt to take a technology such as the Web, and create a market. Know your customer, their needs, and what will attract them to your product. Requiring customer registration will help in identifying customer needs, and with future promotion with direct marketing.

Know your strength.

Understand that the core business of the newspaper is in gathering, editing, and disseminating the news. No one else has the resources or the community involvement as the local newspaper

Partner with other companies.

Few companies in the computer and communications industries are purely friends or purely foes. Newspaper companies should open up and look for new partnerships that will ultimately attract new consumers as well as advertisers.

Get top management involved.

Top management needs to be involved, not only in the core product, but in on-line endeavors as well. Because they supply the money and make decisions about the future of the Web site, top management needs to understand, and support, the efforts of both products and the markets in which they deal.

Invest conservatively in new media.

Many media companies have invested heavily in the Web technology over the past few years, and, as a result it will take many more years to become profitable. Publishers need to begin taking a hard look at where, when, and how much money to invest in the Web.

Summary

There is no argument that the Web has grown at a phenomenal rate, with millions of new Web sites including thousands of newspapers, magazines, television and radio station Web sites. Two fundamental reasons are cited why media organizations spend millions of dollars to create Web sites.

First, media companies are determined not to be left behind in this new technology (Fidler, 1997). Many companies had no idea what they were getting into, or where this new medium would lead, while others still do not know, and continue to pour money into their Web sites, hoping something good will come of it.

Second, as competitors within the same market went on-line, other competitors felt threatened and immediately took steps to defend their franchise (Fidler, 1997). Again, many were unsure, but felt that they could not afford to sit by and watch.

The end result of these two factors was the creation of over 5,000 media Web sites by January, 1998. This resulted in an enormous wealth of information for consumers, most of it free. More and more, consumers are expecting to find their local news, not only on the front lawn, but on-line as well. With so many Web sites to choose from, consumers use their local media Web site for news, weather, sports and classified advertising. In fact, a 1997 study by Tribune Corporation found that 40% of their one million weekly page views came from people searching the classifieds (Silver, 1998).

Mantooth (1982) predicted two major changes in American newspapers as a result of technological advancements such as the Web. First, a reshaping of the newspaper, and second, a stronger need for newspapers to provide better dissemination of the news. Newspapers have rapidly adjusted and reshaped as a result of the Web as evidenced by the following:

1. Most American newspapers now offer an on-line edition.

2. Increase in staffing to support Web based products.

3. Providing greater content on their Web site.

A better dissemination of the news has also been witnessed.

1. Allowing their core product to be "scooped".

2. Providing 24-hour per day access to their Web site.

Mantooth (1982) concluded that an electronic publication was not economically feasible at many newspapers, and would not be, until such time as a large number of people had home computers. Although there has been an explosion of home computers, electronic publications are still not economically feasible. This is evident in the 1997 losses sustained by newspaper publishers in keeping their Web sites on-line (Figures 97-102).

Levins (1997) found that over 90% of the more than 800 Web sites run by U.S. newspaper companies lost money in 1996. With the exception of a few local Web sites, such as Boston.com and the San Jose Mercury Center, local sites are not getting the traffic nor the ads needed to turn a profit. "They're not attracting the national advertisers and they're not picking up significant amounts of local advertisers" (Levins, 1997, p.4i). Based on the results of this dissertation’s survey findings, little has changed since the 1996 Levins study. Newspapers are continuing to make large investment in the Web, with little return.

Neuwirth (1998) found that during 1997, major newspaper corporations incurred huge losses in maintaining their Web sites. For example, the Tribune Corporation lost 30 million dollars and generated only 12 million dollars in revenue. Neuwirth pointed out that in addition to this, Tribune expects to lose 40 million dollars in 1998. Tribune was not alone, with Knight-Ridder Corporation posting a 16 million dollar loss in 1997 to support their 32 Web sites. The New York Times Corporation saw a 66% increase in Web revenues from 1996 to 1997 and still posted a 15 million dollar loss, with 1998 projections of 12 million dollars in losses. Even a smaller newspaper group such as the Central Newspapers, reported that the cost of keeping its Phoenix, Arizona and Indianapolis, Indiana dailies on-line is only around two million dollars, but they still lost money in 1997.

No matter how large the company, they cannot continue to absorb losses such as these. With several years in the Web business, stockholders will begin to demand profits. As a result, it is expected that a number of media Web sites will scale back operations to obtain at least a break even point, while some will maintain a small loss just to keep their Web presence. A few sites will continue to make money such as the Wall Street Journal and CNN, however the success of some on-line operations will doom others to failure. Executives will demand to know why their Web site is losing money while their competitors are profiting. Layoffs, cutbacks, and small to medium size newspapers going off-line may be the norm for 1998.

In January 1998, the New Century Network announced a 10% reduction in force, signaling what may well be a down-turn in the on-line media business. At the same time, Microsoft who has experienced heavier than expected losses with their Sidewalk Web-based entertainment product, announced a major reorganization that will focus less on local content and more on Microsoft’s Expedia travel site. These changes have come about as a result of low page views (lack of consumer interest), and losses which were far more than planned (ZDNet, 1998). At the time of this writing, the New Century Network had been completely shutdown.

Pundits have predicted heavy losses in traditional newspaper classifieds, however, at this time, the newspaper industry does not have any empirical evidence that Web competition is having an impact on print classifieds. Newspaper classifieds continue to grow at a steady pace as shown in Figure 133 (NAA, 1997). Overall, traditional newspaper classified ad revenues increased from 10.5 billion in 1996, to 11.7 billion in 1997, a 10% increase.

Figure 133. 1996 to 1997 increase in newspaper classified ad spending, in billions of dollars.

Liebeskind (1997) stated that the newspaper industry's long-standing dominance of classified advertising is not threatened by the increasing numbers of on-line classified services, as newspapers have met the on-line challenge by joining it (creating their own Web sites). With 71.3% of the newspapers surveyed indicating they have on-line classified services (Figure 69), they have forced much of the potential competition out of business. Liebeskind (1997) explained that start-up operations simply do not have the listings, the information, nor the clout in the community to compete against the local newspaper. Newspapers, in general, have the contacts, the market and the ability, while the new companies who are just setting up sites, do not have the credibility nor the name recognition that newspapers have.

Liebeskind (1997) believed that newspapers are well positioned to take advantage of the Internet. Many newspapers today have interactive capabilities and offer products to their advertisers that are worthwhile and profitable. Liebeskind stated that services started by companies, not already in the classified business, can not compete with newspapers because they cannot get enough listings to achieve "critical mass."

The 7th Web survey (1997) from Graphic, Visualization, & Usability (GVU), a part of Georgia Tech, found that 86.03% of Web users use the Web to gather information. However, that does not mean news. A similar survey, the 1997 Price Waterhouse Consumer Technology Survey found that Web users spend 77% of their time accessing the Web, to gather information (43%) and send or receive e-mail (34%). Other uses included entertainment such as playing games (9%), reading magazines and newspapers (5%), participating in on-line chat rooms (4%), on-line banking (2%), two-way voice communications (1%), and on-line shopping (1%). This is shown graphically in Figure 134. An important point here is that reading magazines and newspapers accounts for only 5% of the time spent on-line. Mantooth (1982) found the exact same amount of time being spent reading newspaper articles more than 15 years ago with the Videotex project. Web Publishers should be aware of this finding as well as others from the survey, in that the Web is showing a number of similarities to the Videotex project from the early 1980’s.

Figure 134. Where time is spent by consumers while on-line (percentages).

The Price Waterhouse survey also found that an average of 4.2 hours (252 minutes) per week were spent on-line by these households. Based on the results of the Price Waterhouse survey, Web users spend (252 minutes / 5 = 50.4) about 50 minutes per day accessing the Web, but only 5% (2.5 minutes) of that time looking at a newspaper Web site. Users quickly check the head-lines and move on to something else on the Web. As Pogash (1996) pointed out, on-line newspapers are not only competing against other forms of media, but also against thousands of other sites.

Case (1997), citing a 1996 survey by Advertising Age, found that nearly half (44.2%) of on-line users never even look at on-line banner ads. Of the 55.8% who look at on-line banner ads, 50.3% never click on these banner ads for more information. Case contended that newspapers have a very small piece of the Internet ad market, and despite intensive efforts to get hometown retailers to commit advertising dollars to the on-line newspaper, newspapers are finding that many of these businesses are not willing to invest in the Web. It may be that advertisers are not seeing the results they need, which may be due to the small amount of time spent by consumers on newspaper Web sites, and that they do not tend to support banner advertising.

Crosbie (1996) stated the Web newspaper business model hopes that consumers will markedly change their daily habits and commit their increasingly rare, free time, to the burden of getting on the Web and surfing the newspaper Web sites to retrieve information that previously had been delivered to them in the form of a newspaper. Crosbie contended that historical trends show the average consumer's disposable time shrinking to less than four hours of free time per day, and as a result, less time will be spent on the Web, and on newspaper’s Web sites.

Despite this trend, the Web newspaper business model assumes that with the technological ability to deliver more information, more frequently, this will motivate people to expend more of their increasingly rare free time surfing the newspaper’s Web site. The hope that Web newspaper circulation can be built and maintained by attracting advertisers and possibly paying subscribers, based on the previously mentioned assumptions, will see Web newspapers failing (Crosbie, 1996).

One of the biggest challenges for newspapers is in making their information available to everyone who wants it, and to attract and retain new customers. A December 1996 study by Aragon Consulting Group (as reported by Investor's Business Daily, 2/20/1997) found that about 40% of the U.S. households will ultimately have computers with Web connections. Of the remaining 60%, one-half (30%) do not care at all about computers, nor the Internet, and never will. The other half are not very eager to enhance the capabilities of their television sets. The study was conducted primarily to see what the market, if any, is for WebTV products.

The biggest fear today is that as we build an information-based economy, a large segment of the population will be fragmented, those who are not computer literate, and those who cannot afford to buy computers. In other words, the poor and the uneducated will be pushed even further into the disadvantaged underclass (Rowland, 1996).

Furthermore, new media designers at the MIT media lab and elsewhere, predict that the day-to-day mass audience will divide into further niches because of the enormous amount of information and sites that will be available on the Web. Audience fragmentation will become so high that a majority of Web sites will experience a large erosion in their users. In fact, pundits predict that the Web will become so fragmented that virtually no one will be able to profit.

Another related point came from Fidler (1997) in which he stated that consumers generally embrace a new technology, but quickly become tired of it. As an example, Fidler discussed the Videotex project in which users were eager to sign up, tried it for a few months, then quit. Although there is much talk about how rapidly the Web is growing, few analysts talk about "churn"; people who try the Web, then quit. Alarmingly, Seminerio (1998) found that during 1997, the Web experienced a 15.9 million user churn in American adults.

Much like the Web today, Videotex services in the early 1980’s were viewed as a logical extension of traditional printed newspapers. Fidler (1997) stated that most publishers perceived the benefit of these services was their ability to provide news and information in a timely, thorough, and more personal fashion. The assumption that Videotex would become an up-to-the minute newspaper, capable of providing a wealth of information not typically found in mainstream media proved however to be wishful thinking.

For newspapers, the Web today has many of the same problems that caused the failure of Videotex. For example, a database of general news, information, and advertising was not all that appealing to subscribers. As discussed earlier, Web users today spend only about 5% of their time on newspaper and magazine Web sites. Other problems included a technology that was attempting to drive a market, slow speeds, and the inability to keep information up to date. Fidler (1997) found that subscribers could get the information they wanted more easily and more quickly from other sources.

Fifteen years ago, Noll (as reported by Fidler, 1997) raised concerns that computerized databases might be too time consuming, difficult to use, and inadequate for most people. Noll’s suggestion that transactions and interpersonal message services might be more important than information retrieval to on-line customers, has so far proven to be the same with the Web, said Fidler.

 

Summary conclusion

The process of gathering, sorting, selecting, evaluating, and validating information will require more time, effort, and expense than most people will be willing to devote to Web news sites. Fidler (1997) contended that in general, most people will continue to rely on professional journalists, information managers, and producers for the majority of their information and entertainment. Based on this assumption, there is little doubt that people will continue to prefer newspapers, magazines, books, and other documents that they can read anywhere and anytime.

Compounding the above assumption, the Web today is far from being a medium that can support newspapers and the advertisers that support newspapers. Web users spend very little of their time accessing newspaper Web sites (only 5%), and less than 50% of these users will look at an advertiser’s banner ad. Newspaper publishers have been forced into creating a presence on the Web, first because of the potential competitive threat and second because consumers expect it. These publishers must now realize, however, that the Web is not the threat once predicted, and will not be for a long, long time, if at all. However, due to a variety of potential Web competitors, newspapers will need to continue to maintain their Web sites.

Newspapers that have created Web sites are now well positioned to take advantage of the Web, however they need to balance the amount of investment in their Web sites to revenues, generating profits or at minimum, a break-even point. Most importantly, they will need to do so with the correct mix of content, shovelware, staff, and alliances to keep losses at a minimum.

The future of newspapers is anyone’s guess, yet it can be safely assumed that the print publication, as well as the on-line product will be here for a good many years to come. What is not clear is the future of, and advancements made in the areas of broadband communications, interactive services, full motion video, electronic tablets and other similar devices, and how these various services will impact the printed newspaper in the future.

 

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