Chapter II

Review of the Literature


Almost overnight, the World Wide Web has grown into a mass medium which is perceived by most traditional media producers (newspapers, magazines, radio and television) as a very serious threat to their long term existence. New media competition is not a foreign concept to newspapers, with experiences occurring first in the early 1920's with radio, and then again with television in the 1950's.

Today, the Web seems to be a new threat to traditional media, even though few electronic publishers are making money on the Web. Much has been written about the Web, and there are wild predictions and there is much hype about what may happen. Mann (1997) stated that with the Web, as with any new technological development, there is an enormous difference between the potential of the technology and its actual uses. The end result, therefore, may be far from the fantastic predictions being put forth.

This dissertation offers a look into past experiences by electronic publishers, reviewing their successes and failures, and providing an intensive study of some 3,000 Web publishers, with the primary focus being on the relationship between the Web and traditional print newspapers.

History of newspaper competition

During the golden age of print media, that period from about 1890 to 1920, publishing entrepreneurs such as William Randolph Hearst, Joseph Pulitzer and Lord Northcliffe, flourished and became as well know to their readers as celebrities and world leaders. Fidler (1997) explained that during those years, publishers’ power and influence were so great that they could make or break politicians and rally support for their own personal causes.

After 1920 however, newspapers were forced to redefine their role with the introduction of a new, far more powerful mass medium called broadcast radio. Like the Internet and cyber media of today, the development of low-cost radio receivers and electronic broadcast media created a great deal of anxiety as well as excitement. Even then, people argued that printed newspapers were doomed by electronic media. However, in the early years, broadcast radio had little effect on print publishers (Fidler, 1997).

By the beginning of the 1930's, advertisers discovered that broadcast radio could deliver a large national audience. Print publishers saw radio as a formidable competitor for advertising dollars as advertisers eagerly spent their money on radio exposure. Fidler (1997) found that the majority of print publishers attempted to boycott advertisers who placed radio ads, and refused to publish radio schedules and promotions. As a result of the perceived threat from radio, many publishers revamped their formats and content to broaden their newspapers' appeal, and began experimenting with special sections, departments, and packages, targeted at specific groups. Weekend magazines, women's sections, children's pages, features pages, and comics flourished.

Reporting styles changed as well, and newspapers began expanding stories to provide more in-depth coverage than radio. During the 1930's and 1940's, Fidler (1997) explained that newspapers provided more background information and analysis than ever before, and, as a result, this is considered one of the most significant developments in the newspaper industry during that period.

Shortly after World War II, newspapers were faced with yet another new, and even more powerful electronic medium, television. But television's immediate threat was to radio, not newspapers. TV rapidly displaced radio as a customer preferred media. Once again, pundits predicted the death of print media, which never happened, and by the early 1980's, most newspapers had, once again, undergone substantial changes in content, design, and technology. Today, print media professionals have conceded that no future redesigning, content improvement, or advanced color press can be expected to displace electronic media.

Thirty years ago, electronic media were confined to radio and broadcast television. Computers, cellular phones, lasers, fiber-optic networks, CD's, digital fax machines, and video cameras were not even thought of, except within the realms of a few research laboratories.

Today, a revolution, brought on by the explosion in consumer on-line and Internet services, is unfolding for traditional publishers. Consumers and publishers are facing a quantum leap in the

amount of information and other content that can be easily accessed. With this vast amount of information comes many opportunities, and competition (Fidler, 1997).

As an example, Fidler (1997) stated that more than three-fourths of the U.S. newspaper industry's revenue comes from a combination of classified and retail advertising. Advertising accounts for about one-half of the magazine business revenue, while being the only source of revenue for radio and television broadcasters.

Overall, newspapers continue to have high consumer acceptance, reaching about two-thirds of all U.S. households (NAA, 1997). With only five major categories of information competitors:


Figure 1. Percent of 173 billion dollar U.S. advertising revenues earned by media related companies during 1996 (source Newspaper Association of America, 1997).

print, radio, television, computer companies and the telephone industry, newspapers, in 1996, led all competition for advertising dollars with revenues of 38.2 billion dollars, according to 1996 statistics from the NAA (Figure 1).

Although newspapers and television moderately compete with each other, Elderkin (1996) believed that the multimedia arena is where newspapers and television may ultimately go "head-to-head." Elderkin stated that newspaper articles will eventually be accompanied with voice synthesis, music, and more color photographs, as well as motion video. This will ultimately create greater consumer interest, resulting in a larger audience, which means higher advertising revenues.

Elderkin (1996) does point out, however, that newspapers will have to restrict themselves on how far they carry multimedia, because of multimedia's complexity and the expense to produce it. Consequently, newspapers will have to find the point where they can use multimedia to maximize their audience while maximizing their advertising potential.

History of Electronic Publishing

Many newspapers have attempted to take advantage of the shift to a digital medium for several decades. Paul (1996) pointed out the first major change was in the shift from hot to cold type (electronic) production systems which swept the newspaper industry worldwide. This allowed newspapers to compile databases of the text that flowed through the production system, and the by-product was the electronic news archive. As a result, newspapers saw the potential of reselling access to information that had initially run in discardable paper form.

Today newspaper companies perform two essential functions. First, they gather, edit, deliver, and archive local news. Many store their files in digital form which can be accessed on a customized, real-time basis from anywhere in the world. Second, they gather the local advertising dollars to pay for their activities. In 1996, this amounted to some 38 billion dollars in business, according to 1996 statistics from The Newspaper Association of America (NAA, 1997).

Various forms of electronic publishing have been in use for a number of years. Many cable systems have devoted at least one channel to a continuous "scroll" of news, weather and stocks, a primitive kind of teletex. Technological advances, declining costs, marketing initiatives and convenience, are all reasons why electronic publishing is becoming a mass medium. Electronic publishing offers users access to a vast library of information. Distance is no longer a barrier as users in small towns can dial up databases anywhere (Fidler, 1997)

The concept of electronic publishing is simple: pages of text and graphics are displayed on a television set or other inexpensive screen. Neustadt (1982) stated that the technology is relatively inexpensive and easy enough to use that it may become a mass medium. It can give people information they now get from newspapers, magazines and books, and can do it quickly, conveniently and with access to vast information resources. The actual publishing function includes deciding what content to provide, operating the computers that will hold the electronic pages, and selling the service to consumers. Neustadt (1982) believed that this part of the business has the potential for considerable diversity.

With the thought of great potential in mind, a number of companies including Knight-Ridder began experimenting with a product called Videotex in the early 1980's. The intent of Videotex was to provide subscribers with electronic access to news, weather, sports, and a variety of services provided by the local newspaper. Interest in Videotex was expressed by a wide variety of business and industrial concerns, including newspapers, magazines, radio, and television companies. Mantooth (1982) found companies such as ABC, CBC, NBC, Fox Cable, and Times Mirror, all had a great deal of interest, as well as financial backing in the project.

As a member of the original Knight-Ridder Videotex development team, and ultimately the director for Viewtron (Knight-Ridder's version of Videotex), Fidler (1997) had the privilege of sharing in the excitement as well as the problems associated with this new medium. The concept of Videotex was somewhat similar to the WebTV model of today. The big difference is that WebTV has access to databases around the world, whereas Videotex had access only to the local newspaper database. Sigel (1980) described the Videotex service as electronic information from a local newspaper’s database, that would be broadcast on unused lines of the normal TV picture and displayed on any TV set equipped with a special adapter to read the information.

From the inception of Videotex, U.S. Videotex services were viewed as a logical extension of traditional printed newspapers. It was perceived by most publishers that the benefit of these services was their ability to provide news and information in a timely, thorough, and more personal fashion. The assumption was that Viewtron would become an up-to-the minute newspaper, capable of providing a wealth of information not typically found in mainstream media. "This proved to be wishful thinking" (Fidler, 1997, p.151).

One over-riding problem that was revealed early on, and that no-one wanted to hear at the time, was that access to a database of general news, information, and advertising was not nearly as appealing as having the ability to communicate with other subscribers. Fidler (1997) stated that nearly everyone involved in the project saw Viewtron as an advertiser-supported electronic newspaper, not as an interpersonal communication medium. Videotex customers also complained about the access speeds, which were only 1200 baud at that time. Drawing graphics on the screen was an extremely slow process, and although 33,600 baud access is available today, even faster access speeds are still being demanded by consumers.

Another serious problem with Viewtron was in keeping information up to date. Despite the extensive effort and expense put forth by the Viewtron staff in covering neighborhood events, subscribers frequently found that the desired information was either out of date, or simply nonexistent. Fidler (1997) explained that, for sports enthusiasts, this was particularly disappointing, because the service found it difficult to maintain current scores and statistics for local high school and community teams. And, even though volunteers were enlisted to provide coverage of local games, they were generally unreliable. For the most part, Fidler found that subscribers could get the information they wanted more easily and more quickly from other sources.

From the start, Videotex was a new technology looking for new markets. In 1983, during the startup of Videotex, newspaper publishers were asking the same questions that are being asked today: "How many customers want pushbutton access to information?" "What are they willing to pay?" "What is the proper audience for these services?" and "What type of information is best suited to electronic dissemination in general?" (Fidler, 1997, p.156).

Similar to what we read about Web publishing today, Mantooth (1982) found dozens of major corporations convinced that the Videotex industry would grow dramatically in the 1980's. A conservative forecast by AT&T at that time estimated that as many as 7% of all U.S. households, some eight million homes, would have Videotex terminals by 1990. Many others, including Strategic Inc., a San Jose, California based marketing firm felt the AT&T predictions were too low. Strategic Inc. estimated that as many as 12 million homes would have some form of Videotex service (Mantooth, 1982).

The conservative predictions from AT&T never came true, and, after hundreds of millions of dollars were spent on Videotex experiments around the country, the services were discontinued in the mid 1980's. Hollander (1994) stated that Videotex failed, not because of hardware and software problems, but because of a lack of reader interest. Consumers that did use the service, however, did so to communicate with each other over important community issues, rather than to search out news.

After the Videotex failure, several years passed before newspapers aggressively started trying other electronic publishing avenues such as bulletin board systems and commercial on-line services. By the beginning of the 1990's, the U.S. market for consumer on-line technology had changed dramatically. Three major on-line services (Prodigy, CompuServe, and America Online) began attracting a modest base of subscribers. Paul (1996) explained, in what he called "2 BW" (2 years before the Web, or about 1993), most newspapers, motivated by a fear of being left behind, began experimenting with electronic publishing. Publishers had a choice of using Prodigy, CompuServe, or America Online, all three providing e-mail, chat forums, Internet access, file transfers, and electronic versions of popular newspapers and magazines. Most newspapers went with America Online because of its ease-of-use, and although publishers initially planned to take a low-budget approach, they quickly discovered that on-line publishing was much more labor intensive than they had anticipated (Fidler, 1997).

Bulletin Board Services (BBS) have been slowly developing since the first one started in Chicago in the late 1970's, providing an extremely efficient way for consumer, commercial, and nonprofit special interest groups to share information. Philo (1995) explained that a BBS is simply an interactive information service that enables customers, via a personal computer and modem, to share information on related interests, exchange advice, and socialize using PC-based BBS software.

In effect, the BBS are micro on-line services catering to an incredibly diverse range of special interests. There are currently over 60,000 BBS in the United States and over 100,000 worldwide, organized around a variety of content categories including news, entertainment, education, shareware, software, information services, and adult entertainment (Philo, 1995). A BBS is typically accessed through a standard phone by calling a local number. Consequently, any BBS out of the consumer's local phone market would result in a long distance call, making it somewhat prohibitive to call beyond the local calling area. Today, however, many BBS systems are connected to the Internet and World Wide Web.

Another early form of electronic publishing was found in a technology called CD-ROM, which became popular in the early 1990's. Used mainly by libraries and researchers, CD-ROM technology gives the user immediate access to the full texts of newspapers, magazines, and encyclopedias. Through his research, Stover (1991) found a number of newspapers producing CD-ROM versions including the Wall Street Journal, Christian Science Monitor, Los Angeles Times, San Jose Mercury News, and the Boston Globe. CD-ROM publishing, however, is not for the average person. Stover explained that the average price for a CD-ROM of these newspapers, in 1991, was about $1,700 for the first year, then $1,000 each additional year. Another problem associated with the CD-ROM technology was updates. Half of the companies supplied monthly updates, while the other half gave quarterly updates. One of the disadvantages of the early CD-ROM technology was the lack of images, both photos and electronic drawings, that went along with the article. The CD-ROM merely contained the ASCII text from the original article.

In summary, by 1993 (pre-Web), few newspapers were available via computer. Those that were available were generally found on America Online, while the remainder maintained their own Bulletin Board systems. Some CD-ROM versions of newspapers were being produced, mostly for on-line retrieval services (which charged for their services), or for libraries.

Early problems of electronic publishing

Michael Noll, an AT&T executive involved in the market trial of Viewtron (as reported by Fidler, 1997), publicly challenged the fundamental hypothesis underlying the Videotex movement. Noll argued that large databases of general interest information would not satisfy the information needs of consumers because ways of satisfying these needs are not well understood. Fifteen years ago, Noll raised concern that computerized databases might be too time consuming, difficult to use, and inadequate for most people. Noll’s suggestion that transaction and interpersonal message service might be of more importance than information retrieval to on-line customers, has proven to be quite prescient, said Fidler (1997).

While Viewtron was promoted as an electronic newspaper, there was very little about the service that resembled its print counterpart. Fidler (1997) explained that the electronic edition lacked an obvious structure that could be easily browsed. Instead of a familiar, manageable package of information with a definite beginning and end, such as a newspaper, Viewtron subscribers were confronted with a strange, seemingly endless labyrinth of information. Today, this information overload problem is compounded one hundred fold, with literally millions of places to retrieve information on the Web.

In the end, the Viewtron design staff found that no matter now much effort they put into visually enhancing the Videotex pages, the medium could not compete with the compelling moving images of television or the ease of reading newspapers and magazines. In hindsight, Fidler (1997) claimed that the attempt to position Viewtron as an electronic newspaper was a mistake. He believed the key error was not recognizing quickly enough that Videotex derived most of its dominant attributes from the interpersonal domain, rather than the document or broadcast domains.

In 1995, about the time the Web started being used seriously, an interesting project based on cable television feeds into the home was started in the northwest suburbs of Orlando Florida. This was known as Time Warner's interactive TV system, an experimental program made up of 4000 users connected to large media servers via cable TV. McKinnon (1996) described the system as one in which subscribers use their TVs, not just for regular cable programming, but also to order movies-on-demand, customized news, games, shopping and banking services, even pizza delivery, all at the touch of a button. In various trials around the country, including Orlando, subscribers selected for test marketing of the interactive system appeared to be enthusiastic about the service, but not enthusiastic enough to pay a lot more for interactive TV. With a few extra whistles and bells, the interactive TV experiment was little more than Videotex ten years later. After two years of test marketing, Time Warner's interactive TV system still has an uncertain future, especially since the April, 1997 announcement that Time Warner would eliminate much of the system services by the end of 1997 (Ellis, 1997). At the time of this writing the system had in fact terminated operations.

McKinnon (1996) believed that the interactive TV industry has gone into a stall because people are not willing to pay more than $10 per month as an additional charge on their cable bills, and, when it comes to the Internet, these same people expect most everything to be free. Another major problem with both interactive TV and the Web lies in the distribution model. Imagine newspapers today being distributed a little differently. For example, what if the newspaper company did not deliver a daily paper to the consumer's home, unless that consumer telephoned the newspapers circulation department every day to request it. Crosbie (1996) asked "Would consumers phone each and every day?" and "Would that print newspaper build and maintain appreciable circulation and attract advertisers?" (Crosbie, 1996, p.8). The answer is "no" to both questions, however that is the precise circulation model that most Web newspapers are using today.

Print newspapers, compared to their electronic counterparts, are much easier to use. As an example, Crosbie (1996) stated that once the consumer subscribes to the paper, it is on the doorstep each and every day. On the other hand, to get the newspaper electronically, the consumer has to boot up a computer, dial an Internet service provider (ISP), run Netscape or some other browser, and revisit a Uniform Resource Locator (URL) day after day to get to the newspaper's site. Then, to retrieve what the consumer is looking for, they wait as each page, photo, and graphic, downloads at various speeds while tying up the household phone line, and paying an access charge for this privilege.

There are other problems with electronic publishing. Harper (1997) stated that although many American newspapers offer an on-line edition, most are simply an electronic version of the printed newspaper, or as it is referred to on the Internet, "shovelware." Kline (1996) concured, stating that hundreds of newspaper are making a big mistake, focusing on simply putting their content on-line.

McAdams (1997) noted that when a major newspaper first goes on the Web, it often does something unique in its design. Then, however, the designers tend to stay with one design, making few, if any, changes. This action is probably deep rooted, back to the print version, where it was always a major event to change the design. McAdams (1997) stated that with the printed version of the newspaper, many proposals are submitted and evaluated before one is chosen, and the process can take months. Furthermore, years may go by before another redesign is even considered. However, in the rapidly changing environment of the Web, McAdams (1997) believed that new functionality needs to be introduced several times each year.

On-line publications need to make allowances for continual, rapid change and create designs that are not so rigid and similar across an entire site. A different kind of production environment from those that exist in most newsrooms in North America, is called for, according to McAdams (1997). Editorial workers need to be able to communicate easily with the graphic designers, artists and programmers. For instance, editors need to understand the technology, and the programmers and other technical people need to understand editing.

Even with the Web in its infancy, there have been layoffs, cutbacks, and closing of some newspaper Web sites. In May 1997, Noack (1997) found the Web site of The Gazette-Times in Corvallis, Oregon, was taken off line by the newspaper's management, because it "wasn’t working." At about the same time, Web staff cutbacks also occurred at The Winona Daily News in southeastern Minnesota, and the Web site of the Griffin Daily News in Georgia was shut down.

History of the Internet

The Internet (initially called ARPANET) was launched in 1969 by the United States military. The purpose was to have a communications system that did not have a central nerve center, and thus could not be easily destroyed by a nuclear attack. The Internet was designed in such a way that if a message was sent, but blocked on the way to its destination, the Internet would keep searching until it found a way around the block. During the 1970's, the Internet grew slowly, and was, for the most part, used by researchers and scientists to communicate with each other and transfer information.

In 1982, a similar network, Eunet was established in Europe. By 1984, the Japanese Unix Network was set up. With the U.S., European, and Japanese networks in place, as well as the American National Science Foundation’s five networked supercomputing centers, tremendous growth resulted. As an example, Forbairt (1995) stated that in February, 1986, there were 2000 host computers, however, by November 1986 there were over 5000 host computers. Fidler (1997) stated that at the end of 1989, more than three million users were connected via 5,000 hubs in 26 countries.

A turning point in the commercial use of the Internet was seen in 1991, with the formation of the Commercial Internet Exchange (CIX), a group of commercial Internet providers. The formation of the CIX established co-operative agreements to let users communicate with others, regardless of which network provided their network connection. As a result, numerous colleges around the world were connected to the Internet, as well as users on some of the more proprietary networks such as CompuServe, America On-line and Prodigy. By 1995, Fidler (1997) found an estimated 30 million people in more than 100 countries had access to the Internet, an increase of 27 million users in just five years.

Though the original purpose of the Internet was to facilitate the electronic exchange of research, programming, mail, and other information among educators and researchers, it evolved in ways no one planned or expected. What has mattered most to Internet users, said Fidler (1997), is the free exchange of ideas and discussion of values, and much of this has been done through the use of e-mail.

Forbairt (1995) explained that e-mail, the electronic version of a letter, was, and still is, the most widely used option on the Internet. E-mail is highly efficient, speedy and an inexpensive means of sending and responding to messages. Also used extensively, Telnet (a terminal emulation program that allowed access to remote systems), FTP (a file transfer protocol) for transferring files between systems, and various Internet search utilities (for finding articles, people, general information), the Internet was a somewhat crude, yet efficient way to send and receive information.

In 1992, the Switzerland based CERN Research Institute introduced the World Wide Web, sparking a flood of new users to this new medium. Forbairt (1995) stated that, as a result of the Web, host computers on the Internet reached a staggering 6.6 million by July 1995, 63% of which were located in the United States. The Web, however, is not the Internet. The Web is simply a tool that runs on top of the Internet, effectively providing the end user with a very friendly graphical user interface (GUI). The Web is the multimedia section of the Internet, and although sound and video are being used more and more, in most cases they are very slow to download to a computer. Forbairt stated that improvements are being made all the time, however it will be a number of years before the Web becomes a truly multimedia environment.

Software, commonly referred to as a browser, is required to access the Web from a computer. Also required is a physical network connection, from the computer the end user is working on, to a host computer on the Internet. Once this connection is established the user simply points (with the mouse) and clicks to get what they want, or to" jump" from site to site around the world.

Today, the primary vehicle for interactivity is the Internet, which is supported by a worldwide network of computers based on common software and communications standards. Although many of these technologies have been around for over 25 years, Philo (1995) noted that, only recently, has the Internet been embraced by a wide variety of companies. These companies see the Internet and the Web as an opportunity to develop new products, services, and markets around the world.

Weber (1995) stated that in 1991, there was disbelief that networked information and a commercialized Internet would happen. However, it did happen, and Weber describes this paradigm shift from "Old World" or the traditional print based medium, to "New World" or on-line publishing. One of the trends that surfaced as early as 1991, was the personalization of information, referring to the premise that individuals acquire information in small chunks -- articles, chapters, paragraphs and single images -- rather than in larger units, such as books and issues of periodicals.

Wilson (1997) felt that the Internet and Web are here to stay, and will continue to grow in its diversity of services. Currently, a variety of goods and services can be purchased via the Internet, including items ranging from automobiles to airline tickets, and every day, new services are being added. As an example, Wilson found that citizens in Massachusetts can even renew driver’s licenses and license plates over the Internet. The major difficulty lies not only in what is out there, but also where and how to find it.

O'Reilly (1996) stated that one of the greatest challenges facing the Internet over the next five years is the need to commercialize its activities. Some of the most useful economic models for this, come not from the telephone, cable, or computer industries, but from print publishing. O'Reilly (1996) pointed out that the model of information supported by advertisers, subscriptions, and the creation of products and brand identities, that stand out in a sea of information, will be a key to the development of future information services on the Internet.

Interestingly, a 1996 study by Scarborough Research found that on-line users are more likely to be heavier newspaper readers or radio listeners and light television viewers. Thus, Scarborough Research (Consoli, 1997) concluded that the growth of on-line usage could negatively impact television much more than newspapers.

History of the Web

Two major developments came about in the period from 1989 to 1994: Mosaic and the World Wide Web. Fidler (1997) stated that without these technologies, or their equivalents, widespread commercialization of the Net would not have been possible. Mosaic was developed in 1992, by a small group of software developers at the University of Illinois's National Center for Supercomputing (NCSA), led by Marc Andreesen. Mosaic is a dynamic graphical user interface (GUI) that greatly facilitated the browsing of Internet databases.

About a year after its development, free copies of Mosaic began circulating throughout the Internet. Within months, Mosaic-based pages were being widely used on the Net. Mosaic's appeal was its simplistic approach, which immediately gave nearly everyone using it, the ability to create and use easy-to-follow visual road maps to the Web.

The Web is a graphical, easy-to-use, client-server software based technology for end users
















Figure 2. A Web page as seen through the Netscape browser, with hyperlinks (underlined) along the bottom.


to access the Internet. Philo (1995) explained that the unique feature of the Web is the ability to Hyper-link a word, icon, button, or picture to any other part of a document on a Web site, anywhere in the world. This can be done using a graphical, point-and-click browser, without the user having to know computer commands in order to navigate through the Internet. It should be noted, however, that users can quickly become lost and/or distracted by the millions of options (Web sites to visit) they have on the Web.

As a result of the Web becoming so popular, on-line networks, such as America Online, Prodigy, and CompuServe, were forced to offer Web access to their customers. Prior to 1996, subscribers to the on-line networks could only retrieve information or use e-mail within the confines of the service they subscribed to. Once the proprietary walls came down, however, and subscribers had Web access, they had world wide access to hundreds of thousands of sites. (Fidler, 1997)

The Web enables individuals and businesses to publish or set up shop on the Internet with relative ease, and generally, at a low to modest cost (Philo, 1995). The Web also provides the means for sending a targeted message to millions of worldwide consumers, giving companies a vehicle for customizing marketing to the individual. From a company's point of view, putting a Web site up on the Internet is similar to opening a store-front. It is the window through which the on-line world can view a business’ product.

An advantage that the Web has over all other media is that consumers can get customized news at any time of the day or night. Consumers no longer have to wait for the newspaper to arrive, or for the 6 o'clock news to come on. Instead, information will be stored in digital form, at various sites on the Internet, waiting for the consumer to access it, when he/she is ready for it. Although major news archives such as Lexis/Nexis have been available for years, for a fee, consumers now have a wide choice of news on the Web for little or no cost, and they can access all of this from the comfort of their homes (Hume, 1995).

Outing (1996a) stated that 1995 was the year newspapers going on-line became mainstream, and the Web is clearly the on-line publishing platform of choice. This is a trend that is unlikely to change. Outing found that nearly 90% of all on-line newspaper services worldwide were accessible via the Web, while only a handful were still operating on proprietary systems such as Prodigy and America Online. Many newspapers that previously operated BBS systems, such as The Fort Worth Star-Telegram, The Seattle Times, and the Kansas City Star have moved from the BBS environment to the Web (Outing, 1996a).

The shift from paper to electronics impacts how individuals access, view, sort and, most importantly, pay for, material needed. Bort (1995) stated that newspaper ads are very static because there is only so much space available. With Web technology, however, there is no limitation, so a company can construct a message that is several layers deep, with animated graphics, sound, even full motion video. The problem with doing this today, however, is the slow speeds at which users are able to access the Web.

Philo (1995) agreed, but contended that mass market, affordable broadband connections into the home, will enhance the on-line industry's penetration and usage rates. He goes on to say that this enhancement will most likely happen by the end of the century. As PC's are connected to broadband networks deployed by the telephone and cable industries, Internet and Web technologies will use the increased bandwidth to provide voice and video-augmentation, providing two-way interactive services.

The key assets offered by this new medium are increased connectivity, portability, and accessibility to both wider, as well as narrower, market segments. Philo (1995) explained that markets, uneconomical to reach through traditional media, are now available through on-line services via the Web. Paul (1996) stated that as the attractions of the Internet grew with greater tools and connectivity options, and because the advantage of partnering with an information service, such as Prodigy or America Online, wore off, "Why be just a boutique in someone else's mall when you can open up shop right on the main boulevard?" (Paul, 1996, p.32).

Explosive growth of the Web

The Web can be viewed as being the greatest threat to the newspaper publishing industry, while at the same time, the greatest resource to expand revenue and to protect the current market. Operating in "near panic mode" (Stoltzman, 1997) since 1995, 1600 newspapers went on-line to protect their share of the local market. Specifically, Outing (1996c) found that at the beginning of 1995, there were approximately 100 newspapers offering on-line services. However, by December 1997, there were 2,544 newspapers on-line, 2466 of which are on the Web (Phillips, 1998). This phenomenal growth is depicted in Figure 3.


Figure 3. Growth of on-line newspapers from 1985 through 1997 (source Editor & Publisher, 1998).

Outing (1996c) indicated that he expected the number of newspapers offering on-line services to increase in number to over 2000 by the end of this century. With the rapid growth of competition on the Web, as well as the unprecedented expansion of the newspaper industry on the Web, other media companies, such as magazines, television, and radio, have felt their market share threatened as well, and have responded by producing Web sites in rapid fashion. Phillips (1998) found that Web sites offered by other media companies at the end of 1997, included magazines (2,577), television (918), and radio (1386) sites. This is up significantly from the 1996 numbers shown in Figure 4.


Figure 4. Number of Web sites by media category at the end of 1996 and 1997.

"Millions upon millions of dollars are being spent" (Pogash, 1996, p.28) by newspapers, even though no one really knows how to turn a profit, or what long-term effect newspapers on-line will have on circulation figures at their print parents. And despite the costs of starting and maintaining a Web site, nearly all the news on the Net is being offered free to everyone. Each site is trying to make itself appealing, and is doing so by offering clever page designs, colorful artwork, and in some cases, animation. As Pogash (1996) pointed out, the newspapers on-line are not only competing against other forms of media, but also against thousands of other sites.

One appealing feature of the Web is the potential for profit. Numerous articles as well as research firms, are predicting phenomenal growth and profits on the Web. In just two years, for example, ABC's ESPNet SportsZone has become one of the top web sites, averaging nearly one million dollars per month in advertising (Keane, 1997). One New York market research firm, Web Track (as reported by Fonda, 1996), found a dramatic increase in advertising spending on the Web, but also determined that 66% of all on-line advertising was done by the top ten Web publishers, such as Yahoo, ESPNSportsNet, and The Wall Street Journal. This confirms Pogash's (1996) findings that only a few publishers are generating a profit as a result of their Web activities.

Various people from all walks of life use the Web. A 1996 survey of 12,000 Web users by Georgia Tech (as reported by Pentz, 1996) revealed the following demographics:

Average age: 33

Female: 32% (a 100% increase from 1995)

Access the Web daily: 80%

Average household income: $59,000

In education or computer jobs: 57%

Access primarily from home: 55%

Use 28.8 kbps/14/4 kbps modem: 39%/25.5%

Use Web over TV daily: 36%

Won't pay for access to Web pages: 65%


Figure 5. Percent usage of the Web by age group (source Scarborough Research, 1996).

The Web threat to newspapers

Almost a half century ago, TV was in its infancy and a new breed of entrepreneur began to experiment with this new medium. Although the first television programs were little more than radio shows with pictures, they eventually developed into much more. Radio of course, did not die, but TV ultimately stole radio's thunder, curbed its growth, and gave birth to a new communications and advertising medium. Eiley (1996) believed that a similar drama should unfold on-line.

Today, nearly half of all American newspaper executives feel their papers could be harmed by Internet-based competition, according to a 1996 survey sponsored by the Hearst Corporation. Another study from Editor & Publisher Interactive (1996), located at (, found 45% of U.S. newspaper publishers, editors and advertising directors worried about the long-term impact of the Internet. More than 30% polled felt the Internet was the biggest reason that print newspaper companies would be less profitable in the future, and they felt the Internet would be the biggest single competitor in 10 years or less.

Eiley (1996) felt that Web-based city directories will be the application with the most potential on the Web, by providing convenience, focus and sophistication beyond that of its paper counterparts. This is where newspapers and telephone yellow pages are vulnerable to infiltration by the Web. Eiley (1996) stated that the only way to challenge this competition is by providing the same focus on-line in more localized markets.

Other media competition

Kelsey (1995) stated that newspapers have one thing in common with each other: To remain the number one information provider in their market. To maintain their position as an information provider, Larson (1995) found that Television stations were jumping on the Web,

much like their newspaper counterparts. In doing so, these new electronic publishers are creating products that are quite similar to on-line newspapers.

Larson (1995) described television sites as having such things as news anchor profiles, a station programming guide, news releases, job listings, sports, weather, community information, and links to other destinations. Although going on-line is a popular alternative today, Larson (1995) pointed out that, as with on-line newspapers, television lacks the fundamental revenue streams to make being on-line profitable as well as popular. A television station Web page is shown in Figure 6.











Figure 6. The Web page of ABC news (television) in Chicago.

Blinch (1996) reported that Microsoft teamed up with NBC, launching a news service called CityScape, which will likely offer information in direct competition with newspaper on-line efforts. Although Bill Gates, CEO of Microsoft stated that the "Internet is the printing press of the future," and "no one entity is going to control it" (Blinch, 1996, p.10), many analysts and industry experts feel that Microsoft will be a major threat to newspapers (Blinch, 1996).

Microsoft is not the only threat, however, because new competitors arrive daily. If the entertainment section of a newspaper is vulnerable, what about sports, news and weather? Eiley (1996) stated that these sections are the target of Digital City, a division of America Online. At the end of 1996, Digital City was on-line in eight cities, and more than 30 are planned for 1997, with an ultimate goal of 88 by the end of the decade. Like CityScape, America Online plans to bring Yellow Page directories and transactions to the local level, but will not be producing original content in-house. Instead, Digital City sites are partnering with local newspapers for content, and providing content links to a number of TV stations and magazines.

Meanwhile, Eiley (1996) reported that CitySearch, backed by AT&T and Goldman Sachs, is targeting local community news and announcements. Newspaper publishers should pay particular attention to this group as their plans call for 30 sites, staffed by more than 1,000 employees, by the end of 1997 (Eiley, 1996). Even Yahoo, the Web-directory and search-engine company has newspapers worried as Yahoo branches out, offering a new service called Lycos.

Other competition is appearing in a new area called "push" technologies. All day long, news and information are pushed out to the user at their desktop. One method of "push" is in the form of e-mail, where the user is updated, usually several times a day, via e-mail. Another method is being offered through the Internet via the corporate network, where news updates are fed automatically and continuously to the users’ desktops. PointCast is one such company, offering free software and free information, charging advertisers to offset costs. Stross (1996) reported that in September 1996, PointCast had 1.4 million registered viewers, and was growing at a rate of 250,000 per month. Remarkably, the PointCast Web site receives as many as 38 million hits per day. Advertisers and advertising agencies are lining up to place ads with PointCast, says Stross (1996). The advertisers are interested in the unique demographic group that PointCast reaches-- office workers with an average annual income of $76,000 (Stross, 1996).

Moreover, PointCast ads resemble TV commercials. "They are in constant motion, shrinking, expanding, cavorting and doing everything but screaming out loud `LOOK AT ME’" (Stross, 1996, p.55). One innovative feature of PointCast is when a viewer finds an ad to be of interest, with one click he/she is transported to the sponsor Web site.

Push technology is of particular interest to Toner (1997), who found that people do not want to wait for the Web, starting up their computer, connecting to the Internet, and clicking the same buttons every day to get to a particular site. Pushing on-line content out to the consumer seems to be what more people are looking for, and Toner contends this could become a $5.7 billion business by the turn of the century.

Toner believed that "push technologies will be the dominant buzzword for 1997" (Toner, 1997, p.42), with dozens of publishers exploring as many different variations. Pushing versus pulling is really the difference between getting home delivery of the newspaper, or going down to the corner newsstand to get the paper. Toner explained further, that today, there are basically three ways to use this push technology: through e-mail, where text or multimedia messages are sent directly to a user's electronic in-box; by Internet-broadcast systems such as PointCast, where software passively displays news and advertising on idle computers; or draw-down tools, such as FreeLoader and WebEx, that automatically download multimedia content to a user's hard drive.

Toner (1997) stated that Mercury Mail, another push technology, sends 325,000 subscribers more than 1 million e-mails daily, ranging from news and sports summaries to selected stock quotes, horoscopes and television lists. He also states that e-mail will likely remain the leading push tool, and today, most publishers approach push in two ways: with a lower-bandwidth product for consumers, such as e-mail, and a broadcast system as PointCast.

Up to now the Web has grown on the pull approach, (i.e. customer demand), however the push approach is attracting advertisers because they can now target their audience, choosing a level of specificity all the way down to the individual household, if they so choose (Krapf, 1996). There is little doubt that pushing news to the consumer is an attractive way for the newspaper to keep them interested. Providing a HyperText Markup Link (HTML) e-mail version of the newspaper’s Web site front page, with links to additional stories, will certainly make it convenient, if not simple for the customer.

Even time itself appears to be a threat to newspapers. People spend most of their time working and sleeping, with the remainder of time fragmented among various activities. Philo (1995) believed that all traditional media (newspapers, magazines, books, television, etc.) will suffer as consumers devote increasing amounts of time to interactive (Web) activities. These traditional media may lose the market share of consumers' time over the next ten years, with national media impacted the hardest. In other words, national media companies will face relative (to other media) audience erosion as their audiences devote more time to more compelling special-interest electronic communities and multimedia activities. However, Philo (1995) went on to say that, the ability of consumers to retrieve news based on user-selected criteria over an on-line service, will take away only marginal numbers of readers from a national newspaper, and perhaps, only marginal numbers of viewers from broadcast news, also.


The on-line environment is ideal for classifieds. Rather than going page by page, column by column as must be done in the print product, on-line consumers can search for ads quickly and easily. Anderson, Brannigan and Outing (1996) found that automated request queries can be set up and personalized to match a person’s desires, sending them ads as soon as they enter the database. For example, a person looking for a 1960 - 1965 Corvette could set up a request for this information to be sent to them as soon as someone places an ad in the newspapers on-line database.

Whether or not Web publishing ever fulfills the revenue expectations of newspaper publishers, it is already forcing these publishers to defend their classified ad franchise. At the Interactive Newspapers '97 conference in Houston in February 1997, the general theme was that newspaper publishers need to take action to protect their classifieds in the wake of on-line intervention into this area of information dissemination. Pundits warned of classified advertisers such as auto dealers, real estate brokers and employers moving rapidly onto the Web, and away from print newspapers. These same warnings were presented a year later at the Interactive Newspapers '98 conference in Seattle in February 1998. The NAA (1997), however, reported that print classifieds continue to grow at a strong pace, up 10% from 1996 figures (see figure 133).

A 1996 Newspaper Association of America report showed that newspapers operate at about a 14% profit margin, while the classified department had a margin of nearly six times that figure. William Bass, a senior analyst with Forrester Research (as reported by Albers, 1997) predicted that by 2001, newspapers will lose 40% of existing real-estate advertising, 30% of help-wanted advertising and 20% of automotive advertising. With the average newspaper's operating margin now at 14%, such a high percentage drop in classified advertising would result in a 50% decline in classified revenue, with overall newspaper operating profits dropping to 3%.


Outing (1997) explained that in-column classified employment ads represent more than one-third of all print classifieds in the U.S. newspaper industry. The NAA found that in 1995, $4.8 billion was spent on recruitment ads alone, with total U.S. classified business at $13.7 billion. Outing (1997) stated that newspapers will soon begin to see this revenue fall as more and more advertisers shift from the traditional newspaper to the more than 3,500 recruiting Web sites in operation on February 1, 1997. He also noted that as of this date, there are more than 1 million resumes and 1.2 million jobs posted on-line.

In a June 1997 survey, the William Olsten Center for Workforce Strategies (as reported by NUA, 1997) found that one in five companies in North America use the Internet for on-line recruiting. The survey also found that currently more than half the workers hired are done so through print classifieds.

Outing (1997) contends that publishers need to develop electronic recruitment services to avoid an eventual decline in employment ad revenue. The real issue is whether or not newspapers can offer value to corporations in matching job-seekers with employers, and, do it in a way that is much better than their competition. Outing (1997) found that much of the current competition uses such interactive features as automatic resume matching, e-mail notification of matching candidates or jobs, hyperlinks to employers, allowing job-seekers to send in electronic resumes and necessary documentation. According to Outing (1997), newspapers are well positioned to fight off the cyber-competition because of their entrenched roots into their communities. However, newspapers will have to be creative and offer services equal to, or better than, their competition.

One example of the employment competition being faced by the newspaper industry is Online Career Center (as reported by Anderson et al., 1996), a national, keyword-searchable employment database that claims to be the most frequently accessed on-line recruitment service, with approximately 18,000 job listing, 4,000 employers using the service and 80,000 individual visitors daily. With Fortune 500 corporations such as IBM, Xerox, Motorola, McDonnell-Douglas and Proctor & Gamble using the service, there has been some negative impact on the newspaper print employment ads. Other competitors in the employment area include Career Mosaic, IntelliMatch, The Monster Board, Interactive Search, Virtual Job Fair, Career Central and CareerPath. A list of URLs can be found in appendix C.

Outing (1997) stated, newspapers have no choice but to figure out how to use Internet technology to better serve their existing corporate customer base, and they need to do it before employers find someone else who can do a better job of filling job vacancies. He suggests that one way for newspapers to become more competitive on-line is to stop supplying the content of recruitment ads. In other words, stop doing the data entry involved in soliciting ads, and become a carrier rather than a content provider.

Personals, a national U.S. personals ad service, is a stand-alone on-line service for singles, which has been built around the lucrative relationship business. Anderson et al. (1996) explained that while most newspapers’ print personal ads today earn money from readers calling a 900-number, offers a Web alternative that is much less expensive to the consumer. Visitors to the Web site can browse the ads for free, but to communicate with an advertiser they must become a member. has been successful and is claiming upward of 100,000 registered users (Anderson et al., 1996).

There is no doubt that is taking advertising from local newspapers. However, in order to continue to grow, has realized that they need the strength of local newspapers to attract new customers. As a result, has begun partnering with other publishers, such as the New York Daily News. Anderson et al. (1996) reported this as an example of how newspapers should look to other such successful ventures to partner with and to generate new revenue streams.


The market for automobile classified ads tends to be more local in nature, and thus the local newspaper is the logical place for consumers to look when car hunting. However, Fitzgerald (1996) stated that auto traders are aggressively going into the on-line world. The on-line medium gives them freedom for content length, especially in the area of images. Reina (1996) said, "if you think newspapers have a monopoly on classified, you're wrong" (Reina, 1996, p.24).

Anderson et al. (1996) examined an on-line product called Classifieds2000, a start-up company that takes print publishers out of the loop by utilizing interactive technologies to excel at serving the automotive advertiser, without relying on print publishers' existing classified ads database. With the Classifieds2000 service, individual buyers and sellers use the service for free. The company makes its money from working with auto dealers who pay to put their messages and auto inventories in front of a large audience of individual car buyers.


Reina (1996) pointed out that realtors have always been strong newspaper classified advertisers, yet newspapers have lost $1 billion in ad revenue in the apartment rental category over the past 7 years. This is because apartment managers have found other places to advertise which cost less and provide more. Likewise, Reina felt that realtors will find the Web more attractive as more and more consumers search the Web for homes.

National franchises offering TV home shows, niche home guides and on-line listing services are now starting to compete with newspapers. Resnick (1997) explained that national and regional groups, such as the National Association of Realtors' Real Estate Information Network (RIN) offer on-line services of their own, cutting on-line newspapers out of the buyer-seller chain. On-line readers can now quickly search for homes on the basis of price, feature and location. They can also match that with information on how much money a particular community spends per school child and the proximity of shopping facilities, parks or other amenities.

Competition for apartment rentals ads is another threat to newspapers classifieds. Rent Net a Web-based real estate guide, now has listings in all 50 states. And, to bolster the service, Rent Net provides e-mail notification of newly listed apartments, floor plans, color photos and location maps. Anderson et al. (1996) found that Rent Net had nearly 900,000 ads representing properties across the U.S. and Canada, where users can easily search the database by location, price and/or apartment features.

Telecommunications companies

Another threat to newspapers comes from the telecommunications companies, specifically their directory divisions (phone books), which are turning into Internet companies. Anderson et al. (1996) pointed out that the Yellow Pages are basically classified ads, and Yellow Page companies would have little to do to compete against an on-line newspaper. The Yellow Pages already have the sales force, the contacts, and the advertisers to build a strong advertising base on-line. And now, they can be updated daily, not once a year, making it much more attractive for advertisers to place their ads there.

Newspaper publishers are very concerned about these telephone company ventures. As an example, Anderson et al. (1996) pointed out that the Los Angeles Times recently refused to accept an advertisement from Pacific Bell for their on-line guide, AtHand. The newspaper felt that by running the advertisement, it would be promoting a service that is directly competitive with its own Web site. Likewise, Mann (1997) explained one of the policies at the Philadelphia Inquirer is that they do not accept print advertising with a URL.

Search Engines

Internet directory and search companies such as Yahoo, Lycos, Digital Alta Vista, Excite and others are all threats to newspaper classifieds. Anderson et al. (1996) discussed Yahoo, which is creating a series of regional and metro directory sites for major U.S. cities, while, at the same time, creating their own classified services. Tedesco (1996) also reported Yahoo partnering with TV stations such as San Francisco's CBS affiliate, KPIX-TV. This partnership gives KPIX-TV a presence on Yahoo and enables Yahoo to provide local news and entertainment as well as free communications services. Because Yahoo is one of the busiest sites on the Web, and advertisers will use Yahoo primarily because they want their message to reach as many people as possible, Anderson et al., stated that as more consumers get on-line, there will be a profound effect on newspaper classifieds as a result of this partnership (Anderson, et al., 1996).

Cable Television

Cable television is a major area of concern for newspapers because of cable television’s potential as a competitor. Cable companies have the ability to partner with a group of weekly newspapers, an alternative paper, a television station or all of them, positioning the cable company for access to the kind of information they need, to compete with the local newspaper. Easterly (as reported by Criner, 1996) stated that once cable achieves sufficient penetration (50% or better), they will become a content publisher. And when that happens, the first thing a consumer will see when turning on their TV will be the cable company’s home page. Easterly concludes that cable companies are going to go after classified advertising immediately. Elderkin (1996) concurred, stating that the shift to cable television could put a tremendous amount of advertising revenues into the cable stations.

Observers warn that newspaper executives cannot afford to ignore these developments. "Newspapers must understand the changes or be left behind" (Albers, 1997, p.47). Many newspapers have responded well to this challenge. Preliminary findings of an NAA survey of newspaper Web sites shows 75% of respondents offer on-line classified advertising (Albers, 1997).

Anyone can become an electronic publisher, and any successful business represents a threat to the existing newspaper franchise. It presents another competing demand on people’s limited time. With a large number of newspaper classifieds already on the Web, the question of the ability to complete is foremost. One broadcasting company, Granite Broadcasting Corporation of New York, has recently announced a new partnership with Classifieds2000, reportedly to increase their competitive edge. This partnership will bring classified ad databases to television Web sites in 11 regional U.S. markets, competing directly against newspaper classifieds. Noack (1997) reported that the Granite classifieds will initially contain listings for automobiles and other vehicles available in each of the station's markets. Eventually, Granite plans other listings, such as computers, real estate, event tickets, personals, and general merchandise.

Newspapers, have, in a way, hurt themselves. Citing an NAA survey, Reina (1996) explained that realtors, automotive advertisers, and recruitment advertisers felt that newspapers set unrealistic rates, offer no special rate packages, are not willing to negotiate, do not offer enough value-added merchandising, and are experiencing a decline in circulation. 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 (NAA, 1997), and Web entrepreneurs are just beginning. As a result, any impact these entrepreneurs may have on newspaper classifieds, is a year or more away. However, Anderson et al. (1996) warn that these Web entrepreneurs will have a significant impact on print classifieds in the years to come, and newspaper companies need to respond now by creating state-of-the-art electronic classifieds of their own.

An increasing number of on-line newspapers are publishing their classifieds on the Internet, primarily as a result of better technological sophistication among some of the larger publishers, and turnkey on-line classified systems, which give publishers a "do it yourself" system. Anderson et al. (1996) state that these publishers are leveraging their existing strengths in their local market and are finding ways to create new revenue from Internet publishing.

The Web complement to newspapers

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, because newspapers have met the on-line challenge by joining it (creating their own Web sites). They have forced much of the potential competition out of business. Liebeskind 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. Kathy Yates, director of new business development at the Knight-Ridder New Media Center in San Jose (as reported by Liebeskind, 1997) stated, newspapers have expanded into a new medium, that done correctly, will generate additional revenue and allow newspapers to become very significant "winners."

Yovovich (1997) also believed that daily newspapers are in a very advantageous position because they already understand the market. Newspapers, in general, have the contacts, the market and the abilities, while the new companies who are just setting up sites, do not have the credibility or name recognition that newspapers have. Philo (1995) stated that existing traditional publishing businesses can stand out in the on-line world by promoting, in print, their on-line efforts, while using an existing print business that can fund on-line activities.

An increasingly interconnected world, where content flows easily, will alter the way consumers and publishers behave. For publishers, Philo (1995) believed this connectivity will breath new life into mature franchises, much like the VCR and CD player breathed new life into the movie and music industries in the 1980's. Connectivity provides unprecedented opportunities for reader involvement, the creation of electronic communities, and electronic commerce. Philo explained that magazine publishers, such as The Washington Post Company's Newsweek, have gone on-line with forums to attract more readers. Likewise, children's book publishers such as Scholastic, have created on-line communities for access by teachers and students. Increasingly, newspapers are experimenting with various interactive services to "enhance reader engagement with the franchise" (Philo, 1995, p.16). In effect, newspapers can keep user’s attention to their Web site by providing more interactive services.

Philo (1995) stated that once local usage becomes 30% or more for the on-line edition, some very interesting newspaper sponsored services become practical, such as polls illuminating local opinion on a given issue. Philo (1995) described a scenario where the newspaper advertises that such a poll will be taken tonight via the on-line service, then it publishes the results in the next day's paper. Or the newspaper could arrange and moderate an on-line "town-meeting" between readers and elected officials, again, with results in the next day's newspaper.

Philo (1995) pointed out that some of the most compelling information is local information, because most households care about what affects their wallets (taxes, real estate values, retailer's sales, children's education, local government, etc.). This puts newspapers in a good position as they virtually own the franchise on local news and information for most communities. Seybold (1996) concurred, and found through surveys that the newspaper's traditional editorial content is not as important in the on-line environment as it is in the printed version. What is important to readers of on-line newspapers, according to Seybold (1996), are more local items like entertainment, community events, services and local sports results. Interestingly, Seybold found that with the exception of major, late breaking news, national news has little value in most on-line newspapers because it is available from many sources.

One unique feature of the newspaper Web site is the ability to publish instantaneously, while not having to wait for subsequent events. As an example, Brooks (1997) cited the

Dallas Morning News who chose to publish the alleged confession by Oklahoma City bombing suspect Timothy McVeigh on its Web site ( rather than waiting for Saturday morning's paper. Brooks stated that the Dallas Morning News may have been the first paper to use the Internet in this way, it probably won't be the last. Brooks also felt that in the future, print editors would have a hard time keeping their on-line editors from breaking stories on their Web sites until the printed edition hits the street. Many newspapers, however, have decided not to compete with themselves, choosing instead to make the electronic version available at roughly the same time as the printed version. Cochran (1995) believed that newspapers need to "scoop" themselves regularly, and until they do, there will not be enough of a reason for readers to turn to the on-line product.

Perhaps newspaper publishers are listening. Within minutes of the announcement of Timothy McVeigh's conviction on 11 federal counts related to the Oklahoma bombing, many newspaper Web sites had the verdict on-line. And, although TV and radio also announced it just as quickly, Web sites offered multimedia archives and far more in-depth coverage than radio, TV, or even print could provide (Kramer, 1997).

Not only can newspapers get news on-line within minutes of the event, they can also use the Internet to share their information with affiliates. Seybold (1995) described efforts currently underway to use the Internet as a means of sharing stories among newspapers, which could have the effect of eliminating the need for costly member organizations such as AP, Reuters, AFP and UPI (these are service bureaus that provide news feeds to the media industry). Virtual Wire, Newshare, and the New Century Network are all examples of these efforts. Virtual Wire, started by the Casper Wyoming Star Tribune offers free membership to organizations, allowing stories to be shared freely. Similarly, Newshare provides feature stores from newspapers, broadcasters, and independent journalists and writers. In exchange for providing their copyrighted content to all Newshare users, publishing members receive negotiated rights to reference and redistribute other Newshare-enabled content to their own users (Seybold 1995).

The New Century Network (NCN) on the other hand is an alliance of eight of the largest U.S. newspaper companies, creating a network of newspapers on-line. The goal of NCN is to set up a cooperative of newspapers that will share information with other member papers. Like Virtual Wire, the NCN effort points to the extinction of wire-service companies as newspapers collaborate with each other for information and transmission via an increasingly accessible Internet.

New revenue opportunities

Presstime magazine (Access as an incentive, 1996) stated that one way to attract subscribers is to offer something they want. It follows that providing Internet access to newspaper subscribers is one sure way to attract and keep subscribers. A number of newspapers around the country are now offering this service, including the Arlington Texas Star-Telegram. Since the program started in June 1996, thousands of upgrades have been accomplished, and hundreds of new subscriptions have been accepted, according to Presstime. In a similar promotion, Journal Newspapers Inc., Fairfax, VA., began offering Internet access with one-year subscriptions in mid-October, 1996. Today these papers have tens of thousands of paid print subscribers obtaining free Internet access.

Offering Internet access is like offering home delivery, while offering a Web page is like offering single copy, said Presstime (1996). Presstime stated, newspapers that create Web sites and then have people access them through other providers, have given up their claim to those people. "It's important to own the customer," Presstime (1996, p.18). As an example, Presstime discussed the e-mail capability that comes with owning the customer, giving the newspaper everything from database marketing to distributing advertising, coupon’s and sending renewal notices.

To make a profit on the Web, many newspapers are doing what they do best -- letting advertisers pay the cost of setting up and maintaining Web sites. This generally means that there are no subscription fees for readers, making it easier to attract a readership. Seybold (1995) cited the Casper Wyoming Star Tribune which is among several newspapers selling Web pages to advertisers for $25 per month. At the same time, the Star Tribune offers a link to the advertiser's own Web site for only $10. The San Jose Mercury News on the other hand offers headlines, article summaries, a feature story, classifieds and access to full news stories for $4.95 per month (only $1 per month for subscribers to the print version). Similarly the Nando Times (Raleigh, North Carolina) was charging $12 per year to access wire-service stories, syndicated items and special features (Seybold, 1995), however they have recently stopped charging, and all access to the site is now free.

Though most newspapers do not currently charge a subscription fee for their on-line product, Peterson (1996) stated that eventually, newspaper-sponsored information on the Internet will be available only to paying subscribers using access passwords. He believed that once there is a sufficient mass of users, and they get in the habit of getting their information on-line, publishers will then be able to charge. The challenge will be in finding the right balance between a subscriber model and a transaction, or "clicks" model.

Bernstein (1996) found several information providers who currently charge for their services and are apparently doing well. As an example, Bernstein found that the

Wall Street Journal has about 32,000 subscriptions to their interactive edition. Of these, about 60% pay the full price of $49 per year, while the rest pay an additional $29 per year on top of their print subscription. Another interesting site pointed out by Bernstein (1996) is Pathfinder (, which gathers news from well-known publications, combines this with personalized news filtering, creating a personal edition, and they charge $4.95 per month for the service.

Another good source of income, thus far, has been in on-line classifieds. Most newspapers have put their print classifieds on-line, in many cases charging an additional percentage of the print classified ad. Anderson et al. (1996) believed that the revenue potential of Web classifieds is in creating enhanced services, such as premium listings with photos, video and audio clips, buyer feedback links to sellers, on-line buying, realtor and auto dealer inventory listings, banner advertising, targeted display advertising, e-mail notification, and much more.

Anderson et al. (1996) stated that in-column classified ads, as well as classified display ads, are only part of the revenue picture for on-line newspapers. On most Web sites, original, on-line-only banner ads are another lucrative revenue source. Advertisers can place ads in specific sections (i.e. news, sport, features) or, for example, a local apartment complex might buy a banner ad for the rental section, or a moving company might want an ad in the homes for sale section. The possibilities are really endless, and the prospect of target marketing, where the on-line system can target ads to users of certain demographics, is very promising.

Anderson et al. (1996) also pointed out that a number of on-line classified solutions today include intelligent agents that monitor a database constantly, watching for new ads that match a users preferences. As an example, Outing (1997) described the San Jose Mercury News whose Talent Scout Web site provides a feature that notifies job-seekers and employers when a possible match enters the database. Additionally the site offers a personalized calendar that notifies users of events occurring in their profession, and a service that alerts the user to hot new jobs in his/her field based on their user profile.

Long term revenue streams will be required for electronic publishers to remain on-line. Whether these come from advertisements, selling subscriptions, offering Internet access, or charging for links to advertiser sites, Pogash (1996) believed that for newspapers to flourish in cyberspace, they need to play their historical role on-line. Newspapers need to, once again, become the civic resource and the community glue. In other words, newspapers need to become "less cool and more useful" (Pogash, 1996, 31). As an example, Pogash (1996) said that newspapers on the Web should help customers find a washing machine repairman, reserve theater tickets, reach city services, e-mail their city council members, renew their driver's licenses, and even check test scores for neighborhood schools.

Kline (1996) concurred, stating that newspapers need to play their historic role -- as town square, citizen resource, community forum and civic glue --on-line. Kline contended that the Internet allows businesses to reach once-distant markets, but more important is the fact that the Internet enables companies to better serve their own, primarily local, markets, where the vast majority of their customers are found. Cochran (1995) also felt that newspapers' strength in the on-line world will be in building the concept of "community journalism" or "public journalism" (Cochran, 1995, p.37). As an example, Cochran examined the Minneapolis Star Tribune's on-line product where he found the paper experimenting with forums for community groups in which the group members, not the newspaper, controlled the content and discussion.

Electronic newspapers

The electronic newspaper today is quite similar to television in the 1940's and 1950's in that it is a medium trying to find itself (Elderkin, 1996). Elderkin stated that newspapers will become electronic in a number of overlapping stages, each stage becoming more powerful and sophisticated than the previous one. He believed the first stage is here, with electronic database newspapers being accessed through the Web. An example of a newspaper Web page is shown in Figure 7.















Figure 7. A newspaper Web page from the Washington Post.


Though no-one can predict the next stages, Elderkin (1995) and Negroponte (1995) think these may include broadcast newspapers (newspapers broadcast to a receiving device over the airwaves), and virtual newspapers where a user would use a virtual reality headpiece to look at the newspaper. Because these stages are many years away, Elderkin contended that in the near future, notepad computers, palmtops and notebook computers will be used increasingly to carry text. These small size units can potentially carry an entire library of information, and Elderkin believed that the print industry will eventually evolve into this format. Though electronic newspapers could eventually take over from print, D'Amico, (1996) stated that they will never truly replace print until they are fully portable, giving the user the ability to carry it on the train, plane, bus, or to the bathroom. If this does in fact happen, newspapers will have to be in a position to provide information in laptop format if they wish to maintain circulation.

There are a number of ways an electronic newspaper could be distributed, including the Web, on-line services, BBS, CD-ROM, direct broadcast, satellite link, cable-TV, cellular communications, or any combination of the above. Most newspapers today appear to be focusing their electronic publishing efforts towards the Web. Stark (1994) described what an electronic newspaper can do:

Provide a front page with name, logo, main stories and index

Interchange main stories on a timed delay

Provide still, or animated advertisements

Jump to various sections with the click of a mouse

Hypertext to other relevant articles

Inclusion of sound and video

Keyword searching

Of course there are many other things that can be done including customizing news.

D'Amico (1996) found a shift in the focus from mass producing goods and services (i.e. traditional newspapers) to customizing products, such as personalized newspapers. As an example, the Farm Journal, a Philadelphia-based print publication with a subscriber base of 800,000, prints an average of 7,000 to 10,000 different editions each month, with targeted articles and advertisements based on each farmer's personal customer profile. D'Amico (1996) stated that once customers realize they can get customized goods and services at a price they are willing to pay, the provider (newspapers) will be in the driver’s seat. To make this happen, Web newspapers need to be in a learning relationship with the customer, where, over time, the newspaper learns more and more about the consumers' preferences, and gets better at providing for them. Once this happens, D'Amico (1996) believed it will be virtually impossible for a competitor to lure the customer away.

Rogers (1996) believed that directed news (customized) will compete with local newspapers, but in no way does it mean the imminent demise of newspapers. Rogers stated that even though directed news offers something new, it can never acquire newspapers' strongest asset, their trusted brand name. It is their brand name that newspapers can use to leverage their credibility on the Internet. Credibility is something that has been missing in many community newspapers for a number of years. Newspapers used to be an important part of what bound a community together, a common place for ideas and discussions. But as communities expanded and fragmented along racial and demographic lines, newspapers have become less and less the community "glue" they once were, and as a result have lost credibility.

Hollander (1994) believed a sense of connection is needed, and electronic newspapers offer an opportunity to bring people together in ways similar to talk radio. He cited a 1993 Times Mirror survey that found 70% of those surveyed tuned into talk shows to learn how different people feel about issues. Newspapers can take advantage of talk radio's instant communication and interaction, by offering a similar forum on the Web.

In many ways, the Internet has bound local communities together even as they undergo economic change. And, just because a person moves to a new locale, does not mean he/she will leave behind the news he/she is used to. For example, Somogyi (1995) pointed out that U.S. travelers in Europe are hard-pressed to escape CNN, and with the Web, one can be anywhere in the world and get to their local home-town news. He warned publishers to be aware of this fact when explaining the value of Web sites to potential advertisers.

Another area that newspaper publishers should be aware of, is in sound and video. Peterson (1996) found that sound and video are becoming big issues for newspapers. As an example, he pointed out that the Associated Press is beginning to supply stories, including audio and video, to their members, and because people would rather watch video than read, television stations are ahead of newspapers in this area. Because of slow access speeds to the Web, however, little video is being presented today. As access speeds increase, it can be expected that video will be used extensively.

If fact, Mann (1997) believed that video will be a big part of the presentation in the future. He felt that there will be news photographers carrying video cameras around for the smaller newspapers, and a full video staff on the larger newspapers. The big challenge for newspapers, said Mann, will be to learn how to translate print stories to video.

The explosive growth of the Web has presented broadcasters and producers of pay-TV channels with a great opportunity to develop low-cost interactive services that will play to their strengths, as well as leverage their extensive video and audio libraries. Fidler (1997) noted that nearly every network pay channel and local television station of significance, has established a presence on the Web since the end of 1995. Like print publishers, broadcasters have the great advantage of being able to easily promote their Web site through their core product.

At this point, broadcaster owned Web sites are simply supplementing their radio and television programs. Kean (1997) found that the major television networks (NBC, ABC, CBS, and Fox) have utilized the Web mostly for promotional space, and the same scenario is true in the magazine industry. A 1996 study by the Magazine Publishers of America (MPA) found that 75% of magazine publishers are using the Web for promotion of their printed publications, rather than for profit. Less than 20% of the magazines surveyed were realizing financial profit on the Web.

While the public enjoys a wealth of information, news and entertainment on the Internet, most of it free on the Web, publishers are wondering if the revenue steams will ever support Internet publishing. Outing (1996b) found that pundits are predicting a backlash, with publishers killing off Web sites that do not become profitable. Outing believed the crux of the problem is that the emerging business model on the Web requires publisher to give away content in order to attract a sufficient number of viewers who, in turn, attract advertisers.

Newspapers are struggling, selling on-line banner ads, which are generating a small fraction of the revenues of comparable display ads printed on newsprint. Case (1997) explained that there is little industry-wide uniformity regarding rates and sizes of on-line display, or banner ads, a fact that alienates potential advertisers. In addition, the effectiveness of Web advertising is uncertain. 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 ads. Furthermore, 50.3% never click on ads for more information.

At present, newspaper circulation is easy to track. By counting the number of copies printed and delivered, minus the returns, these numbers can easily be audited and verified by newspaper auditing firms. Electronic newspapers, however, will require more detailed and sophisticated auditing systems (Elderkin, 1996). Whether it's measured in terms of hits, page views, or click-throughs, Web site traffic is what determines how much a site can charge for advertising (Resnick, 1997). How can potential advertisers be assured that the advertising sales claims made by the newspaper are accurate, and how can advertisers be assured that their advertising bill is correct? Properly auditing electronic newspapers, thus far, has proven to be difficult, especially since a system to do so has not yet been developed (Elderkin, 1996).

Case (1997) 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 lack the motivation, technological sophistication, and money to be effective Web advertisers. As a result, local newspaper sites are relying more on big national advertisers such as Microsoft, IBM and AT&T to fund their efforts.

So far, the Web has been following a path similar to that of broadcast radio, where only the technology providers made money. In its early development, those who benefited financially from the Web are the technology companies selling essential software, and computer hardware, as well as telecommunication companies providing Internet access for consumers and high-speed lines for information providers. Fidler (1997) stated that, to date, very few individuals or companies publishing on the Web are benefiting financially.

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 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).

Levins (1997) also cited recent polls of on-line editors which indicated that many American newspaper companies are operating on business plans that call for their Web sites to become profitable two years after start up. In many cases this may be an impossible feat. Levins explained that turning a profit on a new publishing product in two years, even in an established medium, is pretty remarkable. As an example, Levins pointed out that in the magazine industry, it normally takes five or six years to become profitable. Levins concluded that local newspapers are heavily dependent on local advertisers, and will continue to be dependent on these same advertisers to fund their Web site. However, the Internet users in those communities do not appear to have reached the point that makes that kind of local Internet advertising practical.

Rowland (1997) concurred, and stated that with the exception of search engines, CD shops and pornographers, few Web sites are making money. "It boils down to this: if you compare it to television or even the movies as a medium of mass entertainment, commercial entertainment, the Net just isn't making it" (Rowland, 1997, p.1). Rowland does think that the Web threatens to become a true mass medium. However, at this point in time, he feels the Web is too expensive (for computer hardware, etc.), too time consuming, and too fragmented for the average consumer to get excited about it.

Finally, Seidman (1997) concluded that small content providers and a few large companies will be able to generate some profits on the Web. He believed, however, that mid-size companies will mostly fail because the cost of producing a site is prohibitive, especially when compared with what companies make from site advertising or subscription fees. And, with Web growth slowing, he went on to say that marketers need to look beyond the curiosity fad that has, so far, characterized on-line's evolution. Seidman believed that marketers need to identify compelling new reasons for people to log on and new ways of sustaining existing cybercitizen interests.


One of the underlying themes in numerous articles and at industry conferences during 1997 was that newspapers need to partner with other industries in order to build a strong alliance in the community, and ultimately make a profit. Eiley (1996) stated that the intense new competition in the on-line environment could prove disastrous for local newspapers. And, with essentially no growth in daily circulation since 1990 (according to the NAA), he believed that newspapers must "partner" with other content providers to be successful in the on-line world. The most obvious potential partners are Microsoft and America Online. Eiley (1996) felt that partnering would be most advantageous to smaller weeklies, whose demographics most closely mirror Internet users. "The right partnership could create a new media powerhouse", said Eiley (1996, 2). As an example, he contended that Microsoft could partner with the New York Observer, as well as local TV and radio stations for content, and with the New York Press for classifieds, creating a product that could challenge The New York Times.

Knight-Ridder of Miami recently partnered with Zip2 Corporation to add real estate, automobile and entertainment modules to 30 of its on-line newspapers. CareerPath is another company partnering with newspapers such as the Chicago Tribune, providing job listings, resume services and job matching. Anderson et al. (1996) described, which is owned by six of the largest U.S. newspaper chains, as being the leader in the number of employment ads placed and the number of consumer searches requested.

Instead of partnering with a software company, like Microsoft, some newspapers have decided to partner with their local competitors. Eiley (1996) described efforts by the

Boston Globe and the Los Angeles Times, both of which have partnered with smaller competitor newspapers, local TV and radio stations, as well as community organization and arts establishments on-line. Similarly, the New Century Network, a consortium of nine major newspaper companies and 20 affiliates, plans to resell content as well as national advertising for the industry (Eiley, 1996).

Hume (1995) stated that computer, telephone, cable, and other businesses will provide the new media delivery systems. However, the one thing they will be hard pressed to produce is the "brand name" content that large media companies can offer. This is why so many delivery businesses have been seeking partnerships and contract arrangements with existing news and entertainment content providers.

Although partnering could prove to be a good move for most newspapers, there could be problems. Resnick (1997) believed that for newspapers, going on-line means extending the brand name in a new medium. Many newspapers are partnering with other companies, and in doing so, may be losing their brand name, and their brand name is what got newspapers to where they are today. Finally, newspaper publishers need to be aware of who they partner with, and be especially cautious with contract terms. A partner today could become a competitor tomorrow.

In summary, newspapers are in danger of losing their revenue streams. Eiley (1996) believed that newspaper companies willing to cannibalize their own products and form partnerships (such as Knight-Ridder, Gannett, Fox, Hearst and Tribune) stand the best chance of making a profit. "For newspapers to successfully compete, they will have to forgo their egos and begin to bargain their brand for a share of classified and advertising revenues by making nonexclusive partnerships" (Eiley, 1996, p.3).

Electronic publishers on the Web

A study from AJR Newslink (1997) surveyed 32,803 Web news readers and found that the top news Web site was not a newspaper as one might expect, it was CNN Interactive. The top 12 ranked in order are:

                    1. CNN Interactive*                 7. Los Angeles Times

                    2. Washington Post                 8. San Jose Mercury News

                    3. USA Today                         9. Jerusalem Post

                    4. New York Times                 10. Washington Times

                    5. NandO Times                 11. ESPNet Sports Zone*

                    6. Wall Street Journal        12. Reuters New Media

*Non newspaper site.

Typically, newspaper Web sites do not look like their printed counterparts, and one of the problems for newspapers on the Web is in how to differentiate the newspaper from other providers of on-line services. The following figures show two Web based newspapers, one (USA Today) which is run by a print newspaper, the other (CNN) which is produced by a television network.

Figure 8. USA Today Web page.











Figure 9. CNN Interactive Web page.


Many electronic newspapers, including these, have an index along the left side of every page which many people refer to as "the rail." The rail generally starts at the top of the page and runs all the way down to the bottom. By clicking the mouse in one of the boxes on the rail, readers are guided to featured stories or specific sections. The idea is that editors do not want users to get lost going from one section to another, and they want to make it easy for the users to get around on the system.

A computer screen contains much less space than a page in the newspaper. As a result, on-line versions tend to look dramatically different than their print counterpart. Harper (1997) found that many sites use a process called "layering", where the first layer or page of a digital story contains a headline, a digital photograph and text designed to make the user continue to the next layer. In a way, this process is similar to "jumping" stories from the front page to inside pages. Harper explained that these pages usually contain about 500 words, with the option for the reader to follow a highlighted path with the click of a mouse.

Future of the Internet

As reported by It's the future (1996), the Internet will have developed into a fully immersed 3D world by the year 2010. This world may be modeled on the real world -- cities, towns, houses, trees, lakes, mountains, etc., or it may have a brand new topography. Either way, there will be a gigantic new world out there in cyberspace. This 3D world will open up a vast array of opportunities, with Virtual Tourism being one of them. Thus, it is likely that a long-term goal for information providers will be to create communities, attracting consumers by making them feel at home.

McGovern (1997) predicted that Internet-based auto loan transactions will account for 20-30% of the market by 2001. Backing this up, Chrysler corporation announced that it expects 25% of its sales will be from on-line within 4 years. However, the biggest growth area currently appears to be in travel, where Forrester Research reported $126 million in retail travel sales over the Internet during 1996.

Outing (1996c) stated that 1997 will be a pivotal year in the electronic publishing industry. Consumer interest is high, however several barriers to mass use of the Internet still exist, including slow access speeds (lack of bandwidth), and an on-line transactions infrastructure. Outing found industry observers in agreement, in that a number of things will have to happen to make the Internet a mass medium. These include, a method for measuring who is visiting the site (for demographic purposes), a micro-payment scheme for ease in purchasing, nationwide availability of broadband Web access (with reasonable cost) to the home, via cable modem, satellite, and perhaps by telephone, the acceptance of WebTV and much stronger use of it, and most important, the willingness of financial backers to continue to fund Web sites.

Whether the Internet actually develops into a 3D medium or not, the Internet is here to stay, and will most likely grow. Newspapers, which once were the community glue, need to look

seriously at creating digital communities. It is doubtful that the Web will replace newspapers anytime soon, but publishers need to realize that they cannot lose if they retain market share on the Web (Outing, 1996c).

Fulton (1996) stated that some of what we hear about the future is hype. For example, two years ago, pundits were busy touting the future of interactive television, claiming that everyone would be ordering movies on demand and enjoying the 500+ channel universe. Today, however, most interactive TV trials have disappeared into technical and balance-sheet quagmires, while hundreds of new "channels" are added to the Web every day. Fulton (1996) believed that the next publicity blitz will be the Internet through your cable television connection, WebTV.

Bill Gates (as reported by Gage, 1996) stated that to really understand the Internet phenomenon, you have to think ahead 10 to 20 years, when a broad set of people will be using the Internet to get information as part of their daily activity. These people will expect that everything they do, whether it's scheduling a doctor's appointment, negotiating a contract, or shopping, will be done using the Internet (Gage, 1996).


Lorek (1996) stated, nearly everyone has heard about the Internet, however, many people don't know what it's about. A new device called WebTV, which can turn an ordinary TV set into a World Wide Web surfing machine hopes to change all that. WebTV Networks have created a set top box that allows consumers to hook up to the Web through their TV, providing complete access to the Internet.

Lorek (1996) explaind that with WebTV, consumers can receive electronic mail, lists of Web sites, entertainment, news, city guides, and will have the ability to shop electronically. WebTV works through a television set and a phone line, allowing users to explore the Internet and Web without computer knowledge and without an expensive personal computer. Lorek believed that the Internet needs to find new users and build relationships that will allow it to flourish. Yankelovich Partners (as reported by Lorek, 1996) felt that WebTV might be the answer. In October 1996, Yankelovich Partners surveyed 1000 adults that, at that time, did not access the Internet. They found that 52% would rather access the Internet through their TV, compared to 31% who would rather access through a PC. Interestingly, about 35% of the U.S. population had a computer at the time of the survey.

WebTV is trying to attract the average person by providing them Internet and Web access through a television set. Hood (1997) explained that even though WebTV is a proprietary network, they take the complexity out of the service by controlling the hardware and the access.

Hood believed bringing the Web to TV is the first step in making the virtual community happen.

Crosbie (1996) stated that the bulk of the general consumer population is intimated by technology and its complexities. He found that the general consumer population clearly exhibits different behavior than do the "technosavvies" (Crosbie, 1996, p.8) who currently use the Web, and stated that on average, the general consumer population watch more than 110 hours of TV per month.

Dickinson (1997) stated that Internet commerce and Internet publishing cannot meet their full business potential until the Internet becomes a mass medium, reaching virtually every home in America, and ultimately the world. Dickinson described two barriers to a mass media Internet: cost and performance. These are the same barriers that early TV and radio faced. Dickinson felt that WebTV may eventually help eliminate these barriers, but for now he is pessimistic, pointing out that WebTV does not currently support Java, Active-X, Shockwave, or anything more interesting than RealAudio.

A number of companies are moving into the WebTV industry, including Gateway, NetTV, Thompson/RCA, Compaq, Netscape, IBM and most notably Microsoft, who in 1996 formed a strategic relationship with WebTV Corporation. Costello (1996) stated that with Microsoft's announcements and collaborations, including the one with WebTV, it is becoming clear that software giants want to be a major force behind the Web, whether displayed on TV or PC screen.

Outing (1996e) stated that WebTV will bring a new audience of novice users to the Internet, increasing the chances for Web publishers to make a profit. WebTV is probably the single item that holds the promise of moving the Internet one step closer to having a mass audience. Outing (1996e) found much skepticism about WebTV, with pundits comparing the Internet on a television set to the failed Videotex experiments in the early 1980's. However, he

contends that today, the Internet is far more diverse, with more variety and content to satisfy most consumers than Videotex ever thought of having.

Have and Have Nots

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, or 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 resulting outlook for WebTV is dismal because along with the 30% of the households that are outright not interested, the 40% with computers are not interested in WebTV either.

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

Bill Gates (as reported by Gage, 1996) stated that not everyone is going to be able to have Internet and/or Web access at home. Consequently, Gates felt that we should use schools and libraries to provide these services. Fidler (1997) argued, however, that even though schools and public libraries may provide free or low cost access to the Internet, they are not available all the time. Another consideration is that interactively accessing and processing information from electronic databases and on-line services may not appeal to a lot of people.

The Daily Me

Nicholas Negroponte, former Director of the Media Lab at the Massachusetts Institute of Technology has been cited in many articles, especially about his view of the future newspaper that he calls "The Daily Me." The Daily Me is a newspaper assembled by a computer from parts of other electronic newspapers (or just one newspaper), based on the computer's knowledge of the user's interests. If the user wanted to read only about sports each day, then sports is all the user would get. To paraphrase the New York Times motto, it would be "All The News You Think is Fit to Print" (Potts, 1994, p.20).

Potts (1994) however, felt that the idea of The Daily Me is badly flawed. He explained that news is by definition, what is new. It is not something you already know about. A steady diet of sports might be great in part, but it will not tell you about what is going on in the rest of the world. Think about how many times, you as the consumer, have read a newspaper story with much enthusiasm, just because you happened to see it. Something about the headline, photo, or the subject matter grabbed your attention and made you read it. Potts (1994) contended there is no computer filter in the world that would have given you that story based on your personal interest profile.

Summary Analysis

Fidler (1997) foresaw a day when Computer-Mediated Communication (CMC) networks would become as intimate as one's self. He also suggested that the boundaries between the real world and virtual world would dissolve, so that advanced forms of interpersonal cyber media would become an integral part of many people's daily lives. The process of building virtual communities through CMC networks has been going on for nearly two decades, but it has only recently included people who are non-technical and live their lives outside of the world of academia and scientific research. Although an abundance of information is readily accessible today, without the need for Computer-Mediated Communication technologies, Fidler (1997) contended that, in the future, cyber media will routinely employ personal intelligent agents to gather, sort, and filter information and entertainment to match individual requirements and tastes. Filtering of information will certainly be necessary because of the vast amounts of information that will be new and available on a daily basis.

On the Web, with flashy graphics, Shockwave and Java animations, RealAudio, digital video and a host of others, the competition for newspapers is not with other newspapers, but with television. Brueckner (1996) believed this was happening because most people think about the Web in terms of a medium they already understand, and the medium they understand best is television. He went on to say that traditional advertising, TV, radio, and print, have always operated on the broadcast model. That is, the ads piggyback on programming or editorial content. Because the consumer is used to seeing ads, they generally tolerate them. However, Brueckner found that much of the Web community takes an active dislike to advertising when they recognize it, and the broadcast model of a Web ad is designed to look just like what the community recognizes, an ad.

In an interactive site, marketers presume that content is what the consumer is looking for, taking the attitude that "you found your way to my site, so you must be interested in my products" (Brueckner, 1996, p.60). The problem with this model, explains Brueckner (1996), is in the assumption that people will be interested in your Web site and your products. In other words, if you build it, they will not necessarily come, not until they have a pressing interest to do so. Brueckner (1996) felt that too much of the Web's appeal is novelty, and marketers are spending too much time trying to mimic television. He stated that the Web simply does not have the bandwidth to compete as a broadcast medium, so when the novelty wears off, and it inevitably will, where will the value reside?

The bottom line of any publication is the bottom line. How will on-line sites make money? Although increasing readers, listeners, or viewers is an important goal for all mass media companies, it really is only a part of their overall marketing strategy. An essential part of that strategy is the ability to attract advertisers. However, to attract advertisers, Web sites must demonstrate their ability to attract and hold customers that advertisers are looking for. Without the continued support of advertisers, mainstream media companies could not survive (Fidler, 1997).

Meyer (1997) stated that despite the rapid growth in on-line publishing, profitability of on-line newspapers remains problematic. Local advertisers continue to express hesitancy about advertising on-line. Meyer (1997) claimed that the Internet has been hyped beyond most people's reason, and is used by no more than 4% of the audience. This is regarded by many as grossly insufficient to make a general-interest local publication profitable. Moreover, non-newspapers continue staking claims to increasingly large portions of the on-line advertising dollar. As an example, Meyer (1997) pointed out that the top on-line "newspaper" in both 1995 and 1996, was not a newspaper at all. It was Cable News Network's, CNN On-line, and, the number two spot was held by another cable operator, C/Net Central, from USA Networks.

Meanwhile, agencies representing major advertisers have begun placing their ads only on sites that can deliver millions of advertising views (or "impressions") each month. Meyer (1997) pointed out that it is simply impossible for smaller on-line newspapers to compete with search engines, meta-indexes and other non-originating services which can provide large audiences within their global reach. The poor response from local advertisers and the tremendous competition from large national sites has, in one way or another, caused the downsizing of some newspaper on-line sites.

Meyer (1997) pointed out that at least one on-line publisher has withdrawn to inactive status, and many have trimmed staffing by two-thirds or more. He believed that there is only a small niche of information-seeking people in the general public, and projecting much growth from this small group is inviting a tragic repeat of the 1980's Videotex failure.

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. Addressing a "public" rather than an "audience" may be essential to the future of news. However, a more strategic approach will have to be taken in the future, to meet the niche market demands of the consumer (Hume, 1997).

Fidler (1997) believed that all media companies now see themselves struggling, not just against each other, but also against a changing economic order, new competitors, social, economic, and racial diversity, a struggling educational system and declining literacy, and a public that, in general, has a distrust and disregard for mass media. With the current level of audience and advertising fragmentation, even without the threat of the Web, Fidler (1997) contended that fragmentation is nearly an insurmountable obstacle to future growth for all existing mass media companies. He stated that a number of experts have concluded that the growth of cyber media will ultimately fragment audiences and advertising to a point where mass media will no longer exist. Whether or not this will happen remains to be seen, however there is no doubt that media companies will face even stiffer competition as a new generation of entrepreneurs embrace digital media.

Today, newspaper publishers are building electronic initiatives around their traditional print product. Philo (1995) pointed out that some newspaper companies are going beyond that by acquiring businesses solely for their promise as beneficiaries of electronic interactivity (e.g., Tribune Company's purchase of Compton's NewMedia). For most newspaper publishers, it makes little sense to view the World Wide Web as a main electronic publishing outlet. This is because the Web is exactly what its name says -- world wide -- and the essence of a newspaper is its local focus. It may, for example, be interesting to visit a Web site in Europe, but the novelty soon wears off. If you live in Atlanta, you will probably stay interested in the Atlanta area weather forecast, this weekend's garage sales and how your favorite high-school basketball team is doing. Seybold (1995) contended that even though the war in Bosnia is a concern, people are more likely to spend money keeping an eye on the local school board, the city council or the state legislature.

Seybold (1995) felt that the goal of newspaper publishers is two-fold: "to get print readers to see you as their primary source of local on-line information and to get maximum mileage from the local information that you are already gathering" (Seybold, 1995, p.10). In other words, newspapers should use the Web to attract subscribers to the information services that newspapers can provide. In addition, Seybold contends that newspapers should set up their own newsgroups for discussion of local issues.

Of course a newspaper’s Web site is available to anyone with a browser, but with 50+ million pages on the Web, the chances of anyone surfing over to the local newspaper's site will be slim. Crosbie (1996) described the Web newspaper business model which 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 automatically delivered to them in the form a newspaper. He reported historical trends showing the average consumer's disposable time shrinking to less than four hours of free time per day.

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).

The threat to newspaper classified revenue in general has been discussed in numerous articles and trade shows during the past year. Much of it has been doom and gloom with estimates of classified declines reaching into the 60% range (Liebeskind, 1997). Liebeskind, however, 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, cannot compete with newspapers because they cannot get enough listings to achieve "critical mass."

Philo (1995) believed that over the next several years, publishers will defend their market area without necessarily any meaningful financial gain, and, if these incumbents are successful, new competition will be contained. Despite their advantage as incumbents, traditional publishers must consider pre-empting new competition by setting up Web services first.

What is needed

Saffo, as reported by Fidler (1997) stated that widespread adoption of a new technology will not take place until consumers perceive the new technology to be useful and affordable. What if there were a way for a newspaper to deliver news, weather, sports, and customized electronic coupons to a pocket-sized shopping device small enough to fit inside a purse? Simonds (1994) stated that with not much effort, newspapers could use their existing print production process to drive an array of news, information, advertising and electronic shopping services. If done properly, this would create the critical mass necessary to keep electronic editions going, and could help to legitimize Personal Digital Assistants (PDA) as a new consumer electronics phenomenon. For example, a shopper would be able to utilize a bar code displayed on the screen of their PDA as a coupon for an instant rebate on a product advertised in the newspaper.

The type of data that would become available through a PDA includes place and time of purchase, and a profile of the consumer. Hume (1995) believed that early in the next century, PDA's will be common place, combining all the features of a cellular phone, computer, television, radio, and fax machine into a unit no larger than a paperback book. In it's simplest form, the unit would be plugged into the consumer’s home information center all night, receiving updated versions of customized news. In yet another version, updates might come to the unit all day long via the cellular phone system or by satellite.

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. He pointed out that some portable devices are available today such as the Apple Newton and Sharp Zaurus, but he contends that they are not suitable for reading digital editions of mainstream publications and books. Fidler did, however, consider these devices adequate for reading small amounts of text, and cited Japan's third largest national newspaper which is currently using a number of these devices.

Fidler (1997) explained that in early 1996, the Mainichi Shimbun newspaper became the world's first publisher to begin distributing daily editions specifically designed for reading on a portable electronic display. With updates twice daily, five days a week (more frequently for breaking news) the handheld Zaurus can store up to 18 stories for offline reading, and has the capability to receive and display photos and graphics. Fidler found that the newspaper expects to reach its goal of 50,000 paying subscribers in 1997. On the other hand, the solution that Fidler proposes is what he calls a portable tablet, which at about the size of a thin notebook can be carried just about anywhere.

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 will 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.

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 is 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. Imagine 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. "Ultimately, digital print media will likely give travelers access to their regional newspapers as will their other favorite publications, from nearly any hotel or airport in the world" (Fidler, 1997, p.262).

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 2 viewing screens connected by a hinge. This system would display color pages as well as full motion video. Elderkin contended that these should be sold in drug stores for around $10-$20. Certainly, if this came to pass, a great many people would use the electronic newspaper, but pricing that low is not foreseeable in the near future. However, there is no doubt, when a portable computer starts to be used by a large number of people, the newspaper industry will be radically changed (Elderkin, 1996).

For most Americans, the fascination with new inventions and technological innovations has been with the opportunities and benefits they might yield, as opposed to the details of how these devices work. Fidler (1997) pointed out that with the announcement of nearly every major discovery or breakthrough during the past two centuries, a deluge of wild speculation proclaiming the birth of a new era has resulted. The Web breakthrough is no exception.

Although digital technologies will give individuals greater control over the content and scheduling of mainstream newspapers, magazines, television, and radio, they are unlikely to bring about the end of mass media. As Fidler (1997) pointed out, mass media have evolved and become an essential part of our societies because they fulfill human needs for shared information and entertainment. In essence, mass media provides the cultural glue that bonds large communities of diverse people with common social, political, and economic interests.

And, because 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, 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 publications, books, and other documents that they can read anywhere, anytime. (Fidler, 1997, p.258).

The contribution this study will make to the field

Since the formation of the Web, the newspaper business has been in turmoil (Paterno, 1996). Millions of dollars have been spent by newspaper publishers to create Web sites, in hopes of fighting off any competition that may, in the future, come about. While there have been research studies performed on the Internet, the Web, and some on Web publishing in general, there has not been a comprehensive study of the effects the World Wide Web is having, and will have on newspaper publishers.

The survey included as part of this dissertation, surveyed not only newspaper Web publishers, but also magazine, radio, and television Web publishers. This then is the first survey of its kind, including publishers from the four major media industries.

While large newspaper publishers and chain newspapers are mostly aware of the Web, their market, and how to combat Web competition, many smaller organizations need help in making critical decisions as to what to do on the Web. The analysis of the literature, the survey results, and a look at what other Web publishers are doing, will provide the newspaper industry with insight into future directions they should take.

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