Good story from todays WSJ ..
Washington Post Sees Modest Returns
From Web Operations, Stays the Course
By ERIN WHITE
Staff Reporter of THE WALL STREET JOURNAL
Washington Post Co. doesn't love the Internet. But it knows it can't leave
it.
As newspaper companies go, Washington Post is running one of the more
successful Internet operations. Its washingtonpost.com Web site
(www.washingtonpost.com) reaches 20% of Washington-area Internet
users, making it the 13th-ranked site in the region during the third quarter
ended September 1999, according to Web-traffic tracker Media Metrix
Inc. The typical local reach for a newspaper site is closer to 5% to 10%.
But spending on the Post's Web operations is likely to eat into the
company's profits for years. Its 1999 losses on Internet-related operations
total roughly $65 million. It spent an estimated $80 million to $85 million in
1999, while generating only about $17 million in revenue.
Many other
newspaper
companies are
in the same
bind. Most
think they have
no choice but
to spend
heavily to
protect their
cyber
beachheads
against
Internet-only news competitors.
Some analysts think newspapers have the edge over their Internet
competitors because they have established brand names, ready content
and a history of serving local communities. Traditional publishers also have
established revenue bases. Right now, "it's the newspapers' game to lose,"
says Patrick Keane, a senior analyst at Internet specialist Jupiter
Communications in New York.
Yet the business model of offering news and getting ads isn't enough to
thrive on -- especially when specialized Internet rivals are clawing at
newspapers' dominance of local offerings such as classified advertising,
sports scores and weather. Web companies have beaten newspapers to
revenue-generating ideas that newspapers wished they had done first, such
as local Web auctions and providing Web space for community groups.
How long will the Web losses continue? "I think if we knew that, we'd all
feel a lot better," says Washington Post Chief Financial Officer John B.
Morse Jr.
A closer examination of Internet spending "is now going to be a religion,"
says Christopher Schroeder, who became the Post's new publisher for its
Newsweek and Washington Post Web sites last month. Although he says
the Post continues to invest for the long term and that there is "no pressure
at all towards profitability," he aims to re-evaluate every one of the site's
projects to make sure resources have been allocated appropriately.
Part of the fiscal-discipline strategy involves partnerships such as the one
announced in November between the Post and MSNBC, the cable
channel owned by Microsoft Corp. and General Electric Co.'s NBC
television network. The two news organizations now share editorial,
technological and promotional resources.
There has been some
belt-tightening on the
Web. When
washingtonpost.com
was launched in 1996,
politics editor Mark
Stencel sent four or five
online staffers to the
Democratic and
Republican conventions
to report on events that
also were being covered
by the print edition of
the Washington Post.
Today, online staffers go
to events to get material
for the site, but
washingtonpost.com
doesn't have a single
staffer whose job is mainly to break news for the site. Instead, Web site
"producers" package content from the newspaper and assemble online
features.
Attracting more eyeballs -- the statistic that translates into advertising
dollars -- remains a challenge. To grab readers who saw the morning
paper, washingtonpost.com in September introduced "P.M. Extra," a 1
p.m. update that includes stories from the Washington Post newspaper
staff, and copy from the Associated Press and other news services.
Trying to garner a slice of e-commerce, washingtonpost.com recently
launched onwashington.com (www.onwashington.com), a regional Internet
portal that offers local users free e-mail, links to shopping sites and
directories of local businesses. The hope is to attract advertisers to
audiences targeted on the portal's specialized subsites, including politics,
entertainment, community-oriented pages and general news. Washington
Post executives see other profit possibilities for community groups that use
onwashington.com to post their activities, including selling wares with
Washington Post receiving a small fee.
Last week Washington Post publisher Donald Graham named Boisfeuillet
Jones Jr. to the newly created position of associate publisher. A Post
spokesman said one of the reasons for the appointment is that Mr. Graham
wants to focus more on the company's Internet ventures.
Washington Post has some good company printing Internet red ink. New
York Times Co.'s Internet unit, Times Co. Digital, which just announced
plans to create a tracking stock for its Internet businesses through an initial
public offering that could raise as much as $100 million, has said it expects
to post a loss of $40 million to $60 million in 2000. Knight Ridder Inc.,
San Jose, Calif., which owns the Miami Herald and San Jose Mercury
News, plans to step up its Internet spending this year, delaying a previous
target to break even by 2001, despite a projected 75% rise in 2000 Web
revenue. Knight Ridder doesn't disclose bottom-line numbers for Web
operations, but says its Web ventures have never been profitable.
Some publishers see glimmers of hope for near-term profits. Gannett Co.,
Arlington, Va., whose USAToday.com (www.usatoday.com), launched in
1995, is the most heavily trafficked online newspaper address according to
Media Metrix, said the site began to show a profit in the second half of
1999. Despite some losses on Gannett's other newspaper Web sites, a
spokeswoman says the publisher is moving toward Web profitability and
doesn't expect to post a bigger loss this year despite increased Internet
spending.
Dow Jones & Co., publisher of The Wall Street Journal, says wsj.com has
had profitable months, but won't comment on whether 2000 will be its first
profitable year. However, wsj.com is one of the few newspaper sites that
charges a subscription fee. Washingtonpost.com, nytimes.com,
USAToday.com and Knight Ridder's newspaper sites are all free.
With much of its stock in friendly hands -- all of its Class A shares are
owned by the Graham family -- Washington Post may enjoy more freedom
to sustain continuing Internet losses than other traditional media companies.
But company officials say they don't consider Web investments a matter of
choice.
Write to Erin White at erin.white@wsj.com |
