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Internet hacks: Web news cashes
in
By John Berthelsen
 After
the bubble years in which Internet publications burned
through a phenomenal amount of other people's money, web
journalism is starting to take off. It may hold ominous
implications for newspapers globally, but it could well
save journalism itself.
Until very recently -
mostly in the past six months - nobody had figured out
how to make money off Internet journalism. Now, they
have, partly because very recent, rapid changes in
technology have made the web more reader-friendly and
more receptive to advertising. But it is mostly
conventional newspaper companies that have the
editorial, advertising and marketing resources to take
advantage of the 'Net, not the startups, or e-zines as
they are called.
Inexorably, all media are
losing readers to the 'Net. According to an exhaustive
study of US at-work Internet users by the New York-based
marketing research firm eMarketer, those who use the
web, particularly at work, have cut their television
viewing time by 28.8 percent, their magazine reading
time by 22.5 percent and of newspapers by 23 percent.
These numbers are for the United States, but they are
certain to apply to the world at large, and Asia in
particular, as time passes.
In the study done in
conjunction with the Wall Street Journal Online, titled
"The Elephant in the Room", eMarketer found that a lot
of people in the office are using their computers for
purposes other than work. Some 50 million to 60 million
are online at the office in the US alone, of about 135
million total viewers. These web viewers are more
affluent, more adventurous, better-educated and younger
than newspaper readers. Between 43 and 52 percent make
upwards of US$75,000 a year. Another 21.7 percent earn
more than $100,000. The vast majority - 70 percent -
have a college degree or higher. Baby-boomers and
generation-Xers dominate, with 23.7 percent aged between
25 and 34, and 29.4 percent aged 35-44.
They
also use the web to shop. Some 60 percent of the 53
billion annual online consumer dollars are spent at the
workplace. Of these at-work users, 45 percent notice ads
online and say the ads influence them. The average total
time spent online at the office per Internet visitor
last November was an amazing 35.5 hours. Advertisers are
awakening to these facts. A full quarter of users claim
to be addicted to online meandering while at work.
They are also increasingly likely to use the
Internet for news. Some 35 percent say they refer to the
Internet for news at work, followed by 25 percent who
rely on newspapers, 21 percent on magazines and 17
percent on radio. A minority - 9 percent - say they
refer to television or cable. (Apparently there is some
overlap - the total is 107 percent.) Watching television
at work can get you fired, but searching for the news on
your computer probably won't.
Two major new
factors are responsible for the sudden change in
fortunes.
The first is the growing ubiquity of
fast Internet connections that allow vast amounts of
information to be piped to computers. Broadband means
that for users, getting to information is no longer
tedious and frustrating. It is also always on, spurring
viewers to check their favorite sites as many as 30-40
times a day instead of once or twice, as they would do
with dial-up service. Particularly in the Asia-Pacific
region, broadband is projected by eMarketer to grow from
5.8 million computers in 1990 to 67 million by 2005.
Second, technological advances have made it
possible to embed ads in journalistic copy itself, as
they are in newspapers and magazines, and to tie the ads
to articles related to those interests, rather than
having to resort to annoying pop-ups and banners.
The growing upswing in Internet revenues and
readers is reaching a kind of critical mass that has
been growing for several years, according to Robert S
Cauthorn, vice president for digital media for the San
Francisco Chronicle. Media buyers now have online
entries on their buy sheets that they use to solicit
customers. Simply adding that category has made
advertisers and media buyers conscious of a new - and
effective - way to reach the public.
It is
beginning to pay off. For instance, the New York Times
went from a $7.5 million loss on its Internet site in
2001 to an $8 million profit in 2002 - a swing of nearly
US$16 million in a single year, a spokeswoman says. The
Sacramento Bee, a regional newspaper based in
California, says its website earned $6 million in 2002,
some three-quarters of that from classified advertising.
The San Francisco Chronicle is privately held,
and Cauthorn wouldn't describe revenues. However, he
commented, "I can tell you that our revenues are growing
faster than those of our parent organization, and that
[in March] we had the highest revenues in our history.
The reality is that this year, it has become clear that
the Internet is mass media." SFGate, the Chronicle's
website, is the fourth-most-active news website in the
United States.
The Washington Post also declined
to discuss specific numbers. But, said George Nolan,
communications coordinator for Washington Post/Newsweek
Interactive, "If you look at advertising across all
media last year - radio, television, print - at best the
industry was flat or down by different estimates. At the
same time, our online advertising has been surging
upwards. In the last year, for non-classified
advertising, [the Internet site] was up 36 percent, and
up 80 percent for the fourth quarter."
Officials
with several newspapers and online sites say they expect
steady, long-term growth in revenues, not the kind of
spectacular changes that drove the dotcom bubble of the
1990s into wishful hysteria. They are also gaining
readers whose cost base is dramatically reduced. There
is obviously no need for paper, at about $450 a tonne,
nor is there a wide range of distribution costs
including printers' salaries, trucks to get the papers
through traffic, and fixed costs for presses, etc.
Cauthorn describes the cost of delivering the news as
"infinitesimal" compared with print journalism.
Figures on Asian Internet journalism are not
readily available, and requests to the region's top
papers have gone unanswered. Nonetheless, most if not
all of the major newspapers in Asia maintain readily
accessible and informative websites. Most also know that
their ability to grow in circulation and advertising
revenues is constrained by geography and, in some cases,
their ability to report objectively is constrained by
government censorship.
Unfortunately, there are
no specific studies of Internet journalism consumers in
Asia. However, eMarketer found, an estimated 566 million
persons worldwide logged on in 2002 - a figure that can
be expected to rise to 725 million by 2004. Of those,
Asia-Pacific users totaled 115.9 million in 2000 and are
expected to grow to 235.8 million by 2004, a combined
annual growth rate of 19.4 percent.
Broadband penetration for
selected
countries at end 2001, as a percentage of all
households:
| South Korea |
51.7 |
| Hong Kong |
26.0 |
| Taiwan |
18.2 |
| Singapore |
11.7 |
| US |
10.4 |
| Japan |
5.8 |
| China |
0.1 | Source:
eMarketer | In fact,
eMarketer found, the Asia-Pacific region contains the
largest share of worldwide Internet users, at nearly
one-third. Their percentage of the total is increasing,
from 30.1 percent in 2000 to a projected 32.5 percent in
2004. Japan is a distant second in terms of absolute
numbers of users, at 61 million compared with the US at
152.8 million.
Much of the evidence for the
optimistic new outlook for electronic journalism is
contained in three exhaustive studies of demographics
and the Internet by eMarketer. While these studies
primarily deal with the United States, their
implications are, if anything, even more encouraging for
Asia. For instance, their figures for the growing
ubiquity of high-speed broadband connections, crucial to
fast delivery of attractive advertising, show that Asia
is growing faster than any other region.
Regional share of broadband
households worldwide,
2000-2005 (% of total
broadband households):
|
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
|
W
Europe |
12.5% |
18.8% |
20.1% |
22.7% |
24.9% |
26.6% |
|
N
America |
42.0% |
42.1% |
36.0% |
33.1% |
30.2% |
27.6% |
|
Asia
Pacific |
44.6% |
37.7% |
42.3% |
42.6% |
42.9% |
43.6% |
|
Latin
America |
0.9% |
1.5% |
1.5% |
1.7% |
2.0% |
2.1% | Source: eMarketer, March
2003 |
Newspapers have only recently begun
to become aware of the Internet's potential.
"We
have had the shakeout from irrational exuberance to
seeing the pendulum swing to where people were
irrationally somber," says Ben Macklin, a senior analyst
for eMarketer. "I think now that it is finding its
equilibrium. Content on the Internet is not going to go
away. People are becoming conditioned to expect it. Now
- how to make money? Some publishers are finding some
means that are working and some are not. It's like every
business. The news media swung their attention too
radically, to where they said this isn't going to work,
it's all a house of cards."
Certainly, the
doyens of Internet journalism, the so-called e-zines,
have not done too well. Two of the oldest original
content sites on the web, Suck and Feed, folded because
of lack of money. The Industry Standard, which covered
America's high-tech world, has closed everything but a
rudimentary website. Red Herring, its competition, has
also closed. Salon, perhaps the first major Internet
magazine, has recorded losing nearly $80 million since
it was created in the mid-1990s. Slate, a unit of
Microsoft, has not revealed its financial picture,
although a spokeswoman for the Internet publication says
it has been dependent on advertising revenue for the
past four years.
Some publications have
attempted to get revenues through subscriptions, but by
and large the experience has been disappointing. Despite
Salon's 3 million readers, only about 20,000 have opted
for a subscription. The Wall Street Journal is the most
successful, with 664,000 readers at $79 per year; the
Financial Times, which recently began to require a
monthly payment averaging $6.95 a month for some
services; and the Economist at $19.95 a month, which has
140,000 readers.
"Ultimately, people are willing
to pay for content only if it makes them more money,
saves them money, or it ties into their career or some
other passionate, personal interest," says Richard
Gordon, professor of new media at Northwestern
University.
This is despite truly spectacular
numbers of readers. Slate has 5 million unique viewers,
according to the website publication's public-relations
director. No newspaper in the United States comes close
to those figures. USA Today, the biggest-selling paper,
tops out at 2.13 million daily, followed by the Wall
Street Journal, with 1.8 million. The New York Times
sells 1.11 million, the Washington Post 780,000 - while
its website has 6 million unique visitors a month, some
85 percent from outside the paper's Washington, DC,
circulation area.
Many of these readers are
looking at the newspaper in the morning, then checking
into websites for updates all day long, especially as
the Gulf War II crisis has intensified. Asia Times
Online itself reports striking numbers of new readers
who have propelled the publication's numbers upward.
This website went from an average of 26,000 per day in
January to 42,000 in March to 65,000 so far in April.
Christine Mohan, senior public-relations manager
for New York Times Digital, says the paper's Internet
readers have increased by from 1.1 million to more than
2 million over recent weeks as the war has intensified.
As with the Washington Post, the Times' national and
international readers outside the paper's primary
circulation area are significant.
"That means
that to advertisers, we are a national proposition,"
says the Post Co's George Nolan. "The Washington Post is
a local newspaper, granted that we are in the nation's
capital."
Advertisers have responded with
display ads specifically tailored to the medium, which
provides the online publications with a growing revenue
source. The New York Times recently announced that it
would initiate a half-page Internet site ad. The
advertisers have realized that, unlike with newspapers,
they can target not only specific readers but reach them
at specific times of the day or week. Patrick Hurley of
Salon, for instance, describes a Budweiser Beer
advertisement that runs on Friday, beamed at online
users to take advantage of end-of-the-workweek
anticipation of the weekend.
"Marketers are
starting to understand that people on the 'Net commingle
their lives," Hurley says. No print medium can match
this kind of targeting. The New York Times provides
specials on Paris fashion shows, narrating them as the
models march down the catwalk, in real time.
Nor
can either newspapers or television match the kind of
kinetic, interactive advertisements that now are
reaching Internet users - although some people are
skeptical, including the Chronicle's Cauthorn, who says
it is expensive and not very effective.
"The
reality is that while ads like these are sexy and ad
agencies are thrilled to have billable hours to put them
together, they don't transform a user's experience," he
says. "From an outside analyst's point of view, they are
sexy. But for a fact, what readers want is a whole lot
more prosaic. Ads are content, to be delivered
efficiently to them in the form they want."
Nonetheless, perhaps the best recent example is
a new travel feature initiated by Slate Magazine. The
feature was inaugurated by a three-part series on
Scandinavian countries. Tied into the middle of the
series was an ad for Volvo, the Swedish car maker. By
clicking on the ad, the viewer could take a virtual tour
of the newest Volvo models. He or she could take a
virtual test drive, and learn how to order a car.
Perhaps the most spectacular of these new ads is
for the Porsche Cayenne SUV. By clicking on
www.porschecayenne.com, the reader can zoom on to a test
track with full-dimension sound. Travel advertisers can
give virtual tours of resorts, show off hotel rooms
(although there is some concern that the rooms look
smaller on the web, no matter how big they are). Nor can
television match this kind of advertising, which can be
viewed at the viewer's leisure.
While Internet
advertisers are making these kinds of gains, and readers
are growing exponentially, the print media are reporting
only minuscule annual gains. Of the top 20 newspapers by
circulation size in the United States, only three had
annual circulation gains over 2 percent.
Newspapers are finding that readers are
increasingly combining print reading with the Internet,
particularly as the Iraq war has intensified. Ever since
the scandal erupted over president Bill Clinton and his
affair with White House intern Monica Lewinsky,
newspapers have been posting news on to the web without
waiting for the once-a-day publishing cycle dictated by
printing presses.
The fact is that print
newspapers in the United States are dying - literally.
They won't be gone tomorrow, and some of the best will
continue to flourish. But as newspaper readers age and
die, no new readers are replacing them. According to
Hazel Reinhardt, a Minneapolis-based consultant whose
work centers on market and demographic analysis and who
did a study for the American Society of Newspaper
Editors, some 70 percent of those born before 1946 read
a newspaper on a typical weekday. For baby-boomers, that
has dropped to about 58 percent. For the so-called
Generation X, it is only 46 percent.
Significantly, one survey found that 46 percent
of all trade title journalists believe their publication
will be available only online within the next 15 years.
Some 25 percent of those working for consumer magazines
believe the same. Overall, 12 percent of journalists
believe their publication will exist solely online
within the next five years, while 20 percent expect
their publication to go this way in the next 10 years.
Cauthorn of the San Francisco Chronicle doesn't
expect newspapers to die, but he does expect them to
change. For instance, he believes that some might stop
publishing print editions on Monday through Wednesday or
Thursday because papers on those days lose money. But,
he thinks, they want a paper on Friday for the
entertainment section, Saturday for real estate and auto
ads, and Sunday because the leisurely opportunity to
read a full newspaper slowly is a pleasurable
experience.
Nonetheless, each generation of
younger people has been reading the daily newspaper
less, and there is no evidence that reading increases as
readers age. The average newspaper reader in the United
States is now about 46 years old.
Newspapers
have sponsored newspaper reading programs for students.
Nonetheless, very few schools are trying to encourage
any real newspaper habit. By contrast, in the United
States and many other industrialized countries, such as
Singapore, schools are enthusiastically promoting
computer classes for virtually every child.
The
US Department of Commerce estimates that more than 80
percent of 18-24-year-olds in school or higher
institutions in the US have a home computer and 68
percent have home Internet access. Some 86 percent of
all college/university students use the Internet,
compared with 59 percent of the overall US population.
This is a generation that will probably never
read a newspaper. But it is a generation that will use
the Internet for just about everything, including
reading.
(©2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com
for information on our sales and syndication
policies.)
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