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February 26, 1996

Papers Jump for Internet but Aren't Always Sure Why

By IVER PETERSON

SAN FRANCISCO -- Newspapers may be cutting costs and trimming staffs, but the prospects of selling their news and advertising over the Internet has opened their purses as never before, even though no one yet knows how, or even whether, today's plans to publish on the World Wide Web will ever make money.

At this week's conference on electronic journalism, Interactive Newspapers 96, the mood of the 700 people attending was "What's Next?"

To hear three days of speakers tell it, the answer was, "We don't know, but it's coming."

"This is all a little bit like the blind leading the blind, because none of us knows how all this is going to shake out," said Bill Densmore, president of the Clickshare/Newshare Corp. of Williamstown, Mass., which is developing systems for billing Internet users.

Yet it is a movement everybody has to join, the several hundred publishers and business managers who attended the conference were told. It was the seventh annual gathering here, in the suburbs of Silicon Valley, by the Kelsey Group, the weekly Editor & Publisher, the National Newspaper Association and several other newspaper trade groups.

"This is a matter of protecting one's market, protecting one's turf," said Chris Tucher, business manager for publishing at the Netscape Communications Corp. whose Navigator Web browser is the most popular Internet software..

"We believe that the Net is going to transform the way people get information," said Tucher whose company has a strong stake in the success of the Web. "To put it coarsely, if you don't do it, somebody else will. Whether it's finding a plumber or buying a car or selling your house, some one will find a way to make money using the Internet."

This was the thinking behind Philadelphia Online, a creation of The Philadelphia Inquirer and The Philadelphia Daily News, which are owned by Knight Ridder Inc.

"We're doing it because some day, when we're smart enough, it will be the answer to our prayers," said Tom Sims, who heads the venture.

The National Newspaper Association lists 162 newspapers that currently have electronic pages on the Web, triple the number in 1994. Admittedly, the list includes publications like The Bingo Bugle, of Vashon, Wash., which is more devoted to the board game and to dream interpretation than to the news. But the giants are also there, including The Wall Street Journal, The New York Times and The Chicago Tribune.

What drives this rush is "fear and greed," said John F. Kelsey 3rd, a Princeton, N.J., electronic media consultant whose Kelsey Group was a sponsor of the Interactive Newspapers 96 conference here this week.

The fear comes from the threat to newspapers' advertising base, especially the classifieds, from the electronic world's point-and-click technology and ability to search through piles of information and get an answer complete with pictures and sound.

Greed, Kelsey said, because if a system is ever invented that accurately counts and categorizes each visitor to a newspaper's Web site, publishing on the Internet could become a very profitable marriage of newspapers' advertising base and franchise strengths.

Publishers also hope that their venture into the chaotic and culturally baffling world of the Internet may help papers struggling with an aging and declining readership, and with a corresponding declining share of advertising dollars.

There are two main barriers that keep the Internet from becoming profitable. The first is that the number of people who use the online services is still relatively small -- in the millions daily -- compared with newspaper readership.

The second problem begins with the first rule of the Internet, that everything on it is basically free. People pay the phone company for the use of the lines that hook their computers to the Internet, and they pay the access providers like Compuserve, or small local companies, to connect them to it, but efforts to get people to pay to visit a Web site have generally failed.

Just as they use advertisers to pay nearly three-quarters of the cost of publishing a daily newspaper, publishers on the World Wide Web hope that advertisers will pay for the cost of their Internet presence. Newspaper people at the conference heard estimates that advertisers spent $55 million in on-line advertising last year, and that that figure would reach $5 billion by 2000.

What advertisers get for their money is a picture of their logo or a banner for their product on a newspaper's Web page that is linked, by a click of the mouse, to the company's own advertising page.

However, the stream of advertising dollars to Web pages is held back by the absence of any reliable way of either counting the number of people -- "eyeballs" to Web-site designers -- who visit a page, or of knowing any of the age and income demographics that advertisers insist upon, and that newspapers are good at delivering about print readers.

The current system of counting "hits" on a site is "totally bogus," said Judy Black, a senior partner at the advertising firm of Kenyon & Eckhardt, who is part of an advertisers group working on guidelines to measure Web visits.

At the same time, viewers generally refuse to register by name or location at Web-sites. Web sites do record pieces each visitor's identity, and advertisers can sometimes use these fragments of identity to e-mail messages back to visitors, but they offer none of the demographic information needed to justify a large campaign.

Some engineers are working to developing a way of tagging visitors with an identifying signal, called a "cookie," that would be lodged in the viewer's computer hard drive and would signal each time a certain site is visited, but the privacy issues involved in such a solution are far from settled.

The only thing that is certain, promoters of electronic publishing said, is that someday the breakthrough will come, and John Allen, head of information systems for the Scripps-Howard newspapers, said his chain would be ready.

"Everone is waiting for the killer application that will make this pay for itself," Allen said. "We're in there getting the growth and the learning so that when the big revenue potential is there, we'll be ready."


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