by Lisa Rabasca

As newspaper content zaps to more and more handheld devices, readers will rely on daily papers not just for news, but also to solve life’s little problems, predicts Robert S. Cauthorn, vice president of digital media for the San Francisco Chronicle. On command, newspaper staffers will transmit information to their readers’ cellular phones, pagers, personal digital assistants and laptops, perhaps helping them to locate a restaurant and even find out how long the wait for dinner is.

“Ideally, we will touch our readers’ lives” with the wireless delivery of information anytime, anywhere, says Cauthorn. “It is the key to the next generation of subscription revenue and the key to protecting our franchise for the next 100 years.”

It won’t be easy. Workers must first transform content into bite-sized pieces of significant information that subscribers can’t live without and will pay for, even as they read it on a screen that displays only a handful of characters at a time. And economic opportunities have been slow to show in this emerging and evolving medium. After all, many publishers still struggle to profit from Internet operations.

“Everyone now is feeling the need to kick the tires on wireless,” says Don Livingston, director of business development for Belo in Dallas. “We know it’s not a mass market yet, but we want to experiment with different models and types of products so we will know what people are really interested in.”

Belo is testing whether subscribers will pay nominal fees to have real-time traffic reports sent to their wireless devices. Elsewhere, executives at the Albuquerque Journal want to partner with a wireless carrier that will pay them to share the paper’s content, and other publishers experiment with display and classified advertising on their wireless services. But none of these business models has proven effective, and analysts warn that they probably won’t generate profits in the short term.

“Nine of 10 content providers will face negative return on investment for more than two years,” predicts Dylan Brooks, an analyst with New York City research firm Jupiter Media Metrix.

Even then, not every content provider will make money, warns Jane Zweig, chief executive officer for The Shosteck Group, a Wheaton, Md., research firm. Other media companies, retailers and Internet giant Yahoo! compete with newspaper publishers by providing content for the wireless market. About 47 newspapers offer wireless content, including Knight Ridder of San Jose, The New York Times, Tribune Co. of Chicago, and The Wall Street Journal. Many of these papers also offer synchronized content for PDAs that can be downloaded from wired computers through AvantGo.com of San Mateo, Calif., and Vindigo.com of New York City.

Although unsure how or even whether newspapers will gain by delivering wireless content, Brooks, Zweig and other observers voice no doubt that publishers need to develop a wireless presence (see "Will Wireless Work for You?").

“If we want to hold onto our local-news franchises, we need to be prepared to deliver news and information however people want it,” says Brian Chin, senior online producer for the Seattle Post-Intelligencer. “Newspapers are expected to have Web sites, and it is quite possible consumers will expect us to distribute information wirelessly as well.”

Many publishers look to new-media employees to experiment with wireless content by creating “wireless editions” of their newspapers—generally, a list of the day’s headlines, the first paragraph of each article, and maybe some sports scores and stock prices. The costs associated with delivering wireless information are nominal if employees already use Extensible Markup Language to code copy for the World Wide Web. The same data can be delivered to PDAs, phones and pagers without much effort. (For a detailed look at the technology behind wireless, see “Wireless: The Technologies” in the July/August 2001 issue of TechNews, or see http://www.naa.org/technews/TNArtPage.cfm?AID=1888.)

Expenses add up when publishers hire additional staff to customize content for the wireless devices’ small screens and develop applications that will entice readers to return throughout the day. Possibilities include using a wireless device to get real-time traffic reports, make airline or hotel reservations, trade stock, check movie schedules and find a dream home.

NAA Wireless Pilot Project Newspapers Albuquerque Journal The Arizona Republic The Boston Globe’s Boston.com Daily News, Woodland Hills, Calif. The Dallas Morning News The Florida Times-Union, Jacksonville The Free Lance-Star, Fredericksburg, Va. St. Petersburg Times The Salt Lake Tribune Seattle Post-Intelligencer Star Tribune, Minneapolis USA Today The Virginian-Pilot, Norfolk

To help publishers navigate the wireless airwaves, participants in a pilot NAA project are exploring ways to best serve mobile readers. NAA’s Local News Gateway will begin operating this summer. Users will receive content from 13 papers through wireless phones and PDAs (see list) as publishers test various types of hardware, software and delivery methods. The gateway allows users to find wireless editions by typing in the first few letters of a city or state.

As part of the project, two vendors are testing ways to “monetize” content. WindWire Inc. of Morrisville, N.C., is working with ad reps to sell national and local advertising for wireless services; AdaptiveInfo Inc. of Irvine, Calif., is testing classified ads in a wireless medium. Publishers contract directly with the vendors to configure business models based on local market conditions.

A third vendor, SageMetrics Corp. of North Hollywood, Calif., is measuring wireless traffic. “We’re going to find out whether people want headlines or horoscopes and what advertising they will welcome,” says Melinda Gipson, NAA’s director of electronic-media business development. At press time, deals were still being signed with other vendors. For a complete list, see www.naa.org/edge/wireless.html.

WIRELESS VERSION 1.0
All those cool microtech toys present a big problem: their size. Imagine reading an article on a 1-by-1.5-inch cellular phone screen or a 2-by-2-inch PDA screen. Try using the phone keys to type in the Web address of your newspaper. Click through the choices on your cell phone’s screen to Yahoo!, then key your newspaper’s name into the browser. Most likely, you’ll feel like you’re all thumbs.

Cellular carriers are feeding false consumer expectations about the mobile environment, says Zweig. “The networks aren’t there, the devices aren’t there,” she says.

A lack of standards complicates the landscape. Without uniform programming languages, browsers or appliances, no application will work on every device. “The [U.S.] wireless industry is intent on building a proprietary wireless-only solution rather than embracing standards,” says Zweig.

Given these barriers, consumers have been understandably slow in signing up. The Cellular Telecommunications Industry Association in Washington, D.C., reckons the number of U.S. cellular-phone users at 115 million. Only slightly more than 600,000 use them to access data, according to Cahner In-Stat Group of Scottsdale, Ariz. “Consumers don’t see a need for a cell phone to be anything beyond a voice platform,” Brooks says. And those who favor PDAs over phones tend not to use them as wireless devices but to synchronize them with their computers and download content to read later. As further evidence of consumer hesitancy, Brooks points to Amazon.com’s recent decision to significantly scale back its wireless effort, Amazon Anywhere (see Survey of Wireless-device Users).

But unlike mobile-commerce merchants, publishers can provide true value-added content, others note. “This is a publishing medium,” says Cauthorn. By 2005, Jupiter Media Metrix expects subscription revenue for content delivered wirelessly to total $600 million.

True, content providers need to reformat information to fit various types of devices with varied displays and a variety of bandwidths. Still, newspaper publishers currently control most of the information that consumers want to receive on wireless devices, says Jerry Kaufman, a consultant with Alexander Resources of Dallas.

In a recent survey by Alexander Resources, consumers said they’d be most interested in receiving wireless content that includes entertainment schedules, locations and reservation information, as well as information about weather, news, traffic, stocks, sports, and products and prices. Their interests do not extend to actually purchasing goods (see "Lessons via Japan").

However, Kaufman warns, wireless-content providers must do more than just provide data. “It’s not a technology issue as much as a business and marketing issue. What can newspapers charge, how will they get paid, what information will they provide, what type of customers will they target, and with what carriers will they form alliances?”

Some publishers already are giving these questions much thought and testing theories.

Belo’s newspapers and The Salt Lake Tribune figure among those investigating ways to charge users directly for content. Subscriptions, the most obvious revenue generators, may not necessarily turn out to be the easiest. Customers sign up with carriers for wireless services, so publishers need to entice users to pay additional fees for content without the benefit of billing relationships.

About 14 Belo Web sites offer the product to about 150 subscribers, generating a “modest success,” according to Livingston. “We didn’t have huge expectations.”

Executives at The Salt Lake Tribune are weighing the merits of charging for its PDA wireless edition, now free. One possibility would be to offer a limited number of free stories but charge a nominal fee for the full edition, says Kim McDaniel, development director for Utah Online.

Managers at the Tribune also considered charging a nominal fee for the same wireless edition available to phone users, but research showed readers weren’t as interested. Instead, McDaniel says, the executives plan to leverage the print edition to sell wireless services and online archives. Readers could, for instance, purchase premium subscriptions and receive print and wireless editions plus unlimited access to online archives. A variety of subscription packages will combine the products in different ways and sell them at various prices.

Plans for the Tribune’s wireless-phone edition include a premium service that allows Utah residents to search for movies by theater, title, price and show times.

Although considering sponsorships for the film finder, McDaniel and her peers want enough revenue from subscriptions to avoid advertising support. “The screens are so small,” she says, “users want to get in quick and not wade through ads.”

ADVERTISING UNCERTAINTIES
Billy Purser, senior manager of marketing for WindWire, predicts that the Tribune will miss substantial revenue by not emphasizing advertising. Not “enough people within a city are willing to pay to view content to make subscriptions worthwhile,” he says, forecasting ample revenues through advertising and mobile commerce.

“Let’s say a local merchant runs a promotion on a newspaper’s wireless site,” he proposes. “It’s not unrealistic for the newspaper to ask for a percentage of revenue derived from that promotion.”

WindWire places national advertising on papers’ wireless services. Here’s how it works: The Ford Motor Co. pays WindWire for its logo to appear on a newspaper’s wireless service 1,000 times; WindWire and the paper split the revenue.

Publishers remain free to develop their own revenue models with advertisers. For instance, Purser says, ad reps might make a deal with Visa: For every person who clicks through the ad and applies for a Visa credit card, the paper earns a small fee.

Some newspaper ad reps also are seeking ways to feature classified advertising in their wireless services. AdaptiveInfo developed a technology that helps users quickly find classified advertisements based on information that the user has searched for in the past.

Recycler.com, an online classified site published by Los Angeles Times Interactive, uses AdaptiveInfo technology to help wireless users select automobile and real-estate ads. If, for instance, a consumer wants a Honda, Recycler.com delivers to his or her device all the classified ads for Hondas plus an advertisement for a local Honda dealer, says Kevin Klein, general manager. The consumer can narrow the search to a specific type of Honda such as a Civic. When users click on the dealer’s ad, they receive an inventory list. Revenue comes from selling the classified ads, plus display ads to dealers.

Klein was initially skeptical that consumers would read classified ads on handheld devices, but he now recognizes the utility of allowing a reader to stand in one location and find vehicles or homes in a 20-mile radius, with their costs. “We’ve all had the experience of going to see a house that doesn’t fit the description in the classified ad,” says Klein. “Now you can pull out your device and instantly have other homes to look at.”

COURT YOUR CARRIER
Advertising hasn’t been the revenue generator the Albuquerque Journal had sought for its wireless edition, which offers readers news, business and sports. After working with WindWire for about six months, it earns, on average, $100 a month, says Donn Friedman, assistant managing editor for Journal Online.

Purser suggests the Albuquerque Journal has low advertising revenue because it lacks a dedicated sales person recruiting advertisers for its wireless edition. Revenue will grow as national advertisers get more comfortable with the medium, he says. “It may be $100 today, but we expect it to be stronger a year from now.”

“I don’t think advertising will ever pay the bills,” Friedman counters. Instead, he says, content providers will profit only if they partner with cellular carriers willing to pay them for content.

He compares a newspaper to Home Box Office. “We’re a premium service. The cable companies pay HBO for its content, so carriers ought be willing to pay us for our content.”

As part of their mission, participants in NAA’s pilot project want to determine how much time wireless users spend reading content provided by newspapers. Publishers can use that information as leverage when they approach carriers about alliances.

“Some day we may be able to tell carriers, ‘We logged X minutes in Y days. What’s that worth to you?’ “ says Gipson. Verizon has agreed to “slot” the Local News Gateway on its deck for the pilot’s six-month duration. The national placement will help newspapers determine the worth of such deals, she says.

Regardless, Purser doubts carriers will pay for content. Yahoo! paid Sprint several million dollars for a link on Sprint’s phone screen, he says.

Albuquerque’s Friedman has approached several area carriers about partnering, without much success. “It’s not that they are against paying for content. They are trying to get networks up.” But, he adds, “If they don’t pay us, we’re prepared to pull the plug on content. At some point, someone has to pay the bills—carriers or users.”

Until recently, The Sacramento Bee partnered with a cellular carrier willing to share revenue. The paper delivered sports scores, stock-market results and news bulletins to Verizon wireless devices. Subscribers received the service for free during the first month and were subsequently charged a few dollars per month, says Jim Bonfield, business-development manager for the Bee’s new-media department.

Verizon billed the customers and gave the Bee a percentage of the fee. Because of contract constraints, Bonfield couldn’t disclose the amount that the Bee received from Verizon.

The Bee opted to discontinue the relationship with Verizon when the contract recently came up for renewal. “We are in talks with other wireless providers for our content,” he says, without disclosing specifics.

The Bee may find other ways to profit in a wireless market. The paper recently rolled out a free real-time traffic report similar to Belo’s MyTraffic, paid for by advertisers. Users receive alerts only when faced with traffic problems. A store that users drive by on their routes home sponsors the messages. Updated every 30 minutes until the traffic clears, alerts include discount coupons for the store, redeemable on that day. The coupons represent “an invitation to spend that time shopping rather than in traffic,” says Bonfield.

The paper also partners with nightclubs in the greater Sacramento area. In several, the Bee has installed video cameras that provide an audio Webcast to Internet users in the clubs and elsewhere. Next, the Bee will debut a wireless component for real-time messaging between wireless users in the club and online Internet users. Twenty-somethings surfing the Web at home will see what’s happening in the nightclub and could potentially send messages to club patrons who catch their eyes. People at the club can send wireless messages back.

Bonfield says he is not sure how to make this wireless service pay, but he’s determined to make it happen. “Build the market, and then monetize what you built,” he advises. “If we concentrate on owning tightly defined niche markets, such as the 20-something group, maybe we can target Pepsi or Gap as advertisers.”

For now, income ranks as a second benefit when compared with the brand-name recognition that the paper receives by providing these services. “The hope is the cash will be there,” he says, “but branding is just as important.”

Cauthorn says new-media workers at The Sacramento Bee are conducting the kinds of experiments that all print publishers should explore via wireless devices. Find “meaningful use of the application,” he urges. “Ask what the world will look like when our readers want us all the time.”