COMPETING FOR CYBERTURF

by Mark Toner

If the online struggle over local markets has become a turf war, as the Connections'97 theme suggests, the conference's first speaker wasted little time before lobbing bombshells at his favorite devil in a blue suit.

"This seems to be the pattern," Robert D. Ingle, Knight-Ridder Inc. new-media president, said of Bill Gates' local-content moves. "Lull publishers into believing Microsoft is not after their choicest revenue streams while gearing up for all-out war." While Microsoft-bashing generated the most headlines from NAA's annual new-media confab, some speakers, including Ingle, wondered aloud if the real message has gotten out.

"It seems to be working," Ingle worried. Many publishers, he contends, still do "little or nothing to [develop] a competitive edge over Sidewalk and others trying to crack the local advertising market." In fact, shortly after Connections, Microsoft unveiled plans to roll out by year's end pilots of its long-rumored local real-estate services.

Perhaps because of the influx of Microsoft and other new competitors--as many as 40, not counting those eyeing classifieds--the euphoria of past Connections gatherings seemed as muted as the fog swirling above the San Francisco Hilton and Towers. After finally finding an audience, advertisers and respect from the publishers' suites, evangelists' optimism about newspapers' online future now clashes with these smart new rivals.

"They don't sleep at night," observed David Morgan, president of New York City-based Real Media "When the top news site is ranked 47th, that tells you something." While real local-market competition took center stage for the first time this year, so did real success stories--including many involving real revenue. Another record-shattering turnout--nearly 700 people, up 15 percent from Connections'96--signals that publishers continue to take new media seriously.

But seriously enough? With Microsoft acknowledging outlays of $400 million-to-$600 million for content alone, Ingle questioned whether the entire newspaper industry earmarks similar sums.

"What does Microsoft see that newspapers don't?" he asked.

Gates wasn't present to respond to salvos from Ingle and Oracle Corp. Chairman and CEO Lawrence J. Ellison, whose network-computing crusade has made him something of a professional Microsoft-basher (Presstime, September 1997, p. 56). But plenty of other speakers, both friend and foe, offered frank assessments.

Publishers' strengths "are something we all respect and envy," said New York Sidewalk General Manager Cella Irvine. Still, she added, "consumers have new needs, and new products tend to be made for new media."

Accordingly, Microsoft targets "consumer decision" areas such as real estate, classifieds and entertainment where new technology can replace static newspaper lists with searchable online-city guides, intelligent search agents and personal content.

Newspapers boast "killer, killer content," echoed Ellen Siminoff, director of Yahoo! Communities, "but too much pride in their own distribution. You may be putting up a great site, but it may be in the desert."

Accordingly, a virtually unthinkable idea when Connections was last held--partnerships with new national competitors--now becomes a way of life for publishers big and small.

"There are enemies and would-be friends all around us. Let's face it: Partnering is essential," Ingle warned. "Let's be equally honest and acknowledge how hard it is to keep partnerships up and running."

From prospective suitors' standpoints, that's not for lack of trying. "To me, the Holy Grail is the newspaper affiliate," said Rick Blair, vice president of new enterprises for Digital City, recent winner of several major-metro affiliates and an equity stake from Tribune Co. of Chicago.

"Newspapers have the best ability to promote on a sustained basis, and the devout newspaper reader is our kind of customer."

Yet many partnerships "stink," said Gordon Borrell, who, as Landmark Publishing Group's vice president of new media, entertained offers from the likes of PointCast Corp. of Sunnyvale, Calif., WebTV Networks Inc. of Palo Alto, Calif., Yahoo! Inc. of Santa Clara, Calif., and Dulles, Va.-based Digital City Inc. Among his frustrations: exclusivity demands, prompting other players to seek their own local partners; revenue-sharing requirements; and long-term contracts making it difficult to react to industry changes.

"We're very used to having things on our terms," admitted Michael Silver, general manager of Tribune Interactive, owner and operator of Digital City affiliates in its four newspaper markets. "It's difficult when you're sitting on hundreds of millions of advertising dollars in your community, and your partner is starting from zero." Publishers should get a clear picture of both companies' objectives and seek partners with complementary strengths, he advised.

Technology ranks among the top of those complementary strengths. "Newspapers don't do software development very well," Ingle said, touting Knight-Ridder's relationship with online-directory developer Zip2 Corp. of Palo Alto, Calif.

Yet technology-development deals can become "another way of paying for services," cautioned John A. Williams, Gannett Co.'s vice president of business development. "Don't rush into deals" that sacrifice long-term goals for short-term gains, he cautioned.

Publishers were again reminded of their industry's national partner, the New Century Network, this year beginning national-ad sales and launching a long-awaited central site (http://www.newsworks.com). "To be candid, the spirit of cooperation among the companies of NCN has tested everyone's patience," Ingle admitted. "[But] it's up and running and remains the friendliest partner."

Databases don't just help fill online-revenue coffers. They can also create content that works in the new medium.

"If it's digital, it's searchable; if it's searchable, it's useful," said George Shirk, news director of the Gate, San Francisco Newspapers' joint Web effort. In Chicago, interactive features, including stories allowing users to enter their ZIP code to obtain more local statistics, rank with classifieds among the paper's most popular features. The least? "Shovelware," said Fliegel.

A non-newspaper storyteller argued that publishers should reconsider their entire online presentation. "Almost all newspaper interfaces look identical," said Abby Don, who runs an interactive studio. "The Web is open 24 hours a day, and you may need a different look at different times."

Developing broad online communities also attracts new eyeballs. At The Kansas City (Mo.) Star, staffers scrambled to bring any and all takers on board its big-tent kc.com site, from community organizations and sports teams to traditional radio and television competitors. Even libraries were won over and now place the site's URL on each card they issue. Doing so gave the site greater leverage in a market that was likely to draw competitors' attention, said Candy Thompson, who helped develop the site before moving to Digital Ink.

At the same time, old-fashioned journalistic standards must carry over, warned Ralph Langer, editor and executive vice president of The Dallas Morning News, which made print headlines earlier this year by posting online breaking news about bombing suspect Timothy McVeigh. "We can't scoop ourselves," he argued. "What we do on the Web is the core product."

And for those who question the role of the core print product, John Seely Brown, Xerox Corp.'s chief scientist, forewent the usual laptop-driven PowerPoint presentation for an overhead projector to illustrate that future. No accident, for computers ignore the main ways people remember information, he argued, recalling his first glimpse of early newspaper archives.

"They challenged me to find anything. So I said, 'I remember an 8-inch story with a 14-point headline...it was right next to a picture of a bush.' " That's why online products will always "augment, not replace" print, Brown predicted, offering community forums and interactivity with an "anchor in the physical space." (See Presstime, September 1997, p. 58.)

With scores of players entering local markets, even the strongest newspaper competitor isn't ready to plant its flag in the turf--not yet, anyway.

"You will see relative successes in markets," predicted Sidewalk's Irvine. "It's 4 a.m. in a 24-hour day, and we're all crowded around the same space. I can't conceive...how we'll spread out."

Despite healthy doses of Gates-bashing, speakers acknowledged that the key to claiming cyberturf has little to do with outside competitors.

"All we can change is ourselves," Ingle warned newspaper executives. "We have forgotten how to compete, and we had better learn damn fast because we are on Internet time."