Where Are We Going ?

Computer power continues to grow exponentially, changing the very concept of what a newspaper should be

by Clark Robinson

In 1965, Intel founder Gordon Moore formulated what has become known as Moore's Law: The capacity of computer chips doubles every year. These days, chip capacity doubles every 18 months or so, but that's still a lot of doubling--it means computer power is growing at an exponential rate.

Microsoft Chairman Bill Gates just loves Moore's Law.

To illustrate what happens when a number doubles over and over again, Gates likes to tell the story of the man from India who invented chess. The new game pleased the king of India so much, he asked the inventor to name his reward.

The inventor asked the king to give him one grain of wheat for the first square of a chessboard, two grains for the second square, four grains for the third square and so on, doubling the number of grains with each new square.

The king had no problem agreeing; in fact, the reward seemed rather modest. But it would have taken 18,446,744,073,709,551,615 grains of wheat to complete the board, which would have taken his ministers 584 billion years to count out--130 times the age of the earth.

The lesson? Computer power is increasing at an incredible, even unimaginable rate. And now these supermachines are joining together into a massive, international network of networks--the Internet--which will one day become the fully functioning information superhighway.

"We're watching something historic happen," says Gates in his book, The Road Ahead, "and it will affect the world seismically, rocking us as the discovery of the scientific method, the invention of printing, and the arrival of the Industrial Age did."

TechNews readers agree. In an informal fax poll conducted in August, they said the Internet and the World Wide Web will be the most important technologies to newspapers over the next 50 years. For that reason, this story focuses mainly on the Internet-where it's heading, and what effects it could have on the newspaper industry.

Print Predictions

First, though, let's take a quick look at the future of ink on paper. And why not start with the $64,000 question: Is there a future?

The answer is yes, at least for now. "Most people read newspapers in lounge chairs, not in front of computers," says Scott Sandell, a partner with New Enterprise Associates, a venture-capital firm in Menlo Park, Calif. "I prefer to sit in a lounge chair to read my newspaper."

Even Gates, the apostle of the computer, predicts that "paper will be with us for the foreseeable future....The paper-based book, magazine, or newspaper still has a lot of advantages over its digital counterpart. A newspaper offers a wide field of vision, good resolution, portability, ease-of-use. For at least a decade, it won't be as convenient to read a long, sequential document on a computer screen as on paper."

Now that that's settled, we can discuss the future of some key ink-on-paper technologies.

Most of the technologies TechNews readers think will be important in the future relate to conventional publishing--and all are feasible today. The rate at which they'll be adopted thus depends on how quickly the technologies mature and come down in price, the economics of turning over capital equipment, and market conditions.

TechNews asked a number of industry experts to speculate on what year each new technology will be adopted by a majority of U.S. newspapers. The years listed here--and charted on our Technology Timeline poster--represent a consensus of their predictions.

• Digital Cameras: the year 2000
• Full Pagination: 2004
• Computer to Plate: 2004
• Tailored/Targeted Newspaper (500 housholds or less): 2007
• Shaftless Presses: 2014
• Computer to Press/Digital Imaging: 2014.

The Internet and the Superhighway

Now back to the Internet. Let's start by making a distinction between the 'Net and the fully functioning information superhighway. The two key differences involve bandwidth and devices.

Bandwidth is the speed at which information flows from the network into your computer. Most homes that connect to the Internet today do so using dial-up modems, a narrowband connection. New technologies that are just now coming to the home market, like ISDN, ADSL and cable modems, are considered midband connections. Fiber-optic cables constitute the fastest way to connect, called broadband.

What's the difference? Narrowband creeps along at 28,800 bits per second, midband cruises along at 64,000 to 1.5 million bits per second, and broadband screams along 2 to 6 million bits per second or more. On a narrowband connection, downloading even small graphics can take forever (hence the term "World Wide Wait"). Broadband, on the other hand, will support high-resolution audio and video--instantly, and on demand.

Today, the vast majority of devices connected to the Internet are personal computers. The future superhighway will support not only PCs, but also notebook computers the size of a tablet of paper, flat-panel TV sets, telephones capable of sending live video, interactive kiosks in public places, and wallet-size PCs that will further automate credit and debit transactions.

Gates believes the number of people online will increase from 10 percent to 90 percent over time. Stuart Gibbel, marketing-communications manager for Find/SVP, a research firm headquartered in New York City, is more specific. "Thirty-six million adults in the U.S. are online now," he says. "It will be 45 million by 1998 and 75 million by 2002."

Figuring out exactly when the Internet will morph into the superhighway is partly a question of semantics. "All of these new information appliances will come to be," says Sandell. "The question is: What level of market penetration constitutes a technology being 'available?'"

In The Road Ahead, Gates makes this distinction between the availability of the technology and its diffusion in the marketplace. "By the tenth anniversary of information-highway mania [i.e., 2004], the Internet will deliver the full highway we envisioned," he says. However, "a broadband interactive network....won't be available to the majority of U.S. homes for at least a decade. We simply won't have the high-speed infrastructure in place before then."

Gregory Wester, director of Internet marketing-strategy research with The Yankee Group in Boston, attaches some hard numbers to these predictions. "We think 3 million homes will be connected via broadband and midband technologies by the year 2000, while 43.2 million homes will be online. Four million homes will have TV-based access to the Internet, while 4.5 million will have phone-based access, which they will use largely for e-mail."

"Close to the year 2010, 40 percent of homes will have midband connectivity," he continues. "A majority of homes will not have broadband access any time soon. Maybe by the year 2010 or 2015."

Writing Along the Highway

For you editorial types, the future is fairly bright. At least your job is safe.

"I am a strong believer that the editorial value newspapers add to information will never go away," says Sandell. Adds economist Jessica Korn, "There's a business case for the journalism function."

But don't think you can simply hit the cruise-control button. As newspaper consultant David Cole says, "Journalism is going to change completely."

For one thing, your readers will be one click away from your archives and other related stories. "Newspaper stories must be seen in the context of the archive," insists Janet Murray, senior research scientist at the Massachusetts Institute of Technology. "Stories will have to refer back to the archives. People will want stories that are layered and that interact with each other in interesting ways."

"As Web-based journalism evolves," predicts Gates, "reporters will deliver information about new developments and maintain extensive background information for consumers who want to explore the context of the day's breaking story.

"Important news stories will be both current and under construction at all times. Readers may be able to check a journalist's source material, from news releases to interview transcripts to public documents, which will promote professionalism among news organizations."

The interactive nature of the new medium also has profound consequences. In addition to writing, future journalists will be expected to develop communities of interest around their stories. The new consumer's motto will be: "Tell me, and I'll forget. Show me, and I'll remember. Involve me, and I'll learn."

Which is good for us.

"Community-building is going spectacularly well from the point of view of newspapers," says Owen Youngman, director of interactive media for the Chicago Tribune. "We're the moderating, authoritative voice, and we're adding other voices around that authoritative voice."

The down side is that when readers can talk back, you might not always like what they say. Says Youngman, "Many readers simply tell us, 'You're screwing up our baseball team.'"

In the future, journalists will have many more tools than just the written word to convey information. Murray, for one, thinks that journalists should make their stories come alive using computer simulations. Adds Steve Ross, professor of journalism at Columbia University, "There is plenty of technology that people in other information-based fields are using. It's ready to leap out at you if you only want it. You can do a 3-D image of a crash site--it takes a half-hour for a 3-D walkthrough of a scene. In all of this, there is more and more and more and more and more."

And here's even more: Text will interact with video and audio in ways that seem almost fantastical today. "Let's say you're watching the news and you see somebody you don't recognize walking with the British prime minister. You want to know who she is," says Gates. "Using your television's remote control or your PC's mouse, you point at that person. That action brings up a biography and a list of other news accounts in which the person has figured recently. Point at something on the list, and you'll be able to read the news story or watch it, jumping any number of times from topic to topic and gathering video, audio, and text information from all over the world."

Delivering News Along the Highway

One of the most widely reported predictions is that news on the superhighway will be supertailored. Every news consumer will receive his own "Daily Me."

"The personal Excite product is the next generation's newspaper," says Donn Davis, president of Tribune Ventures in Chicago. "It is updated with new information every hour, and it's free. Personal Excite is Generation Z's newspaper."

Gates thinks many people will employ personal editorial assistants, some of which will be pieces of software with personalities and an intimate knowledge of what you want to read. "These subscription services, whether human or electronic, will gather information that conforms to your particular philosophy and set of interests," he says. "They'll compete with each other on the basis of their talents and their reputations for doing a good job."

In this brave new world, you might chuck electronic pennies at your editorial assistants and the authors of the stories they assemble for you.

"Many companies hope that instead of paying 60 cents for a newspaper, you'll soon pay them a few cents a day to assemble news for you electronically--and that you'll pay the original publisher of each story selected a little bit too," says Gates. "You would decide how many articles you want to read and how much you want to spend. For your daily dose of news, you might subscribe to several review services and let a software agent or human agent pick and choose from them to compile your completely customized newspaper."

This is not as far off as it may seem. "Micropayments will be here next year," says Ross.

Wester, however, predicts that micropayments will be used for only certain types of content. "E-coin or e-cash will be used for crossword puzzles and games," he says. "E-coin will compete with other pricing plans--including bundling all the content and selling subscriptions, and giving content away for free to drive advertising revenues."

And where will you be viewing all this personalized content--on your personal computer? Perhaps. Or maybe on that ultra-thin notebook computer. Or on your flat-panel TV. Or--and this may be the wildest prediction of all--on paper!

"Imagine a Wednesday morning in autumn of 2007," Brad Friedlander and Martyn Roetter write in a recent issue of Scientific American. "During your last moments of sleep, the [network] collected information from various news outlets, assigning them priorities based on personal-interest profiles you had created....When you sat down to drink your first cup of coffee, a thin but meaty newspaper was hot off your printer, specifically tailored to appeal to your concerns....You could read the paper on the display, but you still prefer to actually hold it in your hands."

This is the ultimate in small, distributed digital presses-laser printers in the home. And why not? If 90 percent of the population is online, newspapers will almost certainly be distributed this way.

Advertising Along the Highway

One of the hottest debates among the digerati is whether or not newspapers can hold onto their classified revenues in the information age.

"Classifieds is your game to lose," says Phil Schnyder, president of Asksam Systems, a publishing-software company based in Perry, Fla. Counters newspaper consultant Garrett Queen, "There's no reason to believe that newspapers will be the delivery mechanism for classifieds."

Most experts do agree that classifieds work better online than they do in print. "Paper newspapers bring buyers and sellers together in an inefficient way," says Wester. "In the future, newspapers will compete with directories, the Microsoft Network and America Online for classified customers. Newspapers must use the new technologies to become more efficient and intimate with their customers."

"On the Internet, the classified ad won't be tied to paper or limited to text," says Gates. "If you're looking for a used car, you'll send out a query specifying the price range, model, and features that interest you, and you'll see a list of the available cars that match your criteria. Or you'll ask a software agent to notify you when a suitable car comes on the market. A car seller's ad might include links to a picture or a video of the car or even the car's maintenance records so that you can get a sense of what shape it's in."

The question is whether newspapers will move quickly enough to defend their turf. "Newspaper classifieds could become dominant," says Sandel. "But they will lose revenue if they don't aggressively attack it."

Adds Gates, "Once the majority of customers in a market use electronic access to shop, newspapers' classified revenues will be threatened....Like all companies that play a middleman or brokering role, to succeed in the electronic world newspaper companies will have to be alert to change and take advantage of their unique qualities."

One newspaper chain that plans to defend its classified business with gusto is the Tribune Co. of Chicago. "We are actively investing in each of the key classified areas," says Davis. "The Internet is a good vehicle for classifieds. Some business will go that way, sooner rather than later."

As for online display ads, they won't be much different from online classifieds. "The definition, positioning, execution, and measurement of success for advertising in 2005 will be nothing like it is in 1997," predicts Wester. "Newspaper advertising vernacular will change as well. Multimedia will blur the distinction between display and classified advertising. There is very little distinction between a classified ad, targeted couponing, a Web site and a banner ad."

Gates agrees with this multimedia outlook. "Advertising will evolve into a hybrid, a combination of today's television commercials and infomercials, magazine ads, and detailed sales brochures," he says. "Product literature and manuals might feature video, audio, and text. Vendors will make getting information about their products as simple as possible."

Says Davis, "Advertising lines will become blurred. They will be part display ad, part classified ad, part directory and part direct marketing. The Internet rapidly blurs those lines. It offers an opportunity for bundling."

You Can Get There From Here

All of this indicates that we are in for unprecedented change. How can newspapers survive and even prosper as the Internet becomes the information superhighway? Our sources offer ten key pieces of advice.

1. Be market-driven. "Nowhere is the benefit of a market-driven decision more apparent than in an unproven market," says Gates. "People and companies will have to be open to reinventing themselves--possibly more than once." Adds Bob Ingle, vice president of Knight-Ridder New Media, "We've been monopolists for way too long. We have to accept that the customer is in charge."

2. Figure out and focus on your areas of core competency. According to Max Cacas, online producer for The Freedom Forum, "We have to know what our strengths are and play to those strengths. People want solid information they can rely on." Chris Gulker, publishing-industry manager for Apple Computer agrees: "Newspapers have to wake up and smell the coffee. Your core business is editing. Newspapers deliver true, pure information."

3. Partner with companies outside your areas of competency. "Newspapers need to open up and look for partnerships," says Wester. "The New York Times and Knight-Ridder get it. Internet technology is not their core competency." Says Gates, "In this world of complicated alliances, companies must be able to partner on some projects and compete vigorously on others. Few companies in the computer and communications industries are purely friends or purely foes."

4. Get top management involved. According to a recent research note published by the Gartner Group of Stamford, Conn., "Cross-company new-media task forces will unite all divisions of the publishing enterprise, including advertising, circulation, production, editorial, information services, design and marketing. Transitional efforts will be most effective when managed from the top down. Publishers that can do so will appoint an independent steering-committee manager reporting directly to the chief operating officer to ensure the necessary effort."

5. Invest in new media. "Newspapers have to find the money and the intestinal fortitude to invest in new media," says Ross. "You've got to put the talent and money into this." Uzal Martz, publisher of the Pottsville (Pa.) Republican, agrees: "The real challenge is that the rules are changing. As an industry we are not spending enough on our future."

6. Be creative. Jim Jennings, vice president with Thomson Newspapers, offers this scathing critique: "Newspaper pages are boring when printed on dead trees, and they're boring online," he says. "We need to train people and instill creativity." Adds Ross, "The key thing is the brainpower of the reporters and editors. Our near-term barrier is storytelling talent. It's in the newsroom but not on the Web site."

7. Connect with your local market. "The biggest challenge we have is to provide that local connection," says Martz. "Smaller papers already have it. Major metros don't." Says Wester, "Newspapers need to position themselves as the trusted third party in the local market. The Internet is collaborative, not confrontational. Newspapers must be the local facilitator for commerce--some online and some via the cash register. Readers come to newspapers for local information."

8. Develop your brand name. According to Mark Bailey, general partner with Venrock Associates, a venture-capital firm in Palo Alto, Calif., "Content and branding will carry the day. That's certainly been true for newspapers and other journal publications--that the content and the brand that people are able to build really is what attracts readers. That will continue to be true for new media. The Wall Street Journal and The New York Times are trusted brands, and people will continue to trust them on the Internet."

9. Step up the pace. "The Internet will accelerate the dissemination of news," says Sandell. "Newspapers will need to keep up with people's appetite for news in a faster and faster way. News will be up-to-the-minute."

10. Watch the technology. Says Davis, "As a media company, we are indifferent to the evolution of a timetable, although we want to be closely abreast of it. We will develop content for the infrastructure that's there. That will allow us to make money and provide services to our customers." Adds Gates, "Virtually everything Microsoft does these days reflects my conviction that the Internet is going to grow so that almost everyone in the developed world and huge numbers of people in the developing world will be users. Companies in most fields ignore it at their peril."

Perhaps more than anything, newspapers need to understand that we're entering a period of radical change. This is not a time for analysis paralysis. If newspapers are to be the masters of their own destinies, they must act.

Most would be wise to follow the advice of Tribune Co.'s Davis. "The challenge for newspapers is to come up with great products that fit naturally in a network environment," he says. "We need to attack aggressively in markets where we already are, and in other markets, we need to get more than our fair share."

Bibliography

Abrams, C. "Trends in Commercial Publishing: Network Processes," Gartner Group Research Note, Sept. 23, 1997.

Friedlander, Brad and Toetter, Martyn. "The Future of the PC," Scientific American Special Issue: The Solid-State Century, Jan. 1998.

Gates, Willam H. III. The Road Ahead. Penguin Group, 1996.

Sources

• Mark Bailey, Venrock Associates, 30 Rockefeller Plaza, Room 5508, New York, N.Y. 10112. E-mail, mbailey@venrock.com; phone, (212) 649-5600; fax, (212) 649-5788.
• Max Cacas, The Freedom Forum, 1101 Wilson Blvd., Arlington, Va. 22209. E-mail, mcacas@freedomforum.org; phone, (703) 528-0800.
• David Cole, The Cole Group, The Cole Group, P.O. Box 3426, Daly City, Calif. 94015-0426. E-mail, dmc@colegroup.com; phone, (650) 994-2100; fax, (650) 994-2108.
• Donn Davis, Tribune Ventures, Tribune Co., 435 N. Michigan Ave., Chicago, Ill. 60611. E-mail, donndavis@tribune.com; phone, (312) 222-3660; fax, (312) 321-0688.
• Stuart Gibbel, Find/SVP, 625 Avenue of the Americas, New York, N.Y. 10011. E-mail, sgibbel@findsvp.com; phone, (212) 807-2603; fax, (212) 807-2777.
• Chris Gulker, Apple Computer Inc., 5 Infinite Loop, MS: 301-5KG, Cupertino, Calif. 95014. E-mail, gulker@apple.com; phone, (408) 974-4611; fax, (408) 252-3343.
• Bob Ingle, Knight-Ridder New Media, 50 W. San Fernando St., #700, San Jose, Calif. 95113. E-mail, bingle@newmedia.kri.com; phone, (408) 938-6000; fax, (408) 938-6099.
• Jim Jennings, Thomson Newspapers, The Metro Center, One Station Place, Stamford, Conn. 06902. E-mail, jennings2@compuserve.com; phone, (203) 425-2515; fax, (203) 425-2516.
• Jessica Korn, Columbia University, 530 W. 120th Street, New York, N.Y. 10027. E-mail, jkorn@ctr.columbia.edu; phone, (212) 854-7098; fax, (212) 316-9068.
• Uzal Martz, Pottsville Republican, 111 Mahantongo St., Pottsville, Pa. 17901. E-mail, uzal@aol.com; phone, (717) 622-3456; fax, (717) 628-6130.
• Janet Murray, Massachusetts Institute of Technology, 105 Massachusetts Ave., Room 9-321, Cambridge, Mass. 02139. E-mail, jhmurray@MIT.EDU.
• Garrett Queen, The Cole Group, 10856 La Salinas Circle, Boca Raton, Fla. 33428. E-mail, gqueen@aol.com; phone, (561) 477-8800; fax, (561) 471-8833.
• Steve Ross, Columbia University, 530 W. 120th St., New York, N.Y. 10011. E-mail, ssr3@columbia.edu; phone, (212) 854-7328; fax, (212) 854-7837.
• Scott Sandell, New Enterprise Associates, 2490 Sand Hill Road, Menlo Park, Calif. 94025. E-mail, ssandell@nea.com; phone, (650) 854-9499; fax, (650) 854-9397.
• Phil Schnyder, Asksam Systems, P.O. Box 1428, Perry, Fla. 32348. E-mail, phil@askSam.com; phone, (904) 838-1672; fax, (904) 584-7481.
• Gregory Wester, Yankee Group, 31 St. James Ave., Boston, Mass. 02116. E-mail, gwester@yankeegroup.com; phone, (617) 956-5000, ext. 296; fax, (617) 956-5005.
• Owen Youngman, Chicago Tribune, 435 N. Michigan Ave., Suite 1115, Chicago, Ill. 60611. E-mail, oyoungman@tribune.com; phone, (312) 222-4179; fax, (312) 832-0182.

TechNews Volume 3, Number 6: November/December 1997

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