Is Consumer E-Commerce Essential To A Publisher's Success On The Web? - Statistical Data Included

NO

In fact, if done poorly, it can cause serious harm.

John Babcock Jr.

President, BPI Communications

E-commerce hasn't proved to be absolutely essential at BPI to date. We are aware, in fact, that poorly executed e-commerce could destroy a publisher's most valuable asset: unbiased information. That being said, we also know that focusing on how to leverage one's information franchise in light of surging e-commerce on the Web is a critical exercise for all of us in the B-to-B information business

At BPI, we have a number of successful, quite profitable sites with high revenue streams. In our circles, in the markets we deal with, we have a huge amount of information -- very valuable information -- that people are willing to pay for on the Web. We already have three revenue streams: We have advertising, we have paid subscriptions, and we license our news and our databases to other sites and to other print products.

There is definitely an issue with regard to e-commerce and any publication that is delivering unbiased editorial content to a marketplace. And it's an issue that management and editorial need to deal with if they're going to benefit from e-commerce growth.

It's a question of making sure your editorial staffs feel comfortable with any e-commerce arrangements -- there can be no biases, either real or even potentially perceived. You cannot put an editor or reporter in a position where he or she might be compromised.

Your readers. also, have to feel they're getting unbiased information. Whenever there is any question with regard to that, it's a real problem. You'll lose readers. Sources won't talk to your reporters. And you will, in the end, not have a good information service.

First and always foremost: We are an information provider. In fact, we sell or license a lot of our information to retailers to use on their sites for e-commerce purposes. It's our role as unbiased information providers that allows us to take part in this form of "e-commerce." It's the information that draws the customer to the product. Or more appropriately, the information draws the customer to the site, and then to the product that he's going to buy.

But it's what I call arm's-length e-commerce. We, as information providers, are in a position to connect customers with products. And it's okay for us to help a product manufacturer reach a customer and make a sale, and we've always been willing to be compensated for that, provided that everybody else who has a similar product has the same opportunity.

That, I think, is the basis on which we can and should pursue e-commerce. If an information provider is involved directly in e-commerce, without an intermediary, the risk of being perceived as competitive with people you cover and write about is real - unless everyone who has a product to sell can get that same service at the same price through your site. You can't do it exclusively with any one vendor without creating a bias situation.

The other issue we are wrestling with is the question of branding e-commerce business with the same brand as your information service. I think that will confuse your readers, and may erode your identity as an information provider. A lot of B-to-B publishers going forward will probably create separate brands to deal with e-commerce. In that way, there will be more than an arm's length between the editorial material and whatever may be done on the e-commerce side. Separate branding also allows for separate management; without it, you have to deal with the issue of who runs the brand.

Definitely at BPI we expect to grow with the e-commerce surge. We have, and we are growing still as we speak. In fact my office sits smack in the middle of our e-media operation. One of the many reasons I moved myself here is because we need to deal with editorial integrity issues every time we cut a license, create an alliance, or just get creative with an ad sale on our site.

YES

And it's a natural outgrowth to the reader value we already provide.

Jason E. Klein

President/COO, Times Mirror Magazines

There is little doubt that e-commerce is experiencing explosive growth. While I'd be hard-pressed to say that e-commerce is essential to the future longevity of all magazine publishers, it is a natural extension and a huge potential playing field for certain kinds of magazine publishers.

For service-oriented, special-interest Times Mirror magazines like Golf, Outdoor Life, or Skiing, e-commerce is a natural outgrowth to the value we already provide to our readers. Consumers reading a new product review on the Internet will expect to be able to purchase that item right on the site. Fans of Snowboard Life should be able to buy a snowboard on the magazine's Web site. Likewise, visitors to Golfonline.com should be able to buy the latest clubs featured in the magazine.

We can help immerse our readers in the activities of their choice. People looking for a winter adventure on the mountain slopes of Colorado, for example, should be able to book their vacations through Skiing. We may even be able to heighten the experience of our Golf readers, for instance, through special arrangements with individual golf course operators. We need to be ready to embrace these kinds of possibilities.

E-commerce is garnering lots of attention from Wall Street but whether a publisher can win in this arena is still an open question. It's hard to match the level of investment of a hot, newly-public e-commerce pure play.

Over $19 billion went into Internet IPOs last year, which is $8 billion more than the $11 billion spent on magazine advertising. Our natural advantages as publishers, however, give us a leg up. We have brands, content, and great expertise in each of our market areas. Isn't it in the consumer's interest to purchase a product from a respected source such as a major publisher rather than a "fly-bynight.com"?

As publishers reinvent their franchises for an e-commerce environment, there are still a number of issues that are at best confusing and at worst, potentially damaging. For instance, if Popular Science's online store has a sale on a new computer, does that mean the magazine endorses the product? We need a mechanism that weeds out products inconsistent with the integrity of the title and its editorial content. Editorial integrity is a major issue in the online universe. While there is some consensus among ASME and others about the meaning of editorial integrity in the print world, its definition on the web is far from certain. That definition can't remain static. Web-centric companies don't play by ASME rules. That doesn't mean that we need to mimic them, but it does mean that we need to think carefully about the new rules.

It is a time to question what is perceived to be the accepted wisdom about the relationships between manufacturers, the media, and distribution channels. In the eighties, the prevailing wisdom was that established, branded department-store manufacturers would destroy their relationships with chains like Nordstrom if they sold their wares direct to consumers. Coach, the leather-goods manufacturer, changed the rules. It built a solid business in three channels of distribution, including direct mail catalogs, specialty stores, as well as traditional department stores.

My point is that what publishing brands can and cannot do in e-commerce has yet to be determined. Certainly, there are risks involved for any publisher seeking to enter e-commerce, but we'd be making a mistake to run away from these risks. At Times Mirror Magazines, we believe we can play a role in shaping the e-commerce environment as it pertains to publishers. And from our perspective, it's better to be one of the rule makers rather than to watch from the sidelines.

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