Freewheeling Net meets free market Publishers begin to wonder if

Last year was the year when nearly a thousand newspapers, magazines and new-media start-ups rushed to the Internet. This year, as the bills pile up, the same gang is puzzling over how to get these electronic ventures to pay their own way.

So far, they are going about it with the old-fashioned methods, trying to lure advertisers and subscribers. The Wall Street Journal, The New York Times and Time Warner have announced plans to charge for some or all of their Internet offerings starting this summer.

It is not surprising that Internet publishing, a field open to giant media conglomerates and small entrepreneurs alike, is becoming more commercial. But it does sharply contradict the predictions of many technology mavens.

Just a year or so ago, they said the Internet, with its academic roots, was a distinctive culture -- freewheeling, democratic and deeply anti-commercial. Advertising was anathema to the Internet ethos, they said, and people would never pay for on-line material.None of the old commercial rules was supposed to apply.

Guess again.

Now that the Internet's World Wide Web -- a multimedia blend of text, graphics, video and audio -- has become more accessible, it has become more commercial. And on-line publishers are trying all the tricks in the book -- from free trial periods to pay-per-view services -- to make a buck, or at least break even.

At the start of 1995, there were only 100 newspapers on-line, but now there are 1,100, according to statistics compiled by Editor & Publisher and Planetary News, a consultancy specializing in electronic publishing. But "only the strongest are going to survive," said Steve Outing, president of Planetary News in Boulder, Colo.

To make Internet publishing profitable the advertising market will have to take off.` Last year, when advertising on Web sites was new, it totalled $43 million. That compares with $32 billion in television advertising, $22.5 billion in newspapers and magazines, $1.9 billion for radio.

Predictions are that advertising will pick up and that sooner or later there will be a shakeout, as many publishers learn that they cannot attract enough advertising to support their Web sites.

But advertising is only part of it. Electronic publishers are also angling to make readers pay for the information they use. That option becomes more realistic as programmers develop encryption to protect credit card transactions on the Internet.

So far, the few on-line publishers who are charging readers, or plan to, are electronic-media units of respected magazines and newspapers or new ventures focusing on special-interest subjects like sports or politics. For instance, ESPNET Sportszone, a sports Web site jointly created by ESPN and Starwave Corp., has persuaded thousands of subscribers to part with $4.95 a month.

ESPNET Sportzone is using the most common approach to coax money from readers. It is relying on a variation of the cable television model -- to have free-viewing areas and then to offer premium features that cost money. For newspapers on-line, a premium service might be a news report, sent daily by E-mail, tailored to a subscriber's subject preferences.

This summer, for instance, The New York Times and Time Warner intend to offer personalized electronic reports, following the lead of The San Jose Mercury News' Newshound service.

Another premium Internet service planned by major newspapers is electronic access to their archive of articles, charging a dollar or two per article.

But a couple of on-line publications are going further. They let the customers try the product until they are hooked, and then charge them. One such publication is The Wall Street Journal's Interactive Edition. After an initial sampling period, which ends Aug. 31, the on-line Journal will cost $49 a year, or $29 for subscribers to the paper's print edition.

Microsoft's Slate, the publication headed by Michael Kinsley, The New Republic's former editor, is using a similar technique. It is scheduled to begin publication in the next few weeks. There will be a sample period of a month or so, then a subscription fee.

Microsoft clearly has not only deep pockets but also deep hopes. Inside Building No. 25 on Microsoft's corporate campus in Redmond, Wash., the news room for the Microsoft Network, its Web-based service, is bustling with newly hired editors and reporters.

Microsoft is betting that it can outlast most of its competitors. "The investment issue is who blinks when, as new media evolves to become a business," said Laura Jennings, vice president of the Microsoft Network.

On-line publishers know they need a good lure. For some, that means putting out something readers can't get elsewhere, for others it means putting out some freebies.

"With so may new people coming onto the Internet all the time, we think you have to offer a lot of content for free, letting people wander onto your front porch and then charge them if they want to get into the house," explained Rich LeFurgy, Starwave's vice president of advertising and product marketing.

What is at stake is the growing on-line audience. Last year there were 8.4 million American households on-line. That number is expected to increase to 35 million by the year 2000, estimates Jupiter Communications, a research firm in New York.

Not all publications will thrive. Forecasts of future riches are little comfort, for instance, to Dale Dougherty, publisher of Web Review, a respected weekly Web magazine dealing with Internet culture and technology.

It had a full-time staff of 12 people and advertising revenues of $10,000 a month -- a pittance compared to its costs. So last month, Dougherty warned readers that Web Review would shut down unless 5,000 people would pay $19.95 for a six-month subscription.

To date, only 1,000 readers have said they would be willing to pay that much. "If the rules of the media game on the Web are that you have to spend a lot of money and not get much back," Dougherty said, "then this isn't much of a business yet."

Copyright 1996
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