Profiting From the Internet
Scott Stines - IDEAS Magazine - January 2001

Take out your pen or pencil and answer a couple of important questions.

1. How many newspapers are generating a profit from their online operations?

a. > 100
b. 75 - 99
c. 50 - 74
d. 25 - 49
e. 10 - 24
f.  1 - 9
g. None

2. How many newspapers have integrated the capabilities provided by the Internet into their day-to-day operations?

a. > 100
b. 75 - 99
c. 50 - 74
d. 25 - 49
e. 10 - 24
f.  1 - 9
g. None

If you answered anything other than "F" for the first question, you were incorrect. There are only a handful of newspaper companies that are generating a profit from the Internet: and those are national chains that have been able to aggregate content and advertising opportunities. If you are aware of a stand-alone, single market newspaper that is generating a profit from the Internet, then you have a secret that is worth sharing with others. While some may claim to be profitable, they generally are not accounting for all costs associated with their Internet operations.

If you answered "G - None" to the second question, then you are right. No single newspaper or chain has integrated the Internet into their day-to-day operations. Sure, there are newspapers that are taking subscriptions or ads online, but many end up printing out Internet orders and data entering the information into their front-end systems: which is kind of like paddling a canoe with an outboard motor. Others have made significant progress in a particular area of their business, but none have been able to leverage the power of the Internet across all functional areas of their business.

This should come as no surprise as most businesses have not integrated the Internet into their day-to-day operations. Those businesses have an advantage over most newspaper operations, and as a result, their odds of success are much better. What's their advantage? Those businesses have recognized that the Internet is much more than a one-way distribution channel for content, but an interactive, real-time environment that provides the opportunity to conduct business with customers and suppliers at a significantly lower cost than traditional marketing, sales, and communications channels.

Sure, there are newspapers that recognize the interactive power of the Internet, but organizational decisions made several years ago serve as barriers for integrating the Internet into day-to-day newspaper operations. Many newspapers have created separate departments or even separate companies to "deal" with the Internet. These independent departments or companies have been focused on posting content to newspaper web sites, or building online communities. Many operate without business plans or profit expectations. Most employees have technical backgrounds and do not have a basic understanding of how the newspaper operates. And based on discussions with more than a dozen newspaper online employees, many do not have a favorable opinion of the core business that puts food on their table.

Imagine buying a phone and giving it to just one department that knows all about telecommunications, but little about how your business operates. What is the likelihood of creating and implementing a successful circulation telemarketing program or handling customer service issues when the very tool used to implement those programs is "owned" by someone else with a very different agenda.

No, the odds of success are significantly reduced when the people responsible for your newspaper's online operations are removed from your core business. And if your newsroom runs your on-line operation, you shouldn't expect those responsible for managing expenses to put on a business hat and start generating profitable revenue.

Newspapers are beginning to realize the transactional and customer relationship management capabilities of the Internet. And many of those leading the charge will be in Miami next April 19-20 to attend INMA's Profit.com workshop. If you are interested in two days focused on the non-content side of the Internet, we invite you to join us in Miami.

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