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Content & Media > Interviews > AOL-TimeWarner merger shows that .... >

AOL-TimeWarner merger shows that Internet media are growing faster than traditional media

Madanmohan Rao interviews Internet media expert Steve Outing

Based in Boulder, Colorado, Steve Outing is a veteran journalist; an internationally known expert on interactive media/online journalism; a media analyst/consultant; and an Internet entrepreneur. He is president of Content Exchange LLC, the digital marketplace for online content creators and publishers. Since 1995 he has written a popular column called Stop The Presses! for Editor & Publisher Interactive, which covers the online news industry and has a global audience.

He is owner/host of 3 popular Internet discussion forums about new media: Online-Writing, Online-News and Online-Newspapers. Steve is president of Planetary News, an interactive media research and consulting firm. He is a member of the Writer's Digest editorial advisory board, and is an online writing columnist for that magazine. Steve also writes a monthly Media column for The Guardian newspaper (London).

Q: What are some of your reactions to the AOL-TimeWarner merger?

A:

It is significant that an online media company has outpaced the king of traditional media in terms of market valuation. The merger should have erased any doubts that may have still been lingering that online media would not grow to match industries like television and newspapers. It happened faster than most of us thought it would.

Q: Whither portalmania? What trends do you see unfolding in portalspace in the

coming years?

A:

I continue to think that vertical and regional portals will be successful. It's a big job doing it right, and costly, so we probably will not see big returns immediately. But in time if you're a news organization and you own Bombay.com or Detroit.com, you should come out a winner. One of the newspapers in Las Vegas, Nevada, bought the domain LasVegas.com -- for a large sum of money -- and turned it into a regional portal.

That domain draws a huge amount of traffic because so many people type it in when seeking information about Las Vegas. That site contains everything a visitor or resident might want to know about the city; allows you to book hotel rooms; buy online; etc. That site should prove to be an increasingly valuable asset for the newspaper.

Vertical industry portals also will grow to be a significant business, because they will take advantage of the Internet's ability to facilitate business-to-business commerce. The tricky part for vertical portal purveyors -- and this applies to regional/metro portals, too -- is that competition could get fierce in some sectors. Will there be room for more

than one portal per industry or region?

Q: How do you view online publication evolving since the dawn of the World Wide Web?

A:

Back in 1995, during the birth of the commercial Internet, most Web content was from traditional publishers who thought that the Internet would be a simple spin-off business. They insisted on mostly shoveling traditional-media content online. They didn't

know if the Net would grow into much, and didn't treat it as the independent media form that it is. Only a few pioneers braved the world of original online content back then.

It's really been a slow, evolutionary process. While we all talk about "Internet speed," the news industry has been pretty slow to realize that it needs to treat online news as a separate medium and business -- and run Internet news businesses just as you would a newspaper or television station, and not just as an adjunct.

The markets have led the way, putting huge valuations on Internet companies. Investors recognised the potential of the Internet long before traditional publishers. Many publishers are only now waking up. It's telling that only this last weekend did the first newspaper company, the Times Company Digital (part of the New York Times), issue stock for its spin-off Internet venture. It's about time!

I see online news headed to gain greater respectability -- to gain the same kind of stature as newspapers, magazines and television news. We're almost there. There are still some hurdles, such as some dinosaur organisations like the NCAA (college sports body here in the U.S.) denying press credentials to online media. And the comic strip Doonesbury still makes fun of online journalists. (Anchorman Roland Hedley left his TV network job to

work for a Web news outfit, and covers the news solo with a tiny handheld digital video camera.)

But the tide is turning in terms of perception of online news. AOL's purchase of Time Warner went a long way in making people realize that online media is now part of the big media "establishment." From now on, the public will turn to online news sources as often as traditional news media.

And online news is now firmly entrenched in people's minds as the place to turn when you want breaking news. It's no longer turn on the TV when a big event breaks, but get on the Web.

Q: How can print products and their corresponding Web sites leverage each other's strengths, or is there still some conflict of interest or fear of cannibalisation here?

A:

There's still fear of cannibalization, especially among smaller newspapers and in the magazine industry. I think it's going away. It may take the retirement of all the "old folks" in executive positions (who have traditional media backgrounds) before that notion goes away completely. (By "old folks," I really mean those who think old in terms of traditional media retaining dominance; many chronologically old people do "get it"

about how the Internet changes the media landscape.)

If you have a company that's in both print and online (or broadcast and online), you simply promote one side in the other -- aggressively. You have the print people producing content for print, and the online people producing original content for online. And while there is some repetition of content (shovelware), that's only a small part of what you offer online. The two sides of your company produce content that is complementary, so that a print story promotes additional content that's on the Web site --

and vice versa. The crime story in print promotes the searchable crime database on the Web site. The TV football game announcers promote an online fan chat session going on during the game -- that sort of thing.

If you stop wasting your time on shovelware, your Web site becomes a great marketing tool to promote print subscriptions. Done right, complementary Web and print operations can significantly increase print revenues for a publisher -- and of course print promotion can really help to grow Web site usage (and thus online revenues).

It's funny, but among small publishers, the cannibalisation fear is most prevalent. And what do they do with their Web operations? They shovel print content onto the Web, and do exactly the worst thing they could do -- copy their print edition online so that cannibalisation is most likely. They're being short-sighted. (I don't think that will hurt them that much -- if that causes any cannibalisation it will be minuscule -- but it's no way to create a profitable online business.)

Of course, a large part of the traditional news media industry gets it. I can point to many news companies that understand that having a great Internet operation involves letting that side of the company operate freely to make the most money it can -- regardless of how its strategies might impact the traditional side of the company. The smart ones get it, and have gotten it for a while. It's just taking a long time for the message to get through to the entire traditional news industry.

Q: What are the Top Five lessons you have learned about online publishing

since you were first exposed to the Net?

A:

1) It's a whole new media. Don't treat it just as an adjunct to traditional media.

2) The Internet is about many-to-many communication and community, more than it's about anything else.

3) There's room on the Internet for many business models. Just because one-to-many news broadcasts are not what the Net is best for doesn't mean that it can't be a successful model for a news publisher. Just as an AOL-Time Warner can thrive on the Net, so can a one-man/woman online news service operating out of a suburban basement. The beauty of the online medium is that it supports such diversity -- empowering the tiny and weak, and providing a powerful new medium for huge companies smart enough to

understand that it's not at all like old media.

4) E-mail communication is the most powerful element of the Internet -- yet

most Web publishers still under-utilise it.

5) On the Internet, consumers/readers/users always have the last word. They have with the Internet the ability to fight back; to expose falsehoods; to reward the good and punish the bad. As an online publisher, you can't afford to treat your users badly, for they hold the power to with a few keystrokes destroy your reputation. So always respect your audience.

Q: What are the three best success stories of online news sites that you have come across?

A:

1) Sunline, the award-winning Web site of a small chain of newspapers in Florida. They've got incredible usage figures and strong community loyalty because they really "get" the Internet. They allow their users to interact with their site -- so users can post their own news, in the form of tributes to lost loved ones or pets, etc. They conducted Internet classes for the community, in order to train people in their market in how to get

online and use the Internet to improve their lives. They do things really well on a small budget. While many small papers sit dumbfounded by the Internet and afraid to spend money on Internet ventures, this small paper was aggressive in figuring out what it needed to do to develop an Internet enterprise that would serve its community well -- and become profitable.

2) San Jose Mercury News/Mercury Center/SiliconValley.com. I admire them for early on recognising that online was going to transform the region they cover, and early on committing significant resources to figuring out how to build a successful online news company. They've also made the transition from just covering their physical community, to providing news online for a worldwide audience interested in the "concept" of Silicon Valley.

3) Salon.com. I love the fact that an online-exclusive news site consistently breaks new ground in journalism. It has led the way for many more online news ventures to come to be successful yet also break new ground.

Q: What are the Top Three misconceptions you notice in the way publishers are

approaching the Net?

A:

1) Expecting to be able to devote part of their time and some of their resources to it and have their companies succeed online. It requires the 100% commitment of the top executive. If a media company can't afford that, then it should spin off its new media operation and head it with an individual who can think about nothing but the Net. It's the only way to compete with the pure Internet companies.

2) That their old-media brand name has high value on the Internet. Sometimes, an old-media brand is a detriment, because the Internet public's perception is that this is a company that doesn't really understand the Net. You don't have to look far to see new brand names that became household words in a couple years and have stronger recognition than established old-media brands. If your brand name will serve you well

online, then by all means utilise it. But consider carefully if a new, "Net savvy" brand name might actually serve you better.

3) That you can get away with "lip service" when it comes to allowing your online readers/users to "talk back" to you. Many publishers do little more than put an "e-mail the editor" link on stories, and consider that to be "interactive." They need to truly give users a voice: let them append comments to articles; host discussion forums and live chat sessions where readers can interact with writers; put e-mail addresses on all bylines; etc. Publishers may grasp that the Internet is a many-to-many medium more than a one-to-many medium, but many of them don't act like they know it.

Q: What kinds of consulting/services do you provide for the news community?

A:

I do only minimal consulting right now. I write once a week for Editor & Publisher; once a month for The Guardian (UK) Media page; and once every other month for Writer's Digest magazine. The rest of my time I spend on Content Exchange, my online content start-up company. As part of Content Exchange, my partner Amy Gahran and I write and edit a weekly newsletter called Content Spotlight. I do occasionally do brief consulting work for a variety of publishers and content-related technology companies, and I  regularly speak at conferences and workshops on online content/news/journalism topics.

Q: Any other parting words of advice/comments to the online news community?

A:

Don't be afraid to invest. The payoff down the road will be huge if you persevere.

>>>>>>

The writer can be reached at madan@techsparks.com

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