A Clear Internet Message for Traditional Media: Besides Developing Your Own Branded Information Web Site, Buy Whatever Else Is Available On the Web Whether It Has Anything To Do With News or Not!

Philip M. Stone November 7, 2005

Three trends are now apparent for traditional media to retrieve lost profits: their own branded web sites are the most popular news destinations for local news, they must invest heavily in new media, and new media doesn’t mean just news and information -- as long as enough unique visitors flock to a site, buy it!

About 5,000 newspapers globally have their own web sites, according to the Newspaper Association of America (NAA), and of those more than 1500 are in the US. And the latest statistics from Nielsen/Net Ratings is that more people than ever before are visiting those web sites.

Some 47.3 million people visited US newspaper web sites in September. Put into perspective, that means 32% of all US Internet users hit a newspaper web site. That’s an increase of nearly 16% over the year before. Average time spent on the site is about 38 minutes.

Interestingly, web site popularity is one area where newspapers have a very large advantage over local television and radio. When asked where they go online for local news 62% said their local newspaper compared to 39% for the local TV station online site and 23% to the local radio online site and there is some overlap.

And again it is local news that draws the visitors. They can go to Google and Yahoo and the New York Times, MSNBC etc, for their national and international news fix, but when it comes to local news it is the local newspaper in one form or another that they depend upon.

Much has been written about the huge Internet investments made this year in the US by such companies as the New York Times, Dow Jones, and News Corporation, but media elsewhere are also making huge investments in buying up online sites. The UK is as good an example as any.

Emap, one of the UK’s leading media companies that owns more than150 consumer magazines in the UK, France and around the world, and owns 19 UK local analog radio stations, eight digital music TV channels and one of the UK’s biggest digital radio networks, last month splashed £140 million for online fashion portal Worth Global Style.

The portal advises retailers on trends in the fashion industry -- lots of fashion industry advertising from the big names -- and no doubt there is a good fit there for some of EMAP’s magazines.

And three major UK newspaper publishers – Trinity-Mirror, Daily Mail and General Trust (DMGT) and News Corporation have spent more than £100 million between them in the past 12 months for online sites.

Trinity Mirror, the UK’s largest newspaper publisher, operates 240 local and regional newspapers, five national newspapers, and more than 60 websites .It recently has spent some £81 million for three online sites including £50.5 million for the UK's second biggest web recruitment firm, Hotgroup, which has more than two million registrants. It also has bought a graduate recruitment site, Financial Jobs Online, and a property site, Smartnewhomes.

All the purchases, according to Sly Bailey, Trinity Mirror chief executive, are part of the group’s core strategy of growing classified franchises online and offline. "

The company has also launched a network of local free classified sites branded Adzooks, across several UK cities. Adzooks covers more than 70 categories of ads including apartments for sale or rent, items for sale, dating, local services, jobs, and community news and information. Users can post ads, listings and messages for free.

But for all of that the company announced in October that it is considering cutting 550 – 770 jobs at its newspapers in the advertising and editorial departments because of a slowdown in advertising, and it has told staff it will not pay for any Christmas parties this year.

DMGT had also been looking at Hotgroup as it, too, wanted to expand its jobs classified business. It spent some £4 million during the summer buying top-consultant.com, the UK’s top recruitment site for management consultants, and at the other end of the job scale it bought officerecruit.co.uk that serves secretaries, legal clerks and administrators. Earlier in the year the company spent £35 million for Jobsite and since then it has started three more Jobsite niche sites – pharmaceutical, secretarial and jobs in Scotland.

Property sites are also very hot. Trinity Mirror and DMGT have both bought property sites within the past year – DMGT spending £14 million for Findaproperty, and Trinity Mirror paying £17 million for Smartnewhomes.

And just because media groups are extremely competitive editorially doesn’t mean that they can’t get together on the business side. DMGT and Trinity Mirror are partners with Guardian Media Group and Newquest in Fish4 – a site that advertises jobs, homes, and cars, and with 1.3 million unique users monthly it is said to be the UK’s most frequently visited recruitment site. Through its ownership the site represents around 650 regional newspapers, about 60% of the UK’s total. Provincial press.

Not being left out of all this is Rupert Murdoch. While it is his US online deals, worth around $1.5 billion so far this year that has captured the headlines that doesn’t mean the company has not been active elsewhere.

In Australia, for instance, News Corporation is caught up in a messy hostile bid for realestate.com.au in which it already owns a 51.5% stake, but management has continually fought the buyout saying the price offered is too low. News Corp raised the price in August to A$ 2.00 a share and again in October to $A 2.50 saying that was its final offer, but management is still claiming the bid is too low.  An independent expert has valued the company at between A$2.48 – 2.73 per share.

But that mess has not stopped News Corp and realestate.com.au from together spending £14.3 million for the UK classified advertising web site Propertyfinder.com that they will own 50-50, but with realeastate.com.au having management control.

And while all of those purchases have some synergy with the newspaper classified business, ITV, the largest UK commercial broadcaster, is now saying that it is looking to buy sites outside of the normal stream of TV advertising. 

The company sees the writing on the wall that television advertisers are turning elsewhere because of clutter, ad skipping on personal video recorders, and perceived poor value for money. It sees BT, the largest British telephone company, setting up its own broadband TV business and BSkyB buying EasyNet broadband provider for £211 million, and that the traditional TV advertising model will become increasingly more difficult to sustain as the number of viewing choices increases.

So ITV has determined its future is to seek revenue streams that do not rely so heavily on television advertising. It is said to be looking to pay, for instance, some £170 million for Friends Reunited, a site that puts UK former classmates in touch with one another.  The site, started five years ago by a couple from a bedroom in their London home, now has some 12 million registrants and it has been licensed to several countries including Australia, Hong Kong and South Africa.

ITV is also in the midst of testing local broadband channels and if the uptake is high enough it will establish similar ventures in major towns across the country. One of the channels being tested is for classified advertising.

The ultimate ITV aim is for about 50% of its revenues to come outside its core television channel by 2012, when Britain is scheduled to close down analog transmissions.

What has become obvious in all this is that the UK traditional media are anxious to become major players in the new media world. They accept that for traditional media – newspapers and broadcasters –that their traditional growth expectations have come to an end. They still have very healthy profitable traditional businesses, but the real growth is going to come from new media and they need to be a part of it.

For newspapers seeing readers, particularly the young, drift off to the Internet it was only logical that where they went, the traditional media needed to be, too. 

For television, the success of digital TV and BSkyB and the advent of new broadband services being announced almost daily, made it obvious that new revenue streams had to be found.

That’s true not just in the UK but also in most countries. It is the savvy traditional media players that see all of this as more of an opportunity to get involved in new revenues streams rather than crying about what the future may do to their traditional business. And they are the ones who in the end will come though the upheaval just fine.

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