For Position Only: Investing in Online Content Benefits All

CreativePro Staff

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While the crashing and burning of the dot-conomy has been deafening in recent months, another disaster has been rumbling a bit more quietly: Traditional media publishers are pulling rugs out from under their Web sites and laying off content creators by the hundreds, because providing original content online is apparently just too expensive.

Among the recent casualties:

• 69 employees (17 percent of the staff) of The New York Times’ Digital division
• 200 jobs (nearly 50 percent of the workforce) at the News Digital Media division of Rupert Murdoch’s News Corp.
• 68 employees (16 percent of the total) of KnightRidder.com.

The list goes on and on. CNN reorganized and laid off 400 people, including more than 100 of the CNN Interactive staff. CBS, NBC, and Viacom have all drastically cut back their Internet divisions in the last six months. Even Disney is squawking about losing money online and is abandoning its Go.com portal. (If you’re in the mood for more sobering news, check out this list of dot.com closures at the online version of "The Wall Street Journal.")

Abandoning Ship
The reasons these publishers are abandoning their Internet ships are many and complex, having to do with the increasingly monopolistic nature of the publishing industry, the general economic downturn, and the paltry advertising revenue they’ve earned online.

But as far as I’m concerned, none of these excuses — individually or cumulatively — justifies the curtailment in online investments. While I’m sympathetic to all who lost their jobs at pets.com, eve.com, boo.com, living.com, and all the other e-tailers that have gone belly-up, I understand that if a retailer doesn’t make money, it can’t stay in business. And though lacking the physical substance of as a dog bed or an end table, content is just as much a product, with its attendant costs and revenue requirements. But there’s a great deal more flexibility that can go into the packaging and delivery of content than with hard goods. If traditional media publishers won’t go out on a limb for what they offer and how they offer it, we consumers will lose content in the short term, and the publishers will miss out on profit in the long term.

The Illogic of It All
Let’s look at it from their business perspective: Media conglomerates have stockholders to please, and they’ve been trying unsuccessfully to make their sites profitable via online advertising. That hasn’t been happening, particularly as e-tailers close shop by the dozen. But the fact is, numerous reports indicate that online advertising is still going strong. According to Advertising Age magazine, online advertising is the most frequent type of ad spending: 67 percent of media sellers peddle Internet advertising, 60 percent sell print advertising, and 41 percent sell TV advertising. And although online advertising isn’t growing at the rates of the late 1990s, it still grew by more than 50 percent in 2000 — to $2.9 billion — according to a recent report from Competitive Media Reporting. Finally, a report by Myers Reports predicts that online ad spending will bounce back later this year, dwarfing the record spending that occurred in 1999. Print advertising still wins out easily when measured in dollars spent, with an estimated $17.7 billion in ads purchased in 2000. But $2.9 billion in online advertising in 2000 is nothing to scoff at, particularly given the expected growth in online advertising in the coming years.

So why can’t the mega-media conglomerates sit tight through the current hiccup in the economy? Online advertising has tremendous potential, especially as bandwidth increases and streaming media becomes more commonplace. And along with those technological improvements will come better, more creative ways not only to advertise, but also to track the efficacy of online advertising and to measure brand awareness across multiple media.

Given that mega-media conglomerates have the deepest pockets for creating and being creative with content, I argue that it’s incumbent on them to lead the way, not bail out when the going gets a little tough. Start-up dot-coms whose mission has been to provide original news content have been harder hit by the economy than the big boys. Indeed, as sad as the travails of beleaguered online content providers may be — including Salon.com (which just announced another round of layoffs), voter.com (an acclaimed political content site that shut down just this week), and APB.com (an award-winning crime news site that went bankrupt this summer) — the voids they leave behind give mega-media conglomerates fresh opportunity. Because contrary to a quote by AlleyCat News editor-in-chief Anna Copeland Wheatley in the January 5, 2001, "New York Times," original and independent online content is not a fantasy. Consumers want content almost as much as they want a tax refund this spring — and they want it in print, online, and any other way they can get it.

Exceptions to the Rule
Some mega-media conglomerates do recognize the imperative of combining print, online, and other multimedia publishing avenues. Take Hearst Corp.: Back in 1999, the company launched its CosmoGirl Web site simultaneously with the print magazine, knowing that its audience wanted both. "Our studies tell us that ‘CosmoGirl’ readers are surfing the site while holding copies of the magazine on their laps, going back and forth between the two," Atoosa Rubensteing, "CosmoGirl" editor in chief, recently told "Advertising Age" magazine.

"CosmoGirl’s" responsiveness to its readership appears to have paid off: The magazine was named Startup of the Year by Adweek, Hearst expanded the publication to 10 issues annually in 2000, and "CosmoGirl" just increased its rate base. That Hearst launched the magazine with both print and online content undoubtedly doesn’t deserve complete credit for the success of "CosmoGirl," but it certainly deserves some of the credit. More to the point, it’s an indication that giving people what they want — print and online content — can be done successfully. Another example is Oprah Winfrey, who has mastered the merchandising of her name across TV ("The Oprah Show"), periodicals ("O, the Oprah Magazine"), books (Oprah’s Book Club), and the Web (oprah.com). Just don’t get me started on the angels thing.

But you don’t have to be Oprah (or Martha Stewart or Mary Engelbreit) to successfully leverage your brand across online and print media. If publishers give consumers original, useful, and compelling content online that complements and enhances the print product, I suspect that one of these days they will be able to sell ample online ads to support it, and that consumers will even be willing to pay for it, just as they do for the printed page. From my perspective, now is the time for those mega-media publishing conglomerates to build loyalties, explore markets, and continue making the Internet the place that best satisfies our hunger for content. Greater financial rewards will follow.

Read more by Anita Dennis.