| A L L T H E N E W S F I T T O M I N T |
Tech Trib boots up
Daily paper pursues quarterly profits on Internet
By Jeff Borden
Compared with all the garish, whiz-bang gimmickry that pops off the Internet, Digital City Naperville is one down-to-earth Web site.
Click on the seven icons at the top of the page and out spill the details of day-to-day life in the western suburb and environs: where and when the Naperville Central Redhawks girls basketball team will meet Glenbard North, the next meeting of the Lisle Chapter of Better Business Contacts, a chance to chat with a Republican candidate for the DuPage County Board.
Not exactly heart-stopping stuff, but don't underestimate Digital City Naperville or 16 other Digital City Web sites (http://chicago.digitalcity.com) created by the Chicago Tribune. They're vital elements in a wider-ranging strategy to further insinuate Chicago's largest metropolitan newspaper into the lives of its customers while protecting its electronic flank from a new array of cyber competitors.
Tribune Co., long dedicated to finding new ways to profitably distribute the enormous amounts of information it gathers, sees a potentially lucrative revenue stream catering to a new generation as likely to identify with the personal computer as baby boomers do with television.
"I'm not the editor of a newspaper anymore," says Tribune Editor Howard A. Tyner, surveying the fourth-floor newsroom from his glass-enclosed office. "I'm the manager of an information business. There is consensus that the Internet as a content delivery system has clear advantages over ink on paper and television. We want to be in on it."
The Tribune, with $2.7 billion in revenues last year, is spending more than $20 million annually on its computerized products, including the flagship www.chicago.tribune.com, the digital version of the daily print product. The Internet sites are generating about $15 million annually, and the company predicts they'll be profitable within three years.
| The Internet "has clear advantages over ink on paper and television." |
Newspapers are deeply concerned as well-financed computer software firms like Redmond, Wash.-based Microsoft Corp. hungrily eye their advertising base, particularly the lucrative classified advertising segment.
Nationally, classified ads generate about $16 billion annually in revenues, according to figures compiled by the Vienna, Va.-based Newspaper Assn. of America, and account for as much as 50% to 60% of newspaper profits.
Microsoft already operates a national classified automobile service called Carpoint and is readying a foray into the real estate category, code-named Boardwalk.
Meanwhile, the company also has Sidewalk, an entertainment-driven Web site in nine U.S. cities offering information on live music, restaurants, clubs and other venues. The service is slated for expansion into 50 cities, including Chicago, by yearend.
"Newspapers are terribly vulnerable," notes Gerald D. Reilly, a Greenwich, Conn.-based newspaper broker and appraiser. "When you have a $9-billion company (like Microsoft), a building full of very bright people and a very ambitious executive (Microsoft Chairman Bill Gates), you'd better believe it's a serious threat."
The Trib has plenty of local company on the Internet, including the Chicago Sun-Times (www.chicago-news.com) and Daily Herald (www.dailyherald.com), daily newspapers that continue to upgrade their digital offerings.
But Tribune Co., which began edging onto the Internet in 1991 as one of the first investors in America Online, boasts one of the country's most sophisticated Internet products.
"They're way out in front," declares Bill Bass, an analyst at Forrester Research Inc. in Cambridge, Mass. "They believed early that local on-line was going to be a significant way people would access information."
Flagship site's offerings
Additionally, the company has forged partnerships with other newspaper-heavy media firms to create efforts such as New Century Network, which pools classified advertising from the nine largest newspaper companies.
The Trib's flagship electronic product, www.chicagotribune.com -- which recently was updated with a fresher, edgier look -- reproduces the ink-on-paper product on the Internet, but with important differences. Stock quotations, weather reports, television listings and sports scores are updated throughout the day.
Many of the sections have links to other Web sites offering more detailed information, such as the most recent weather reports in other cities.
"It's not that it's electronic that's interesting to us -- it's being in closer contact with our readers," says Owen R. Youngman, director of interactive media. "We're still trying to do all the things you expect of a journalist, but sometimes, more powerfully and with more immediacy."
About 100,000 computer users visit www.chicago.tribune.com per day, and the number is rising, while daily circulation for the print product dropped 4% to 653,554 in the most recent auditing period. Meanwhile, more than 350,000 computer users visit Digital City each month.
The Digital City products -- concentrated mainly in the north and northwest suburbs, where Tribune research has determined that personal computer ownership is high and the retail base is strong -- are more interactive.
"They're intended to be more than a local community newspaper," Mr. Youngman explains. "They're more like a town square, a place where people can take the pulse of the community."
Digital City Chicago echoes its suburban brethren, but includes selections from other media voices: Chicago magazine, public television station WTTW-TV/Channel 11, WKQX-FM and Crain's Chicago Business.
Trib-generated Internet products also include Metromix, an entertainment guide; Silicon Prairie, a daily look at area high-tech issues, including employment advertising, and several classified Web sites. All funnel cash into the Tribune.
Another link to customers
Among retail advertisers using Trib digital products are American Airlines, First Chicago/NBD Bank and Jewel/Osco.
"Most are on the Web as an extension of their business," notes Kurt Fliegel, interactive advertising manager, pointing to services such as on-line banking, airline ticket buying and home shopping. "They see this as another channel through which they can talk to their customers."
But Mr. Fliegel says that many potential advertisers are still wary about buying on the Internet. "The technology is becoming more complex every day," he explains. "A lot of media planners don't understand it."
Meanwhile, other area dailies are beefing up their Internet presence.
The Arlington Heights-based Daily Herald is posting most of its print product on the Internet, but recently introduced digital real estate and automotive classified sections with access to far more listings than the daily editions.
"We needed to protect our franchise," explains Stuart R. Paddock III, Daily Herald manager of new media. "It's a new environment and hotly contested."
The Sun-Times has a digital version, but also 69 additional newspaper titles from its sister publications of Pioneer Press, Star Newspapers and Daily Southtown. The company plans to expand its Internet products with a particular emphasis on classified advertising.
"I don't believe the newspaper will be killed by the Internet; it's a different medium," says Fred LeBolt, director of on-line publications for the Sun-Times. "It's wise for companies in our business to grab some shelf space."
Indeed, media observers believe that newspapers must exploit their brand names as Microsoft and its peers come hunting for dollars.
"Microsoft has a ton of money, but not necessarily a feel for the media business," says Gene Quinn, who helped launch Tribune's digital products and now is senior vice-president of on-line and interactive services at MTV Networks Inc. in New York. "The newspaper can deflect and blunt (any Internet) attack with its brand name."
For example, he notes that a homeowner trying to sell a house in Des Plaines is more likely to post an ad on Trib's Digital product than on Microsoft's.
Investors are paying close attention to the newspapers' push onto the Internet.
"This is a natural extension any smart business should do," says Marc J. Gabelli, managing director of New York-based investment firm Gabelli Funds Inc. "The published paper will still have its embedded base, but more importantly, you're going to be attracting new customers."
©1998 by Crain Communications Inc.
Source: Crain's Chicago Business, Feb. 9, 1998. Used by permission.