News Publishers Adjust Web Strategies

NEW YORK Increasing Internet usage to obtain news, particularly among young consumers, is forcing newspaper companies to adjust their Web strategies.

In a speech to the Association of Newspaper Editors, News Corp. CEO Rupert Murdoch warned news executives and editors that they must invest more heavily in their Internet offerings to keep pace with changing consumer media habits. Murdoch admitted that his own news outlets had fallen short in seeing the effect the Internet and new technologies are having on how consumers get information.

“As an industry, many of us have been remarkably, unaccountably complacent,” he said. “Certainly, I didn’t do as much as I should have after all the excitement of the late 1990s. I suspect many of you in this room did the same, quietly hoping that this thing called the digital revolution would just limp along.”

Newspaper companies have struggled with declining circulation numbers, an aging readership and dwindling classified revenue as consumers turn to Web services like Craig’s List. According to a recent report by the Carnegie Foundation, Internet portals are the main source of news for 18-to-34 year olds.

“What is happening is, in short, a revolution in the way young people are accessing news,” Murdoch said.

News Corp. only recently turned its full attention to the Internet. Earlier in the year, it hired the McKinsey consulting firm to devise an invigorated Internet strategy for its stable of media properties, which includes Fox News and The New York Post.

The increased use of news aggregators like Google News and Yahoo News drove Knight-Ridder, Tribune and Gannett to buy 75 percent of Topix.net, a news search engine that lets users search hundreds of information sources.

Dow Jones and The New York Times have sought to fight their declining or stagnant print advertising sales by adding Internet inventory. Dow Jones paid $520 million for MarketWatch last November, and The Times bought About.com for $410 million in February.

The increased attention is due to the strong growth of Internet advertising. Dow Jones, reporting its first-quarter earnings, said its Internet revenue, including the MarketWatch, was up 36 percent to $117.2 million, while print revenue fell 9 percent. Excluding the MarketWatch acquisition, Internet revenue was up 8 percent. Dow Jones charges for access to The Wall Street Journal Online, in addition to selling advertising.

The Times continued to see its Internet operations as a growth engine. While non-Internet ad sales declined, Internet ad revenue was up 30 percent in the quarter compared to a year earlier. Overall news ad revenue at the company was flat from the previous year.

Martin Nisenholtz, senior vice president of digital operations for The Times, said the About.com acquisition was already paying off with increasing distribution of content. The Times is putting its online videos on About.com, which Nisenholtz said would increase video views by 30 percent.

“We can go to the marketplace with a significant buy and be at the table with a lot of the big players,” he added, referring to the addition of About.com’s more diverse audience.

Another major reason for the acquisition, Nisenholtz said, is the addition of About.com’s cost-per-click advertising, the fastest-growing sector of online advertising. More than half of About.com’s revenue comes from CPC. Murdoch said Internet technology could offer news organizations other ways to attract advertisers.

“Plainly, the Internet allows us to be more granular in our advertising, targeting potential consumers based on where they’ve surfed and what products they’ve bought,” Murdoch said. “The ability to more precisely target customers using technology-powered forms of advertising—contextual-based targeting and behavioral targeting—represent a great opportunity for us to maintain and even grow market share and are clearly the future of advertising.”