Online separation? Newspapers have been there and done that

I was reading Alan Mutter's spot-on Andreessen’s not-so-hot idea for publishers and once again ran across some comments of the "newspapers need to set up separate online operations and give them freedom" variety.

Here's the problem: It's been done, over and over. It's being done right now. It's happening in ways you don't see, and I promise you won't like the outcome.

Let's take the biggest, and least visible, part first.

For years, investors have been pulling their money out of newspaper stocks and putting it elsewhere. Much of it has gone into pure-play Internet companies like Google. That's about as separate and independent as you're going to get. Not what you meant? Like I said, you aren't liking that outcome if you find yourself working for the Bugville Daily Bugle and it's owned by a capital-starved corporation that's laying people off in order to survive. But it's how capitalism works. Money seeks returns.

The Hearst family heavily bankrolled the startup of cable broadband services back when hardly anybody believed in it. The Tribune Company, before it got itself taken over by a real estate flipper, was a key investor in America Online, which transformed online services from a niche business focused on geeks to an experience for everybody. is owned by the New York Times.,, and are owned by a group of five newspaper companies. There are many other examples.

But if you're advocating a separate online department for the Bugville Daily Bugle, then of course that's not what you meant. It is, however, how investors and corporations look at the problem.

Then there were the separate "online division" efforts, some of them set up in vain hope of cashing in on the IPO craze. Cox Interactive, where I worked at the turn of the century, ran all the local operations for all of Cox's TV, radio, newspaper and cable Internet markets. Newhouse did something similar with Advance Internet. Knight-Ridder Digital took the local sites away from KR's newspapers.

Nobody at the Bugville Daily Bugle was happy about that. When these spinoff efforts failed and newspapers regained control of their Web operations, the usual result was a brief power struggle and a settling of vendettas, ending in the unemployment of most or all of the online staffers.

There were many cases in which local newspapers set up internal online groups that operated independently. Several years ago, a Borrell report showed a strong correlation between that organizational form and revenue performance. But it's not as simple as that. Correlation is not causation. I would argue that the organizations that used that structure had an intent that was missing from most of the newspaper industry at that time. They simply intended for their Web operations to succeed. The rest of the industry didn't really give a rat, and it showed.

But something very important has happened at most newspapers in the last few years. It started, I think, when investor Bruce Sherman kicked the legs out from under Knight-Ridder's chair. And it accelerated when the economy came crashing down. There's been a great awakening in America's newsrooms -- and a huge turnover in personnel who weren't willing or able to wake up. There are exceptions, but the newspapers I deal with are, on the whole, very different beasts than they were in the slumber years.

We don't have the luxury of hiring everyone we want, or even need. Local advertisers have radically cut their spending because they're in economic pain, too. This isn't about the "failure of newspapers." It's about the failure of banking. We have to live with the results of that.

For most U.S. daily newspapers today, confronting the world with everybody playing on the same team, using all the tools that are available makes far more sense than splitting what's left of the staff in two pieces, telling each team to ignore the other one, and then bitching about a lack of cooperation.


I agree with everything you say above with regard to the news operations of newspapers and their sites. However, there is an argument for "splitting what's left of the staff in two pieces" or perhaps eight or 10 pieces. That argument is that the Web by its very nature is a vertical medium focused on narrow topics, while newspapers are a horizontal medium covering a wide variety of topics. When there is a sufficient special-interest audience in a community and critical mass of potential advertisers who wish to reach and influence this audience, then it may well make sense to have a separate, vertical, niche Web operation run by true believers who have little to do with the core newspaper. Witness the success of what started as and is now being rolled out nationally as or the many local mommy-blog communities springing up across the nation. Or consider a traditional newspaper special-interest profit-producer like bridal: see and dozens of other independent local bridal sites in communities across the country. Newspapers will die a death of a million cuts from ankle biters with a computer, url, Web host and a fire-in-the-gut idea if they DON'T identify high-potential niche categories and use the Web to compete against themselves. It is folly to bury these verticals on the general interest news site where they get neither the internal attention nor the eyeballs to make them viable. But this is precisely what most papers current do. Finally, feature content and special sections traditionally have been the step-children of the print paper. Yet little talked about or even acknowledged is the fact that advertising associated with special sections and niche features content even today helps mightily in paying the bills of the print news operation. The Web actually amplifies the profit potential of specialty niches by making it easier for advertisers to target individuals when they are indulging their passions (and in a mood to buy). We know for sure that every organization from Google to Yahoo, AOL to Yelp and a host of others are scrambling to own the niche territory locally. That should tell us something. The only thing likely to erect barriers to these giants is savvy local folks providing knowledgeable local news, insider information and entertainment in vertical niches, niches the newspaper still can own.

You and I have had this discussion before. I don't know of a single -- and none of the examples you cite suffice -- effort to set up an online business that is totally separate and distinct from the newspaper that spawned it. That's what was needed, and I would say needed now, but is probably too late. Most newspaper.coms generate too much revenue for the mothership to risk being disrupted by a pure-play competitor of their own creation. The very fact that the online operations of some newspapers were later absorbed by the newspapers, and the online staff lost their jobs in the process, proves that there was not enough separation between the two businesses. If they were really separate businesses, there would be no possible way for them to be absorbed into the newspaper. It would be either survive and thrive for the online operation, or be shut down. BTW: In my business , we continue to grow, month-by-month, our online advertising revenue. The local online advertising revenue is there to be had, with the right approach.

This is a great piece in the Anderseen, Mutter chain........You so aptly described something complex that folks should know about the industry! This is a great read, thank for sharing it.