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  • Feb. 25: CEO Michael Richardson joined Leslie for a discussion on the MP3 file format.
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     Leslie Walker
    The Media Gets a Message

    By Leslie Walker
    Washington Post Staff Writer
    Thursday, March 4, 1999; Page E1

    New media has old media on the run. You could feel it as top people from both worlds convened in New York City this week to take the manic pulse of the Internet industry.

    To explain why old media is morphing so fast into the new, Intuit Inc. founder Scott Cook asked a question: "Would you rather read about your taxes, or would you rather get your taxes done?"

    The answer that most of us would give could spell trouble for print companies, which have been slow to grasp the Internet's action-oriented nature. Maybe that's why their executives at the gathering, organized by Jupiter Communications, so often appeared defensive as they talked up the value of "original content" online and lamented their inability to attract big advertising dollars.

    Already, these people are feeling squeezed between the likes of and Yahoo, the online stores and the all-purpose World Wide Web gateways that are drawing the lion's share of Web traffic. That is bringing a shift in power the glamour and economic clout of their world is starting to shift to the new media empires that are growing faster than people anticipated.

    It's true the online pioneers' ideas about how to build Internet empires were hardly new, but their mantras ("context, community, commerce") at least rang truer this year to the point that these people were jokingly called "cult" members by new cult inductee USA Networks chief executive Barry Diller, and "zealots" by Newsweek Editor-in-Chief Richard Smith.

    Senior people from Time Warner Inc., the New York Times, MTV and US News & World Report all took to the rostrum to defend their Internet strategies. Yet their visions lacked the sparkle of speeches from people running pure Internet companies. And it didn't help that speaker after speaker trotted out Web traffic data showing sites run by old-line media companies trailing those of pure Internet firms.

    More worrisome were the projections: By 2002, Jupiter analysts say, the number of American households using the Internet will eclipse those taking a newspaper. Already, the firm's surveys show a third of Americans are already online, and the time they spend in cyberspace reduces their television viewing and magazine reading. More than half of heavy Internet users report watching less TV; one in four say they have reduced the time they spend with magazines.

    US News & World Report President Eric Gertler spoke a little too proudly of how his magazine has achieved profitability online by curbing spending. Rather than investing in the new medium's potential, Gertler talked about the need to preserve his magazine's reputation for "credibility and balance" and avoid losing paid subscribers to the real-world magazine.

    Martin Nisenholtz, president of the New York Times Electronic Media Co., said the newspaper's free Web site is "close to being profitable" and dismissed the notion that it is stealing print customers. "The whole cannibalization cabal is just wrong," he declared, adding that the Times's Web site signed up 5,000 credit-card subscriptions to the print edition last month.

    Newsweek's Smith, however, was generally pessimistic about the Web. He decried the lack of clarity in Internet business strategies and deplored Internet economics that have forced his magazine, which is owned by The Washington Post Co., and other companies to let people read their print publications online for free. "I think giving content away is ridiculous," he complained.

    Time New Media president Linda McCutcheon was more optimistic in describing how her company is rushing into direct Internet commerce, but she couldn't resist a jab at Internet "portal" sites such as Yahoo and Excite. McCutcheon sarcastically questioned the business value of general-purpose sites that attempt to be Internet on-ramps: "Where the portal business is right now is sort of like waking up and saying, 'Honey it's a beautiful day. Let's drive to the Lincoln Tunnel. We can get anywhere in the world from there.'"

    For their part, portal owners spoke passionately of helping people pass through Internet "tunnels" to wherever they want to go. Yahoo co-founder Jerry Yang said his company still believes in the medium's "democratic" nature and will continue adding tools as fast as they are developed free e-mail, chat, direct commerce and personal publishing.

    Cook of Intuit said the Web's ability to let people research and buy things on the spot makes him skeptical of claims that old-style online content such as news will undergo a "renaissance" once interactive services become so commonplace as to be routine.

    As the debate goes on, major media companies are arguing internally about whether to spin off their new-media units and sell stock to the public.

    Media executives predict this will be one of the hottest stories to unfold in 1999. More interesting, perhaps, will be how they spend the money. I hope they pour every dime into interactive tools and services. One of hardest lessons for traditional companies to learn about new media is that it is fundamentally more about other people's content than their own.

    © Copyright 1999 The Washington Post Company

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