Newspapers suddenly seem to have a handle on the Web and are now rolling out online classifieds sites right and left to make money on the business that the Net once threatened to steal away.
Newspaper giant Knight-Ridder, for one, is brimming with enthusiasm about the future - and new sites to go with it. On Friday, the media chain announced the launch of HomeHunter, a real estate search and information service built largely on the existing content base of its regional newspapers. And just last month Knight-Ridder launched CarHunter, a similar database-driven service for the lucrative car market.
Meanwhile, the Los Angeles Times, Chicago Tribune, and The Washington Post have formed a partnership to jointly move into car and real estate online classifieds and services. The coalition plans to launch Cars.com within the next two months. A firm time table for the real estate site launch hasn't been set.
"Cars.com and CarHunter will be competing against the same people," said Los Angeles Times vice president for new business development Renee Labran, referring to services like Microsoft's CarPoint, and Auto-By-Tel. "But we won't be competing against each other. We like to think of Knight-Ridder as friends." The Times and Knight-Ridder papers operate in different markets.
"Newspapers are in the best position to hold classified ad revenues, because these are inherently local markets," says Knight-Ridder new media president Bob Ingle. Thus, newspapers have an advantage in the car market because they have already built long-standing relationships with local dealerships.
Perhaps more importantly, Ingle says, "We already have the base of content you need to provide a whole raft of value-added services." In the case of HomeHunter, that includes not only real estate news, but community information on topics ranging from education to health, schools, churches, parks and recreation, and shopping.
Of course, newspapers' enthusiasm has done nothing to deter the online competition. "The new players have done a heck of a job," says Karen Eppers an analyst with Forrester Research. "Look at Microsoft's CarPoint. It launched with something like 90,000 used car listings and approximately the same number of new cars, and product reviews. And it's very easy to conceive of auto loan information and more in the near future, as they shore up relationships with content providers and financial institutions."
Entering the Web, the main hurdles papers have had to clear have been software development and database management. Knight-Ridder's online successes are largely attributable to its significant investment in Zip2 Corp., an Internet software and online directory company that has helped build the Web sites of 133 newspapers across the country. Zip2 provides newspapers the software development capabilities they need to grow their existing content bases onto the Web and is betting that, in the end, it will be papers rather than online-only services that provide the best content and win the battle for ad dollars.
"Zip2 is squarely on the side of the newspapers, because the classified ad market is theirs to lose," says Zip2 co-founder and director of marketing development Kimbal Musk. "There will always be a print product, but ad dollars will slowly begin to drift to the Web. We're here to help newspapers keep that."
Underscoring the ongoing need for Zip2's services, Knight-Ridder and a host of other players in the newspaper industry, including The New York Times Co. and The Hearst Corp., last week invested a total of US$25 million in new equity capital in Zip2.
At this point, some 700 of the nation's 1,500 dailies have established themselves on the Web, and three quarters of them have at least some components of their classifieds online. "Newspapers have moved very aggressively in the past two years to protect their franchises, and also to exploit new opportunities presented by the electronic world," says Jim Conaghan, director of market and business analysis for the Newspaper Association of America.
If Zip2 and the newspapers are right in their assumption that it will take the papers' built-in content base to win in the melded world of advertising, product reviews, and the like, it will ultimately remain difficult to determine the leakage of ad revenues from print to the Web, says Conaghan. Every paper offers different pricing packages and bundled deals to advertisers who want their ads in print and online.
Conventional wisdom in the newspaper industry once said that the emergence of classified advertising on the Internet could threaten the vital core of newspapers' traditional revenue stream. About this time last year, Editor & Publisher, the bible of the newspaper publishing industry, warned that online classified ads were essentially a clear and present danger to the 37 percent slice of newspapers' total advertising pie represented by classifieds.
But that view is fading now, giving way to a theory that says newspapers may in fact be in a better position than anyone to capitalize on the potential of the Web.
