COVER

NEWS, ONE BYTE AT A TIME

Not far down the road, print publishers fear they may lose their franchise as one of the community’s main sources of information

WARREN CARAGATA January 29 1996
COVER

NEWS, ONE BYTE AT A TIME

Not far down the road, print publishers fear they may lose their franchise as one of the community’s main sources of information

WARREN CARAGATA January 29 1996

NEWS, ONE BYTE AT A TIME

COVER

Not far down the road, print publishers fear they may lose their franchise as one of the community’s main sources of information

WARREN CARAGATA

It is a Saturday morning several years from now, and a city neighborhood is stirring, hungry for its wake-up hit of coffee and news. At one house, the television is tuned to the all-news channel. Over the back fence, a father planning a family outing is getting the day’s weather forecast and last night’s sports scores from a telephone information service.

One house on the block is for sale and, in the front room, a couple is watching videos of new homes they have chosen from a television data bank. Down the street, while a business executive prepares her coffee, the computer in her study is dialling an on-line information service to get the night’s news, selected according to her preferences; the service remembers that on Saturdays, she likes not just the weekly stock trends but also film reviews.

Nothing in that scenario is technically far-fetched—but everything about it frightens the people who run Canada’s daily newspapers. Not far down the virtual road, publishers fear that papers will lose their franchise as one of the community’s main sources of news. “They’re just fixated on this,” says Peter Desbarats, head of the graduate school of journalism at the University of Western Ontario in London, Ont. “It’s panic.” There are a few things that relieve the panic. Newspaper executives are fond of noting that new ways of delivering information have never totally replaced the old ways—radio, for instance, lived on after the advent of television. But many also believe they can stave off extinction by embracing the very technologies they fear—that after suffering a long decline in newspaper circulation, they can find a rosier future in non-traditional formats. And in light of the near-doubling of newsprint costs since January, 1994, the prospect of being able to publish with electrons in addition to ink is not so bad. Rising prices, says Clair Balfour, director of electronic information services at Southam, “eloquently make the case for new media.”

That combination of panic and hope explains the rush by newspaper companies to produce new electronic products or reshape old ones. The Halifax Daily News has had an Internet presence on the World Wide Web since June, 1994. The Regina Leader-Post has two channels on cable, one with TV listings, the other with news headlines and, in deference to an older market, obituaries. Southam Inc.,

of Toronto, which owns 17 daily papers across the country, has set up an electronic newsroom in Edmonton with a staff of 12 people and is looking at plans to start a computer-based information service, possibly in co-operation with software giant Microsoft Corp. of Redmond, Wash. Andrew Prozes, Southam’s president of city newspapers and new media, says the company also plans a trial run in Ottawa, starting later this winter, of a pay-per-call telephone information service. The Toronto-based Canadian flagship of Thomson Newspapers, The Globe and Mail, which has already used technology to convert itself into a national newspaper, has a well-established Internet site and runs one of the country’s major information database services, Globe Information Services. The Toronto Star, the country’s largest-circulation daily, plans to start an on-line service early this year. And The Toronto Sun and other members of the Rogers Multi-Media group, including The Financial Post and Maclean’s, will launch an Internet service in the spring.

Newspapers have been available electronically for years through databases like Info Globe or Southam s Infomart. But those services are expensive and aimed at the business and professional market. What is new, says Victor Kruklis, vice-president of marketing and development at The Toronto Star, is the attempt to make

electronic information available to the consumer market, a development spurred by the surge in home-computer sales. Last year, Statistics Canada reported computers in 28.8 per cent of households, up from 16.2 per cent five years earlier; more than half of those with incomes over $70,000 are computer-equipped. Nearly all computers are now sold with modems, allowing communication with other computers over the phone line, and are equipped with pre-installed software allowing painless subscriptions to such major on-line services as Prodigy,

CompuServe and America Online. Microsoft made the process even easier with the release of Windows 95, providing a builtin link to its own service, Microsoft Network.

Having watched television take away advertisers and readers, newspaper publishers are not about to let the same thing happen in cyberspace. The big fear is that classified advertising, which Kruklis says provides about 20 per cent or more of newspaper revenue, will be bled away by online competitors. Those competitors are already there, although not yet in large numbers. But the real threat will come as cable TV companies upgrade their systems to provide interactive services, allowing anyone with a television and a set-top box to search and view video classified ads for cars, homes and other products.

Southam and other newspapers are fighting back. Classified ads from Southam’s newspapers will all be on the Internet by August,

Prozes says, and ads from The Ottawa Citizen and The Windsor Star will be available within a promised few weeks.

But a still deeper anxiety is prompting newspapers to look beyond newsprint: the apprehension that time has passed their product by. In 1971, Canada boasted 114 daily newspapers. That number, after the closure of The Oshawa Times in November, 1994, and of the Charlottetown Evening Patriot last June, is down to 105. In 1971, for every 1,000 Canadians, there were, on average, 1,325 newspapers sold each week.

The number has dropped steadily and, in 1995, is down to 1,168 papers for every 1,000 people. In a bid to compete with TV, newspapers have experimented with such things as Sunday editions, color photos, shorter stories and sections targeted at everyone from young readers to gourmets. “Nothing that they have tried has changed the trend,” Desbarats says. Some papers, with specialized audiences, will survive and even prosper, he believes, but fate will be crueller for others. “At some point,” Desbarats adds, “fairly major newspapers will start to fall over the cliff.” In the United States, they already have. Earlier this year, The Times Mirror Co. of Los Angeles closed New York Newsday and the Baltimore Evening Sun. And last week, Southam announced plans to lay off 750 employees from its newspapers.

The world of on-line news presents its own benefits—and problems. At bottom, on-line papers are not all that different from their printed cousins. The task, at least, remains the same: to help readers sort through the raw information of their daily lives. “The on-line world is just a different way of delivering journalism,” says Jim Sheppard, a longtime foreign correspondent for The Canadian Press and now a news editor at Digital Ink, The Washington Posts on-line service. “We

apply the same standards on-line that apply at The Washington Post.” One big difference, however, is space. As long as there have been newspapers, journalists have encountered limitations on how much they can write. On-line, those limitations vanish, and a rich supplement of information can accompany news stories. At Digital Ink, a recent story on Suriname, for example, was complemented with encyclopedia references, U.S. state department travel advisories and

previous Suriname stories from the Post, The Associated Press and Reuters. “We can put gigabytes of information on-line,” Sheppard says. The Nando Times, a similar operation based in Raleigh, N.C., allows Web surfers free access to a constantly updated menu of news from the major wire services. Users who pay a flat fee of $16 a year also gain access to a premium daily service of several hundred stories, columns, cartoons and crossword puzzles from 32 different news and feature sources.

But not everyone is enthusiastic. Thomson Newspapers, for one, has approached electronic media with caution. It is not that the company is fixated on the printed page: in 1995, it sold 14 small dailies across the country and 25 in the United States, even as it has built itself into one of the world’s largest database suppliers. (In 1994, Thomson Corp.’s information division had more than twice the operating income of its newspapers.) But Thomson has been slower to join Southam, Torstar (owner of The Toronto Star and 24 other papers) and other firms in the rush to develop on-line products aimed at the consumer market. Thomson Newspapers has lately started to fashion a beachhead in the market, and in Ontario, seven Thomson papers are now offering Internet access to their readers. At Thomson Newspapers’ corporate headquarters in Stamford, Conn., Gerald Flake, senior vice-president of technology, explains that the company’s caution results from the fact that developments in new media carry large investment costs and no immediate prospect of profit. “I don’t think there’s a lot of businesses out there that are making lots of money right now,” he says. The company’s aim, Flake adds, is to “be on the leading edge, not the bleeding edge.”

One problem for publishers is that the technology is changing so quickly that it is hard to predict what the market will look like in a few years. Even harder to determine is how people will use technology that they now know almost nothing about. “Nobody really knows what the public wants,” says Gavin McLintock, head of applications development for OCRInet, an Ottawa research network that took part in a trial of an on-line, interactive version of The Ottawa Citizen. And other nagging questions remain. Will computer information be piped into the home through cable, making it possible to get not just a story about a speech by Prime Minister Jean Chrétien but video clips of the speech itself, instantly delivered without the interminable wait required when data moves down telephone lines? What happens, McLintock wonders, when 100,000 people all click on their on-line newspaper at the same time? What is the potential for information brownouts? And finally, the critical question: just because it is possible to do things, will people pay to do them?

Some newspapers are embracing the technology they fear