Clicking on Profits

__"Profits in Site?" by Scott Kirsner, in American Journalism Review (Dec. 1997), 8701 Adelphi Rd., Adelphi, Md. 20783–1716.__

Newspaper and magazine publishers "are Boston-based freelance writer. Some, such beginning to see evidence that the Web isn’t as Gannett’s Florida Today, which runs the a complete charity case," reports Kirsner, a Space Online Web site, have even broken into the black. While the 12,500-circulation Griffin (Georgia) Daily News and some 120 other papers have shut down their Web sites, larger publishers, with the financial resources to be patient, are optimistic.

Forrester Research, a Cambridge, Massachusetts, consulting firm, expects publishing on the Web to be "a tough slog" until 2000. But then it should become profitable, with on-line advertisers (up to 75 percent of them, national advertisers) spending a projected $4.5 billion a year. By 2002, estimates another firm, Jupiter Communications, annual online advertising should reach $7.7 billion.

Today, Kirsner says, the bulk of most Web publishers’ income comes from three types of advertising: display, classified, and sponsorships. To have their ad graphic displayed 500,000 times on the New York Times on the Web site, for instance, advertisers pay $20,000, or $40 per 1,000 "impressions." But that way of charging advertisers may be becoming obsolete, Kirsner says. In 1996, Procter & Gamble arranged to pay for its display ads on the Yahoo! search service according to how many times users clicked on the ads and were delivered to a P&G site—not just how many times the ad was shown. An even more frightening development, from an on-line publisher’s point of view, is that some Web sites have begun selling ads on a"pay-per-transaction" basis: advertisers only pay if visitors to the site actually buy something.

To forge stronger long-term relationships with advertisers, "and perhaps to distract them from the new payment models," observes Kirsner, some online publishers "are offering both sponsorship packages and ‘co-branded’ areas—essentially ‘advertorial’ custom publishing products." The New York Times-owned Boston Globe Online has an "Emerging Business" area sponsored by Fleet Bank. Florida Today’s Space Online made sure it had the Kennedy Space Center and other sponsors aboard before its launch.

Web publishers are also running classified ads, long a big moneymaker for newspapers. Boston Globe Online expects classifieds to bring in as much as 35 percent of its revenue this year, up from less than five percent in 1996.

Though Web surfers are accustomed to free access, subscriptions are another potential source of revenue. The Wall Street Journal Interactive Edition, for example, derives more than 20 percent of its revenue from subscriptions. Other on-line publishers are also experimenting with subscriptions. Indeed, while there are some signs that the World Wide Web may become a paying proposition, "experimentation" is still the byword.