In its affiliates meeting in Seattle last week, New Century Network VP Paul Kessinger hinted that the NCN of the future may not resemble the one from its first year. In fact, it may split its operation into two in order to remain viable -- one would focus on national advertising sales and the other would center on Web navigation.
Pressure from affiliates and the challenges of responding to the ever-changing Internet marketplace have cut NCN into two camps, sources said. NCN has gotten most of its criticism over NewsWorks, mostly because many affiliates complained the site's content is competing head-to-head with their own sites. So over time, the company has taken the focus off of building content for the site -- punctuated by cutting back its workforce last month by 10 percent and promising to build local content on member sites.
Within a month, Kessinger says NCN will make a deal to create added content and an improved searchability for member sites and for the Internet from member sites. That deal is among the three plans to build the future of NCN, which also includes HTML e-mail delivery.
"It doesn't surprise me that they have made these changes," said Bill Bass, analyst for Forrester Research Inc. in Cambridge, Mass. "HTML e-mail is a hot area. The ad network is a good plan -- there's no really better plan to pull newspapers together. But that doesn't mean they are going to make a lot of money off it."
Analysts have said HTML e-mail is the next important development on the Web, not only from the perspective of delivering information electronically, but also delivering advertisements, which will be subject to click-through rates similar to ads placed on sites. National banner ads placed on HTML e-mail represent the highest "cost per thousand" buy because users have registered for the content and are highly targeted.
But the drawback is that although NCN projects a $3 million take for their national advertising network this year, the majority of the money goes to the top 10 online newspapers in their network, and not to the smaller newspapers that signed on to NCN for their help in placing advertisements on their site. Media buyers at agencies make their buys based on traffic, and usually buy in groupings such as top 10, top 20, and so forth. NCN reported a $900,000 advertising take for 1997. Twenty percent of the profit goes to NCN for operations, while the rest goes to the affiliates on whose sites the ads were placed.
One Midwestern online newspaper, whose print edition has a circulation of about 150,000, got a check late last year for $16 for its monthly share of the advertising network - while the larger sites pulled in tens of thousands of dollars. NCN reports that in January, out of 140 affiliates, 90 sites received advertising from the likes of Ameritech, IBM, Intel, and Solomon Smith Barney.
Within the month, NCN will either choose a partner or develop for themselves an Internet searchability function that will guide viewers to find minutiae on affiliate sites, such as school lunch menus, water rates, and other special local information.
As each online site gets "wider" -- that is, has a growing breadth of information -- it's often more difficult to find information that is needed, Kessinger said.
Newspapers need united front
Analysts say that there's a great need for an entity such as NCN, and it's important that they serve the industry to further its profitability and traffic.
"I think it is very important for newspapers to understand that they're not in the same world anymore," said industry analyst Peter Zollman, based in Altamonte Springs, Fla. "People who were competitors may now be partners. People like NCN can facilitate efforts toward that end. The problem is, can NCN do it, or has it missed its opportunity as the unifying force?"
"I hope they succeed. I hope they put together a plan to garner support from the owners. I think NCN's very significant to newspaper owners across the country," said Morris Communications' Michael Romaner. "I think it could fail. I'm keeping my fingers crossed that it doesn't, because I think it could serve our industry very well if it stays alive and is exploring new things for the future."
Industry analyst and NCN contractor Vin Crosbie agreed. "The industry has to cooperate," he said. "Like [Ben Franklin] said during the American Revolution, 'If we don't hang together, we'll hang separately.' "