Feature

Media: All About ... Newspapers' online investment

Jane Bainbridge discovers how print media are building a web presence.

Rupert Murdoch has made no secret of his intention to extend his media empire into cyberspace. His U-turn on dotcom investments has come with a dedicated pot of $1 billion to buy his way into the internet and has already seen him pick up the video gaming company IGN Entertainment and Intermix Media with its myspace.com site.

But last week's announcement that News International, in a joint purchase with realestate.au, had bought Asserta Holdings and its UK property portal propertyfinder.com for £14.3 million, threw the spotlight back on NI's online strategy. This deal means Murdoch has control of a site used by estate agents throughout the UK to advertise more than 200,000 properties either for sale or rent. NI says it will use its newspapers and websites to build awareness of the brand and create "new distribution channels for the listings".

Of course, Murdoch has online versions of his newspapers in keeping with other publishers but the real bugbear for Murdoch and his competitors is the difficulty in generating paid-for content. The culture of free editorial content is a difficult one to break for all involved with only the niche markets or archives succeeding in charging.

And not everyone can see the sense in Murdoch's strategy, with the WPP chief executive, Sir Martin Sorrell, recently suggesting Murdoch was panicking and spending "willy nilly" to catch up with the rapid growth of the web.

However, Murdoch is not alone in looking to buy his way into the more profitable online businesses. Trinity Mirror and the Daily Mail & General Trust have also been snapping up online businesses and expertise.

1. News International has created strong online properties of its newspapers. Thesun.co.uk has become one of the biggest newspaper-based sites in the country and has expanded its content with page3.com offering photos of its topless models. However, there were rumours last year that The Sun was losing readers to its online version and that it had cut back on editorial content as a result. Barry Cree, the director at Aegis' agency Diffiniti, says: "The Sun online has gone from an afterthought to high up on our list of who we'd want to partner with. It's virtually impossible to charge for content but The Sun charges for its Fantasy Football and has been really successful despite others offering it for free."

2. Guardian Newspapers is widely regarded as one of the best examples in the business of a newspaper expanding its offering online. While the publisher says its aim is very much to provide free access, it has developed some paid-for subscriber offerings such as crosswords, e-mail services, ad-free versions of the site and digital editions of the newspaper.

Charlie Dobres, the deputy chairman at i-level, says: "The Guardian is a particularly good example of how a UK newspaper has used the web to build an international offering. The online version gets 11 million readers worldwide and most are non-UK residents."

3. The Financial Times has gone furthest down the route of paid-for editorial content. Although the majority of its site is free, readers pay for content more than 24 hours' old and to read the full version they must pay a £75 per year subscription. A "level two" subscription of £200 per year offers world press and archives as well as company financial information.

4. In November 1994, The Daily Telegraph became the first newspaper to move online in Europe with the launch of the electronic Telegraph. It has more than 2.4 million registered users and its Telegraph Crossword Society charges £30 per year to access a range of crosswords and puzzles.

5. Associated Newspapers has also been on a spending spree to broaden its web properties. In 2004, it bought Jobsite for £35 million and has added top-consultant.com and officerecruit.co.uk to its fold. While some think it has been slow with its online versions of its papers, it has expanded its broad regional newspaper offerings with its range of "thisis" sites.

6. Trinity Mirror's chief executive, Sly Bailey, has stated that her goal is to make the company into a multiplatform local publishing business. It has bought Financial Jobs Online, the classified ad company Hotgroup and smartnewhomes.com. It has also launched a network of free community classified sites called adzooks.co.uk.

WHAT IT MEANS FOR ...

NEWSPAPERS

- Faced with a loss in revenue as advertising - especially classified and recruitment - migrates to the net they absolutely have to do something.

Hence many are buying expertise and established businesses in these areas.

- Very few cross-platform advertising deals are being done so new revenue can be generated through online versions. But Diffiniti's Cree says: "It's mostly new money coming in but not as fast as the old money is going out."

- At the moment the business side of newspapers is more easily transferred on line with readers as happy to get information on their computer screen at work. But the leisure side of papers is less easy to replicate on line although a roll up screen is apparently not far away.

ADVERTISERS

- The usual difficulties with the proliferation of media apply: the weakening of the traditional press means it is harder to reach mass markets with print ads and there is little online to meet that need.

- Cree says: "The benefit is if you get it right you can do more. Creative can be a moving image with sound and interaction, you can get an e-mail address and build lifetime customers from one ad."

- While I-level's Dobres says advertisers don't like the uncertainty of this rapidly changing landscape there are opportunities such as reaching international audiences through known UK brands such as The Guardian's site.