To see just how bad the climate is for online publishing and new media, look no further than the bottom lines of most of the major players.
Bertelsmann Multimedia Group posted a $261 million loss for the year. CNet Networks lost $1.4 billion in the third quarter. Walt Disney Internet Group experienced a $142 million loss in the past nine months.
Theres not much need to go on. The publishing market is the worst anyone has seen in a quarter-century, and there are no signs that its going to get better anytime soon. Still, many online news and entertainment sites are close-hauled and determined to sail on. “This is a storm that will pass,” says Chris Schroeder, CEO of Washingtonpost.Newsweek Interactive. “The survivors will be stronger than ever before.” Theyre also likely to look familiar. Shell-shocked advertisers continue to gravitate toward the major online brands. In the first six months of 2001, 76 percent of the online ads went to the top 10 media companies, according to the Interactive Advertising Bureau. Thats up 6 percent for the same period last year.
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Tom Curley, president and publisher of USA Today, says the top brands will be able to play, but it still isnt easy. “Its been a tough year. The struggle hasnt abated like we would have hoped,” he says. Like other publishers, USA Today cut 20 percent of its online staff, but Curley is optimistic about electronic publishing. “Its about ideas and concepts and linkages.”
Increasingly, those connections are being made between the online sites and their big-brand mother ships, which are hovering closer than ever. Walt Disney Internet Group, which posted revenue of $242 million for the Interactive 500 survey period, has been cross-selling its ABCnews.com, Disney.com and ESPN.com sites with other Disney properties. “Unlike other content companies, we have brands and relationships within [The] Walt Disney [Co.],” says Larry Shapiro, Walt Disney Interactive Groups executive vice president of business development and operations.
MP3.com, one of the entertainment content sites on the Interactive 500, has also been busy selling integrated advertising and sponsorship packages across parent Vivendi Universals other leading brands, including Rolling Stone magazine, says Derrick Oien, MP3.coms president and chief operating officer.
Larry Lux, president of Playboy.com, says his business is holding up because it is diversified. While advertising is down, e-commerce, subscriptions and gaming sites are up. It has pared down to the more traditional Playboy advertisers. Cross-platform packages are also attracting advertisers, he says. Some decide to go deluxe with magazine and online ads, plus parties at the famed Playboy mansion. Playboy.com offers the same soft-core adult material as the magazine.
One of the few pure-play media and e-commerce companies thats still holding on is CNet. Despite heavy losses, CNet President Dan Rosensweig remains positive. “We feel very optimistic about online marketing,” he says.
Over the past year, CNet has consolidated its position as the leading online tech news source. Its site sees 23 million visitors per month. “Weve reached a stage of real scale with our business,” Rosensweig says. “We believe in profitability, and that gap continues to close.”