But in these more realistic times, ad revenue is less of a priority than using e-mail products, typically free to subscribers, to drive traffic to their sites, and add value to users' experiences by creating a multimedia platform for content.
"I think [newspapers] realized it's crucial [to be delivering content via e-mail] as a lot of these Internet-content companies came into play and caught on that e-mail was a great way to push content out to a subscriber base," said Christopher Todd, an analyst at Jupiter Media Metrix. "Newspapers have realized this as well."
BUILDING A BASE
Venerable ink-on-paper products using e-mail extensively include The New York Times, The Wall Street Journal and The Washington Post, which push e-mail newsletters and breaking news updates from their online arms-New York Times Digital, which publishes NYTimes.com; Wall Street Journal Online; and washingtonpost.com, published by Washingtonpost.Newsweek Interactive. (Local newspapers are also using their market clout to compete directly against local TV stations. See P. S-8 of the Special Report on the newspaper industry.)
"I haven't heard much about papers that have necessarily made a business on it yet, but I know they are experimenting with it," Mr. Todd said. "The key is you really have to build your subscriber base. It's tough to have a sales force to go out and sell advertising against 30,000 to 40,000 subscribers. Typically, once you reach about 500,000 subscribers, that's a pretty decent base" for national advertisers.
NYTimes.com is registering those kinds of numbers with its e-newsletter "Today's Headlines," which delivers daily headlines for free to more than 1.4 million subscribers. The Times also delivers breaking news e-mail alerts and 10 weekly newsletters-all which will be HTML-enabled by the end of this quarter, improving the appearance of the newsletters to make them look more like mini Web sites. The ad-supported newsletters cover subjects ranging from technology to personal finance to wine and food-the newest addition.
"The vertical aspects to these newsletters are quite attractive to advertisers because it's a pre-qualified audience who's interested in this subject matter," said Stephen Newman, assistant general manager at NYTimes.com. Advertisers include IBM Corp., Neiman Marcus Co., Nextel and Tiffany & Co.
The Minneapolis Star Tribune, a novice in the e-mail arena, delivers a "Go Vikings" newsletter twice a week during football season to 8,400 subscribers, proving how popular niche e-mail products can be.
"Once you've got the hardware, once you've got the software, and once you've got the interface with the Web and e-mail servers that can process all of this information, there's really nothing holding a newspaper back from serving smaller and smaller niches profitably," said Earl Wilkinson, executive director of Dallas-based International Newspaper Marketing Association. "If you had 500 enthusiasts, that's powerful stuff."
Yet the e-mail offerings of most publishers, like washingtonpost.com, are organized around broader, horizontal content areas like news, politics, sports and entertainment. "From an advertising perspective, the sell is an assumption that by the type of e-mail we have, we're reaching a certain type of audience," said Christopher Schroeder, CEO-publisher of Washingtonpost.Newsweek Interactive, the new-media arm of the Washington Post Co. Advertisers in the Post's e-mail products include Accenture and the Kennedy Center.
But publishers think creating a total experience for the user is even more important than driving revenue. "Right now, this is in the early days. It certainly covers its direct costs, but I'm looking at something that's going to give far more contributions to the company overall," Mr. Schroeder explained. "I think the general idea that anything that can be done to take the best of washingtonpost.com content to users is a good thing."
NYTimes.com's Mr. Newman agrees. "E-mail has two extremely important objectives. One is a retention-based mechanism that plays into our overriding strategy to be able to serve New York Times-quality content wherever people want it," he said, "and the second is it's a revenue source and an area that we really believe in and that we're investing in."
`HOLISTIC CONTENT DELIVERY'
Wall Street Journal Online, which pioneered the e-mail space as far back as 1996, also positions e-mail as one part of a larger, holistic content-delivery mechanism. "You have a subscriber. They're not just subscribers to Wall Street Journal Online, meaning the Web; they're also subscribers to us as a service," said Neil Budde, editor and publisher of Wall Street Journal Online. It offers three e-mail alerts and a dozen other e-mail options, like weekly wrap-ups or e-mail columns, to paying Web subscribers, as well as three free offerings to non-subscribers.
"Some days they'll come to the Web because they want the depth we have on the Web, some days they'll get it on a palm device, and some days they'll get it through e-mail," Mr. Budde said. "What platform they choose to receive it in becomes less important than the relationship we have to them as a customer and the fact that we're serving their needs."
One need is time-efficient news access, explained INMA's Mr. Wilkinson. "That is the consumer value proposition. We've moved from value-for-money to value-for-time. The e-newsletters absolutely save people time. They are intrusive, and that's a good thing."
But adding value means quality, not quantity. "Anytime we start anything new on the site, the fundamental question we ask is `Why is it of unique value to the medium?"' Washingtonpost.Newsweek's Mr. Schroeder said. "What can we deliver that is unique to an Internet experience? E-mail is an obvious, alert-driven way of getting things into people's hands. ... [But] launching e-mails for the sake of quantity, we will never do."
Because publishers see e-mail as a value-add, they're not fearful of cannibalizing their print products. Web content has proved that online and offline arms can and do prosper simultaneously. The New York Times' print product, for example, often advertises in NYTimes.com's e-mail efforts, which have become the second-largest lead generator of credit-card subscriptions to the paper.
Mr. Budde said digital content augments what people get from the print version. "All of our research suggests that most people are not replacing one with another. Most of our customers tend to be news junkies and are actually adding more things on."