NEW YORK (AdAge.com) -- Myth: newspapers stuck their heads in the sand and just hoped the internet would go away.
Reality: Newspapers took some of the biggest, earliest swings on the web, most turned out to be misses, and then got steamrolled by Google just like everyone else.
The nation's print media may be on life support, but some are quietly building digital portfolios again -- albeit on a smaller scale -- and some are starting to bear fruit.
We're not talking about the digital editions of papers themselves, but startups that take old media in new directions. Gannett, for example, the nation's biggest publisher with 85 dailies, has acquired a half dozen startups, and taken stakes in several others that will contribute meaningfully to the $1 billion in digital revenue it expects to collect in 2009. For those keeping score, News Corp. missed the $1 billion mark in 2008, even with MySpace in the portfolio.
"Gannett is trying to harness technologies so that it can emerge from this chaos as a hybrid digital company," said Ken Doctor, news analyst at research firm Outsell.
Gannett's portfolio of digital start-ups includes Pointroll, which powers some of the most innovative rich-media display ads on the web, including Apple's ads on The New York Times and The Wall Street Journal. Pointroll, acquired in 2005, is now up to 350 employees and served a billion impressions for 1,500 agency and advertiser clients in 2008.
"The ultimate goal is to transform Gannet into a real digital leader by leveraging the strength of content and the audience that it has and extending that into the digital world," said Pointroll CEO Jason Tafler.
Other digital investments at Gannett include ShopLocal, which is putting Gannett newspapers' circular business (still an $8 billion business) online; Ripple6, maker of social networking tools; and MomsLikeMe, which operates 80 local mothering sites around the country. All are being integrated with Gannett's Digital Media Network, a network of Gannett-owned sites, including 85 daily newspapers and 23 TV stations, launched last week.
Gannett took a minority $10 million stake in New York-based live video streamer Mogulus. The company has a nebulous business model, but it certainly helps Gannett provide inexpensive tools to print and TV journalists to help them tell stories on the web in a different way.
Make no mistake, Gannett is a troubled company; its stock is trading below $4. While it's pouring a lot of public energy into making its print franchises work online, it's also nurturing web portfolios in hopes of emerging from the downturn with more diverse digital businesses.
The newspaper business is crippled -- along with broadcast TV and radio -- and frankly, doesn't have the firepower to make huge digital investments beyond attempting to keep what revenue it has left from walking out the door. Part of that is attempting to keep at least some classified revenue that left for the web.
Ironically, this is where newspapers have had some digital success. McClatchy, Tribune Co., Washington Post, Gannett and Belo jointly own Classified Ventures, publisher of classified sites such as cars.com, apartments.com and homegain.com. Similarly, Careerbuilder, jointly owned by Gannett, Tribune, McClatchy and Microsoft, powers employment classifieds for 9,000 websites, including 140 newspapers.
But what about businesses that bring both new revenue and audiences to traditional newspaper companies?
Newspaper companies have thrown their lot in with ad networks, including a joint venture between Tribune, Gannett, New York Times and Hearst called QuadrantOne. Cox Enterprises, owner of 17 dailies, a cable system, 15 TV stations and 86 radio stations, took a different approach in acquiring tech firm Adify for $300 million last summer.
Adify makes technology that allows anyone to set up an ad network. Last month, Adify launched Adify Media, which will sell inventory across those networks, essentially creating a huge ad network (reach: 69 million unique visitors) that will sell Cox properties such as Autotrader, along with vertical networks such as Martha Stewart Living's Martha's Circle.
"It provided a platform that works with existing Cox divisions. [It] also gave us a growth path outside our divisions into a new industry," said Rodney Mayer, Adify Media's general manager and a former Cox exec.
Betting on e-reader
Perhaps the most prolific investor in tech among dead-tree companies is Hearst, owner of the San Francisco Chronicle and Esquire, which has a portfolio that includes UGO Entertainment and Kaboodle, both purchased in 2007, as well as stakes in companies such as streaming music service Pandora, video-services company Brightcove and many others. It took a stake in video-production company TurnHere in 2008, and has said it plans to launch an e-reader optimized for magazines.
"Hearst Corp. is keenly interested in e-reading and expects that new devices and media platforms will be a big part of its future," said spokesman Paul Luthringer.
It's a far cry from the '90s, when papers were local monopolists flush with cash and tried inventing things such as New Century Network to syndicate content or cut hardball deals with AOL and CompuServe. Given recent history, it might be better.
Will they all pan out? No. Will a few? Maybe.
QuadrantOne (investment stake)
Mogulus (investment stake)
Pandora (investment stake)
E Ink (investment stake)
Brightcove (investment stake)
Buzzfeed (investment stake)
Double Fusion -- in-game advertising (investment stake)
First30Days (investment stake)
IGG (investment stake)
MobiTV (investment stake)
NR2B Research (investment stake)
Spire/Suzanne's files (investment stake)
TurnHere (investment stake)
WideOrbit (investment stake)
QuadrantOne (25% interest)
Classified Ventures (16.5% interest along with McClatchy, Gannet and Belo.)
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