Several other backers last week rolled out plans for brandwise.com, a site where consumers can shop for home appliances.
Backed by the Good Housekeeping Institute, the testing lab that has stamped its seal of approval on products advertised in Good Housekeeping for nearly 100 years, brandwise.com will help shoppers compare products online.
Hearst is far from the only magazine exploring online sales opportunities. Since 1993, magazine publishers like Conde Nast Pub- lications, Hachette Filipacchi Magazines, Hearst, Meredith Corp. and Time Inc. have struggled to secure their place on the Internet with what they did best: editorial content. Learning that the Web was no place for "shovelware," publishers produced original, interactive content.
NEW BUSINESS MODELS
That drew some readers, but it has been largely an expensive proposition with relatively little payoff. Subscription models have had limited success and pure ad sales haven't been able to foot the bill. Now, though, publishers realize they can't view the Web just as a place to get more readers and advertisers for their print products. Instead, they're linking with online retailers and e-commerce partners to create new (hopefully profitable) business models based on the power of their brand names.
At the same time, new media has recently piqued the interest of media companies' top executives seeking to bolster the bottom line. Potential casualties of that realization, however, could be the new media pioneers. Already two "old timers" are gone: former Time Inc. New Media President Linda McCutcheon, who resigned in April; and Hearst's Kathryn Creech, former senior VP-general manager of HomeArts, who left shortly after Hearst HomeArts merged with Women.com Networks in January. Both left, saying they wanted to pursue other opportunities. Neither could be reached for comment.
`FACILITATORS OF THE SALE'
In the Women.com merger, Hearst took a 50% stake in the online women's community, which enveloped Hearst's HomeArts network of women's magazine sites, including Country Living, Good Housekeeping and Redbook. It was a move to gain exposure and ultimately build a more profitable Web presence.
"The HomeArts brand, as it turned out, was a little bit limiting for us," said Kenneth Bronfin, senior VP-deputy group head, Hearst New Media & Technology. He noted that the name failed to attract a diverse audience of women and thereby gain access to additional e-commerce opportunities. Women.com features an extensive shopping area with more than 17 categories of merchants, ranging from Calyx & Corolla, an online florist, to eToys and JCrew.com.
In general, Mr. Bronfin believes online publishers should be conduits to e-commerce rather than direct retailers.
"If you build a great site and put in great content and build a relationship with consumers, you build a sense of trust and become an intermediary between the consumer and the retailer," he said. "I don't think most publishers want to take inventory. I don't believe they will become retail outlets. They will become facilitators of the sale."
DIVERSIFY REVENUE STREAMS
Getting equity in a company that sells something is a good move, because it gives them a shot at making money, said Patrick Keane, senior analyst at Jupiter Communications.
"Media companies can't turn a profit online through advertising alone," Mr. Keane said. "They have to diversify their revenue stream."
Brandwise.com touts an unbiased shopping environment where retailers' ads are kept out of product comparisons and products will be ranked on quality, not price, said Kathy Misunas, CEO of brandwise.com. It also has several revenue streams, including advertising and sponsorships; commissions from online sales; brandwise.com's direct selling of warranties; and, eventually, market research.
Other site investors are Whirlpool Corp. and the Boston Consulting Group, with additional investors expected by the site's launch, slated for August.
NARROW AUDIENCE FITS THE WEB
Magazines "can translate very well online because they have a narrow audience and narrow content," Mr. Keane said. "That's a more successful kind of media model online than the broadcast media model."
Now publishers are realizing they can leverage their magazine brands not only to get people to read their content, but also to shop.
In fact, online magazines might have a leg up on e-commerce companies not tied to publishing houses because their content might provide the incentive, and not just the ability, for people to shop online.
"What we are talking about is [e-commerce's] closing the loop for something the customer is already coming to us for," said Sarah Chubb, director of CondeNet, the online unit of Advance Publications, the parent of Conde Nast Publications.
CondeNet launched in May 1995 as a group of food and travel sites that relied on Conde Nast magazines as one resource for content.
"The advantage we have over a company that wanted to build a food site from scratch is that we could build a beautiful site from scratch but use this great stuff from the magazines and adapt it for the Web site. In that way, [the content's] credible," said Joan Feeney, editorial director at CondeNet, referring to Epicurious Food, CondeNet's food site.
PLANS TO ADD MORE SITES
CondeNet has plans to integrate commerce capabilities into its sites this year, Ms. Chubb said, declining to give further details.
It also will add new sites to its portfolio.
"We'll build no new sites without e-commerce capabilities," said Hilary Peck, CondeNet's marketing director.
Ms. Chubb said CondeNet is looking for online retailers to partner with to facilitate online sales and fulfillment. That way, Conde-Net can sell online without having to build a warehouse for storing product.
Hachette Filipacchi Magazines, which began migrating early to the Web in 1994, is also exploring e-commerce opportunities, said Jim Docherty, VP-Hachette Filipacchi Magazines online media.
"We are [considering] a lot more private labeling ideas, meaning consumers can buy from our sites but fulfillment comes from a third party," he said. "We are not retailers. The back end of commerce would be done by private-label services, and we are not going to be warehousing goods or taking credit cards. We are bringing the [magazines'] brand names."
LEVERAGING PORTAL DEALS
Attracting consumers to its online properties through AOL and other portal deals is key to Meredith Corp.'s e-commerce initiatives. In April, the company unveiled an expanded shopping area on its Better Homes & Gardens site, where visitors can purchase Better Homes & Gardens' book titles and other Meredith products, and a limited number of other products through affiliate deals with online retailers like wine merchant Virtual Vineyards. "E-commerce for us means selling our own product online," said David Johnson, general manager of Meredith Interactive Media.
Meredith is using Amazon.
com and barnesandnoble.com for transaction and fulfillment services.
"Nowadays, consumers are looking for commerce opportunities on content sites," he said. "It remains to be seen what are the right ways to execute that. We don't want to lose sight of the fact that the natural extension for us is to sell our magazines and books online."
Times Mirror, publisher of Golf, Skiing and other sports titles, has just recently graduated from relying solely on targeted advertising to a revenue stream including affiliate-deal revenue.
Times Mirror launch-ed its Web efforts in 1998 when it purchased Inter-Zine Productions, a network of sports sites, and formed Times Mirror Interzines.
"All of our sites have commerce deals" with online merchants such as eToys, said Interzines President Michael Dubester. "We are definitely moving toward e-commerce; it's unavoidable. The real question is what does that mean, and I don't know if I know how to answer that yet. But content sites have to be more commerce-capable."
Time Inc., the publishing and entertainment subsidiary of Time Warner, also has e-commerce plans, but it's been a long time coming for Time.
For the past 18 months, Time has been dismantling Pathfinder, which was launched in 1994 as a portal for all of Time Inc.'s magazines.
A `HIDEOUS WAY OF MARKETING'
"There became a feeling that marketing 49 different brands would be a hideous way of marketing resources, whereas marketing one brand would be a more efficient way," said Dan Okrent, editor-at-large for Time Inc., of the decision to create the Pathfinder model.
But the site never realized a profit through ad sales. On May 5 it announced a strategy of building five vertical hubs, containing content from the various publications. The hubs will be arranged around sports, news, entertainment, business and lifestyle themes.
Another change is that Time Warner is taking the reins from Time. Michael Pepe, Time Warner e-commerce president, will oversee the venture which will include Web properties ranging from CNN and People to Warner Bros. He succeeds Ms. McCutcheon.
ADOPTING A HUB MODEL
Time Warner will integrate e-commerce capabilities into the sites, which will consolidate existing Pathfinder sites. In March, for example, the company inked a deal with eBay to integrate its auctioning service into the sites. Gerald Levin, Time Warner chairman-CEO, expects the e-commerce capabilities to attract visitors and facilitate highly targeted advertising and direct marketing.
Time Warner's growing oversight of the new media division over the last two years has been the result of its realizing that the Internet is financially "the sexy place to be," said an executive close to the company.
"In the past two years the same corporate managers who wanted nothing to do with [new media] now want it."
Copyright May 1999, Crain Communications Inc.