Hachette Filipacchi New Media has decided the single source ad revenue model for Web sites is no longer viable.
It's a dramatic conclusion for a company that has online versions of some of the most recognizable consumer magazine brands around, including Elle, Car & Driver, Woman's Day and Premiere.
The new-business model Hachette has come up with is to work with a third party to develop commerce initiatives using the Hachette brands.
The company has awarded a five-year service contract to c2o, an Internet maintenance and consulting company that's a division of well-known technology services provider EDS, to manage all Hachette online publications.
All revenues from the Hachette sites, including advertising, transactional and licensing, will be split between Hachette and c2o.
The pact, valued by Hachette executives at $30 million, basically calls on c2o to co-invest in and develop electronic commerce sites for the magazines.
Hachette, unlike some other big publishers, has a number of high-profile specialty brands with loyal audiences that its executives say lend themselves easily to e-commerce.
"Consider two of our titles, Stereo Review and Audio," said Jim Docherty, president of Hachette Filipacchi New Media. "Selling consumer electronics online" on sites under those monikers is a clear possibility, he said.
Another example is Travel Holiday; a site involving booking vacations would be a natural connection.
Other titles in Hachette's stable that should easily lend themselves to e-commerce applications are American Photo, Boating, Car & Driver, Cycle World, Eating Well, Elle Decor, Flying, Home, Metropolitan Home, Popular Photography, Road & Track and Video.
"Hachette's commerce play is a bold statement on where the future of this business is headed," said Laura Berland, exec VP, ORB Digital Direct, a commerce network. ORB has no connections to the Hachette/c2o deal.
"Without transactions, many content sites won't survive," she added.
"What's driving this deal is a singular focus on profit," Mr. Docherty said. "In point of fact, you ultimately need multiple revenue streams. In the long-term, if you expect advertising and only advertising to pull the freight, you won't make it."
Copyright June 1998, Crain Communications Inc.