PAPERS: BE INTERACTIVE LEADERS OR BE LUNCH

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Newspapers must avoid becoming a "hot dog stand" in someone else's electronic shopping mall.

So said Donald K. Brazeal, editorand publisher of The Washington Post's new Digital In electronic products subsidiary, at the Interactive Newspapers '94 Conference in Tampa, Fla., last week.

"There is a caution in this process," Mr. Brazeal said at the conference sponsored by Editor & Publisher and the Kelsey Group, an electronic publishing consultancy. More than 600 people attended the conference, double last year's attendance.

Some new-media visionaries view newspapers merely as information providers, he said, and only "want to rent us a hot dog stand in their electronic shopping mall." Some want to buy newspaper information cheaply and repackage and resell it. And others want to steal newspaper customers, he said.

Though it is not clear what the newspaper of the future will be, newspapers appear to recognize the need to experiment with supplemental interactive services to keep from losing share to telephone companies, computer companies and other start-up entrepreneurial ventures.

More than 2,700 daily and weekly newspapers with circulations over 30,000 now have voice, fax or online interactive services, up 35% already from 1993 and more than double 1992's figure, according to Kelsey Group.

"It's a growing recognition that newspapers are not just in the print business," said John Kelsey III, president of Kelsey Group.

for example, has 800- and 900-number telephone information lines and a fax/mail information service. It is testing depositing personal information clips in voice mailboxes with Nynex Corp. and plans to offer news on Prodigy this year.

"The move to multimedia is imperative," said Randolph Charles, marketing and new-business development director for Newsday. "It's not an ancillary product opportunity. The print franchise is being weakened. A way to move along is to move out of print into other vehicles."

As content providers, newspapers are well positioned to be a major part of the electronic superhighway.

"Content is where it is happening," Mr. Kelsey said. "Content is what people care about. Content is why people will buy devices ... Content will fill up 500 channels. The good news is [newspapers] are in the content business. The bad news is that [newspapers] face an uncertain future because over time traditional print advertising revenue will decline."

Advertising will play a major role as newspapers adapt their information to new TV, computer and telephone technology. Advertisers, for example, can sponsor news, weather, sports and business information services and target certain demographics. They also can use audiotext for direct response promotions and building consumer databases.

Online shopping services for groceries, flowers and tickets to major events also offer newspapers new revenue opportunities.

Newspapers will likely see more revenue from subscription and user fees as new technology takes over, Mr. Brazeal said. But advertising will still remain newspaper's dominant revenue base.

Advertisers and agencies, however, are showing a lagging interest for these new services, executives said.

"Early on, particularly on the advertising side, it will be difficult," said Eric Philo, VP at Goldman, Sachs & Co. "The audience is small and advertisers and agencies are still trying to figure this out. They will not want to spend a lot of money ... I have a feeling that many of these things won't pay off for many years-maybe the next century."

"Some folks are looking for the killer application," said Gene Quinn, general manager of Chicago Online, a joint venture between the Chicago Tribune and America Online. "There will be no killer application for years."

Jerome Rubin, chairman of the News In The Future Consortium at the Massachusetts Institute of Technology, painted a picture of what new media might look like. Personalized news and advertising could come from TV sets activated by voice recognition commands. Or, a computer could generate news on portable erasable displays or flat-screen panels that offer full-motion video.

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