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PAPERS JOSTLE FOR SPACE ON THE INFO SUPERHIGHWAY ELECTRONIC CLASSIFIEDS, SHOPPING, COMPUTER LINKS HOLD LURE

By Published on .

Newspapers are racing onto the information superhighway to avoid being passed by high-tech news and advertising services.

After years of dabbling in audiotex, newspapers are moving aggressively into on-line computer services, electronic classifieds and shopping and even video.

Publishers realize they must pave their way onto the coming information superhighway or risk losing their editorial and advertising dominance to telephone, cable and on-line service companies.

"There is a tremendous amount of hype out there now .*.*. and a bit of a frenzy," says Roger Fidler, director of Knight-Ridder Information Design Laboratory. "Many things being done today are purely from a defensive standpoint. Many feel they've got to do something."

In the past year, about 30 newspapers have announced plans to make news and advertising available on on-line services. That number should double in the next year, says Randy Bennett, director of new technologies for Newspaper Association of America.

Many newspapers are pairing up with national on-line services such as America Online, CompuServe and Prodigy.

Last month, the Atlanta Journal-Constitution became the first local newspaper on Prodigy-a move that will be followed by more than a dozen other newspapers, including the Los Angeles Times and Newsday in September.

The Journal-Constitution's service offers stories and classified ads from the printed paper. It also provides more localized information, such as community group listings and school sports scores (see story on Page 36).

Part of each screen display is dedicated to display advertising as well. So far, Rich's department store is the sole advertiser on the Access Atlanta service.

"We wanted to learn about different ways to communicate with our customers," says Don Van Suilichem, senior VP-director of marketing for Rich's/Goldsmith's Department Stores, the retailer's parent company. "We don't know where it's going to go. But we think we have to be in there and learn at the beginning of it."

Some papers are entering electronic ventures in part to defend against competing services.

The Los Angeles Times, which saw a rival automotive electronic classified service emerge in 1992, is exploring multiple paths onto the superhighway.

In the last year, it's launched an advertiser-supported audiotex information service and automotive classified ads by telephone.

It also plans to make its paper available on Prodigy in September and has teamed with Pacific Telesis to offer a forthcoming operator-assisted classifieds/Yellow Pages shopping service.

"It's ours to lose," says Chip Perry, VP-new business development at the Times. "We're protecting ourselves against [competitors] coming after our editorial and advertising content."

Papers are teaming up with other on-line services for electronic editions.

The San Jose Mercury News and Chicago Tribune last spring went on America Online, which adds The New York Times in May. The Washington Post has teamed with Ziff-Davis Interactive for an online service to rollout later this year. The Detroit Free Press, Gannett Suburban Newspapers and Florida Today of Melbourne, Fla., are experimenting with CompuServe, though it doesn't allow local advertising.

Although these CompuServe papers won't feature local ads, there's no doubt advertising will be a part of electronic papers.

At some services currently, computer users can see classified ads before they appear in the printed newspaper.

But display ad development is lagging as newspapers are still experimenting with format possibilities.

"Advertising in an electronic environment is not merely a display ad posted on a computer screen. That's not very engaging," says Don Brazeal, editor-publisher of The Washington Post's Digital Ink subsidiary. "Customers have to be constantly in control of what they are looking at and it has to be inviting, useful, and time saving."

"We're all just learning how to do this," says David Scott, publisher of electronic information services for the Journal-Constitution. "As we build audience, we're going to target the 20 to 30 top advertisers who have some money ... to help explore this new medium and invent it."

Transaction capabilities will be key to on-line advertising, but even that will lag until marketers can receive and process electronic transactions.

San Jose Mercury News' Mercury Center and Chicago Tribune's Chicago Online offer limited on-line shopping.

San Jose has local advertisers on its shopping service, including a computer store, a computer bookshop, a camera retailer and a professional services referral company. Sports fans and concertgoers can buy tickets through Ticketmaster on Chicago Online.

"Our customers are computer-literate people," says Vince Emery, marketing manager of Computer Literacy Bookshops. "It allows us to put more information than a print ad allows and it lets us communicate directly with our customers."

Newspapers also are teaming with one-time rival telephone companies (the newspaper industry once tried to keep phone companies off the information superhighway).

Knight-Ridder plans to explore ways to develop news and advertising services as part of Bell Atlantic Corp.'s planned video-on-demand service.

The Journal-Constitution has teamed with BellSouth Enterprises and Los Angeles Times has paired with Pacific Telesis to create an operator-assisted telephone service that combines the papers' news, information, classified and advertising with the telephone company's Yellow Pages directory.

Calls will be billed on monthly phone statements.

"FindxIt 511" is introduced formally in May in Atlanta with a TV, radio, print and outdoor campaign from BBDO/South, Atlanta. The Los Angeles Times/Pacific Telesis service should begin in late 1994 or early 1995.

"Despite all the rhetoric to keep the phone companies out of information services, we're pragmatic enough to see they're coming our way," says Mr. Perry.

Advertising will remain newspapers' dominant revenue source in the years to come, says Craig Gugel, senior VP-media research & technology at Backer Spielvogel Bates, New York. Subscriptions and service fees could make up a greater share of revenue, he says.

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