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Information Processing: THE INTERNET

ALL THE NEWS THAT'S FIT TO BROWSE

Despite elusive cyberprofits, the networks are jumping in

As scoops go, it was a far cry from Watergate. But when the defense rested on May 28 in the Oklahoma City bombing trial of Timothy McVeigh, the first news organization to get word out was the MSNBC Internet service. And on May 27, when a deadly tornado ripped through the tiny central Texas town of Jarrell, the only place to check for names of the dead and missing outside the state was on cnn.com.

Such is news in the age of the Net--blazingly fast, highly competitive, and about to ratchet up another notch. On May 15, ABC made its online news debut. Two weeks later, CBS planted a stake in cyberspace, saying it will launch its own Net news site by yearend. And on June 4, CNN Interactive announced a deal with software maker Oracle Corp. that will allow Netizens to create customized news pages--selected from 300 categories--that are delivered automatically to their PCs every 15 minutes.

MYSTERY. With this latest round of announcements, it's now official: The Net news wars have begun. Today, all four major broadcast networks and CNN--once content to let such news anchors as Dan Rather, Tom Brokaw, and Peter Jennings lure viewers to TV sets each night--are laying multimillion-dollar bets on the World Wide Web.

To some, it's a mystery. Ratings methods are still fuzzy, viewership skimpy by TV standards, and profits elusive, but news organizations say they have little choice but to join the cyber-fray. "We are looking at the erosion of our broadcast audience on the one hand, and a new world where the convergence of the TV and computer will make news, data, and text immediate and personal," says Tom Rogers, NBC's executive vice-president. "We have to put together products toward that time."

What they have put together is all too similar. At the click of a mouse, news is available 24 hours, customized, and immediate. Each online news service offers a handful of top stories for the day, which are frequently the same and seldom updated. On June 1, for example, most of the biggies had the latest on the McVeigh trial, along with stories on the French elections and President Clinton's vow to fight Paula Jones's sexual harassment complaint. Only CNN strayed from the pack, with a piece on the upcoming Tony Awards.

This me-too format could make it tough for the majors to distinguish themselves from one another, especially without the on-air personalities of their anchors. And that, experts say, could slow precious advertising dollars--bad news considering online news operations are spending $20 million to $25 million on average just to get started.

BLEEDING. Take MSNBC, a $500 million joint venture between NBC and Microsoft Corp. that features both a cable network and a Web site. MSNBC was expected to lose money for five years, but execs now say the cable channel is on track for breakeven sooner, possibly year four. But no one at either company is venturing a guess when the online service, which has cost $30 million so far, will stop bleeding red ink. Says analyst Mark Mooradian of market researcher Jupiter Communications: "Nobody's going into this as a profitable venture. Everyone is looking five to ten years down the road."

The reason for the long view is twofold: The networks, which have been losing viewers for two decades, are seeing some log on instead of tune in. At the same time, news is becoming a hot ticket on the Net. A Baruch College/Harris Poll survey commissioned by BUSINESS WEEK shows that 30% of Web surfers visit news sites "often." Overall, news is the No.4 reason they list for getting on the Net, behind research, education, and entertainment. Such popularity with Net surfers could make news sites a must for advertisers, who are expected to spend some $5 billion on Web ads in 2000, says Jupiter Communications.

The problem for the TV networks, at least for now, is that most Netizens are zeroing in elsewhere for the latest news. According to market researcher PC Meter, which tracks Net usage, 11.5% of its sample of 12,000 households are visiting CNET, a San Francisco-based startup that specializes in technology news. CNET Chief Executive Halsey M. Minor credits much of his success--CNET averaged some 3.2 million page views a day in 1997's first quarter--to the computer-savvy nature of Web surfers. "We satisfy a niche, it just happens to be a big niche," says Minor. "But the general news category is going to be the most competitive niche that exists on the Web. Period."

Today's Internet news has a ways to go before it has the name recognition of network news, however. The highest-ranked broadcast service on the Web, cnn.com, came in no better than 48th in PC Meter's March survey of the most popular Web sites, behind disney.com, Time Warner Inc.'s Pathfinder service, and even weather.com.

WEAPONS. Ouch--especially considering that CNN was the first major broadcaster on the Net. Launched in the summer of 1995, it surpassed 1 million hits in just two days, and during the U.S. November elections, its three Web sites--cnn.com, the financial site cnnfn.com, and allpolitics.com--received a staggering 50 million hits in one day. Indeed, CNN is the rare Net news organization that is profitable, thanks in part to an impressive list of 170 advertisers, including IBM and Best Western hotels.

Now other networks are trying to overtake CNN. Broadcasters such as NBC and ABC bring impressive weapons to the battle for Net news preeminence. NBC regularly trots out network stars Tom Brokaw and Katie Couric for chats on the Net site. And, at the end of most news programs, the Web site gets a promo. When an NBC prime-time Dateline show on the nation's worst roads directed viewers to the Web site for a look at how their local roads held up, the site was clogged. "We just saw the traffic zoom," says Merril Brown, MSNBC's Internet editor-in-chief.

Gearing up for a longer battle, MSNBC's Web site has 100 reporters in Redmond, Wash., working up their own stories. It's also the news arm for the Microsoft Network Web service, giving it immediate access to some 2.3 million subscribers. The result: After less than a year, the MSNBC Web site captures 3.6% of Net users each month, says PC Meter, just behind the 3.7% that drops by CNN's main news site.

ABC, which just launched its service, has no such track record--but plenty of partners. Its has a deal with AOL and Netscape, ensuring access to 12 million viewers, says Jeff Gralnick, vice-president and the executive producer in charge of abcnews.com. To promote the site, ABC is calling on the big names. In the first few days after operation, it sent heavyweights Sam Donaldson and Cokie Roberts from their This Week set on Sunday morning for an online chat.

Less certain is how much competition the current Big Three of TV news services will get from Fox Broadcasting Co. and cbsnow.com, announced by CBS at its affiliate meeting on May 30. Unlike other broadcasters with online services, CBS will use heavy doses of local news from its more than 200 TV station affiliates, which are being promised a cut of the ad revenues.

Meanwhile, foxnews.com is being hampered by a lack of promotion from the seven-month-old Fox news cable channel, which has had trouble lining up significant numbers of cable operators to carry it. Fox has lured such biggies as ABC congressional correspondent Brit Hume, but its strength is still Fox's trademark racy style. Its Web site recently ran such sure-to-titillate items as a Japanese hacker who replaced weather charts on the Net with pornographic pictures and another about a Tampa couple suing a local supermarket after finding a finger in a ham sandwich they had bought.

Fox's aim, as with such raunchy TV fare as Married with Children, is to bring younger viewers to the Web. That's good. For now, the majority of Web users are males in their 40s, well educated and with high incomes. In short, they are CNN people. But if the online news services are to succeed, they'll have to bring in more teens and women. That could work both ways, figures ABC's Gralnick. "If we can hook 'em on our service as youngsters, maybe we can move them over to the broadcast network, as well."

How to do that? One technology that could woo the masses is simultaneous video streaming. That lets a broadcaster bring the same video to the computer that it is showing on TV. But analysts say bandwidth is still an issue and that until most PC owners use 56.6 kb modems, this approach won't make a big difference. "There have to be things out there that people will pay to receive, whether it is on cable or the Internet," says CNN President Tom Johnson.

Just what that will be is still unclear to the TV newshounds descending on the Net. But, after nearly 50 years of competing for eyeballs on the tube, they're intent on grabbing eyeballs on the Net.By Ronald Grover in Los Angeles, with Linda Himelstein in San FranciscoReturn to top


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