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Publishing: From software to content

Microsoft is getting serious about producing its own content, but is it ready to adapt to the world of publishing? And is publishing ready to adapt to Microsoft?

The death knell for traditional publishing has been sounded countless times since the advent of the Internet, but many defenders have steadfastly maintained that any immediate threat to pulp was pure fiction. Until Thursday.

That's when details began to surface about long-rumored plans by the Microsoft Network (MSN) to start up regional online magazines in several major cities in what appears to be direct competition with their print counterparts.

The new venture, called Cityscape, may be one of the most ambitious expansions of online content ever undertaken. It is the latest dimension to Bill Gates's obsession with his new approach to the Internet, which was underscored in a column he wrote in January entitled, "Content is King."

Sources told CNET this week that Cityscape's online publications would feature such "consumer journalism" as film guides and dining reviews--which some believe to be the raison d'?tre for magazines in many cities targeted by Microsoft, such as Chicago, Los Angeles, Philadelphia, and San Francisco Focus.

The strategy seems disarmingly simple: following the principles of monopoly in a free-market economy, Microsoft would like to lock up the online industry from front to back--and that means starting with the written word. But what remains unclear, analysts and journalists say, is whether the technology giant is capable of making a successful transition from publishing software to publishing articles.

And things are equally uncertain on the other side. Executives at the established magazines in the cities where Cityscape intends to set up shop had not heard of the venture until contacted by CNET, revealing an element of surprise that may well work to Microsoft's advantage.

The chaos draws a reminiscent smile from veterans like Bill Cleary, founder of the CKS Group technology consulting company, who is reminded of another electronic revolution, one of television and its marketplace a half-century ago.

"TV originally gathered content from radio, similar to the 'repurposing' of material you now see on the Internet. It took ten years to evolve its own content. It's a whole new concept," Cleary said. That decade-long time frame is being compressed to a matter of months on the Internet.

Cityscape marks the first time that a high technology company has made a significant commitment to produce original content, rather than using material already published by print and online publications. The parallel between TV and the Net runs even deeper when comparisons are drawn between Microsoft and its counterpart in the era of television, Sony.

Led by an equally visionary if somewhat more charismatic chairman named Akio Morita, the electronic powerhouse had a similar notion to own its industry from content to store shelf in the late 1980s, when it descended on Hollywood with the purchase of two major studios and a record company.

From the outset, Sony encountered some problems that Microsoft won't have to worry about, such as widespread Japan-bashing and critics who charged that the company wanted to replay history by expanding their country's global power through trade wars instead of armed conflict.

Still, there are some definite lessons for Gates and his own army of executives. As was the case with the Japanese, Microsoft's most formidable barrier may be one of culture, not economics.

One source close to the Cityscape venture, for example, said Microsoft is being vague to the point of paranoia about its plans, even internally--leaving some prospective employees in the dark about such things as what kind of jobs they were applying for. "That's the norm, when they're going to do something big, anything new," the source said.

It is this kind of operating procedure that may be standard in Silicon Valley but prove unpalatable in the domain of arts and letters. To bridge such cultural gaps, some analysts recommend that Microsoft executives learn from Sony's initial mistakes and put others in charge of the content, instead of trying to run an area obviously outside their expertise.

"The challenge is to let the experts do their jobs," Cleary said, noting the ill-fated approach taken by Japanese companies that used a heavy hand in overseeing American management of their operations in the last decade. "Gates understands word processing, but does he understand journalism?"

He does, however, understand business. In its Silicon Valley wars, Microsoft has long been known for its prowess in exploiting what it considered weak markets. And its current prey may be some unsuspecting regional magazines.

"I'm not aware of anybody's knowledge of this here," said the publisher of one large metropolitan magazine. "This has not come into selling points with our advertisers."

At the same time, this executive and others say they are not particularly concerned about any possible encroachment by online publications into their territory. "The goals of magazines vs. online journalism are different, but we can coexist because they work differently for readers," said a senior executive at another city publication on the East Coast.

Echoing a refrain commonly heard in traditional publishing circles, she said, "It's a matter of comfort level--you're not going to curl up with your computer before you go to bed." But this executive acknowledged that the advertising market is another story: "Competition there isn't any different from the print medium."

Microsoft is trying to adapt by hiring brand-name talent to run its new content business. The company has lured some high-profile journalists to its compound in Redmond, Washington, including former New Republic editor Michael Kinsley to run a political magazine and former Los Angeles Times foreign correspondent Dan Fisher to head up the Cityscape operation.

But some question the depth of that commitment. "They may have a couple of figureheads running things, but how much effort are they really willing to make among the staff?" asked Stephan Somogyi, senior editor at the industry newsletter Digital Media.

"A mainstream journalist I know visited MSN's newsroom and described it as being staffed by a bunch of kids wearing baseball caps backwards, and not a reporter among them," Somogyi said. "That may be a testament to how Microsoft thinks journalism can be done."

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