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Newspapers' Net correction

After years of shunning the "model," print media giants are changing their tune, writes CNET News.com's Jeff Pelline.

When I left a steady newspaper job nine years ago to help launch this online news site, many people called me nuts.

Too risky, no credibility and no brand loyalty, the naysayers said. It seemed OK to me: I'd worked at big daily newspapers and a magazine for 15 years, and, as a news hound, welcomed the chance to publish scoops in real time.

It's a simple "model," as the MBAs put it: We get a scoop and publish it on the Internet ASAP. No "back shop," no printers, no newspaper delivery people. Readers like it, and the print competitors hate it. As it turned out, this new world order also troubled PR types, who try to control the news with "embargoes" and "pre-briefings," but we'll save that story for a rainy day.

The bursting of the Internet bubble and dismal execution taught most of these young buckaroos a real-life lesson.
What I also found curious about Internet journalism, as a longtime business writer, were the margins. Big city newspapers are largely monopolies--typically with low double-digit margins--but Internet companies were promising double that, at least in the go-go days.

Whenever I mentioned this to Internet executives, most of them just looked at me with that "whatever" stare. They had no interest in generating the results of a newspaper or oil company for goodness sake--they could do much better.

The bursting of the Internet bubble and dismal execution taught most of these young buckaroos a real-life lesson. Some still fantasize about publishing news without any journalists or even bloggers (not just without ink and paper), relying instead on computer programs. Good luck, buckaroos.

Many print media executives, meanwhile, largely ignored the Internet, apparently hoping it would just go away--like W.C. Fields did when it came to kids.

Despite the opportunity to make their businesses more profitable, the brass worried about cannibalizing their own print model. Although many companies invested in the Internet, it definitely was a sidelight business. ("I work for the print edition, not the online edition," was the typical refrain from many longtime journalists.)

Now the print media giants are changing their tune--albeit it more from a defensive than offensive posture. Stuck with stagnant growth and under pressure from Wall Street, these companies are taking their biggest plunge yet into the Internet pool.

The print media giants are changing their tune--albeit it more from a defensive than offensive posture.
In the latest example, The New York Times Co. said Thursday it will buy online information portal About.com for $410 million from publisher Primedia.

"We are very excited about this acquisition, which furthers our strategy of delivering news and information to local and national audiences with multiple media products," said Janet Robinson, CEO of The New York Times Co.

But that's not all:

•  In November, Dow Jones bought Marketwatch for $520 million. The higher-than-expected price of $18 per share expanded Dow Jones' Internet audience at a time when subscriber growth at The Wall Street Journal online is leveling off.

•  In December, The Washington Post Co. agreed to buy online magazine Slate from Microsoft. "Slate reaches a highly educated and influential audience of readers who use the Web as a primary source of news, information and commerce," according to the Post. "Slate's audience is similar to the audience of other WPNI publications (Washingtonpost.com and Newsweek.com)."

•  In January, TheStreet.com, one of the pioneering Internet news sites, hired investment banker Allen & Co. to help its board consider strategic alternatives, including a sale. TheStreet.com's stock has rallied based on speculation that it will be acquired by a larger, more established competitor.

This year will no doubt go down as a time when Internet and print media companies danced like never before. For star-struck Internet companies, it may be a reality check to have to dance with old-timers. But the old-timers sure don't mind: It puts more dance in their step than a new pair of wingtip shoes.