Newspapers Explore New Market Technologies : Publishing: From fax machines to telephone data services, the industry is searching for better ways to reach readers and serve advertisers.

To a degree, the question about the fate of the American newspaper is this: Can the nation’s newspaper companies, which basically provide local communities with mass information, survive by simply augmenting their once-grand business with such technologies as fax reports, telephone data services and videotext?

Or is the communications industry headed the way of Time Inc., the magazine company that moved into cable TV and then merged with Warner Communications to form a massive global entertainment and information empire?

As newspaper publishers opened their annual convention Monday in Los Angeles, the first meeting in Southern California in their 104-year history, that uncertainty underlay the proceedings. And when it came up in a session looking at telecommunications, the speaker asked it rhetorically-- unable, frankly, to answer it.

Newspapers are a mature industry, James C. Lessersohn, manager of corporate planning at the New York Times, told publishers. So are their traditional competition, radio, television and magazines.

Their readers’ time and money are being lured away by newer media such as cable TV and video. And advertisers are being siphoned off, at least to a degree, by direct marketing such as mail-order catalogues and telephone sales.

To react, American newspapers in the next decade must find ways to reach a nation that is increasingly fragmented demographically, publishers were told. They must lure young and female readers who have switched to television and at the same time somehow deliver to advertisers narrowly targeted portions of their readership.

The best answer that publishers have for now is to “augment” their publishing franchises by exploiting new information media. The newspaper industry is experimenting with four principal technologies.

* With fax machines, newspapers are testing shortened digests of their papers transmitted to locations far away, such as a four- to eight-page version of the Los Angeles Times now circulated in Moscow. Other papers, such as the Knoxville (Tenn.) News-Sentinel, are testing afternoon fax reports to local businesses such as law and real estate firms in advance of the next day’s paper.

The fax tests are still so new that only 12 papers are involved, publishers were told, and their profitability is still uncertain. Much depends on how widespread fax technology becomes.

* Telephone services--providing current information through the day via phone lines--offer a second technology by which publishers hope to widen their appeal and market penetration.

The Atlanta Journal and Constitution offers perhaps the most extensive such program. Its audio text includes phone lines for stock prices, weather, sports, soap opera updates and rush hour traffic reports. It also offers what it calls “talking ads,” in which readers can call advertisers for more information about advertised specials.

The Atlanta paper acquired a local telephone directory company to launch the program, which it advertises each day in the paper. In 1989, the program’s first year in operation, the paper received 5.5 million callers, not all of whom were readers.

* The third technology is videotext, highlighted now by such interactive database services as Prodigy and Compuserve. Only the latter is making a profit, and after several ill-fated forays by newspapers in this field in the mid-1980s, Lessersohn of the New York Times described videotext as largely stalled.

* Perhaps the most interesting technology that the newspaper industry is exploring is something still vaguely called “hybrid.” In this system, readers might see a directory of specialized news and information reports listed in the paper each day, order them by phone and receive them immediately by fax.

All of these efforts are designed to counter a trend in which readers, particularly younger ones, have turned away from newspapers and in which advertisers, seeking to reach only those consumers most likely to buy their products, are taking advantage of newer technologies.

A study group of the publishers association reported Monday that it sees reason for opportunity in these new technologies because rival media, such as cable TV, serve a different function. Cable, aside from such channels as Cable News Network, largely offers viewers entertainment programming. Direct mail and telephone marketing, on the other hand, offer consumers just advertising, without entertainment or news.

Only newspapers, publishers insisted, offer information, an ingredient that they see as having enduring appeal.

Nearly 40% of those who use the Atlanta weather phone system, for instance, are not even readers of the Atlanta paper, said James T. McKnight, director of information services at the Cox Newspapers in Atlanta.

Still, some newspaper executives worry. “We are getting caught up in the invention of these things, not the content,” said Nancy Woodhull, president of news services of the giant Gannett Co. “Fax is exciting, but it must complement and extend the reach of our existing products.”

These efforts also put newspaper publishers squarely at odds with telephone companies that control the lines of communication.

Among the six “key issues” that the ANPA has identified for the 1990s, for instance, is whether the government will rule that “telephone companies could neither produce nor profit from the content that goes over their monopolized local wires”--in short, keep the phone companies out of the information business.

The battle currently is being played out in the courts. But before it is over, Congress may well have to pass a law, suggested William H. Cowles, chairman of the ANPA and publisher of the Spokesman-Review and Spokane Chronicle in Washington state.

Already, newspapers involved in these new efforts report resistence from local phone companies, as McKnight has encountered in Atlanta.

In their key issues, outlined by Cowles in the keynote address opening the convention, publishers must “meet the challenge of new competitive technology” by transforming newspapers into “gateways” for readers to get all kinds of information through all kinds of media, “thereby expanding our audience and market share.”

It is not entirely clear whether these efforts will succeed. The signs of grim prospects were obvious even in the hallways at the gathering. ABC “Nightline” correspondent Jeff Greenfield, a speaker at the convention, was also conducting interviews for his television program, asking publishers and industry analysts, only partly rhetorically, whether it mattered to the culture if only a shrinking elite read newspapers in the future.

And what is to happen to the smaller newspapers that, unlike the New York Times or the Los Angeles Times, have no global fax networks and other high-technology schemes to meet the competition?

In Kalamazoo, Mich., they’re increasing circulation the old-fashioned way.

The local newspaper, the Kalamazoo Gazette, is giving subscribers--and potential new readers--the distinct impression that it cares.

And if that occasionally means sending a fresh bouquet of flowers or a box of candy to an angry subscriber who fails to receive the paper, so be it.

Times staff writer Bruce Horovitz contributed to this story.