‘Electronic’ Newspaper Emerging After Slow Start : Media: Companies resisted new technologies, then saw early efforts fail. Now some services are catching on.

In Denver, the Rocky Mountain News gives subscribers the computer software necessary to receive--free of charge--a separate “A la Carte” edition of the daily paper, updated frequently and available 24 hours a day by computer-telephone hookup.

In Ft. Worth, the Star-Telegram offers stories from the daily paper and from national news services to residents for $9.95 a month on StarText--a computer service that enables users to get an early look at the next day’s classified ads, as well as make travel reservations, exchange electronic messages and access a “reference room” that includes book and movie reviews and gardening tips.

In Atlanta, the Journal and Constitution have 250 special telephone lines for readers who want sports scores, news updates, restaurant reviews, movie schedules, soap opera updates and stock, weather and traffic reports.

Newspapers, threatened by increased competition and decreased profits and readership, are searching for new ways to attract and retain readers and advertisers as the print media move, however timorously, into the increasingly electronic decades of the Information Age.

Newspapers are trying to figure out how they can reuse information they gather every day at great expense and now use only once. They want to take advantage of new communications technologies. They want to cement a seven-day-a-week relationship with readers by becoming more useful and more interesting to a generation accustomed to the accessibility and excitement of television, computers and video games.

Above all, newspapers want to reverse--or at least stem--a decline that finds only 52.6% of the American public reading a newspaper every day.

Many experts in communications technology envision a personalized electronic newspaper, available by some combination of computer and television set, early in the next century; in the meantime, some newspapers are experimenting with a variety of intermediate technologies.

“I cannot imagine a time in the future when there will not be newspapers in the home,” says John B. Evans, executive vice president at Rupert Murdoch’s News Corp. “A newspaper is a data base. It happens to be on crushed trees right now. I don’t think a newspaper proprietor . . . should care how it is delivered as long as it’s his information.”

More than a dozen newspapers have tried sending small editions to selected subscribers by fax, and others are experimenting with various versions of videotex--newspapers by computer.

If newspapers insist on remaining exclusively in the traditional “newspaper business,” as opposed to the “information business” or the “communications business,” experts say they will suffer the same fate as the coal and railroad industries, which considered themselves in the coal and railroad businesses, rather than the energy and transportation businesses.

Some in the newspaper industry have lulled themselves into complacency with the bromide that new technologies don’t supplant old technologies, they just supplement them.

No, television didn’t kill radio, but it clearly diminished its impact. Airplanes put many steamship and railroad companies out of business. Print newspapers may remain alive in an era of electronic communication, but they, too, could become quaint relics of another time.

“There is increasing awareness in the industry that we’ll need to do new things if we are to prosper in the future as we have in the past,” says Jay Harris, vice president for operations at Knight-Ridder Newspapers.

But while one of the newspaper’s primary functions has always been to chronicle change, newspapers themselves have been largely resistant to it. High profit margins and monopolies or near-monopolies have enabled the industry to neglect experimentation, research and development.

Newspapers traditionally have been willing to spend money “only if there is an immediate rate of return,” says Joseph Ungaro, an executive with the Gannett newspaper chain.

Thus, newspapers were slow to computerize, slow to shift from drab black and white to spritely redesigns incorporating color and slow to recognize both the opportunity and the threat of new communications technologies.

Newspapers must undergo a “paradigm shift,” says John Altson, speaking as someone who has long worked on new newspaper technologies, rather than as an executive for his current employer, IBM. Altson says that instead of insisting that everything will be fine if only they can raise advertising rates a little, cut costs a little and redesign the paper a little, newspapers must begin “looking at the customers and . . . understanding their needs.”

Editors worry that such suggestions are really code words for “dumbing down” their papers, for providing color photos, flashy graphics and short stories, rather than comprehensive news and insightful commentary. But technology experts say there will be a market for the traditional content in the future, regardless of how it is assembled and delivered and even if its audience shrinks.

Newspapers, wire services and broadcast networks are unlikely to be replaced as the primary news-gathering agencies in America; what will change will be the means of delivering that news and how that news is integrated into the broad information mix of the future. The news organizations that survive--and thrive--will be those that adapt best to the new technologies.

The “new” technology used by the most newspapers so far is not terribly radical; it’s the telephone.

More than 300 newspapers, including The Times, have (900) area code telephone numbers that require users to pay a fee, part of which goes to the paper, to get recorded information. About 50 other newspapers offer such telephone services free to users but sell time on the telephone announcements to advertisers.

The Times has (900) numbers for stock market reports, crossword puzzle clues and a horoscope. The paper is considering (900) numbers for weather reports, restaurant reviews, soap opera updates, sports scores and recipes, as well as travel, entertainment and real estate information.

Many newspapers already have such (900) services, and the Baltimore Sun operates a job resume service by telephone. A reader sees a help wanted ad, dials a number listed there and, by responding to various questions, leaves a resume that the employer can retrieve and respond to, also by telephone.

The Atlanta Journal and Constitution probably have the widest range of audiotex services and the most widely used system; the papers receive 35,000 to 40,000 calls a day on special telephone lines, virtually all free local calls--except for “personal” ads on a (900) line.

About half the Atlanta audiotex services include paid messages from advertisers. But Chris Jennewein, general manager of the papers’ Voice Information Services subsidiary, says he’s found that including an ad on a recorded message with a baseball score, stock report or some other specific piece of information is “not all that attractive to an advertiser.”

Jennewein says the Atlanta papers have “stopped looking at the information hot lines as revenue-generating entities and focused instead on their value in enhancing the news report.”

Audiotex enables newspapers to reclaim some territory they long ago ceded to radio and television--including up-to-the-minute election results and late sports scores.

“It’s important to be able to give out the score of a Braves game on the West Coast, even though your paper’s not going to have it because . . . (deadlines are) too early,” Jennewein says.

Newspapers must provide this information, with or without advertising support, Jennewein says. But he understands the need for money to finance these services, and he says there is “a tremendous amount of revenue potential in using this telecommunications technology as a promotional or a direct marketing tool.”

Pizza Hut ads in the Atlanta newspapers during the college basketball playoffs earlier this year included telephone numbers for a contest to choose winners of the playoff games; more than 65,000 readers called in.

The Atlanta papers also have a large number of recorded messages from advertisers. Users call the main “Talking Ad” number, then punch in the four-digit extension for any of more than 50 advertisers whose numbers are published daily in the paper. A caller wanting to find a local, late-hours pharmacy could call the pharmacy number listed in the paper, listen to the pharmacy’s “ad,” then punch in his ZIP code for the address of the nearest chain outlet. Some advertisers include a “Talking Ad” phone number in their own ads.

The Atlanta papers also have various experts available, live, for callers. During tax season, callers could speak directly to accountants and financial planners.

Audiotex is “the best thing” newspapers have done in recent years, says Jerry Bennington, president of XPress Information Services, but it’s “inherently limited . . . there are only so many things that you can get across by audio, and people only listen for so long.”

Few newspapers are making a profit on audiotex so far--Atlanta hopes to break even within the next year--but newspapers see the service as a means of recycling information they already have and an opportunity to build extra bridges to their increasingly elusive readers and advertisers.

Advertisers--beset by mergers and a weak economy and enticed by television, direct mail and telemarketing opportunities--have been drifting away from newspapers in alarming numbers.

Retail advertising, which has long provided more than 50% of newspaper advertising revenue, suffered its largest drop last year since the current form of record-keeping began in 1949. Classified advertising--which provides about 35% of total newspaper advertising revenue nationwide--is dropping even faster at many papers, down almost 30% in the first quarter of 1991 at The Times, for example.

Many experts say it is only a matter of time before classified advertising is taken over by some computerized service that can target specific audiences and products more efficiently than a traditional newspaper.

That’s why several newspapers now provide classified ads by computer themselves. In April, USA Today and Prodigy Services announced a joint venture for a national, computerized classified advertising service.

For similar reasons, several newspapers provide entertainment listings and sports, weather and stock market reports by telephone.

By the time most readers get the stock tables in their morning newspaper, the information is a day old. If newspapers don’t provide quicker access to that information, someone else will.

“In 10 or 20 years, you’re not going to find . . . six or eight pages of stock tables necessarily in the newspaper,” says Walter Baer, deputy vice president at the Rand Corp.

The Atlanta papers already have eliminated two financial tables--stock options and commodity futures--and now send that information by fax, without charge, to anyone who requests it.

Many in the newspaper industry worry that if other sources begin to provide stock, sports and weather reports and classified ads, that will simply be the electronic foot in the journalistic door. In time, executives fear, a nibbling away of traditional newspaper services will deprive them of the mass appeal that has long been the newspaper’s special strength.

But some say it is inevitable that newspapers, like other publications, will become more specialized.

Newspapers have a “broadcast mentality,” says Altson of IBM. “One product serves all. . . . “

Instead, he says, they must adopt the approach of the specialty magazine, trying to reach readers who have specific interests and needs.

But there’s “a great deal of resistance” to talk of an electronic or personalized newspaper in the newspaper industry, says Roger Fidler, president of PressLink Inc., a subsidiary of Knight-Ridder Inc. “It’s very threatening. I’m surprised by the degree of hostility toward the concept.”

Many in the industry seem to agree with Andrew Barnes, editor of the St. Petersburg Times, who says, “My instinct is that if you can provide information in a direct and timely fashion for people, of a wide variety so that they can get what they need, it’s likely to go on being a going business.”

Fidler insists, however, that technology is “moving in some interesting ways now that may radically alter the way we would deliver newspapers to our customers,” and newspapers should work to become agents of change, rather than victims of it.

This doesn’t mean that “when we go to the electronic newspaper, we start with a clean slate and throw out all we’ve learned over the last 200 years,” Fidler says. “I’m looking to retain the essence of a newspaper, the portions of the newspaper metaphor that will help people to intuitively navigate an electronic newspaper.”

The layout and design of a conventional newspaper, much like the sound track in a movie, provide clues that tell a reader what to expect. How big is the headline on a story? What page is the story on? Is the story at the top or bottom of the page?

How can these clues be incorporated in an entirely new technology?

Egged on by Fidler and others, Knight-Ridder--with newspapers in Philadelphia, Miami, Detroit, San Jose and 25 other cities--is at the forefront of research on tomorrow’s newspaper.

Knight-Ridder was one of those media companies that experimented unsuccessfully with newspapers on computer (or television screens) in the late 1970s, and executives acknowledge some of the mistakes made then.

Knight-Ridder’s Viewtron, like many other videotex prototypes, relied on a specially made computer that cost $600, was difficult to use and had no other application.

“That was asking a lot of the marketplace,” says James Batten, chairman of Knight-Ridder.

The company lost more than $50 million on Viewtron, but Batten says he came away from the experiment “reassured about the durability and long-term prospects of newspapers because this threat . . . seemed like much less of a threat after doing the best creative job we could do.”

Unlike many in the industry, however, Batten believes it would be “a big mistake . . . (to) decide the technological air raid is over and go back to bed.”

Batten says he is convinced that the newspaper in its present form “is going to be a pervasive, influential part of American life as far as I can see,” but Knight-Ridder has continued to look for new ways to attract readers. Two years ago, the company created its 25/43 Project to study how best to attract readers in that age range. The first major outgrowth of that project is a massive face lift and restructuring of The News in Boca Raton, Fla.

In Boca Raton, the “reader-friendly” News has much shorter stories than most newspapers, and none of its stories continue from one page to the next; the paper uses bright colors and many charts, maps and other graphics; it publishes daily explanations of how to read stock tables.

Several other experiments are also under way at Knight-Ridder, among them:

* An “Edge of Knight-Ridder” program designed to finance what Batten calls “risky, new ideas,” 27 of which are in various stages of development.

* An “info lab” experiment to offer readers--by computer, fax and/or regular mail--regular access to information gathered by the newspaper that isn’t published for general readership but might be of special interest to certain readers.

* Audiotex projects at several papers; in Miami, with a large Cuban population, the recorded telephone information is available in Spanish as well as in English.

Knight-Ridder is not alone in its experimentation, of course.

Dow Jones, with its electronic clipping service and computerized data bases, showed more profit from its various information services last year than from the Wall Street Journal and all its other publications combined.

The Atlanta Journal and Constitution lead on many fronts in the struggle to define the newspaper of the future.

Jennewein says newspapers must become “an interactive medium . . . (not) just something that goes thud on your doorstep and that’s the end of it.”

In addition to audiotex services, the Atlanta papers provide previously published articles, financial planning work sheets and various other kinds of information by fax, and--last summer--they began a videotex service, Access Atlanta. Users connect to Access Atlanta by computer, telephone and modem, the device that enables computers to communicate with each other by telephone.

The papers’ classified ads and business news section and stock tables are available by computer the night before publication. Movie and restaurant reviews and a guide to leisure-time activities also are available, as are a message service, electronic bulletin board and “chat line.”

The cost of these basic services is $6.95 per month, regardless of usage. Users can pay extra, per minute, for Associated Press news, weather and sports stories and for stories that were published in the Atlanta papers during the previous three years.

Computer use is far more widespread than it was when videotex experiments failed at many papers a decade ago, and the Atlanta papers are among a handful that are again testing the concept.

The Fort Worth Star-Telegram, for example, charges $9.95 a month for StarText, a daily, computerized version of the paper.

StarText requires no special computer software and is easy to set up. StarText users see many stories written for the next day’s paper as soon as they are cleared by editors for regular production the previous night.

“Typically, on a given day, StarText has about two or three times as much information as the paper itself actually publishes,” says Gerry Barker, marketing director for StarText.

Joseph Donth, president of StarText, says StarText has made steadily increasing if modest profits since 1984. Last year, he says, the profit was “slightly over $100,000.”

StarText, which has 3,600 subscribers--compared to the combined morning-afternoon circulation of 260,000 for the Ft. Worth papers--is being adapted by the Kansas City Star for use as StarView this fall.

When that happens, says Scott Whiteside, vice president at the Star, many stories published in the Star will refer people to StarView for background documents, previously published stories and other information.

Whiteside says he expects the newspaper and the videotex systems to complement each other.

The newspaper industry has battled aggressively to keep AT&T; out of the information services business, but Joe McGuff, editor of the Star, says newspapers may ultimately be “competing with phone companies for delivering information and advertising. If it’s going to be delivered on a video screen as well as in print, we better do it before they do.”

Although both the Ft. Worth and Atlanta computerized systems are relatively easy to use--neither requires special software or monitors--both take substantially more time to “read” than a newspaper. Simple scanning is just not simple on such systems at this stage.

The Rocky Mountain News’ computerized “A la Carte” edition can take even more time. It’s a more complex system, but it gives more to the user.

Denny Dressman, managing editor for administration at the Rocky Mountain News, says the paper has invested $450,000 to $500,000 in “A la Carte,” and to help defray those costs, the News sells “sponsorship” of each “A la Carte” section to advertisers. Advertisers get their “logo” and a brief message on each screen of news in that section; users who want more information on a given advertiser can get it by striking the appropriate keys. “If you’re ever going to move to a ‘computerized’ newspaper . . . you have to have display advertising,” Dressman says.

Most computerized information services are designed to enable users to receive only the specific information they request; giving them unsolicited advertising may present problems. But advertising is also part of Prodigy Services, which provides almost 1 million computer users with news, sports, stock market and weather reports, entertainment listings and various shopping services.

By charging a flat monthly fee, rather than per-minute use time, Prodigy--like the News--avoids the problem of having people pay for something they don’t want.

Advertising intrudes in Prodigy--it occupies the bottom 20% of virtually every screen of information--but advertising also intrudes in conventional newspapers, magazines, television and radio, so that should not be an insuperable barrier to acceptance.

Newspapers’ printing presses may prove to be a potentially greater barrier, however--at least in the short term. To shift into electronic publishing, newspapers would have to write off a huge amount spent on printing presses recently upgraded for better color reproduction and other features.

“But the real value a newspaper has is not its presses and distribution system but its people--news and advertising staffs and the structure and supporting people,” says Fidler of Knight Ridder.

If newspaper executives recognize that and act accordingly, Fidler and others say, the transition to the electronic newspaper can be both exciting and profitable. If they cling to tradition, they could become the dinosaurs of the information age.

Joyce Sherwood of The Times’ editorial library assisted with the research for these articles.

Advertising in Newspapers

Money spent to advertise in news papers increased year-by-year throughout the ‘80s, thought the amounts began to level off in the latter part of the decade. But in 1990, the amount spent on advertising declined from the previous year. The decrease continued in the first quarter of 1991. The figures below track the year-by-year percentage change in money spent on ads. For example, in 1981, 11.7% more money was spent on advertising than in 1980. 1980: 6.7% 1981: 11.7% 1982: 7.1% 1983: 16.3% 1984: 14.3% 1985: 7.0% 1986: 7.2% 1987: 9.0% 1988*: 6.1% 1989: 3.8% 1990: -0.3% 1991**: -6.97% * 1988 figures not directly compatible with prior years. ** First quarter 1991. Source: Newspaper Advertising Bureau, Inc.