Being an Internet service provider

Newspapers that really want a stake in the 'Net can provide the on-ramp for its customers as an Internet Service Provider (ISP). Small communities in particular may have a short-term revenue opportunity, while the "big guys skim the cream" of large cities, said on-line services manager Jon Donley of the San Antonio (Texas) Express-News.

In San Antonio's case, the opportunity period has proven longer and more profitable than expected. When looking at an on-line product, planners found that San Antonio didn't have enough modem access to meet customer demand. That meant lots of busy signals and frustration, and ultimately limited access to the newspaper's offerings on-line.

People who want to be on the Internet are your customers now, Donley said, and the Express-News wanted keep theirs in-house by claiming the information distribution franchise. They used the daily marketing clout of the newspaper to attract users and then tied the to the Express-News brand by distributing access software that pointed to its site as a default.

Although funding the new media department was the first goal of its ISP effort, the newspaper has embraced a new mission statement that "tossed out any wording having to do with newspaper," and charged the organization to be an information provider in any medium.

The basic setup was a SunSparc20, serving as both web and ISP server, although any high-end UNIX, Mac, NT or PC box will serve. Other requirements are a modem bank, routers to pull traffic from server to the 'Net, an in-house LAN connection, incoming lines for each modem, a phone switcher and TI connection to the 'Net. Software is needed for the 'Web server, server utilities, and customer management. Netscape Commerce Server does the server job. For customer management, San Antonio started with freeware available on the 'Net, "and we got what we paid for," so a search for replacement is underway.

Donley said the benefits of being an ISP are largely keeping control. You get ownership and control of the delivery system, direct access to user information, and a franchise in the new medium. Having the newspaper as a daily outreach tool and branding the logon software keeps customers in the family. And "we do make money on this," he said, enough to justify a new $250,000 marketing campaign and company expansion.

Difficulties are the price of ownership: You get the security headaches, the cost of distributing client software, the burn of keeping up with the technology race and the burden of customer support. San Antonio hired a system administrator to run the equipment and local bulletin-board operator to run the help desk, with 17 additional staffers altogether. A good help desk is essential, and better service has been a market advantage for the ISP, now called ENConnect, Donley said.

Ultimately the market opportunity determines whether a newspaper should be an ISP. With existing assets, like an MIS staff, a marketing tool, a ready-made customer base and network components, the newspaper can fill the gap in areas underserved by heavy-hitters like America Online, the telcos and Microsoft, Donley contends.

A production of The Cole Group, Copyright (c) 1997, All Rights Reserved.

Last updated: 25 June 1997.

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