Unrealistic expectations

NEW ORLEANS -- The new media song remained the same at NEXPO: we've got to do it, and stop asking when we're going to make some money.

"It takes the average magazine three to five years to become profitable. We're six months into this," said Peter Winter of Cox Interactive Media. "The biggest mistake I see is unrealistic profit expectations.

"We at Cox are on a five-year plan. We don't expect to make any money till the fourth quarter of the fourth year," said Winter. Cox Interactive was founded in August 1996, Winter said during the "@NEXPO.net" new media session held Sunday, June 22, 1997.

Richard Peterson, director of new ventures for San Diego Union-Tribune, went so far as to chastise the industry for failing to invest in new media as research and development, rather than as a new business expected to start cranking out profits Real Soon Now®.

Peterson interspersed video interviews with the de rigeur PowerPoint slides chock-a-block with factoids such as the newspaper industry's failure to have a single representative in Business Week's last roundup of the top 1000 R&D companies.

"We're just a couple of years in and we're starting to panic about profits," said Tim McGuire of the Star Tribune of Minneapolis in one of Peterson's video interviews. "In the last few years we've seen as much R&D as we've ever had, and you can already feel it starting to wear thin."

In another video interview, Lincoln Millstein of the Boston Globe also expressed some trepidation that the industry's commitment to research and development will last only as long as its fear.

"The thing I worry about is that I think in the next couple of years we're going to see high profile new media companies going to go out of business as their venture capital dries up," said Millstein. "I'm afraid traditional media is going to start to gloat. ..."

Newspapers do have advantages, though, said Winter. While advertisers can now put up their own Web sites -- an easier proposition then publishing their own newspaper -- "Advertisers need a site like they need a UHF TV station," he said. "Without promotion, a Web site can be like a lemonade stand -- you don't see it unless you happen to drive down that street."

Peterson's session was marked by humor, along with the video. "Hi. My name is Rich. I'm a recovering editor."

But Peterson went on to score the industry for its unwillingness to spend money on new media.

"Imagine a cemetery ... casualties of the post-industrial age," he said. The cemetery would contain a "Slide rule, the IBM Selectric ... and a grand marble edifice: The Tomb of the Unknown newspaper. The epitaph: We missed our last big chance."

-- Christopher J. Feola

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

Last updated: 26 June 1997.

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