USA TODAY Online
 

The Internet can trace its origins back to the late 1960s, when the military developed a system that allowed computers to work together in a network.  It was soon discovered that this system could be of commercial use, and what we now know as the World Wide Web was conceived in 1989 as a direct result of this.  Four years later, the number of Internet users was growing at a rate of 341,634% annually.  We have now entered a new millennium, yet no one knows what impact the virtual world will have on society and economy in general.  Still, most companies started realizing by the mid-90s that the Web was here to stay, and therefore decided to join in on the ride.  USA Today was one of these companies, and the newspaper launched USA TODAY Online in April 1995.  This paper will discuss the company’s objectives, and also present a short situation analysis of USA TODAY as of 1997, two years after its initial launch.  The market at the time will be analyzed, and this knowledge will be included with other relevant information to describe some alternatives USA TODAY could have chosen for its online site.  In conclusion, a recommended strategy will be presented on the basis of what the Internet’s prospects looked like in 1997.
 

Newspapers are operating in a very mature and declining market.  There are generally few growth opportunities, yet USA TODAY managed to find a successful niche when entering the market in 1982.  USA TODAY is owned by Gannett Co. Inc, America’s largest newspaper group in terms of circulation.  The idea behind creating a national newspaper was to serve the needs previously met by weekly newsmagazines and local newspapers.  Most other countries have had general-info daily national newspapers for many years, and it may seem strange that no one in the United States had thought of the concept before 1982.  Rather than being optimistic about the business prospects, however, the market responded negatively to the Gannett’s risky plans.  The critiques appeared to be right the first few years of operation, as USA TODAY consistently generated red numbers.  Yet, proving its critics wrong, the newspaper became profitable already in 1993.  During the last decade, USA TODAY was the only major newspaper to experience a growth in circulation.  In 1996, only fourteen years after its launch, Gannett’s once doubted start-up became the most widely read newspaper in the United States with a daily audience of 4.8 million.  The objective of establishing a leading national daily newspaper had finally been achieved.  This accomplishment obviously inspired the newspaper to create a dominant presence also on the World Wide Web.
 

Since the web site’s release in 1995, USA TODAY seems to have tried almost every workable model for online publishing.  The newspaper was relatively quick at realizing that a presence on the Internet would be beneficial, yet discovering how to make the online business profitable seemed a bigger challenge.  In defense of USA TODAY, it should be emphasized that any business plan targeting the Internet is based on a certain level of insecurity.  In many ways this parallels the experience encountered with the introduction of television and radio.  There are for example few sources to draw knowledge from, and entering the market consequently becomes virtually impossible if one is not willing to use a “try and fail”-strategy.  Similarly, it did not initially seem clear how one could make a profit on the web.  The latter caused USA TODAY to try several different models, sometimes even at the same time.  By early 1996, it seemed clear to USA TODAY that an advertisement-based revenue service was preferable to a subscription-based one.  A brief look at the Internet as of 1997 easily explains this reasoning.
 

 Before the World Wide Web became the dominant protocol for gaining access to electronic content, access to the Internet was provided by online publishing companies, of which AOL today is the best known.  Initially, USA TODAY’s objective was to compete in this market.  In early 1995, though, Netscape started distributing its browser for free, thereby making browsing available to everyone and transforming the Internet forever.  While USA TODAY before this development could enter the market with a business model based on subscription fees, the competition would now be for web surfers without affiliation to any online publishing company.  Instead of offering Internet access, USA TODAY online therefore had to focus merely on providing content, this obviously in addition to generating profit from its web site.  Luckily for the newspaper, though, its main competitors were not better positioned in the market to face the challenges. 
 

USA TODAY chose four companies to watch closely, namely CNN Interactive, ESPNet Sportszone, MSNBC.com and Yahoo!.  The first is evidently the web division of global news provider CNN, while ESPNet Sportszone is a joint venture between the cable channel ESPN and Starwave Corporation.  MSNBC.com is associated with the TV-channel that bears the same name, and is the combined venture of television broadcaster NBC and Microsoft Corporation.  Yahoo! is principally a search engine, yet also attempts to offer almost any service that should be requested online.  When focusing on USA TODAY’s online competition, it is striking how both NBC and ESPN have aligned themselves with various technology companies.  Starwave is a producer of interactive content and web sites, while Microsoft is the world’s leading producer of computer software.  Yahoo! appears to be least involved in direct competition with USA TODAY, while CNNI on the other hand tries to offer services very similar to that of newspapers.  Old economy companies seldom have sufficient knowledge to do business online, a fact that made NBC and ESPN find online partners.  The merging of two cultures that took place in the creation of MSNBC.com, in which journalists for instance had to learn that a customer is called a viewer in the world of online business, clearly illustrates some problems an old economy firm can encounter when going online.  Drawing on this knowledge, forming a partnership with a new economy firm seems to be a logical move for USA TODAY as well.
 

In such a scenario, Yahoo! stands out as the obvious partner, this as the two companies are well positioned to compliment each other’s weaknesses.  Yahoo’s business plan is to create target guides for geographic and demographic audiences, something to which USA TODAY is well positioned to contribute content.  This would on one hand benefit USA TODAY in terms of increased traffic, while Yahoo! on its side would get high quality content for its web site.  The newspaper would, additionally, through a partnership be able to integrate other interactive Yahoo! community services in its online site, including features such as live chats and a search engine. 
 

An alternative to a merger with Yahoo! is a partnership with EPSNet.com.  This could, however, prove difficult.  Baseball and sports were originally believed two be the major strengths of USA TODAY’s online version, and also a competitive advantage versus CNN Interactive.  Still, ESPNet’s and USA TODAY’s web services seem to clash only on this specific area, a fact that should make a merger of the two services possible.  An issue, though, is how important the respective brand names are to the companies, and also if the ESPNet visitors are interested in possible features from USA TODAY.  Visitors to USA TODAY’s web site are likely to be part of a customer segment interested in general news, while the ESPNet’s users prefer a dedicated sport site.  The issue is if a merger has potential to strengthen their appeal.  USA TODAY’s objective is to remain a leading general-interest publisher online, but just this lack of customer targeting might prove another significant challenge for newspaper in the long-term.
 

As so much information is readily available on the Internet, it is relatively easy for users to find web sites dedicated to their specific area of interest.  One of the key characteristics of the World Wide Web is the opportunity it gives to collect information from a wide range of sources, a feature that has forced web sites to become more and more interactive.  By not only targeting specific customer targets, but also every single individual visiting a web site, companies enable themselves to provide their visitors with the best service possible.  This can be done either by a combination of scripts and cookies, or by implementing a free subscription service.  The New York Times has done the latter, thereby forcing visitors to register online for access to the site.  Doing so provides the newspaper with detailed information on every single user, yet can also influence potential readers to select a competing service.  Naturally, understanding every single individual’s preferences, The New York Times can easily target each individual visitor with news and advertisements.  A final alternative would be a paid subscription service, but USA TODAY seems to have ruled this out already.  The overwhelming amount of free content that is available online does, in addition the newspaper’s previous experiences with the business model, clearly support the decision of not again to implement a paid subscription service.
 

USA TODAY does not own most of its content, a fact that might make forming a partnership problematic.  As Associated Press content can be provided by anyone on the Internet, USA TODAY’s lack of uniqueness can give it a competitive disadvantage.  Competitors as The New York Times, which content to a large extent is original, can in other words position themselves as more attractive partners.  Allegra Young, USA TODAY’s Marketing Manager, comments: “Our most valuable resource is the USA TODAY brand.”  While name recognition definitively plays a factor online, it also seems clear that customer loyalty is lower on the web than it is in the real world.  Additionally, Allegra points out the fact that only nine percent of the newspaper’s visitors had read the printed version the day before.  Considering these figures, USA TODAY might want to reconsider its position of not wanting to try out what it deems to be “evolutionary paths.”  The company does in other words have to decide if it merely wants to be an online edition of the printed paper, or if it is willing to adapt the web site’s concept to the needs of the Internet.  The latter alternative clearly appears to be the better of the two.

    USA TODAY is regarded as America’s leading national newspaper, and is strengthened by a nation-wide distribution net.  This, however, is not a competitive advantage on the Internet.  Anyone with access to for instance Reuters articles can for example easily provide a nation-wide news service online.  As USA TODAY’s real world competitive advantage looses much of its power on the Internet, USA TODAY should attempt to build up its web site around the content-based advantages it has in comparison to for instance CNNI.  These are specifically college sports, baseball, weather, personal finance, technology and local (State) news.  USA TODAY does, in other words, have to realize that people are more likely to visit and revisit USA TODAY’s online web site if the content offered is unique.  Brand name alone is unlikely to secure longevity on the net, nor will the company prosper online if it is unwilling to learn the laws of the new economy.
 

Finally though, one can question how important the online market will become to a company as USA TODAY.  Broadcasters like CNN are accustomed to real-time coverage, which is increasingly becoming a must for spoiled Internet users.  Running a newspaper is a different business from running a TV-station, though, and in many ways, TV-stations seem better positioned than newspapers when it comes to offering live and updated coverage on the Internet. USA TODAY does, in addition, appear to have been less aggressive than for example CNNI and MSNBC.com in terms of hiring; this even though the mentioned competitors have the added advantage of the Internet knowledge they have attained through mergers.  Unless USA TODAY reaches the conclusion that running an online web site is very different from that of producing a newspaper, or unless a potential information technology partner convinces the company to do so, it seems very unlikely that USA TODAY On-Line will become anything but a niche for the company in terms of revenue. 
 

The latter conclusion must be interpreted with some caution.  There is now, as in 1997, little knowledge on the effectiveness of Internet advertisements. Still, while USA TODAY had a monthly earning of around 540 000 dollars on Internet advertisements in the fiscal year ending in April 1997, this proves insignificant compared to the total advertisement expenditures in the United States.  In 1996, a total of 4,4 billion dollars was spent on newspaper advertisements alone, consequently making online revenue opportunities seem very limited in a relative perspective.  Even though the number of online readers might eventually surpass that of the printed version, a visitor online is unlikely to become nearly as profitable as a customer who actually buys the newspaper.  Additionally, USA TODAY should also be able to find growth opportunities for its printed edition.  The company will not benefit from losing focus on the printed newspaper, which is likely to remain USA TODAY’s core product.  Rather, the newspaper should think of its online site as a compliment to the printed version.
 

In conclusion, it should again be emphasized that the future of the Internet is very uncertain.  On one hand, the World Wide Web is experiencing an extreme growth, and the full range of opportunities available can for example not be completely explored before a larger part of the world’s population obtains access to the Internet.  Yet, even though the Internet may revolutionize certain businesses, USA TODAY’s own numbers show that services offered online are not in direct competition with traditional newspapers.  Until more information on the Internet’s impact on the newspaper market is obtained, however, USA TODAY should attempt to become even more aggressive taking advantage of the new medium.  Hopefully, this will lead the newspaper to discover that online publishing represents a very different business from that of newspaper publishing.  With a bit of luck, this might ultimately convince USA TODAY to search for an online partner that can teach a trick or two on how to become a success on the World Wide Web.

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