A more realistic business model

The hope that advertising would pay for web presence isn't coming to fruition for many

media companies, who are now turning to paid content to turn around their loss-making websites. Aleksander Nowacki reports.

When Rzeczpospolita became the first daily newspaper in the country to start an on-line version in 1993, experts predicted a great future for it. Ten years on and the great commercial success of Rzeczpospolita OnLine has not materialized, although finally steps are being taken to turn things round.

On the 10th anniversary of the website launch, access to the newspaper's archive, containing all articles published over the decade, became a paid service. With access granted by sending an SMS text message, it has brought Rzeczpospolita OnLine back into favor with market observers.

"Linking the Internet and mobile telephony is all the rage right now," said Zbigniew Bajka, professor at the Press Research Center. "The introduction of this service is a sign that the market is slowly approaching maturity."

Market watchers see it as an attempt to regain lost time.

"When Rzeczpospolita OnLine started everyone was very excited," said Artur Gortych, Interactive Advertising Bureau chairman and president of Artegence interactive agency. "They were expected to become market leaders for years to come. But they failed to follow through with their success." Gortych went on to criticize the paper's strategy of presence on the Internet market. The interface of Rzeczpospolita OnLine has not changed for five years, a thing unheard of on the Internet, he said.

"You have to change something every six months," Gortych explained. "The Internet is alive, it follows a different rhythm than a print version." Rzeczpospolita OnLine's decision to introduce the paid archive service is, however, a sign that it is changing its ways.

"The market is bound to develop in the same way as it has in western European countries," said Marek Kopyt, head of Rzeczpospolita OnLine. "The only question is when it will happen."

That, according to Gortych, is still a long way away. While in Germany, the Internet accounts for 2 percent of the advertising market, and a large proportion of it benefits news sites, the domestic market is nowhere near that stage of development.

Although it is a dynamically growing market with a 37-percent increase in value last year, Internet advertising sales were worth just zł. 33 million, and most of that sum went to the largest portals, such as Onet.pl or Wirtualna Polska. Only a tiny piece of the advertising cake fell to Internet versions of print media.

The most successful in this respect is Gazeta Wyborcza, but it is not regarded as a direct competitor by Marek Kopyt.

"Ever since Gazeta Wyborcza began its unsuccessful attempt to compete with the leading portals, we have been without any real competition," he said.

His evaluation of the largest daily's portal is, however, not shared by experts. Although last year's revenue from the portal was just zł. 2 million, market watchers are certain that it has a lot of development potential.

Bajka sees the portal as an obvious focus of development for Agora.

"With the amount of content the holding generates, the portal can go a long way," he said. "The Internet is the largest shopping mall in the world. Sales of information are on the increase."

Jacek Kołtonik, Web sales director at media house CR Media says that paid content won't always work.

"Many sites have looked at the possibility of introducing paid content and have been frustrated by the users' unwillingness to pay," he said. "I should think that advertising is a more promising source of revenue in the short-to medium-term." His words seem to be borne out by the case of Agora, which derives 85 percent of its Internet revenues from ad sales.

But Gortych pointed out that, while long commercial breaks have become an accepted part of watching TV, much shorter ads on the Internet are regarded as an irritant. He also sees an increasing awareness that content has to be paid for.

Gazeta Wyborcza is not oblivious to this, as "Piłkarzyki," a fantasy football league competition accessible via the Internet and cell phones, shows. It has a rival in a similar SuperExpress competition, which could be accessed via the Internet for the first time this year.

It is possible that significant changes on the market of on-line versions of daily newspapers are in the works.

German publisher Axel Springer has announced plans to start a tabloid newspaper, positioned halfway between Gazeta Wyborcza and SuperExpress. Market watchers predict that the new publication may well be targeted to young readers.

"My students are more comfortable reading news online than in print," Bajka emphasized, pointing to his own experience as a journalism teacher. "The news is up-to-date, in an interactive form. These features situate it in the mainstream of the youth culture." It is therefore natural that, if Axel Springer decides to target its publication toward younger readers, the online version will be crucial to its success.

"A new player will have to fight for a market position," Gortych said. "The Internet is certainly a tool to do that." It is possible that Axel Springer will provide a further boost to the market. But that is still a thing of the future.