Mainstream magazines are launching Internet sites but advertisers have been slow to join them.

Vogue, Private Eye, The New Scientist and a host of other publications have opted for a presence on the Internet. There are currently 75 online titles in the UK, the largest number in Europe.

Datamonitor, the market research organisation, predicts that the European online news and magazine businesses will grow by 150 per cent a year until the year 2000.

Clearly, electronic publishing has changed from futuristic fantasy into serious business.

The publishing house Condé Nast is reputed to have spent over 500,000 on putting four of its most prestigious titles on the Internet – Vogue, Tatler, World of Interiors and GQ.

Jacquiline Euwe, commercial director at Condé Nast, believes the Internet has huge potential for the company.

“It’s a real business opportunity for us,” she says. “It’s not simply a matter of prestige, but an ideal opportunity to extend our brand.”

Internet surfers are a marketing dream. They tend to be young – almost two-thirds are aged under 35 – upmarket – almost 80 per cent are ABC1 – and relatively wealthy, in that 55 per cent of UK Web users earn over 25,000 and 29 per cent over 40,000, according to market research company GVU.

But for all the buoyant predictions, there are serious doubts about whether publishers will benefit to any great extent from Internet-related revenue.

Establishing a magazine site on the Internet can cost tens of thousands of pounds. For publishers, any return on this investment would have to be viewed in the long term.

Mark Dickinson, managing director of multimedia consultant Index Finger, confirms this. “Electronic publishing is going to be a slow-burn where profits will not be made overnight,” he says.

The fact that publishers are hesitating to go online would seem to endorse his view.

According to Web Track Sources, revenue generated from advertising in the US last year was about 25m to 30m. Of this, two-thirds went to the top ten largest sites.

Major advertisers such as AT&T have been placing advertisements only on sites that have millions of “visitors” every month, excluding virtually all small sites.

The general consensus among media analysts is that for audience levels, and consequently advertising revenue, to increase, magazine sites have to become more adventurous in their use of content and technology.

Craig Waller, managing director of Premier On Line, a division of contract publisher Premier Magazines, believes the Internet has been completely misunderstood by most companies.

“It is not merely an advertising medium, nor is it just an electronic version of the printed medium,” he says. “The only thing that will entice people to visit sites is well-crafted and tailored editorial.”

This point is reinforced by a recent NOP survey, which confirmed that 43 per cent of Internet users were looking for good information, with 37 per cent stressing the importance of ease of use.

Elaborate graphics used by many online magazines, which take two or three minutes to download, are clearly deterring Internet users.

Ajaz Ahmed, managing partner at media communications company AKQA, believes a whole section of advertisers may be losing out.

“While advertisers continue to be cautious, the best sites are building up traffic with thousands of potential customers,” he says.

Advertising on the Web has distinct advantages over traditional media. It is more global and can be bought on the basis of how many times a page is accessed by a viewer. Additionally, with the right software, it is possible to obtain valuable demographic information about viewers.

But far from providing compelling content and technological innovation, the medium is marked by tremendous mimicry, with many publishers simply duplicating their print versions on the Internet.

Several of them appear to be experimenting, by trial and error in many instances.

“What has to be appreciated is that we are witnessing a communications revolution and the Internet is at the very early stages of its development,” says Dickinson at Index Finger. “But it will improve with time.”

But publishers are beginning to appreciate that for their sites to be viewed with credibility, they have to complement, rather than copy, their print titles.

Esquire magazine recently launched a magazine site called Designer City. As well as providing features on male fashion, it has a stockists directory, covering 700 different labels, and a shopping mall, where browsers can purchase items from stores like Browns and Ted Baker.

Wired UK has adopted this ethos. Rather than duplicate the hugely successful Wired magazine, it offers an online archive service and a chat board, providing interactive feedback on articles.

The Mirror Group, publisher of the daily sports and horse racing paper The Sporting Life, has taken the idea a step further. It has recently published a CD-Rom of The Sporting Life form book, which is a database containing more than 12.5 million individual records. Users can look up the past performance of any horse, jockey or trainer currently active in UK horse racing.

But it’s not just a CD-Rom, as the software allows the data to be updated daily on the Internet. The package is being marketed worldwide to the racing fraternity at more than 1,000 a copy.

The Mirror has other similar databases it intends to exploit and the next logical step will be to start taking online bets, with the Mirror Group skimming off a percentage of takings.

“In the UK, there isn’t the audience to produce a general magazine. What is required is a title that will give added value to the printed medium,” says Tom Loosemore, Internet editor of Wired UK.

Business & Technology On-Line, which started in July, has become the first pay-per-view Internet service in the UK.

Despite having a target market of only 50,000 IT professionals and journalists in the UK, it has already been able to attract 4,000 subscribers, who pay up to 40 per hour to use the service.

The Wall Street Journal Interactive Edition is also set to become an electronic publishing success. From the beginning of September, subscribers will receive up-to-the-minute news, analysis and financial information. With a registered readership of 550,000, this will be a defining moment in the development of the publication.

But far from being dominated by large publishers, the Internet is set to become a breeding ground for a new wave of media players. Specialists will be able to start a magazine site at a fraction of the price of the print equivalent.

Richard Woods, communications officer at Unnett Pippex, which is an Internet service provider, agrees, and believes the big publishers will be severely tested by this new competition.

“Everyone is expecting the big publishers to hold sway on the Internet, but new skills will be required and I’m predicting they won’t enjoy their current prominence,” he says.

His prediction is unfolding with the launch of several magazine sites owned by fmcg manufacturers.

Mars Confectionery has produced a youth magazine site called SnickersMegabite and Allied Domecq has financed a chat board for the gay community called Planet Patrol. Both have proved successful.

“Traditionally Mars has been a huge advertiser in magazines, but it’s now acting as a media owner,” says Roger Green, publishing director for Internet Magazine. “One day, magazine publishers may be paying Mars to advertise on its sites.”

With few media brands attracting large audiences to their sites, and banners proving ineffective on the Web, advertising brands feel they can compete with traditional publishers.

But those companies that are unable to produce the necessary content for sites are opting for joint sponsorship deals. These sites allow the sponsor to provide interactive content.

The Guardian, for example, received several hundred thousand pounds from Vauxhall for its Eurosoccer site, which was timed to coincide with the Euro 96 championship. A cross between sponsorship and contract publishing, this is a clear indication of how this new medium is overturning traditional business relationships.

But Dickinson insists that fmcg sites will be unable to keep up with the long-term investment of large publishers like Condé Nast and News International.

“Even with the reduced costs of producing a magazine or newspaper on the Internet, it’s going to be difficult to compete,” he says.

“The major players have the staff and resources to provide enormous amounts of content, which is going to drive the Internet. It doesn’t matter if it comes from print, TV or radio, because it can be adapted. Ultimately, the different forms of media will blur into one.”

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