Saturday, May 16, 2009

A 27-Year Head Start. What Happened?

The Internet is nothing if not full of surprises. You just never know what's going to pop-up in a search engine. For example, the following post from a now inactive blog titled "West and Clear" in Fort Worth, Texas.

Co-authored by five individuals who focused on telling the story of "their piece of the Trinity River" (the river that runs through Fort Worth), one post by Steve Smith centered on StarText. It included a short video clip about an early online effort by a San Francisco newspaper.

Wiht Steve's permission I have excerpted his entry below, including the video clip which I think you'll find entertaining.

Feb. 2, 2009

"This nostalgic view of the Birth of the Death of Newspapers in San Francisco in 1981 has been making the rounds on the Internet over the past few days ... But what some people may not remember is that the Star-Telegram was actually at the forefront of online newspapers, too. The S-T launched its own effort, dubbed StarText, on May 3, 1982.

"Now look at that — does that look like something that could destroy your business model? Six months after launch, the service only had 50 customers because many computers then on the market could not connect to StarText. Ultimately, it managed to build a subscriber base of 3,000. The Startlegram pulled the plug on StarText in 1997.

"You’d think that with a 27-year head start, the Star-Telegram would have figured out the whole online thing. And that’s why many people have about as much sympathy for newspapers as they do the auto industry — both knew what the future held, but they didn’t do anything to stop it. So here’s to remembering StarText, and what might have been for the Star-Telegram."

--Steve Smith

Steve, you have certainly asked the $64,000 Question. Although in reality, the answer deserves quite a few more zeros. And just for the record, at its height, StarText was close to 5,000 subscribers. For two years in a row in the mid-Eighties, StarText generated a profit, and a six-figure profit at that. To the best of our knowledge, achieving profitability was another industry first as it relates to a local online business.

So what did happen? How did StarText race ahead of much bigger and better-financed competition only to become spectators, like the rest of our industry, to the ascent of EBay, Craigslist, Yahoo and Google? It's a question that haunts all of us who hoped t0 lead our print brethren into a digital future.

Looking back, there were multiple reasons we lost that early advantage. In my opinion, they include:

-- The Size of the Business. As noted, at its height StarText had something close to 5,000 subscribers paying $10 a month for service. We got to profitability in less than four years. We even managed to sell the software to the St Louis Post-Dispatch (something for another topic). But in truth, growth had gotten much harder. It was obvious getting the next 5,000 would require a substanially larger investment in marketing and resources. At the time, newspaper margins were north of 25%; subscribers numbered in the hundreds of thousands; profits in the millions. You're the publisher. The Internet is not here yet. No other local online service has emerged, much yet threatened. Are you going to throw a lot more money into the StarText budget?

-- The Nature of the Business. You frequently hear the phrase, "core competency." That means doing what you do best. Newspapers are great at news. They are great at circulating news. They are great at selling news. They are not as great building and managing technology-intensive businesses, like EBay and Google. It's just not our thing. A company like Yahoo employs 5,000 engineers. A large newspaper may have a fraction of that number in an IT Dept. strained to keep 20-year-old legacy systems working. Success on the Internet is a high-stakes, winner-take-all, no holds barred affair. Not for the timid or those steeped in two hundreds of years of "this is the way we've always done it."

-- The Pace of the Business. We all know about "dog years." Now we hear about change measured in "Internet years." As an editor, I frequently participated and helped manage changes in the look, feel and content of the newspaper. It was a lengthy and convoluted process. Typically it started with a brainstorming session to develop ideas. Those ideas eventually turned into prototypes. The prototypes went through a rigorous reveiw process up and down the chain of command, changing multiple times along the way. At some point the revised prototypes were presented to focus groups. The results were analyzed and more changes made. More review process. Some day it might actually get to the launch phase. I have seen this take anywhere from six months to two years. The combined amount of angst and effort over a change in type font, launching a new section, altering the white space in the masthead, was immense. And more often than not, readers never notice what changed. Try using that as a model for the Internet, where mighty Google labels everything "Beta." No wonder we have tire tracks on our backs when it comes to online.

-- The Willingness to Experiment -- and Fail. Tom Steinert-Threlkeld, the originator of StarText, heard it first hand from his boss in NY: "We don't experiment." We plowed ahead anyway. But newspapers are not known for their R&D departments. I can't verify its accuracy, but I did read somewhere that as an industry (at least in the Eighties) newspapers "spend less than one half of one percent on R&D." Makers of video games plow back 20% and more. No one likes to fail. But "new media" is just that -- "new." Everything we try isn't going to succeed. Don't forget "Share-A-Plane" from my earlier post. The mantra at Google is it's okay to fail, just "fail quickly." Generally failure has not been recognized as a good career path in newspapers.

Other reasons StarText faded? A round of management changes at the Star-Telegram in the late Eighties and early Nineties; our slowness in recognizing the opportunity that become the World Wide Web. Like the gradual demise of newspapers themselves over the last decade, it wasn't like the single fireball that killed the dinosaurs but the proverbial "death from a thousand cuts."

But we have to note for the record the final chapters are yet to be written. StarText may be relegated to history but the fight goes on. Newspapers are down but not out. They are investing in online and getting return from those investments. They are even innovating despite the budget challenges. And yes, I'm still in the fight and proud to be with my fellow troops on the front lines of change.