Why consider videotex? - column

Folio: The Magazine for Magazine Management, April, 1984 by Bob Birnbaum

Why consider videotex? The controversy continues over whether videotex (which allows two-way interaction between sender and viewer) represents a threat or an opportunity to print publishing. The following interview, conducted in December 1983, represents an effort to supply hard information based on the hands-on, working experience of a print publishing house. Richard Cross is an associate director of Consumers Union, publisher of Consumer Reports, which recently introduced a Videotex service.

BB: Why should a publisher of a consumer or trade magazine consider the potential of videotex at this time?

RC: Few, if any, publishers have made profits as videotex information providers. So no consumer or trade magazine publisher could be faulted for not being an active videotex information provider. But over the next 12 months, real revenue-producing opportunities will occur as videotex becomes available to the public. Aggressive publishers will not want to miss the competitive advantages of being early participants in this potentially fast-growing industry.

Knight-Ridder's Viewtron service is now operational, and Keycom and Times-Mirror will be going commercial this spring. Dow Jones' ASCII-based News Retrieval Service is growing at a very fast rate and is expanding its service to include information and services for consumers. Chemical Bank's PRONTO system, which will include home shopping and information services along with home banking, is now being launched.

The growth of ASCII-based systems like PRONTO and Dow Jones News Retrieval Service may be fueled by sales of home computers--and consumers' desires to have their computers do something useful. If so, system operators will be looking for and paying for information and services that attract customers and sell advertising. At the very least, publishers who have information or services suitable for the medium should be prepared to take advantage of income and profit opportunities as they emerge.

BB: Videotex offers "information on demand" to the subscriber; magazine publishing generally does not. How would this distinction impact on magazine operations and economics in those instances when a publishing house is engaged in both types of publishing?

RC: Providing "information on demand" should be approached as a new publishing opportunity. It is not simply the repackaging of existing information. It's not print and it's not video. Creating a quality videotex project requires lots of experimentation with structure, format and writing style. Publishers will have to commit resources for the experimentation necessary to videotex product development.

A publisher who is committed to making the best use of videotex--providing timely, up-to-date information--will find his information gathering or information generating operations in need of change if they're currently geared to weekly, biweekly or monthly publication schedules. Required operational changes can be major, as they are for Consumer Reports, where products are tested in batches and where product information is collected on an as-needed basis for reports in our magazine and not on a continuous assembly-line basis more suitable for the instant updating capabilities of videotex.

Because it provides instant publication capability, videotex may be an ideal solution to the inadequacies of print publishing. Publishers of directories, lists, schedules, financial data or of any information that changes frequently, for example, will have the fewest operational problems and should welcome electronic distribution as a release from the limitations of print publication.

The economics of videotex for most publishers ("information providers," in industry jargon) are fairly straightforward: revenues from system operators will at least have to cover the cost of producing the videotex product. Information providers will not have the same relationship with advertisers as they have in their print-publishing role. Advertising revenues so critical to the viability of print-publishing role. Advertising revenues so critical to the viability of print-publishing will accrue to the videotex system operator, not to the information provider. Because information providers will be competing with each other for a share of system operator advertiser and subscription revenues, it is important to establish at least a presence in the industry early in the industry's development.

BB: Are there any other ways a publisher can generate revenues as a videotex information provider?

RC: It is possible for an advertiser to "sponsor" information segments, which are then distributed at no cost to system operators in much the same way that broadcast radio features and television shows are syndicated to broadcast outlets. But as far as I know, no such arrangement currently exists. In addition, print-publishers shouldn't overlook using videotex to promote sales of subscriptions, books, merchandise, reprints, back-issues or special services to the videotex user. There's little doubt that system operators will prefer information providers who are able to generate their own revenues as opposed to those who will want a share of videotex system subscriber fees.