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Q&A: Neil Budde, Former WSJ.com Publisher

Neil Budde helped launch one of the more successful, and among the first of the paid-only online content sites, The Wall Street Journal Interactive. Today, the site is thriving and inching toward profitability with over 660,000 paying customers.

But in the meantime, its lack of profitability is often cited in the ongoing free vs. paid debate over whether to slide more content behind a firewall instead of relying on advertising. After all, the NYTimes.com site went the registration route, stayed free, and is now turning a profit for the parent publisher New York Times Company.

It's now somebody else's debate too. Last fall, he left his position as publisher of the WSJ.com (and after 15 years with parent company Dow Jones) and later formed The Neil Budde Group, a consultancy that works with publishers and technology companies to help them "realign their online and offline media."

He recently chatted with internetnews.com about what that means, where and how some companies get in trouble regarding content management, and what works.

Q: What are some examples of problems businesses run into when they try to realign offline and online media and where do you come in?

It covers a range of things, but mostly it falls into a couple of different camps: the fairly traditional publishers that are rebuilding some of their publishing systems, and finding they have a lot of technology to pick from, and that it's not exactly an off-the-shelf product they can use for software. They have to find out how to choose technology that fits their needs.

Some clients may be trying to sell products that help implement paid content models, but the (media) company may not be so sure about what to do. So we're talking to a range of companies with slightly different positions of interest, helping some refine their products in order to meet the needs of media companies, or evaluate the technology. That's a big chunk of what I did at the WSJ.com, evaluating emerging technology and what we have to pay attention to.

A lot more companies are at some stage of moving towards a paid content model, others are sticking with a mixed model, but all of them are trying to get some help in sorting through strategic issues, and tying that in with what they're doing online. Many are approached by technology companies that have products that could be used by media companies such as billing systems that tie into a back end.

Q: Some traditional publishing companies' sales staff just don't trust their online cousins, especially newspapers that are threatened by the migration of classifieds online. How do you help them get along?

Many of them are still sorting through the whole online job listings issue. The newspapers are still grappling with the fact that they get a nice revenue stream from selling print classified job ads, but at the same time are figuring out how to build an online arm and offer similar elements (to advertisers). They have to build it in such a way, that they gain new customers, without doing too much damage to what's in print. But at the same time, they have to recognize that over long haul that print revenue stream is going to get smaller.

It's a little crazy to say, but if you don't look at the possibility of cannibalization that occurs between online and offline properties' ad revenues, someone will do it for you. That's why it's important to have people sitting in the same spot, looking at both sides, rather than having two sides, both pushing hard in one or another direction.

Q: But the print and online side of the house are still fighting over how to position advertisers online and off, right?

It's often more of a logistical issue. Many agencies just handled print and then there were ones that offered integrated (online/offline) marketing. Some companies just wanted one point of contact. We heard a lot of that, but we also heard the opposite when they wanted to do something different besides print, or a typical banner. You really need a team approach these days.

I think media companies are warming up to that idea, to make more of an effort to tie those sales efforts together. In the early days (of the Web) we had to make sure to establish the value of the package, so that it didn't look like the online part was just being tossed in. To some extent, publishers may have to revisit package deals. The one great thing of buying print and online is that you are in many ways getting a different audience, or a reach in a different way that you see in print. But more and more we see more advertisers thinking of how to extend a common message. And online, it's still all about making better offers and finding ways to target advertising within context of the content.

Q: So contextual advertising is what everyone is talking about? (Besides when the online ad recession is going to be over?)

Well, they're talking about thinking through contextual ads, and what are the most effective ways to place advertising on a page.

If you look at Google and Overture, they sold contextual, targeted ads because they know someone is looking for that information. If you look at a lot of news-oriented search areas, everything, the ads, are in the same template as the article. I think there ought to be other things the (news) sites can do with that example, rather than just placing ads everywhere they can on a site with no thought on how they fit together, then wondering why no one is clicking on them.

Other trends people are talking about? It will be interesting to see how the half-screen ads will work. It's interesting in that they take a lot of navigation away (from the reader). It is engaging you along with an article you may be reading?

I've been impressed with what a lot of news sites are doing with Flash, in how they use images and audio in advertising and in presenting the content. People are using the medium more effectively, beyond streaming, say, television spots. The GE ads come to mind as an example, the ones that let you actually draw on the ad. It's engaging, it draws you in to spend time with it by actually doodling. But rich media usage still has a long way to go from an advertising standpoint.

Q: What's your take on the blogging phenomena? In terms of media distribution system, isn't it a movement that content sites need to watch carefully -- or be a part of the 'blogosphere' themselves?

If you look at what people said about Blogs, it sounds like what they said about the Web sites in general a few years back. They are going to disintermediate the media, put the power in the hands of everybody, that big media names won't matter that much anymore. The difference between saying that then and now, is that it's a lot easier to be the publisher everyone said they would be.

But I don't know if blogs have fundamentally changed the dynamics of the media business. There are great tools available that have taken personal Web pages into a new area, but it's not exactly a new phenomenon. It's just that some people are doing it quite well, and becoming experts at looking at what's going on in the world. What's amusing to me, is that most of the Weblogs I use are for business purposes. I end up signing up for their e-mail as well, so now I'm reading an e-mail newsletter instead of a blog.

I think the blogging movement is important and interesting. But I also think it's not necessarily going to change the world the way we think. In some ways, it's actually going back to the traditional notion of using an intermediary who's helping you sort out what you need to know without being overwhelmed with what's on the Web.

Q: What are your favorite sites? What are you paying for online?

I like (RealNetworks') RealOne. I pay for that service for the PGA coverage. But I'm paying more for services now than content, such as Go To My PC, which is good for people with multiple computers in use.

Q: What's your advice for companies trying to figure out to manage and what to charge for content?

You've got to start with a focus on customers, who they are, and find out what they want. It sounds like a cliché, but it's still true. In some ways working online puts companies even closer to their customers, which, for some can be tough. They can't avoid it, but some companies will refuse to respond to email from customers, and wonder instead about why they are writing. One of the things online helped....how to take that feedback, be more attentive, and shape products based on some of that. So I would start there.

It sounds simple in many ways, but it can be a fairly difficult thing, not so much to listen, but to understand what they want. You have to figure out what that means. From an online perspective, the industry is getting better at that, learning as much as they can from data, usage, better analysis of a registration (process) and understanding the flows and uses of the site. I think a lot of that will shape what they can charge and what they should charge.

If you don't have that in-depth knowledge of what the audience is using, it's hard to make decisions about what you want to do for them.

Analytics are becoming even more important than ever. More companies are providing those tools and providing more options on how to use them, and targeting (online) advertising based on that.

Finally, don't stop trying to innovate. The (online media) industry has a long way to go before we sort through all the problems.