A move by Hearst raises new questions about pi.com's future

A Hearst startup, called Skiff, seemed to have the technology to make seattlepi.com a stronger competitor with its old newspaper rival across town. But the Skiff has set sail, sold to Rupert Murdoch's outfit, and things look even more questionable for the local web site.
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The P-I globe is still there along with a legacy website, but the newspaper is gone.

A Hearst startup, called Skiff, seemed to have the technology to make seattlepi.com a stronger competitor with its old newspaper rival across town. But the Skiff has set sail, sold to Rupert Murdoch's outfit, and things look even more questionable for the local web site.

Since it folded the print Post-Intelligencer 15 months ago, Hearst Corp. has kept the P-I brand alive here with its spinoff seattlepi.com website. But the website'ꀙs truncated 17-member reporting staff, and its reliance on pictures of cats and pinups to draw visitors, make it clear it is a work in progress and a holding action for some sort of digital news operation still to come.

Until Monday (June 14), that would have been Skiff, which Hearst described as an "e-reading service platform" when it spun off Skiff as a stand-alone project last December after years of secret development. Hearst officials said Skiff would carry all the New York-based media chain's newspapers and magazines, including the P-I, along with other print material. Readers would be able to subscribe through a company store and would get their news digitally on a magazine-sized, flex-screen e-reader being developed by Hearst.

But an announcement Monday that Rupert Murdoch's News Corp. was buying Skiff — but not the project'ꀙs e-reader — leaves both Skiff'ꀙs future and the future of seattlepi.com unclear. The impact will also be felt by the city'ꀙs last remaining print daily, the Seattle Times.

News Corp. Chairman and Chief Executive Rupert Murdoch has made no secret of his desire to put up pay walls as quickly as possible around his own newspaper properties, which include the Wall Street Journal and New York Post. Along with acquiring Skiff, News Corp. said it had taken a stake in Journalism Online, which plans to handle financial details of pay walls for some 1,500 online publishers.

Journalism Online says it expects to begin rolling out several different payment models for its clients this summer.

"Today's developments underscore News Corporation's ongoing commitment to create strong business models that support journalism at a time of great change in our industry,'ꀝ Jon Miller, News Corp.'s chief digital officer, said in a company statement.

The announcement did not say whether Hearst's newspaper and magazine properties will be behind Journalism Online's paywall, or what will happen to non-print operations like seattlepi.com after Hearst unloads Skiff. A Hearst spokesman declined to comment on the company's plans for the Seattle website. Michelle Nicolosi, Seattlepi.com'ꀙs executive producer, could not be reached for comment.

However, Hearst's sale of Skiff clouds the site's future prospects. The website has not generated a profit for Hearst, according to an interview in March by Hearst's Seattle Media General Manager Pat Balles with KIRO-fm radio. Balles said the site was headed for profit, and was generating about 4 million unique visitors monthly — roughly the same traffic it had when the print P-I folded — but Balles gave no date for moving into the black.

Any effort by Hearst to charge for access to the Seattle website would almost surely derail any move toward profitability and would likely require a substantial boost in the site's editorial staffing and other expenses. Currently, seattlepi.com'ꀙs website shows it has just 14 "news gatherers," supplemented by three interns.

With Skiff, Hearst would have had control over the site's revenue production and e-reader platform. But if Hearst decides to put the site behind Journalism Online's paywall without Skiff, it will have to pay out about 20 percent of any revenue the site generates in management fees to Journalism Online and pay additional fees to any e-book operator like Amazon's Kindle.

Nor would there be any guarantee that even with a larger news staff and beefed-up ad sales, readers would pay for access to the site. Of the U.S. papers only the Journal has managed to build a substantial paying online readership, although other large papers plan to implement some type of payment system later this year. When the Long Island, N.Y., paper, Newsday, slapped a $5 per week paywall around its premium online content last October, only 35 people signed up for the service during the first month. The paper dropped the charge.

Indeed, without any prospect of an immediate boost in revenue and with Hearst's apparent exit from its own online e-reader platform, the more likely option will be for Hearst to either try to sell the Seattle site or close it. Although the P-I brand still resonates in Seattle, finding a buyer willing to pay for an understaffed, money-losing news website could be a challenge.

All this is good news for the Seattle Times. With Skiff as an option, the financially strapped Times faced the prospect of fighting for online ad revenue later this year with a digital competitor backed by Hearst's deep pockets and a digitally focused local ad staff. Under News Corp. ownership, Skiff won't have a local presence and the Times will be able to continue its own digital transformation at a slower and less-costly pace.

A Seattle Times corporate spokeswoman did not return Crosscut's request for comment on the Skiff sale.


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