While media companies climb aboard the Web train, destination unknown, the creation of most sites is couched in terms of promotions, offering information and added value to tv audiences, and providing direct access and gaining feedback on broadcast and related activities. The underlying question, however, is how to make it pay.

In current Web ventures, many will point to three basic revenue-generating models: moving merchandise, cost savings generated via moving information and customer services online, and advertising and sponsorship.

Most agree that technology, including bandwidth issues and standardization of Web commerce software, must merge with creative marketing initiatives to bring Web advertising beyond repurposed brochures and banners and make Web sites more directly lucrative for all parties. But with forecasts of a $2 billion Internet ad market worldwide by 2000, broadcasters, distributors and cable companies have been among the pioneers in meeting the creative and financial challenges of a young industry.

TSN, the ‘next generation’

tsn launched its site (www.tsn.ca) last September with five in-house staff at a cost of about $750,000, and in June of this year undertook a massive, user-directed overhaul to reach the ‘next generation’ of tsn.ca, which now employs 14 staff and has an annual budget of about $1.4 million.

tsn director of media development Jeffrey Elliott says the site is based on user interactivity (‘We’re not in the information arms race,’ he says) and supports the tsn network as a core property.

‘Fifty-three percent of Web surfers take their time away from watching tv, that has a significant impact on our core business,’ says Elliott. ‘We have to provide some enticing content for them on the other side. It’s also a vehicle for advertisers to do pinpoint marketing because of our specific demo; and you can actually talk to the audience, that’s the fun part.’

tsn is involved in a number of sponsorship and advertising partnerships. The site is divided into gateways, like the Scoreboard, the Ticket Booth and the Locker Room, most of which have associated sponsors. The site’s interactive games, QB1 and Diamond Ball, which are linked to broadcast events, have billboard sponsorships from the likes of Pepsi, Labatt, Subway and Stentor, with links to advertisers’ own sites.

Elliott says the service is still in the testing phase with commercial ventures and works closely with advertisers based on their unique goals.

‘It’s not a proven medium yet,’ he says. ‘It’s incumbent on us and on advertisers to work together and treat it as a giant sandbox to figure out how to make it work so people can start making money.’

tsn uses page requests, of which the site gets about 60,000 per day, and e-mail, in the order of 300 pieces a day, to measure the site’s efficacy and provide detailed post reports to advertisers.

ChumCity Interactive

ChumCity Interactive, the new media division of Citytv, MuchMusic and Bravo!, was formed almost two years ago. gm Josh Raphaelson says the interactive arm was created specifically as a revenue-generating division. ‘It was never planned to be an extension of the promotions department,’ he says.

ChumCity Interactive consists of a staff of about 10, and under its framework fall the creation and management of three sites (www.muchmusic.com, bravo.ca and citytv.com), American OnLine services and Cityrom, the cd-rom development arm which is the exclusive Canadian distributor of titles from New York’s Voyager. Cityrom is also developing its own titles, including three cd-roms set for release this fall.

Raphaelson says ChumCity Interactive pursued three different revenue streams – advertising, commercial online service subscriptions, and merchandise sales – and says among these sources, ad revenue is the most significant.

‘We’ve managed to develop an effective revenue-generating operation for a fraction of what competitors spend,’ says Raphaelson. ‘Because of that, we will be able to reach profitability with what we’re doing fairly quickly. Before the end of our second year of operation, we will be at profitability.’

Raphaelson says the ChumCity sites have had about 24 advertisers in the past year, including tech-driven companies like Apple and ast, video game developers Nintendo, Sega and UBI Soft as well as brands like Nestle and Levi’s.

Like most in the Web game, Raphaelson says the challenge is to go beyond simple banner advertising, noting ChumCity Interactive regularly holds contests and other client-tailored promotions. ‘The content of what goes behind the advertising should be consistent with our environment and also meet the client’s objectives,’ he says.

Raphaelson says ChumCity Interactive provides advertisers with post analysis reports and that a statistical solution is being developed in-house to offer a more sophisticated measurement approach than currently available services.

In terms of moving merchandise, orders come mainly via e-mail or on the 1-800-4citycd number, he says, adding ChumCity Interactive is in the process of building into the site capacity for direct credit purchases. Raphaelson says the company is also looking toward various interpretations of database marketing.

‘At some point, you’ll see us with a database of some sort of specialized information that people will subscribe to,’ he says. ‘It may not be marketers so much as musicians or other new media professionals interested in acquiring research from our media tv archive. We’re just pulling together which of our assets make sense for that.’

Showcase enhances site

Richard Rotman, director of communications for Showcase (www.screen.com/showcase), says the network has yet to fully exploit the revenue-generating opportunities that exist through the Web. Rotman says the site has been up for almost a year and efforts have been focused on enhancing it.

The key, he says, is to match Web demographics with broadcast properties, and points to thirtysomething as an example of a show with a Web-compatible audience base.

Rotman says about $20,000 to $30,000 was initially spent creating the site and about another $1,000 per month goes into maintenance.

Cochran’s licensing vision

The Showcase site was created and is maintained by Halifax-based Cochran Entertainment, which also provides measurement services. Since the interactive division of the production company was set up two years ago, Cochran has developed over 12 sites, including those for the Atlantic Film Festival, the Banff Television Festival, cbc’s Street Cents and its own successful Theodore Tugboat kids’ series.

Cochran president Andrew Cochran says the best minds in the business continue to grapple with making the Web pay in an industry still in its infancy. He recognizes the three standard revenue guidelines, in which he includes soft income whereby tv viewership is bolstered by a site, and corporate sponsors add value and greater identity association with the broadcast property.

Cochran also points to an emerging avenue of opportunity for producers in the licensing of Web sites as companion pieces to tv properties.

‘Until now,’ he says, ‘people have thought of Web sites as extending the content of the tv program, anything from a value-added component to a pure promotion vehicle. An emerging opportunity is treating content on the Web as something, like a tv show, that can have value for its own content and can be licensed.’

One example, he says, is his company’s Life on the Internet tv series, which was recently sold to pbs. As part of the sale, Cochran created a different version of a companion site for the show and licensed it to PBS Online.

Cochran says the global availability of Web content can make deals of this nature complex. He says the pbs Life on the Internet site was created in such a way that it could be branded as a pbs site; a PBS Online companion to a pbs series.

‘pbs has developed a very large and distinguished site,’ he says, ‘so for them there was value to add content inside their destination on the Internet, and the value for us was increased exposure.’

Cochran Entertainment’s Web creation division consists of about five full-time staff, and Cochran says while tv production still accounts for the bulk of dollar volume, about one-third of the company’s overall activity is in Web services.

In addition to detailing the undertakings and structure of Cochran Entertainment, the company’s own site (www.cochran.com) contains a comprehensive directory of worldwide film and tv resources on the Internet.

Second site for Cinar

Montreal’s Cinar Films launched a Web site this spring (www.cinar.com) to enhance the company’s identity as a provider of quality animation and family entertainment. The emphasis, Cinar vp of animation Lesley Taylor says, is on distribution and information.

‘We created the Web site to showcase our library and our up-and-coming projects; to reach broadcasters and those interested in purchasing our shows,’ says Taylor. ‘The site might be their first contact and then they could contact our distribution people to follow up.’

She says the original site cost Cinar about $20,000, a deceptively low figure mitigated by use of Cinar staff and resources. The site was developed with Montreal’s Arena Communications, with graphic work done in-house. Taylor says Cinar staff now has the capability to handle day-to-day changes in the site.

According to Taylor, in the early stages of Web development, the Cinar site hasn’t been a direct moneymaker, but the company is looking down the road at developing a second site that may be a more directly lucrative venture.

The plan for the next Cinar site involves the creation of a kids’ page where young users could learn about the animation process and create their own projects, as well as the possible inclusion of a Cinar store. The company is also considering creating sites for individual properties like Wimzie’s House and making merchandise available online.

New venture @ Discovery

A Web presence was deemed a necessary component of a network partially devoted to science and technology, says Discovery vp of production and administration Ken Murphy, and Discovery’s Web site (www.discovery.ca) was launched simultaneously with the specialty network in January 1995.

Murphy says thus far, Discovery’s high-end site has been focused strictly on information, added value and promotion, with no sponsorship or commercial logos present, and has been highly successful as such; Murphy says Discovery has written its own code to track visitors and the site averages about 1,300 individual user sessions per day or about 40,000 per month.

He says Discovery will soon be launching a new Web venture, moving into new areas of activity while maintaining the current promotional site.

The current site, developed in-house for a cost of about $100,000, has a yearly maintenance budget, including staff, of about $250,000, a figure Murphy says tends to increase with efforts to keep the site fresh.

Murphy says he is not alone in the industry in wrestling with revenue questions. ‘We’re all doing a bit of a head-scratch on where’s the dough, on how these things can become viable commercial entities.’

Discovery will likely move into some form of sponsorship or ad-driven online service, says Murphy, and, as electronic commerce becomes more refined and standardized, some form of ‘microtransactional activity.’

CBC’s moneymaker

As CBC Newsworld approaches its seventh anniversary on the air, it marked the occasion in advance with the launch of an online news service featuring realtime video and a major sponsor present at its inception. CBC Newsworld Online (www.newsworld.cbc.ca) features news updated from noon to 7 p.m. daily and as stories break, as well as programming, biographical and merchandising information.

The site uses VDO Live software from Israel-based VDO Live to provide realtime video without onerous download times.

CBC Newsworld manager of programming and scheduling Janice Ward says IBM Canada was on board before the launch of the site, sponsoring the home page and the news portion of the site in a one-year agreement. As an additional promotion and an experimentation with database marketing, Newsworld Online also developed an IBM Cyber Contest accessible on the page whereby users provide demographic information to enter and participate in a weekly draw for Newsworld and ibm prizes.

Ward says the site was designed to be self-sustaining and is already close to being paid for by advertising. Newsworld is developing packages for other advertisers and struck a deal with Sun Microsystems to provide the site’s server.

‘We look at this as the launching of a new specialty service,’ says Ward. ‘This is a service that extends the branding and use of Newsworld. Many people grew up with CBC Radio; we think this generation will grow up with the Internet as well as tv. This is a different way of spreading the branding of CBC Newsworld.’

Cablecos’ role

Cable companies are also highly involved with Web site creation, as commercial ventures linked to the provision of high-speed cable modem service as it moves past the test phase.

Calgary-based Shaw Cable operates three Web sites – a corporate information site, a site for high-speed-modem test homes, and a site recently developed as part of the high-speed site currently called the ‘retail village.’

Currently available to high-speed users, the retail village will be available at ‘phone speed’ at the end of August and will allow retailers and services, like banks, to advertise and provide promotional information. While the site will not be transactional at the outset, some retailers will ultimately offer transactions from their own servers.

‘The retail village and the whole retail section of our service is going to be an important source of revenue in the future,’ says Richard Burry, Shaw director of pc interactive services. ‘It’s important to provide local content for high-speed customers, but also access to local services.’

Shaw’s high-speed services are being tested in Woodbridge, Ont. and Calgary; areas of launch are still undetermined. Burry says high-speed service will be an enticement to advertisers, allowing them more options and a richer experience for the user.