The high cost of running a website: January 27, 2003 issue of New Thinking by Gerry McGovern

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January 27, 2003

The high cost of running a website

By Gerry McGovern

The Web has begun to mature. As this happens, managers are realizing that running a quality website is a very expensive business. Quality content does not come cheap. Many organizations are therefore beginning to question the return on investment they are seeing from their websites.

If you're managing a website, you're in the business of publishing. Oh, in the early days, the Web was sold as something much more than publishing. It was something almost magical. The old rules didn't apply. The Web was about interactivity, online communities and ecommerce. If you didn't absolutely embrace the Web, you simple didn't get it.

On a day-to-day basis, you're a publisher. If you are running an intranet, you have a constant problem getting content out of various departments. On your public website, you worry about whether the content is well written and understandable. Your website requires that content gets commissioned, written, edited and published. That's what publishers do.

Publishing has a dirty little secret. It's a secret that was well hidden in the early days of the Web. It was hidden behind venture capital and unbelievable hype. It was hidden behind the enthusiasm of pioneers. It was hidden behind the belief that what was important was to be a player. That the profits would come later.

The dirty little secret of publishing is that it is very hard to make a profit out of publishing. I have been involved in the publishing industry for about twenty years. In that time, I have seen a great many magazines and book publishers come and go. I have seen the inside of magazines that have survived. They are run as a very tight ship.

The big publishers can make a lot of money. But they have to be very big. To make real money out of publishing you need to achieve significant scale. Otherwise, you'd better have content that is so valuable people are willing to pay a lot of money for it.

If most organizations took the time to analyze the costs and the returns of their websites in the last five years, they'd be in for a shock. Yes, it did cost that much. No, it didn't deliver enough value to cover its costs.

A frightening amount of money has been wasted on the Web. The trash-and-build approach churned through money. Every year or so, some organizations create new designs and pretty much start again. There are many organizations who have hundreds of intranets and public websites. This is hugely wasteful and almost impossible to manage.

The Web has begun to mature. The days when you could try anything out and see what happens are gone. There is a definite trend whereby the Web must justify itself from a financial perspective. Management wants measurables. Management wants results.

This trend is good for the Web. Some organizations will find that the Web simply doesn't work very well for them. They will create small, simple websites that are easy to maintain. Some will find that with proper planning, the Web can deliver results. But even in these situations, success will often depend on managing costs as tightly as possible.

It's easy to be a publisher on the Web. It's easy to lose a lot of money too.

Gerry McGovern

Next issue: No silver bullet for web content
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It's easy to be a publisher on the Web. It's easy to lose a lot of money too.

Gerry McGovern's books are recommended reading at the following universities

Augustana College, United States
Brandeis University, United States
Drury University, United States
Dublin Institute of Technology, Ireland
Indiana University, United States
Monash University, Australia
Northeastern University, United States
University of Applied Sciences, Germany
University of Regina, Canada
University of Teesside, UK
Manchester Metropolitan University

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