Off Line

Take an ex-con with a smooth line of patter, a group of mystery investors and some gullible journalists. What have you got? Houston's first on-line daily newspaper. At least for a few weeks.

The January 30 collapse of a wall at Northline Mall killed three people, but the tragedy breathed life into the Houston Daily News. The Internet-based newspaper that was supposed to offer the city a daily alternative to the Chronicle had officially launched operations two weeks earlier, but the mall disaster provided the first chance for the Daily News to show what an electronic newspaper could do for the customer.

Seizing the moment, the staff, led by news editor Sue Davis, worked long into the night, updating regularly from the scene. Davis herself pulled a graveyard shift, shooting some pithy footage with her video camera that was later fed into the Daily News's computers and placed on-line. The collection of offices that comprised the News was buzzing with reporters gulping coffee, banging on computers and hustling diskettes to the Internet production crew down the hall.

By morning, the staff was exhausted but giddy. Readers plugging into the Houston Daily News site on the Web had a more complete and updated version of the Northline story than radio, television or the Chronicle provided. For the employees, the results offered the first concrete proof that the concept of an on-line newspaper in Houston could work, that the Houston Daily News could offer a product other media couldn't. "We beat the shit out of the Chronicle," claims business editor Scott E Berrett. "We were all proud."

Within 24 hours, that sense of pride was gone. The staff's paychecks had not materialized on time -- again. And in a move that underscored the serious internal problems plaguing the operation, Daily News president Paul Allen had the paper's Internet provider pull it off-line. With a flick of the switch, the Houston Daily News was out of business.

Allen had the paper restored to the Net the next day, but by then the brief moment of euphoria had worn off, and the harsher realities of the Houston Daily News asserted themselves: inadequate equipment, few supplies and conflicting stories about who was in charge and where the money to pay the mounting bills was supposed to come from.

Ultimately, it didn't come from anywhere. The Internet provider, NeoSoft, eventually refused to do business with the News, as did other vendors with terminally past-due invoices. Reporters stopped showing up for work. The Daily News's vice president of operations, Dick Merrifield, whose wife was the paper's landlord, resigned from the company and then unceremoniously escorted Paul Allen from the office suite for failing to pay his rent. Barely a month after it first hit the Net, the Houston Daily News was lost in cyberspace.

The employees, some of whom quit respectable jobs to join the on-line paper, still hope to collect their back pay. But finding someone to take responsibility for the demise of the Houston Daily News -- and its several hundred thousand dollars of outstanding debts -- is harder than tracking Bigfoot. Though most fingers point at Allen, he says that he, too, has come out on the short end of the deal. "I've worked my ass off for two years, and I've got almost nothing out of it," he laments.

Some of the principals of the News, including Merrifield, are trying to resurrect the venture with a new name -- Houston Today -- and a snazzier new look. But the coffers remain empty, and as yet no investors have rushed to fund the latest edition, though Merrifield says he's lined up interest from various quarters.

"We're close on three different fronts," he says.
Others are skeptical. "We've heard all that before," says J.D. Luna, who left his job as a Channel 51 reporter to work for the News. "Show us the money."

Whether a daily Internet newspaper can make it in Houston -- or anywhere, for that matter -- is a matter of much debate these days. A number of people still devoutly believe that the Internet is truly the Next Big Thing and that the time is ripe for an electronic newspaper to succeed. "We're gonna ride this wave," vows Berrett. "It's time to do it. The time is now."

Despite a number of ongoing attempts by established media outlets around the country, however, no one has yet figured out how to do anything other than pour money down the Internet drain. "What people are doing now is clearly not working," says Denise Caruso, an interactive media analyst and New York Times columnist. "No one is profitable in this business."

Try telling that to the true believers who flocked to the Daily News, seduced by the combined lure of fast money and the chance to be in the vanguard of the Internet revolution. "We think that we're onto something," says Steve Herskowitz, the staff attorney for both the Houston Daily News and Houston Today. "This'll be the way that people will get their news in the future."

That may be, but it's unlikely that the characters who briefly brought the Houston Daily News on-line will be the ones providing that news.

"I have never seen such a bunch of clueless idiots," says NeoSoft president Ellen Jones. "What a bunch of lamers."

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