Late last year, executives of TMP Worldwide met with the members of the Chamber of Commerce in Cincinnati to propose a new Internet service to help them recruit hourly employees, like truck drivers or cashiers.
A TMP unit, Monster.com, had already become the top site for recruiting people for skilled jobs. The new service, which TMP told them would probably be called CincinnatiJobMatch.com, would be more suited to lower-paid jobs and would cost less than Monster, which in turn was cheaper than newspaper help-wanted advertising.
Word got back to the Cincinnati Enquirer, and it reacted quickly, boasting in big ads that the Enquirer was "the real monster of the Cincinnati job market."
Moreover, the paper discovered that TMP hadn't registered CincinnatiJobMatch.com, so it quickly registered rights to that name. And on March 18, the Enquirer used that site to introduce its own service for hourly jobs, a week ahead of TMP, which starts its service March 25, at tristatejobmatch.com.
If The Enquirer appears a bit testy, it is no wonder. Over the last few years, Internet job sites, especially Monster, have eaten away at newspapers' help-wanted ads, which inch for inch have been their single most profitable product. In the process, Monster has become one of the biggest dotcom businesses around, and the most profitable. With US$536 million in revenue last year, it had pretax operating income of US$150 million, edging out eBay, which had a US$140 million operating profit.
This is grim news for newspapers, and no relief is in sight.
"Even if the economy recovers, the newspapers are not ever going to get back to the levels they saw from 1995 to 2000," said Craig Huber, an analyst at Morgan Stanley Dean Witter, who estimates that about 10 percent of the help-wanted market is now online; he expects that to rise to 25 percent within three years.
Newspapers have fought back. Most of them allow companies that place help-wanted ads to have them listed on the newspaper Web site, too, for an additional fee.
Some, such as the New York Times, have adopted some features of stand-alone job sites, prefer to have resume databases.
The Tribune Co and Knight Ridder have gone further, jointly buying two independent job sites, Careerbuilder.com and Headhunter.net, to create a hybrid -- under the Careerbuilder name -- that sells listings along with newspaper ads and has a national sales force.
The recession has tilted the balance even more toward Monster, as more employers choose to give what little money they have for recruiting to Internet sites because they are cheaper and more efficient.
Last year, help-wanted revenue at the nation's newspapers fell 35 percent, to US$5.7 billion, says IDC, the research firm in Framingham, Massachusetts; domestic revenue of online job sites rose 38 percent, to US$727 million.
TMP is by far the biggest cause of the newspapers' pain. Its share of the online job market has risen from one-third to one-half in the last two years, IDC says.
Not that Monster is unscathed by the recession. It was insulated for a while because many of its biggest customers buy one-year contracts, and it kept growing for much of last year. As the contracts started expiring, though, revenue plunged 20 percent in the fourth quarter.
But TMP is a rarity in that its Internet unit is doing much better than its traditional businesses. TMP's revenue is falling, profits are stagnating, and investors are questioning its strategy of buying temporary-help agencies, executive-search firms and Web sites that help students find jobs.