Salon's financial woes nix the dream of IPO riches for journalists. So
what works online? Try small, passionate, and cheap.
by Dan Kennedy
"Once we get to profitability, which we're projecting to be a year from now,"
he [Salon editor and founder David Talbot] adds, "we will be a good candidate
for an IPO." He says the three syllables Eye-Pee-Oh with a kind of naughty
relish, the way you can imagine Humbert Humbert saying Lo-Lee-Tah.
Like Nabokov's anti-hero, David Talbot moved quickly -- and disastrously
-- from desire to consummation. Despite nothing but losses, and lacking even a
plausible theory for how to change red ink to black, Salon had its IPO
just six months after the Wired piece appeared. If you bought in on
opening day, you could have had a share of stock for $10.50. Not long after,
the stock reached its high of $15.17. The closing price this past Monday: $2.
Last week was an ugly one for Salon, the ancient (that is, nearly
five-year-old) San Francisco-based news-and-culture Web site best known for
provocative columnists such as Camille Paglia and David Horowitz; smart
coverage of topics such as politics, technology, and sex; and embarrassing
stunts such as writer Dan Savage's claiming to have licked the doorknobs last
winter at Gary Bauer's Iowa headquarters when he had the flu. Facing a reported $7 million
deficit, Talbot laid off 13 of his 150 employees -- including his wife, Camille
Peri -- thus decimating Salon's coverage of media, books, and travel.
Salon is hardly alone in its misery. With the bloom finally off the
dot-com stocks, media ventures are being hit hard. APBNews.com, which covers
crime news from around the world, is broke, hoping against hope it can scratch
up some more venture capital and resume operations. CBS has drastically
downsized its Internet division. TheStreet.com, which, like Salon, went
public a year ago and made its editor, Wall Street Journal expatriate
David Kansas, a very rich man, has seen its stock price plummet, and may have
to abandon its user-unfriendly subscription-based model. Next up is New York
media maven Kurt Andersen's Web site Inside.com, which will charge subscribers
about $200 a year for the skinny on movies, television, books, magazines, and
newspapers. The verdict on the pre-launch version: not bad, but hardly
compelling enough to justify letting Andersen hoover your wallet. What was he
Then again, what were any of them thinking? The idea that journalists could
become multimillionaires just by doing journalism was always ridiculous.
Reality was kept at bay as long as the NASDAQ seemed immune to the laws of
finance. Now, though, the alarm has gone off, and it's time to wake up and
figure out where Internet media are going. The answer may be familiar to anyone
who remembers those future-of-the-Net discussions from the early and mid '90s,
before money fever set in: the online world favors community over hierarchy;
interactivity over passivity; and small, intense groups of participants rather
than mass, sheep-like audiences. In other words, if the bubble has truly burst,
then it may be back to the future.
"The idea of critics getting rich was a pipe dream, I guess," says Dwight
Garner, who left Salon several years ago and is now an editor for the
New York Times Book Review. "I still hold out hope that Salon can
pull a rabbit out of a hat, but it [financial viability] was always one of the
questions that nagged. But then came the IPO, and you just wanted to click your
heels and believe."
The dot-com cash squeeze underscores an important lesson that has been
forgotten during the frenzy of the past couple of years: the Internet is just
another medium. In the print world, high-quality, general-interest magazines
invariably lose money, and exist strictly at the indulgence of well-heeled
backers. The New Yorker has Si Newhouse; the New Republic has
Marty Peretz; the Nation has Paul Newman. Salon's principal
online competitor, Slate, is a wholly owned division of Microsoft, thus
exempting editor Michael Kinsley from the kinds of day-to-day financial
problems with which Talbot must contend. (Question for Judge Thomas Penfield
Jackson: is Slate part of the operating system or is it an application
program?) When Kinsley and company realized they had made a mistake by charging
$19.95 a year for subscriptions, thereby pissing away most of their audience --
are you taking notes, Kurt? -- they simply dropped the idea and returned to
all-free content. No muss, no fuss. Certainly no big deal to Bill Gates's
Salon CEO Michael O'Donnell recently told Inside.com that there was "too
much value locked in" to sell out, but it's not likely that anyone was fooled.
Here's a suggestion: dangle Salon in front of Apple's Steve Jobs, who
loathes Gates and might relish competing in an arena where Apple and Microsoft
would be more evenly matched. But though that might be a solution to
Salon's woes, there's no question that something would be lost. With a
handful of media conglomerates controlling most of the film, television, and
movie studios, book publishers, newspapers, and magazines, media activists have
always held out hope that the Internet would be a place where independent
projects could continue to thrive.
The thing is, independent media can thrive on the Net. It's just that
independent media that look too much like the mainstream may get left behind --
including Salon, which, despite its hip, alternative tone, is
essentially a mainstream magazine that just happens to be published on the Web.
Indeed, Salon and Slate may be the two of the better
general-interest magazines to have been launched in the 1990s (suck-up watch: I
have written for both, and would like to do so again), but that doesn't make
the Internet a particularly hospitable medium for such publications. After
several years of mounting dot-com losses, culminating in the recent
stock-market decline, perhaps it's time to realize that the original vision of
the Internet, as outlined in Howard Rheingold's 1993 classic, The Virtual
Community -- decentralized, democratic, individualistic, and fueled by
passion rather than money -- is actually the one that works best.
"Slate and Salon are literal re-creations of print magazines,"
says media critic Jon Katz, who writes for the technoid Web site Slashdot.org.
"They have some very good stuff, but the Internet is all about not being walled
enclaves." Katz believes Salon has faltered at least in part because it
moved away from its original interactive vision and became increasingly
obsessed with media, which he thinks is a turnoff to all except other media
people. "The reality of the 21st century is that Tina Brown is not an important
person in media," Katz says. "The housewife who gets 800,000 hits on her
quilting Web site is important."
So what works? The key is to be small, quirky, passionate, and not particularly
dependent on large infusions of cash. Say what you will about Matt Drudge, but
his Drudge Report remains the prototype for how to put together a successful
online media project. At the peak of his influence, from 1996 through the 1998
impeachment drama, Drudge was earning a reported $30,000 a year, holed up in
his California apartment. Yet his Web site and his e-mail dispatches -- from
Lucianne Goldberg's lips to his keyboard -- were must-reads for anyone in
politics or media. Nor has he entirely lost his juice: Tina Brown's Talk
Miramax Books recently dropped plans to publish a gossip-and-sex-mongering book
on former independent counsel Ken Starr and his merry band of investigators
after the project was exposed by Drudge.
Drudge may be the best-known model, but he is hardly alone. Veteran journalist
Mickey Kaus last year started his own KausFiles.com site as an outlet for his
acidic media commentaries, which are now reprinted by Slate.
Investigative reporter Robert Parry, formerly of the Associated Press and
Newsweek, does an end run around the mainstream with his Consortium News
site. Harry Knowles has become a force in the film industry with his fanzine
site Ain't It Cool News. On a somewhat larger scale, Feed has managed to
emulate at least some of Salon's and Slate's editorial success
without burning through millions of dollars of other people's money.
Of course, doing important work for a small Web site can be of limited value if
you can't get the word out. But the Internet has made that easier, too.
Consider the case of Al Giordano, a former Boston Phoenix staffer who
recently started the one-man NarcoNews.com site to report on the corruption
fostered by the US drug war in Mexico. "I earn half the money that I earned as
a political reporter," says Giordano. "And I live in Latin America, which
lowers my daily overhead considerably. I couldn't do this from New York or
Boston at my current income level. I'm not complaining. I'm having a blast."
Giving Giordano's work reach and influence beyond what he would be able to
accomplish on his own are what might called "metasites" -- heavily trafficked
Web sites that consist almost entirely of links to offsite content. Two that
have featured Giordano's dispatches are the Media Channel, a left-leaning
project started earlier this year by former Boston TV and radio journalist
Danny Schechter, and MediaNews.org, which, at least among media insiders, is
the hot flavor of the moment.
The Media Channel and MediaNews.org couldn't be more different. The Media
Channel, with a worldwide reach and more than 400 affiliates (including the
Phoenix), is a big-budget operation, and Schechter spends much of his
time pursuing foundation money. MediaNews.org is the one-person project of Jim
Romenesko, a former magazine and newspaper reporter who started the site last
year as a hobby (it was then known as MediaGossip.com) and now does it on
salary -- no stock options, thank you very much -- for the Poynter Institute.
Where Schechter and Romenesko converge is that both are pursuing their
passions, and neither has any visions of dot-com millions. "I'm fully aware
that I'll never be rich," says Romenesko, who nevertheless sees a bright side:
he's now making what the senior editors at his former paper, the St. Paul
Pioneer Press, were making, "and I don't have to manage people." Says
Schechter of the Media Channel: "We don't see this as generating billions of
dollars. I'm not necessarily against the impulse to make money. The problem is
when the impulse to make money leads to the dumbing-down of content."
One journalist who's seen both sides is Brock Meeks. In the mid 1990s, his
one-person, free e-mail newsletter, CyberWire Dispatch, chronicled, in
scatological style, various regulatory and legislative outrages being
perpetrated by federal officials just as the Internet was getting off the
ground. Meeks remains outspoken. Of the expectation that journalists would make
millions, he says, "I don't know what they were thinking, other than the fact
that they were greedy bastards." Of Salon's recent woes, he says, "Once
in a while I see something interesting coming out of Salon, but most of
the time I would say, 'Who gives a shit?' "
But CyberWire Dispatch is pretty much on hold these days. For the past
several years Meeks has worked as chief Washington correspondent for MSNBC.com,
the Microsoft-NBC joint venture, writing for the Web site and appearing on
MSNBC's cable shows. It's a long way from his previous independence: Microsoft,
of course, is run by Bill Gates, and NBC by General Electric, whose chairman,
Jack Welch, has done much over the years to make sure that the network has
nothing untoward to say about GE's nuclear power plants and military weapons
systems. MSNBC also has a content partnership with the Washington Post Company,
whose holdings include the Washington Post and Newsweek; its
sister cable channel, CNBC, partners with the Wall Street Journal.
Meeks still believes that small projects can have an impact on the Internet.
But the future, he says, is in huge "aggregations" such as MSNBC, which offer
"a lot of quality journalism in one place." He adds: "That's how you attract
ads, and that's how you make the money." Meeks may be right, but his is a
disconcerting vision. A study released this week by the Pew Research Center for
the People and the Press found that younger news consumers are turning
increasingly to the Internet, and that they prefer big, established news sites
such as MSNBC.com, CNN.com, and ABCNews.com. It's inevitable but nevertheless
unsettling that the same corporate conglomerates that dominate traditional
media now also dominate new media.
The unfortunate truth about a Web site such as Salon may be that it's
stuck in the middle -- too big to live off the land like NarcoNews.com or
MediaNews.org, and too small to survive on its own. "I think Salon
prides itself on being one of the few independent media organizations out
there," says Washington-based staff writer Jake Tapper. "I like the fact that
we're independent. I really do. How long we will be able to hold out, I don't
know. Hopefully forever."
Forever is a long time. Don Hazen, executive director of the San
Francisco-based Independent Media Institute, offers what may prove to be a more
realistic assessment. "The Web was supposed to be much cheaper to do, and it
turned out to be more expensive than anybody thought," he says. "I'm a big fan
of Salon. I read it every day. But I was always skeptical of the
Salon model, and I'm really surprised that they've gotten this far."
Here's hoping Salon survives -- either on its own or under the
sponsorship of a benign, deep-pockets owner. But regardless of what happens,
it's too soon to give up the vision of the Internet as an incubator for
outside-the-mainstream media. Just as long as no one thinks he's going to get
filthy rich in the process.
Articles from July 24, 1997 & before can be accessed here