Posted by Tony from 66-42-63-25.lsan.dial.netzero.com (184.108.40.206) on Thursday, January 23, 2003 at 9:18PM :
Salon Goes for Broke
By Don Hazen, AlterNet
January 23, 2003
It was harsh. Editor David Talbot didn't mince any words. He told Salon readers that starting today (Thursday, Jan. 23), essentially you either pay for Salon or we put you through an advertising ringer. No exceptions. (Non-payers could opt to sign up for advertiser-supported day passes; the first ad was Mercedes Benz.)
"There's no free lunch on the Web anymore," Talbot says. "There's no viable media without developing a base of revenue."
After bobbing and weaving for years, surviving a litany of near death experiences, cutting staff costs and some of its editorial beef, and insisting that profitability was just around the corner virtually every quarter since 1995, Salon is still standing, but barely. The LA Times reports that in December, Salon told the SEC that it was about to run out of cash within a few weeks. Something had to give. Hence Salon's bold – some think desperate – step, which could be its death or its salvation. The message: Essentially, everybody must pay.
This is an historic moment for the Web. Salon is calling the question that many in the Internet community have long debated. Will people pay for quality editorial content online? So far it hasn't proven to be a good model. The same people who think nothing of paying $5 for a latte, $40 for a bottle of wine, $35 for a subscription to a magazine they see once a month and may never glance at, haven't quite managed to pull out the credit card for another $30 for hot news every weekday from Salon.
If you buy a daily paper you pay 50 cents to a buck a day, not to mention several bucks on Sundays. The cheapest newspaper buyer is paying $125 a year and yet Salon only wants $30 from you and only $18.50 if you can tolerate the ads. So what's the problem?
Seems like a fair deal...especially with no ads. Say I go to Salon twice a week for a year; that's 100 visits, which equals 30 cents a day. It's a no-brainer. I say: Sign up as fast as you can!
We need Salon solvent (as well as maybe another five Web sites that may need to be subsidized by readers as well). How much do you give PBS, NPR, Pacifica? Salon is clearly as important.
Actually quite a few people already have signed up for Salon; between 50,000 and 60,000, a healthy number for the online world – yet only a small percentage of Salon's actual traffic, which can be a few million people a month (although many are repeaters). And 50,000 subscribers is also chump change when compared to print vehicles like Vanity Fair, which has somewhere in the range of a million subscribers, or even the New Yorker, which has more than 600,000 who pay nearly $50 annually.
Salon business people say if they could convert only 7 percent of their regular readers, the online mag could be profitable.
But memo to Talbot: Forget about getting rich, chasing the Holy Grail of profitability. Try sustainability. You guys have great jobs, work that you love, lots of influence and unprecedented journalistic success. Pay yourselves well and treat your investors kindly. Make the thing break even. And keep giving us the good stuff.
Actually a mixed revenue model – a range of cash flows – has a lot of potential for Salon, especially if Salon could wake up to the fact that it could raise substantial tax-exempt bucks and use them to buttress the operation. Wealthy donors could fund investigations, send journalists abroad, have public events and market the journalism, etc. while writing off the donations. Raising a million dollars this way annually is clearly achievable in a few years, especially with lots of Silicon Valley early profits (those who got out early) tucked away wanting to do good works and bask in a little limelight.
At more than 135 years old, The Nation magazine has perfected the mixed revenue model, even to the point that its wily eminence gris publisher Victor Navasky is bragging that The Nation is now earning a profit.
Of course, the notion of profitability seems a little silly for a company that has already spent $80 million, whose stock opened for over $10 and now can only be bought in the penny stock arena. If only Salon had been able to invest that dough in a sustainable model, it would probably be more influential than Time or Newsweek – and in many key circles it is. But that wasn't what the venture investors were thinking. They were thinking quick bucks and get out, not the way to support quality journalism.
Fundamentally, the online advertising ad model never really worked. In a funny way, the Web purists – the early adopters, the principled news junkies – decided that the Internet was theirs. They may have lost radio, TV and even cable to crass commercialism, but they just don't want ads cluttering up their online information.
This is in contrast to Gen Y, the kids, porn denizens, sports fanatics, game players etc. who make up a big chunk of the web. But there's still an audience of tens of millions of highly educated influential people, those whom writer and demographer Paul Ray calls the "cultural creatives."
In addition, of what little ad dollars there are on the Web, approximately 80 percent are funneled to the top 20 sites, all of which are run by corporate giants. "The result is there's not much left over for independent publishers like Salon," says Talbot.
But Talbot makes a more fundamental point that all of us who care about the public discourse and the availability of ideas and information should be concerned about: media ownership concentration. A rabidly deregulatory Michael Powell at the helm of the FCC is greasing the skids for a degree of concentration that many imagined impossible a few short years ago.
Says Talbot: "It's imperative that America has more voices. With the Internet we all thought there would be 1,001 platforms to reach the public. That sadly hasn't come to be. Most of the usual corporate giants have gobbled up the Web. We feel a sense of mission here. There's not much like Salon left out there. We're doing something that's important. Not just for ourselves, but for the nation and American journalism."
Despite the many irritations that Salon inflicts, Talbot is essentially right, even if his point is self-serving. Sure, while on Salon one still has to side-step the detritus of the bully rightwing pundits David Horowitz and Andrew Sullivan, whose "Idiocy of the Week" is one of the most pompously annoying pieces of journalism around.
And now they are adding another horror, Tina Brown; we thought we'd seen the last of her after Talk magazine folded.
But Salon is still a great magazine for the Gen Xers and older intellectual progressives, people who are grappling with how to balance the idealistic passion that occasionally bubbles up with the more hard-nosed realism that accompanies the responsibilities of raising kids or caring for aging parents, paying mortgages and school tuition, etc.
Many of this demographic apparently likes Salon's smart yet restrained liberal writers like Jake Tapper and Joe Conason, as well as the similar strong voices coming from inside the magazine like Joan Walsh and Gary Kamiya, and especially the prodigious work of the considerably younger Michelle Goldberg in New York (when she can stop worrying about those darn sectarians organizing the peace marches). Salon has terrific cultural coverage; smart takes on movies and music, excellent technology writing, and sometimes clever writing about sex and relationships.
Talbot's final clarion call is convincing: "Salon's tough, independent voice is needed more than ever. With the Bush administration consolidating its one-party rule and a toothless media long ago abdicating its role as watchdog, the public needs alternative sources of information like Salon to stay informed and alert. This isn't partisan carping; it's the essential function of a press in a free society, and with war and economic crisis looming, it's more critical than ever. And yet docility prevails in the corpulent world of corporate media – a passivity enlivened only by the raucous Bush cheerleading at Fox News and your local talk radio station."
So help make history. Sign up for Salon and say you were there at the beginning of a new era in media. And in case you wondered, Salon's new business model in no way helps AlterNet. In fact, it means that Salon content will no longer be available on AlterNet's free site. But we'll still be reading it – after we pay our $30 – and cheering them on.
Don Hazen is executive editor of AlterNet.
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