Webzines face do-or-die struggle

Put those two proclamations together, and you wind up with a succinct way to describe the future of independent online publishers.

Content isn't dead on the Internet, but electronic commerce is Wall Street's current king. And with brand name advertisers spending the bulk of their online dollars with services like Yahoo! and America Online, the future is far from certain for many of the Web's smaller publishers.

The mostly independent Webzines -- sites such as Salon, Feed or The Onion -- produce some of the Web's sharpest, freshest content.

Yet their surest chance for survival will be growing their readership enough to bring in more ad revenues. That could come by selling out to a larger company, which could better afford the marketing needed to build traffic, or through promotional deals. For instance, editors of The Onion recently cut a $500,000 book deal with Crown Publishing to expose the Webzine to a broader audience.

Introducing e-commerce to their sites, adding technological innovations or joining forces with other e-zines to get more advertising dollars are some of the ways cash-short Web publishers expect to stay afloat in 1999, but there's no guarantee any of those measures will be enough to sustain independent life.

For the most part, popular buzz over the wordy culture and entertainment sites has faded as larger numbers of people spend more of their online time on portal sites, feasting on e-mail services, stock quotes, news and home-page building services.

Missing mainstream
"You don't hear much about Suck or Slate or Word or Feed in a big way," agrees Patrick Keane, Internet content analyst with Jupiter Communications.

Furthermore, the top 50 Web sites still control about 80 percent of the estimated billion dollars in online ad revenues, according to industry analysts.

Two years ago, fierce competition for ad revenues forced the shutdown of a number of sites -- online service Prodigy's Stim, ABC News' All Politics and the Microsoft Network's original entertainment-oriented online content -- among others. Media mavens declared that advertising wouldn't support online content long enough for the medium to reach mass proportions.

(Microsoft, which owns MSN and Slate, is a partner with NBC in MSNBC.)

"Content is still strong and kicking," insists Jason Calacanis, editor of Silicon Alley Reporter, a magazine that follows the New York new media scene. "But the zine on its own is weak. It needs something else to go with it."

Alliances provide life links
For scrappy survivors like three year-old Feed, a technology-savvy site for twentysomethings, the future lies with alliances with other Webzines. E-commerce is the savior for Concrete Media's teenzine Bolt and reviews-based site Girls On, which are fashioning themselves as niche portals and are close to breaking even, says Concrete chairman Dan Pelson.

Other Webzines are trading their independence to ensure survival.

For example, in October search directory Lycos bought Wired Digital - a network of services including the Web's first commercial zine Hotwired and the feisty opinion site Suck.com - for $83 million.

Then there's the case of retailer Delia's, best known for its catalog of clothes and accessories for teenage girls, which acquired the online teen magazine gURL.com in December 1997 as part of its move onto the Internet.

Last week, when Delia's announced it would spin off its Internet operations in a public offering, its stock jumped 26 percent on the news.

"If the [online content] property has a distinct audience and strong organic growth, they may be acquired by a bigger company," says Andrea Williams, Internet analyst with Volpe Brown & Whelan.

Stephanie Syman, editor in chief and founder of Feed, which attracts about 200,000 readers a month, says "it's quite possible we'll be acquired by 2001."

Meanwhile, Feed will look to other Webzines with a similar audience and 18-34-year-old demographic to create joint sponsorships for advertisers.

"Alliances will be very key to growth," says Syman.

Fighting on
Over the next year, Slate, the political commentary magazine owned by Microsoft Corp., will dabble with alternate forms of delivery to help grow its audience, including e-mail services, electronic book devices and advanced printing technologies that will automatically download sections like "Today's Papers" to a user's printer, says publisher Rogers Weed.

"We're going to benefit from the general growth of the Net and the general growth of Internet advertising," says Michael Kinsley, editor of Slate, which, unlike other e-zines, has an owner with deep pockets.

In March Slate started charging $19.95 a year for access to most of its content, and since then it has attracted "in the high 20 [thousands] in paid subscriptions," says Kinsley. "If we can maintain that growth in absolute terms, we're OK."

Even so, that's only about $500,000 a year in revenue, and Weed concedes the e-zine hasn't hit his "highest expectations" in subscription growth. Slate's ad revenues doubled from fiscal year 1997 to 1998, and with the e-zine now being sold as part of the Microsoft Network, revenues should double again in 1999, Weed says.

Solo Salon
Meanwhile, literary e-zine Salon, possibly the largest independent Web publisher with about 700,000 readers a month, is determined to make it solo.

Salon made headlines last year with the story of an affair involving GOP House Judiciary chair Henry Hyde. The San Francisco-based Web site hopes to stay in the limelight with a multimillion-dollar advertising campaign breaking early this year.

Salon publisher Michael O'Donnell expects to increase Salon's ad revenues by developing a network-type model. "We have eight destination sites under Salon," says O'Donnell, citing its technology and parenting areas and a new department on sexuality called "Urge." Other popular areas of the site could be spun off as their own separate businesses, O'Donnell says.

Advertisers come through
In O'Donnell's view, destination sites like Salon are compelling for readers and advertisers because "all the portals are now resembling each other."

In addition, there are signs that ad agencies and mainstream advertisers are becoming more interested in smaller e-zines.

"There is a focus on major sites because it's an easy way to buy a consistently large audience, but a marketer's message actually does far better on niche publications," says Kent Valandra, executive vice president and director of new media at Western International Media, a Los Angeles agency that buys space and time for major marketers. "There's better follow through [or click through] from users."