WASHINGTON, Jan. 9 (UPI) -- In just two short years, Salon
has gone from being a daring online magazine with an elite, but small, following
of digerati to being one of the most popular content sites on the Web. Once
proclaimed as "The finest of the new breed of Net-native magazines"
by The San Jose Mercury and "an ahead-of-the-curve, culturally adroit
mag" by The Boston Globe, Salon made quite a splash as one of the
Web's leading cultural and literary sites.
Too bad it couldn't last.
Despite its impressive growth and media accolades, Salon
hasn't been able to avoid the fate--both fiscal and otherwise--that has befallen
many of its dot-com peers. It seems that in an era where a company can go from
being a superstar to a has-been in a matter of weeks, none are impervious.
When Salon cut 20 percent of its staff at the end of 2000,
it sent shockwaves through online media. "To me, the Salon layoffs reflect
the financial pressures that are battering online publishers--and I don't see
any letup in sight," said Professor Jeff South of the Virginia Commonwealth
University 21st Century News Center. "It's all very sad." What is
perhaps saddest of all is that financial pressure has stripped much of the individuality
from sites such as Salon and forced editorial departments to adhere to guidelines
set by advertisers, not writers.
Salon's cutbacks are part of an effort to make up an expected
$6 million shortfall in the site's $20 million projected revenue. "The
market is demanding profitability and we're committed to get there as quickly
as possible in 2001," said Michael O'Donnell, Salon.com's CEO and president,
in a statement. "This was a difficult decision because it involves talented
people who have worked very hard to make Salon a success."
The layoffs will affect 15 employees, including four on
its editorial staff. Salon said it expects to report third-quarter earnings,
for the period ending in December, of between $2 and $2.3 million, close to
30 percent short of the $3.2 million it had forecast earlier.
"We're adjusting to this market, which has
clearly gotten worse, and might continue to for the next few months," O'Donnell
said in an interview.
Salon's stock has taken a beating since April's dive.
Salon shares closed recently at 94 cents, just 57 cents above its 52-week low.
It peaked back in June 1999 at $10 a share.
This isn't the first time that Salon has found itself
struggling to stay afloat. In June, the company laid off 13 people and closed
its Seattle office. But this second round of layoffs has many wondering whether
Salon and others of its ilk can withstand the industry shakeout.
Most believe they will.
"My guess is that Salon will survive, and things
will slowly look better for all content sites once we pass through this trough
that we're in now," say Steve Outing, interactive journalist and CEO of
Content-Exchange.com.
Although sites such as Word, Slate, and Salon were viewed
with a mix of disdain and downright disapproval in the early days of online
content, the Monica Lewinsky/Clinton story that broke in 1998 changed all that.
With near-instantaneous coverage and in-depth analysis,
Slate and Salon gained credibility quickly and challenged the old guard of traditional
media. Those were heady times for online journalism.
In March of 1998, Ethan Goldstine of the Online
Journalism Review praised Salon as "a Web rarity--a site surviving
and apparently succeeding just by providing high quality, intellectual content,
without Bill Gates's help."
Unfortunately, the magazine was unable to get by on its
feisty attitude alone.
Earlier this year, Salon underwent a massive redesign,
much to the dismay of loyal readers. Perhaps in an effort to appease advertisers
and attract a wider audience, Salon changed from an edgy, opinionated soapbox
for media coverage, culture, news and technology to a watered-down version of
its former self-complete with more political coverage and news from the wires.
Just like the former leather-clad rebel that seeks the
safe harbor of the suburbs, Salon seems to have sacrificed much of its moxie
and sass in a misguided effort to grow quickly.
So, can Salon crawl back from the edge? Well, that depends
on whether you view revenue or reputation as the main ingredient for success.
While the site probably won't return to its glory days, it may be able to remake
itself into something that combines its former swagger with a viable revenue
model.
First, it will likely have to forgo its reliance on online
advertising, which currently accounts for about 85 percent of its revenue. But
then what? Some analysts believe that the pay-for-content model will reemerge
as a viable model for online publishers.
Forrester Research's report, "The Content Site Turnaround"
claims that the pay-for-content model could grow. "[Paid content] will
gross $10 billion for content sites in 2005 as the number of consumers willing
to pay slowly grows," says the report. The report also surmises that, "On
average, online consumers would pay only $3.75 for a monthly subscription to
a content site and not more than $6.00 per month for any kind of content."
Thus far, there are only two pay-for-content success stories:
The Wall Street Journal ($4.95 a month) and Consumer Reports ($3.95
by monthly subscription). However, both of those have formidable print counterparts
that fuel their online ventures. Salon does not.
Forrester isn't alone in its cautious yet optimistic outlook.
Content-Exchange's Outing says he "absolutely expects to see a revival
of the paid-content model," but adds "that doesn't mean the end of
mostly free content, just that there will be more premium versions of sites
that offer added value over the free version. It was tried a few years ago,
but now there's real motivation to make it work. There's not a ton of investor
money to fall back on if your site doesn't make money quickly."
Like many cultural icons of the last couple of years,
Salon is definitely struggling to remain relevant in the 2000s. One has to wonder
if becoming another source for celebrity gossip and wire stories will provide
enough substance for it to thrive in this hypercritical, shakeout era.
Sacha Cohen is a Washington,
DC-based writer. Her work has appeared in The Washington Post, Kiplinger.com,
Fast Company, Oxygen's ka-Ching and other print and online publications.
Sacha has been covering Internet trends and culture since 1996.
Copyright 2000 by United Press International.
All rights reserved.
