How Stand-Alone Sites Cope   

Newspapers are forcing readers to jump through hoops before they can get to Web stories, but the situation can get even more complicated at stand-alone online news sites.

For instance, nearly everything is free at the financial news Web site CBSMarketWatch.com, and anybody can click with abandon through Slate.com. Want to read a story on the National Journal's Technology Daily Web site? You'll have to pay as much as $4,700 for a year's subscription. And as of April, readers who want to zip through online People, Entertainment Weekly, Teen People and a host of other AOL Time Warner titles have to pay for either AOL memberships or magazine subscriptions. For now, Time, Sports Illustrated, Money and Business 2.0 will remain accessible to anyone online.

And that's all easy compared with the system at Salon.com, where readers have choices: They can drop $30 for the "premium" subscription and get Salon without advertisements for a year as well as free magazine subscriptions, discounts and MP3 downloads; or pay $18.50 but see ads and get some but not all of the premium advantages; or go for $6 a month for the access with ads and even fewer perks. Also in the mix of possibilities is a seven-day trial, in which people first pay any of the annual fee options and then keep or cancel the membership, and a free "day pass," which comes larded with full-page advertisements that capture the screen before delivering the stories.

As at newspapers, the divergent approaches to cultivating both readers and advertisers are symptomatic of an industry in flux. Online publishing is less than a decade old, and companies are picking their way through a buffet of models to see what formula best delivers profits.

CBS MarketWatch, where all is free, this year proudly announced its first profitable quarter. In March, Salon's chairman, founder and editor, David Talbot, praised the subscription gambit, calling it "the key reason Salon is in business today." Slate is "on a path to profitability" with a "dramatically" growing audience, says Publisher Cyrus Krohn. "Television is down, print is down, but online is growing." Slate and Salon, online newsmagazines of sorts, specialize in irreverent news commentary, arts and entertainment coverage and feisty columnists.

The hook online Web sites are nabbing advertisers with is access to those elusive consumers who historically might have read the paper or watched a little TV in the morning and listened to the radio on the way to work, but were then largely inaccessible until the end of the workday. With Internet-wired computers on the desks of so many desirable consumers, the time between commutes is no longer an advertising wasteland.

"TV is primarily a prime-time media, but for us prime time is daytime," says Larry Kramer, chairman and chief executive officer of CBS MarketWatch (cbsmarketwatch.com). "That's how we're going after the biggest advertisers. They are on our site because they can reach that audience during the day that they are reaching at night. It's a big deal when you are trying to deliver a message." Kramer credits the site's editorial niche, extensive licensing deals and cost-cutting for its financial success. "Financial news is perfect for the Internet," he says. "It has a short shelf life, it has a need to be paired up with historical data, and it in some ways needs to be both customized and not customized--you need a front-page mentality to help people know what is important.... But there is value in giving them customized news, based on what stocks they own."

The online Wall Street Journal "did us a big favor" by charging for information, Kramer adds. People interested in financial news, but not in paying for it, came to CBS MarketWatch, Kramer says, and haven't left.

About half of the site's revenue comes from licensing. The company licenses content--stories written by MarketWatch staffers--to more than 200 Web sites, Kramer says, including all of the major financial brokerages. It also bought a technology company specializing in financial software called BigCharts a few years ago, and it licenses BigCharts services to other Web sites. BigCharts software lets Web sites, for example, offer their clientele customized maps, graphs and other information about financial data.

"When advertising was cut in half from 2000 to 2001, licensing grew about 75 percent," Kramer boasts.

Slate toyed with paid subscriptions in 1998 before abandoning the approach after 11 months and letting readers surf the site for free (see Free Press, March 1999). "We had 30,000 subscribers," says Publisher Krohn. "It became apparent that advertising would be the better approach." Revenue has grown every year during the past five years, he says, and "we're on a path to profitability." Krohn adds, however, that Slate, which has the deep pockets of Microsoft behind it, may simply have been ahead of its time. "We may want to revisit that in the future," he says.

"At the moment we're having a good deal of success with advertising, and we're getting Fortune 500 companies with six- and seven-figure marketing campaigns," he continues. "Ultimately, I think we made the right decision, and whether or not we choose to pursue a subscription model in the future with some content, or put the entire site behind a subscription model, those are all avenues we will consider taking."

Technology Daily (nationaljournal.com/pubs/techdaily/) started publishing during the height of the Internet boom, in January 1999, and it's still up and running, supporting five reporters and other editorial staffers all focused on one thing: intersections of government and technology.

Washington is dense with rarefied print publications like Technology Daily, which is essentially a newsletter for lobbyists and other creatures of the capital who obsess over government minutiae. Information is vital to these people, about 350 of whom are willing to spend big bucks on Technology Daily. "You're talking about people who are very well informed, and you're trying to tell them something they don't know already," says Editor in Chief Louis Peck. He says Technology Daily has been "marginally profitable" for the first time this year.

No online publication has been subject to as much scrutiny, praise and ridicule as Salon, founded in San Francisco in 1995 by Talbot, a former arts and features editor at the San Francisco Examiner. News of Salon's imminent demise has appeared persistently since the collapse of the dotcom bubble, fluttering through Weblogs and newspapers as regularly as government consumer spending reports. The site has indeed come close to shuttering several times, but injections of cash from investors have allowed Talbot & Co. to escape from every dance with death.

The company has tried a range of different money-making strategies. For the most part, however, it lives thanks to the wallets of investors.

Talbot says the company continues to examine deals with print publishers and broadcasters to further cement the Salon brand, but it's mostly focusing on the Internet. The company received "lots of snide and skeptical" comments when it started charging for access. But the subscription revenue "has kept us going," he says, explaining that the rise in subscription revenues convinced investors that Salon was viable, and that's one reason they hung in there.

The company achieved its first week of profitability in February, Talbot says. About 60,000 people have bought subscriptions, accounting for about half of the company's revenue. The other half, advertising, fell "considerably during the past year or so," Talbot says, partially blaming the constant Salon deathwatch. "The economy has been terrible," Talbot laments. But in the wake of the war in Iraq, he predicts, "advertising will come back. It can't be down forever."