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"Slate" and "Salon" were hailed as harbingers of a new media order. Today they're pulling in readers but hemorrhaging money.

By Dan Kennedy

JUNE 14, 1999:  Three years ago this month, Slate debuted amid extraordinary hype and fanfare. Bankrolled by Microsoft and edited by celebrity policy wonk Michael Kinsley, Slate was billed as a breakthrough in the evolution of the Web as a serious journalistic medium. Ken Auletta weighed in with a buttery New Yorker profile. Newsweek put Kinsley, who had moved from Washington, DC, to the Microsoft campus in Redmond, Washington, on its cover, clad in raingear and face to face with a big old Pacific Northwest salmon.

It was a heady time for online journalism. Slate was the third high-profile general-interest Web magazine. The previous fall, a band of exiles from the San Francisco Examiner, armed with $100,000 in seed money from Apple Computer, had started Salon. A year before that, Wired magazine had launched HotWired, a Web offspring that was, in some ways, better than its paper-and-ink parent. Slate, Salon, and HotWired all offered energetic takes on politics, culture, media, and technology. Surely, with Web usage growing at an exponential rate, the Big Three webzines would soon grow into 50. Or 5000, for that matter.

Today, against all expectations, there are not 5000 but, rather, a measly two. The Web has indeed become the communications phenomenon of our time. The number of Americans 16 and older who use it grew from 66 million to 83 million, or 40 percent of the adult population, between 1997 and 1998, according to a survey by IntelliQuest. Thanks to fevered speculation, companies such as Amazon.com, which has lost millions of dollars, have a higher stock-market valuation than real-world mega-retailers such as Barnes & Noble and Wal-Mart. No doubt even your grandmother (or a grandmother near you) has purchased something online. But the Internet frenzy has not extended to journalism.

HotWired was downsized last year into a solid but unsexy technology-only site. Salon and Slate are still going strong, with vibrant content that rivals national magazines such as the Atlantic Monthly and the New Republic in seriousness, but with shorter pieces and more bite. Each, though, has lost what has been estimated at millions of dollars. Salon, which now bills itself as Salon.com, is preparing to sell stock at an initial public offering (IPO) later this year in an attempt to raise more cash, as well as to enrich founder/editor-in-chief/chairman David Talbot and other top editors. Slate is scrambling to catch up after abandoning an unsuccessful year-long experiment in which it charged a $19.95 subscription fee -- thus reinforcing a truism that the only Web content people will pay for is financial advice and pornography.

All of which raises a question: what happened?

The simplest answer is that nothing's happened -- that it's still early, and financial viability will arrive at some unspecified moment in the future. "I still believe very definitely what I believed when I came out here, which is that the economics of the Internet will make this kind of thing profitable, because of the money you save on paper, printing, and postage," says Kinsley (see "The Kinsley Report" below). Adds Salon executive editor Gary Kamiya: "I do think that we will see other attempts made. It's hard to know what the timetable of that will be." (Kamiya could not speak specifically about Salon's profitability or lack thereof because of a mandated "quiet period" leading up to the company's forthcoming IPO. Talbot, who was traveling last week, did not respond to an e-mail seeking comment -- and, of course, he is bound by the same rules.)

According to a study by Pricewaterhouse-Coopers and the Internet Advertising Bureau, the value of Net ads nearly doubled from 1997 to 1998, from $900 million to $1.9 billion. Similar increases are projected for coming years. But given that the big news in 1998 was that the value of Internet advertising had finally surpassed that of outdoor billboards (nearly $1.6 billion), it's obvious that the Internet advertising market still has a lot of growing to do. Besides, even print magazines can take five, six, or more years to become profitable. Sports Illustrated, to name a well-known example, took more than a decade. The publishers of webzines, then, have a doubly difficult task: growing their products and growing their medium simultaneously.

"While people talk a lot about the low barriers to entry, to create a viable publication actually takes a fair amount of capital," says Stefanie Syman, executive editor and co-publisher of Feed, a four-year-old media-and-culture webzine with a considerably more modest budget than those of the Big Two. "We'd like to be breaking even soon. But I think it's unreasonable to expect that sites will be breaking even in a market that's far from mature."

Those who look to the Web as a revolutionary environment for a new wave of independent journalism shouldn't be too sanguine, since they may be waiting for a future that will never arrive. Though there are literally thousands of modest webzines, ranging from one-person rantfests to the thoughtful essays and commentary offered by the likes of Feed, Word, and Nerve (a purveyor of "literate smut"), real reporting costs money. Ultimately, it's important that Slate, Salon, and other Web publications become profitable, not because every 28-year-old content editor has a God-given right to become an IPO millionaire, but because journalism is expensive.

Besides, Salon and Slate are both so good that it would be a damn shame if the paradigm they've established can't grow and prosper.

Each has taken a decidedly different route to get where it is. Salon, by far the more wide-ranging, even "alternative," of the two, is also loopily uneven. The diversity of opinion is a strength; what might be euphemistically described as the diversity of quality is not. (Disclosure: I wrote regular media commentary for Salon for much of 1997.) Salon burst into the mainstream last year with portentous but impenetrable coverage of an alleged conspiracy involving independent counsel Ken Starr, right-wing financier Richard Mellon Scaife, and Whitewater figure David Hale. Salon also, to its credit, broke one of the year's most important stories: the home-wrecking past of unctuous impeachment hypocrite Henry Hyde. Unfortunately, David Talbot undermined that scoop by writing a smug, self-righteous editorial in which he asserted that "ugly times call for ugly tactics," thus cementing Salon's reputation as Bill Clinton's best friend. Never mind that other Salon columnists, most notably Camille Paglia and David Horowitz, regularly lambaste Clinton.

Salon has expanded enormously in recent months, and intends to expand even more in the future. Indeed, senior editor Scott Rosenberg says the magazine metaphor doesn't even fit anymore (hence the "Salon.com"); he calls it instead "a network of Web sites." These sites are devoted to topics such as books, media, politics, technology, parenting ("Mothers Who Think"), and lots and lots of sex, mainly in the form of overly intellectualized dirty talk for self-absorbed twentysomethings. Though much of the writing sparkles in Salon, there's a sense that adult supervision is almost nonexistent; too often, pieces appear to get in merely for their sheer outrageousness.

Salon's Kosovo material has been remarkably insightful, one of the few indispensable supplements to the New York Times. Media critic James Poniewozik, who's leaving for Time, is sharp and smart. On the other hand, "Alt," a new weekly column by Jenn Shreve on the alternative press, is the very definition of vapid: once-over-lightlies of pieces she barely seems to have read. She's had both good and bad things to say about the Phoenix, so let's take an outside example: a recent piece in the San Francisco Bay Guardian on the environmental devastation in Latin America being caused by industrialized coffee-growing. The Bay Guardian recommended that people instead buy more-expensive shade-grown coffee, and published information on where to get it. Feel-good political correctness? Well, sure. But it was a solid story about an important topic. Shreve, though, dismissed it as "bad alternative journalism 101," and included a sophomoric six-point checklist with such gems as "Make sure your liberal guilt-trip has a capitalist destination by providing contact info for a list of companies happy to overcharge you for the easing of your overburdened conscience." Blech.

By contrast, Slate has made a virtue of consistency. Kinsley, a former editor of the New Republic and of Harper's, has suffused Slate with his way-inside-the-Beltway sensibility. The result is an intelligent, idiosyncratic take on the news of the day that actually saves you time: Slate's breakthrough innovation is a series of regular features summarizing domestic and international newspapers, magazines, reviews of hot movies and books ("Summary Judgment"), even the Sunday-morning talk shows -- a godsend for those of us who need to know who said what, but who regard actually sitting down and watching these things as akin to unanesthetized root-canal surgery. Also unlike Salon, Slate remains a magazine, more or less: though it's grown, it hasn't metastasized into a "network," and it's fairly simple to get a handle on all of its content. Slate offers erudite, humor-tinged gossip on politics, culture, and finance; e-mail exchanges on books and news; and occasional longer (but not long) features. A recent example was Mickey Kaus's counterintuitive analysis of Ken Starr's much-criticized prosecution of Julie Hiatt Steele, the ex-friend of alleged presidential groping victim Kathleen Willey. Kaus concluded that Starr may be crazy, but he's not stupid: if Steele had been convicted of lying about Willey's story, Starr hoped to flip her and trace her lies to the White House. In other words, rather than trying unfairly to punish a minor player, as the conventional media spin had it, Starr was really looking to build another obstruction-of-justice case against Bill Clinton.

Slate's hardly perfect. For one thing, Kinsley's guiding hand is so firm that none of his writers has really emerged as a star even though they include excellent contributors such as Timothy Noah, David Plotz, William Saleton, and Jodie Allen. (The exceptions are Scott Shuger, who serves up "Today's Papers" with too much spin and attitude for my tastes, but who has become something of a minor celebrity, and New York magazine financial guru James Surowiecki, who's a big deal in his own right.) Salon, by contrast, promotes many of its writers with flattering caricatures and personality-oriented hypes. For another, Slate's DC-centricity gives it focus but limits its appeal. But Slate's biggest problem by far is its reliance on Microsoft's brain-dead Web technology. Without question, Slate is one of the slowest-loading, buggiest sites I use regularly, with mangled graphics and weird "broken pipe" messages cropping up every time I log on. Then again, I use a Macintosh, running Netscape; no doubt Bill Gates's minions have optimized Slate for Internet Explorer and Windows 98.

Sounds like something for Salon -- and maybe the Justice Department -- to investigate.

To be sure, the economics of offering original journalism on the Web à la Salon and Slate are daunting. In a recent analysis of Salon's IPO, Slate reported that Salon spent $6.4 million during the last nine months of 1998, while taking in just $2.1 million. Financial journalist Christopher Byron, writing for TheStreet.com (a finance-and-investing webzine that is to the Wall Street Journal what Slate and Salon are to the New York Times), wrote recently that investing in Salon "amounts to little more than a new way to lose money." (Cheeky, given that TheStreet.com, which recently made multimillionaires of its founders, hedge-fund manager James Cramer and New Republic owner Martin Peretz, is itself considered by many financial analysts to be grossly overvalued.) Slate's numbers, buried deep within Microsoft's ledgers, are not so readily available, but are generally presumed to be as depressing as Salon's.

Even so, it's rather amazing that Slate and Salon continue to be out there alone. Dwight Garner, who was book editor at Salon before becoming a top editor at the New York Times Book Review last December, recalls numerous panicky e-mails circulated among Salon staffers about rumors of competition -- rumors that invariably turned out to be unfounded or overblown. "I've been surprised all along that more people didn't try and jump in -- enterprising young people, the sort who in an earlier era might have started an alternative weekly," says Garner. "It seems like the most obvious thing in the world. It kind of depresses you about the state of American journalism."

Internet pioneer Howard Rheingold, a writer/speaker/consultant and the author of The Virtual Community (1993), thinks the lack of general-interest webzines may have something to do with "the hypersegmentation of the market." Just as cable TV fragmented the mass reach of network TV, the Web, with thousands of sites catering to narrow interests, is slicing the media audience still further. "It's very difficult to make large amounts of money that way," Rheingold notes. "It challenges the business model on which mass media are based."

Indeed, there is already evidence that online journalism works best when money is removed from the equation. Take Matt Drudge, the Internet's first journalistic superstar. He was just scraping along when his entertaining-and-sometimes-even-accurate Drudge Report was his sole source of income; but he was able to parlay that into a high-paying gig on the Fox News Channel. Or consider the case of a real journalist, Brock Meeks, whose CyberWire Dispatch, during its heyday in the mid '90s, reported with scatological fervor on regulatory outrages and Internet censorship. Meeks, now chief Washington correspondent for MSNBC.com, always had a day job. Thus, he saw the Internet as a way to get out information he would otherwise have to keep to himself, not as a way to get rich.

"Can we make money from that? I seriously doubt it. Because CyberWire Dispatch is an equal-opportunity offender," says Meeks, who's looking at ways of reviving his pioneering newsletter. "Bell South and AOL aren't going to sign up as sponsors, because CyberWire Dispatch would relish biting the hand that feeds it. Fortunately, I've always had a straight job that could support my outlaw journalistic activities."

One of the most important outlets for reporting on the Web is the Consortium, a project started in November 1995 -- the same month as Salon -- by former Associated Press and Newsweek investigative reporter Robert Parry. Featuring detail-oriented digging with a leftist slant, the Consortium reports on topics such as US involvement in Guatemala's human-rights disaster, the Pinochet case, and the right-wing forces behind the Clinton impeachment effort. Recently, Parry scored a coup when Newsweek picked up on a Consortium report that intelligence forces were preparing to jam up Slobodan Milosevic's overseas bank accounts. But Parry, without marketing money or fancy graphics, gets just 500 to 1000 hits per day, far below the 1.2 million "unique users" Salon claims it attracts on a monthly basis. Mostly he gets along on foundation money, contributions, and the occasional resale of an article to progressive publications such as In These Times. He also publishes a print magazine, IF, that's a tribute both to I.F. Stone and to George Seldes's In Fact.

"One of the ideas of the Internet was that you would have an explosion of original material," Parry says. "But it is very difficult to sustain this kind of work financially. That's the area where I think the Internet has really not met its promise."

As Parry's experience suggests, one of the problems with serious online journalism is that it can be difficult or impossible to track down. Veteran progressive journalist Danny Schechter, the executive producer and co-founder of the television-production company Globalvision, is working with Oneworld.net, a British operation, to bring alternative, independent foreign news to the Web. The idea, says Schechter, is to take good work that's already being done by journalists and activists and bring it all to one recognizable place so that people can find it. Globalvision and Oneworld.net are also working on a Web project called the Media Channel that will aggregate media criticism from a wide variety of sources.

"The cost of production has come way down relative to what it once was," Schechter says. "Now we're concerned about the means of distribution in a monopolized marketplace. Anything that breaks through that distribution bottleneck is positive and good."

In a media universe overwhelmed by bland, look-alike news outlets espousing the same corporate-friendly, centrist points of view, it's vital that independent voices be heard. It's inconceivable to think that the Web can't play a role in that.

The Net should be an ideal medium in which to incubate all kinds of new journalistic projects. Unfortunately, even as it gives Brock Meeks and Robert Parry and Danny Schechter a theoretical chance to be heard, it also promotes the safe and the familiar. New York University journalism professor Jay Rosen points out how much easier the Web has made it for him to keep up with the Washington Post, the Boston Globe, and the Los Angeles Times -- and notes that the time he spends with those papers is time he doesn't have to spend with new media ventures.

Rosen has a suggestion for would-be Internet journalists: real interactivity -- not just occasionally responding on a webzine's reader forum, such as Salon's "Table Talk" and Slate's "The Fray," but discussing, arguing, encouraging true give-and-take. In essence, it would be an electronic form of civic journalism, the reader-involvement model of newspapering that Rosen has espoused for years.

"The sovereignty of text, to put it in academics' terms, is shifting rapidly. It's a power shift, and it's moving toward the audience," says Rosen. "You are going to need journalists, but journalists are going to need to be interactive in some way that they haven't been traditionally. There are publics online, already formed around issues and concerns. It would be interesting to take a group -- say, 'Human Rights Worldwide' -- and try to create an interactive publication for those people. I'm kind of hoping there will be a generation of journalists raised on the Web who see interactivity as an opportunity create a new genre of journalism." In a culture that's crying out for genuine human connection, that suggestion might be the most truly revolutionary of all.

Regardless of whether Slate and Salon ever become solidly profitable, or whether others follow in their footsteps, it's clear that Internet journalism will not evolve in simple, predictable ways. But it may be no exaggeration to suggest -- as many have -- that the Web is the most important advance in publishing since the Gutenberg press. Perhaps in the not-too-distant future, we'll begin to see more journalism that's worthy of such a momentous development.

The Kinsley Report

It's not quite accurate to say that the pre-Slate Michael Kinsley was a creature of Old Media. Following stints editing the New Republic and Harper's, he spent nearly seven years co-hosting CNN's Crossfire -- as new a medium as there was before the rise of the Internet.

Still, as a familiar inside-the-Beltway figure, Kinsley inspired considerable skepticism among some of the Net's early pioneers. Many New Media pundits gleefully predicted he would be back in Washington (DC, that is) within months.

Instead, Kinsley's still in Washington State and still running Slate, despite a highly public dalliance with the New Yorker last summer. And, backed by Bill Gates's Godzilla-size checkbook, Kinsley has created something unique -- a cross between a newsmagazine and a journal of opinion, with updates throughout the day.

Kinsley talked about what he's learned, and what's next, in a conversation with the Phoenix:

Q: Why has no one followed Slate and Salon in attempting to launch a well-funded, general-interest Web magazine?

A: It turns out to be harder than people thought -- not necessarily harder than I thought -- to make this kind of thing work. It takes a print magazine typically seven or eight years to become profitable. And we're building a market.

The Web is a place that is torn by fashion, as you know. Three years ago, the fashion was content -- "content is king," that was the big cliché. Then the fashion became transactions, commerce. Now the fashion is portals. So I would say the main reason there aren't webzines starting hither and thither is not anything in particular that has happened in real life, but, rather, the tides of fashion have shifted.

Q: You once said it was important for readers to pay at least something for content, because a publication that was entirely dependent on advertising could have problems with its editorial independence. Yet you recently abandoned your strategy of charging a subscription fee for Slate. What's your current thinking?

A: If you had your choice of being subscriber-supported or advertiser-supported, you would probably choose to be reader-supported. That was my basic point.

Although I've been thinking about that lately, because my friend Meg Greenfield just died. All the obituaries discussed the fact that she came to the Washington Post when the Reporter went out of business. And the reason the Reporter went out of business was because the readers deserted them in droves when they supported the war in Vietnam. And so that sort of made the point that readers can be persnickety and aren't necessarily reliable supporters of your independence either.

The best thing's a mix. But the Web wasn't ready for it.

Q: Last year, you told the New York Times, "It's important to us to break even and to be a business, not someone's charity case." Yet even many high-quality print magazines lose money. How does Slate make it to profitability?

A: I still believe very definitely what I believed when I came out here, which is that the economics of the Internet will make this kind of thing profitable, because of the money you save on paper, printing, and postage.

Our models include the Economist, Time, Newsweek, and also the New Yorker and the New Republic. Many of these magazines are in fact profitable, even though they have to pay for paper, printing, and postage. So I don't think it's hopeless -- I think it's definitely doable, and it remains my main goal.

Q: What's the most surprising thing you've learned doing this?

A: I guess I'm going to look like a fool for being surprised, but the enormous demands for speed and immediacy. I started out thinking we would literally be a weekly magazine published on the Web. Yet we were updating every day, from day one. Now we're updating constantly. We hear from readers who say, "It's been 45 minutes since the school shooting, and you have nothing on it."

Q:You must feel like you're expected to be more of a TV station than a magazine.

A: That's one of the things we're definitely trying to resist. And it's not only the timeliness aspect, but the multimedia. With the coming of greater bandwidth, it's going to get easier and easier, and therefore more and more expected of you, to have video and to have audio. One of the things I'm determined to resist is turning Slate into TV by other means. We are going to cling to the print metaphor. Although we hope to use video and other big-bandwidth things in useful and creative ways, we don't want to become a TV station.

You know, people are constantly suggesting, "Why don't you take your e-mail dialogues, put two people in a chair, and have them do it on video?" My answer is, we think e-mail is a medium that is better at communicating serious ideas in a lively way than TV.

Q: Last summer, after you almost became editor of the New Yorker, you said that was the only job for which you would have left Slate. Do you see yourself at Slate long-term, or after three years are you looking to do something else?

A: I'm not going to be here for the rest of my life, but I'm going to be here for several more years at the very least. I'm still having a blast. And maybe I will be here for the rest of my life. I did Crossfire for six and a half years, and I'm enjoying this at least as much as I enjoyed that.

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