New media gets the message Content and community were vital to investor's plans to get rich quick. But
sites with great content and large communities are still being forced to
close, writes Jim McClellan
More internet news <http://www.guardian.co.uk/internetnews>
Jim McClellan
http://www.guardianunlimited.co.uk/online/story/0,3605,509994,00.html
Thursday June 21, 2001
The Guardian
In the mid-90s, techno-gurus claimed that successful websites needed to
focus on "the three Cs" - content, community and commerce. Of these, content
- as in stuff to read, watch, listen to or look at, was pronounced the king.

Truth be told, content's hold on power was always shaky and was quickly
deposed by community and commerce. But plenty of people - crucially venture
capitalists - still believed that content was important online. As a result,
various webzines appeared, offering the kind of thing normally supplied by
the offline media, albeit with a few interactive knobs on.
Five years on, things look very different. According to the American net
journalist David Hudson, the three Cs that now characterise life online are
"consolidation, cutbacks and collapse". Content sites have come under
particular pressure, with well-loved names being forced to close. Suck
<http://www.suck.com>, set up by Carl Steadman and Joey Anuff, and Feed
<http://www.feedmag.com>, set up by Steven Johnson and Stefanie Syman,
suspended operations earlier this month, provoking much lamentation.
Both titles were internet old-timers (online since 1995), and embraced the
creative possibilities of the net. Suck specialised in sarcastic debunking
of net hype and clever hyper-linking. Feed offered cultural commentary and
experimental interfaces. Both were pioneers in their own way and had become
part of the online furniture.
Perhaps that was part of their problem, suggests Clay Shirky, a web analyst
(and occasional Feed contributor) from The Accelerator Group <href=> in New
York. "Suck's initial editorial mission was to be smart and sceptical about
the web. At the time no one else was either of those things. By 1999,
everybody had gotten smart about the web. And by 2000 everyone had gotten
sceptical.
Feed's editorial mission wasn't clear, because it was always a work in
progress. But it's hard to say what The New Yorker's mission is, aside from
showcasing good writing." Actually, both sites did evolve. Suck kept the
sarcasm but moved to cover pop culture. Feed dropped the experimental,
academic tone. And, last year, both sites joined forces to create Automatic
Media. The visible result was Plastic <http://www.plastic.com>, the
Slashdot-style community weblog devoted to media and politics, which remains
online, because the staff, in particular Joey Anuff, work without pay.
Behind the scenes, the aim was to create an advertising network and pool the
ad staff of both sites to cut costs. It was a good idea but never really had
a chance of working, thanks to the collapse. That collapse (and the
unwillingness of investors to continue to fund loss-making net operations)
is the reason sites like Feed and Suck are closing. Most content sites
support themselves by selling advertising (usually banner ads). According to
Rebecca Ulph, an analyst at Forrester Europe <http://www.forrester.com>, the
online ad market is still growing.
"Even in these days of doom and gloom, it's up 30-50% a year. But the prob
lem is, it's not growing aas fast as the amount of content it's attempting
to support." As a result, says Shirky, the market is massively over-supplied
and the rates sites can charge have fallen to around a thirtieth of three
years ago. Both Ulph and Shirky believe advertising revenues will eventually
be big enough to support content sites. Forrester has suggested that by
2005, "ad spending would bring around $27 billion to US content sites".
The sites that get these revenues, says Ulph, will offer detailed marketing
services to their advertisers - services that let them properly target
consumers. There'll be fewer sites, they'll be bigger and they won't be the
names we know now. As Shirky says, "the collapse of content sites is just
beginning". T o survive, sites are looking to boost their revenues by
resorting to what could be called "the four Ss" - shopping, syndication,
services and subscriptions. None are easy. Back in 1998, many sites hoped to
make money from selling items related to their content.
Unfortunately, it has become clear that consumers prefer to buy from
dedicated retail sites. Syndication (or licensing) works for some. For
example, Zach Leonard, the chief executive of FT Marketwatch
<http://www.ftmarketwatch. com> says his site initially thought revenues
would be "80% advertising, 20% licensing. But the split's worked out to be
60/40."
Still, FT Marketwatch is well placed. It has the FT brand, and can license
every thing from tools and real time financial data, to more standard
content to businesses keen to be associated with that brand. Similarly,
using services associated with content either to generate money or shore up
ad revenues is an option for only a few businesses. Rebecca Ulph mentions
the free wedding planning service offered by Confetti
<http://www.confetti.co.uk> which locks consumers into the site largely
because of the trouble it would take to switch to a rival.
In America, Ediets <http://www.ediets.com> has built a profitable business
out of charging consumers $10-$15 a month for content and personalised
diet-planning tools. Shirky remains sceptical. "Ediets is almost like a
micro-application service provider. But it's not clear it is a general
solution for the problems faced by what we generally mean by content sites."

The general solution many seem to favour is subscription. After all, it
works offline. However, no one has really been able to make it work online.
There are exceptions, the most notable being the online edition of the Wall
Street Journal, which claims to have 574,000 paying subscribers. However,
this hasn't made WSJ.com <http://www.WSJ.com> profitable.
In March the site confirmed it was cutting jobs as a result of the ad
revenue squeeze. Ulph says the high subscription figures aren't what they
seem. Most subscribers are businesses, who take up the general subscription
offer for the print and online edition combined. Shirky adds that WSJ.com
offers its opinion pieces free, because it wants them to circulate widely.
It is a sign that if subscription charges do come in for content sites, they
won't be crude flat fees. Most will continue to offer some free content
(aimed at general consumers) and content you pay for (aimed mainly at niche
markets, in particular business users). For example, many US newspapers
offer their content free for seven days, but charge for their archives.
Yahoo <http://www.Yahoo.com> now charges for some premium services,
including auction listings and the ability to make phone calls via its
instant messenger client. Salon <http://www.Salon.co,>, the
cultural/political webzine tipped to be the next content casualty, charges
users $30 a year for extra content and the chance to read the main site
ad-free.
As far as the UK/European market is concerned, Shirky says it will be a "big
indicator" if FT.com decides to try subscriptions. FT Marketwatch's Zach
Leonard says that the FT group is "actively looking" at online
subscriptions. "The questions are what and how much would remain free."
Indeed, at the moment, as he points out, FT.com <http://www.FT.com> charges
for some services/content - for example, its AskFT archive search. FT.com is
one of the few sites that might be able to charge, says Ulph. "Sites have to
produce the best of breed content you can't get anywhere else reliably,
otherwise people won't pay for it."
There needs to be a fundamental change in the consumer mindset, she
suggests. People expect to get content free. When faced with a charge, they
assume they'll be able to find something similar elsewhere free. They also
feel they have already paid once - in their ISP subscription charges. That
indicates, suggests Leonard, that companies such as AOL-TimeWarner and
TerraLycos will be best placed to make money from content. They might adapt
a cable TV pricing model, and add levels of content according to how much
the user paid.
"That way, the user experience is not hindered. They just pay upfront and
everything is all in." AOL, in particular, seems to be moving this way.
While the high-profile content casualties are American, the pressures are
being felt here. Ulph says several sports sites will close over the next
year.
The women's sites will also struggle. Drew Cullen, editor of the cheeky
British IT news site The Register <http://www.theregister.co.uk> suggests
Dotmusic may have problems.
"It has a massive readership, but it doesn't generate much income." What
about The Register? Cullen seems confident. The Register knows its niche. It
has a large readership and a small staff (14 in total). It is managing to
support itself via advertising. "But if we wanted to do more than wash our
face, we'd have to look for money, which would be difficult now." Perhaps
that's a blessing in disguise.
According to Clay Shirky, "venture capital damaged online media." Most such
companies put money into net companies expecting to lose it or make back 30
times their investment in two years, he explains. Content sites were never
going to offer those kinds of returns. "Media outlets chug along either just
below the waterline, as with the New Yorker, or just above, as with most
magazines. The media business is just not a wealth creation business."
Unfortunately, people believed that everything connected with the net would
make them billions. No one thought content sites needed to be shielded like
a new magazine for five years while they found their feet. So content sites
now need to look for a different kind of money, says Shirky. "They need
patrons, rich media companies that don't mind running them as a loss leader.
After all, The New Yorker has never turned a profit."
Then again, there's only one New Yorker. You could argue Microsoft is
running Slate, its cultural webzine as a New Yorker-style loss leader. This
particular solution might work for Salon, possibly even Feed and Suck, but
not many more.
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