Salon got its start when David Talbot left the San Francisco Examiner in early 1995, taking with him a few key staff members and editors to work on a new online experiment. Talbot had become restless at the Examiner and wanted to start something new, something that would reinvigorate journalism and deliver investigative news with a firm purpose. The web was fresh, dynamic, and inexpensive, so it only made sense to make the bold new publication a web publication. It was Tablot’s wife, Camille Peri, who recognized the implicit value of the web as a place of community and exchange when she suggested the name Salon for the site. Originally intended to be a part of Apple’s online platform known as eWorld, Adobe Ventures (Adobe’s investment arm) stepped in with a windfall investment for the site when Apple backed out at the last minute just before its launch in the fall of 1995.
Slate got its start when Michael Kingsley left the New Republic in late 1995, taking with him a few key staff members and editors to work on a new online experiment. He went straight to Microsoft with an idea for a timely, weekly format news magazine published exclusively online at a time when Microsoft was aggressively expanding into new markets (a strategy that would produce, in addition to Slate the news network MSNBC). He carved out a space for himself on the Microsoft campus, with satellites in NYC, run by Judith Shulevitz, and Washingon, run by Jodie Allen. After about six months of prep, and with the financial backing of Microsoft at their wings, Slate launched in mid-1996.
Slate and Salon. Over the years they would be compared endlessly by outsiders looking in on a newly minted, digitally native audience. The web has upended many an industry, for better or worse, and the news is no exception. Publications of the older tradition struggled to track the patterns of this new generation, but Salon and Slate, were designed using the very fabric of a digital medium. They wove seamlessly into the spirit of the web and experimented with new tactics, like when both publications changed from weekly, to daily, to semi-daily formats. They reacted to change like only a digital publication can. Sometimes the two were strangely alike, though their approach and tone would often dovetail from one another. And their quest to grab the attention of the same audience would sometimes blossom into an all-out rivalry.
If we’re talking history though, and we are talking history here, it’s hard to talk about one without the other. The two are remarkably alike, right down to being the online-only, initially loss-leading experiments of deep-pocketed behemoth technology companies looking for a foothold in news media.
People don’t have to make money on the web. That might feel like a rather obvious statement, but it doesn’t always feel like a given. The technologies behind the web aren’t, strictly speaking, predisposed to any particular use and don’t have to be used to run a business. And yet diving into the histories of these two websites has revealed to me less about their editorial evolution and far more about their bottom line. Sure, at least some of this can be attributed to the media world’s self-preserving interest in the economics of online publishing. But even their own recorded histories spend a fair amount of time on it.
My point is, when it comes to money, the question for Salon and Slate was never if, but when and how much.
Salon and Slate are interesting case studies because they provide an alternative to more traditional business models. They got their start thanks to the financial backing of much larger tech world benefactors hoping for a return on investment, but also a degree of credibility and influence in the media world.
Investing in these ideals is nothing new. It was the same motivation used by political patrons of early newspapers to buy editorial bias for a political party, in the times before an independent press.
In the mid-1800’s, newspapers had an implicit and recognizable bias. The newspaper business was expensive in the 19th century, and they needed a way to cover an expensive printing process and distribution. To cover the costs, newspapers were actually funded directly by political parties, and their bias reflected that political backing. There was no wool being pulled over the public’s eyes, this was well known fact. Some newspapers espoused the ideals of the Republican agenda, while others did the same for the Democrats.
Funds were allocated as such. There are certain laws governing the release of statues, proceedings and reports from the legislative branch to the public, producing a number of lucrative printing contracts at every level of government. In exchange for adherence to a certain political agenda, these contracts were awarded to one newspaper or another. This combined with some private (yet still politically motivated) contributions, allowed newspapers to pay for the actual printing and distribution of their print rags, which were still essentially a loss leading affair. The tradeoff, of course, was that newspapers couldn’t deviate too far from their affiliated political party or risk losing funding, so they would unabashedly represent their beliefs.
Towards the end of the 19th century, a few things happened. The invention of wood pulp paper made printing newspapers a lot cheaper. Literacy across the country dramatically increased and more people were interested in reading the paper. And the telegraph made access to global and local news much more immediate and widespread. Suddenly, newspapers found that they no longer needed funding from political parties. They could sell newspapers directly to their readers and more than cover their operating costs. In the span of just a couple of decades the newspapers business became profitable.
In other words, increased readership freed newspapers from the shackles of political patronage and were once again in charge of their own editorial direction. The result was the independent press, an institution that is more or less alive today in the same tradition.
Like the newspapers of the 19th century, Salon and Slate were funded through a kind of patronage. Adobe Ventures (for Salon) and Microsoft (for Slate) knew that online magazines weren’t going to pull in lots of money. At least not at first, the investment was for a longer term play. Though unlike the political parties of the newspaper era, neither company had much interest in editorial bias. Their stock and trade, the tradeoff for their patronage, was an actual return on investment. Or put another way, it was a gamble.
The gamble was based on an assumption. Salon.com and Slate.com were news publications, sure. But they were created online and distributed exclusively on the web medium. That made them more than just a publication. They were internet companies, dot-coms, as well. News publications might not be worth a rapid return, but dot-coms sure were.
In the early 2000’s, dot-coms were the future. Forget the real world. Everything was going to be online. In a race to be a financial part of that future, investors around the world began to invest heavily in any dot-com they could get their hands on. Companies that could barely turn a profit were subject to massive valuations by investment firms hoping to drive up the price of an IPO. By 2001, this would crash and burn in the dot-com collapse and damn near wreck the stock market and economy, but at the time that didn’t stop a whole lot of people from buying in.
Microsoft’s investment in Slate was a bit different. They weren’t just buying an internet company, they were buying actual goodwill in the media world in the form of journalism unfettered by their own influence. Salon, instead backed by much more traditional venture capital, were not immune to the dot-com surge. With some pressure from their investors, they decided to offer their own Initial Public Offerring (IPO) with a ludicrous valuation of over 100 million dollars. Never mind that each quarter the magazine was firmly in the red. They were going to make a lot of money one day; it was a sure thing. On the day of their IPO, Salon brought in $25 million in funding, scaled up their staff, and got to work on the next phase of the site.
It didn’t last long. After the dot-com bubble burst, Salon was forced to cut costs and let staff and writers go. It was clear that patronage came at too high a cost and forced the site into a direction it wasn’t ready for. Eventually, they, as well as Slate would come to the same conclusion the newspapers did. With a large enough readership, they could have their independence too. Unfortunately, a bigger audience freed the sites from one form of monetization only to make them beholden to another.
Newspapers in the early 20th century found that even with increased numbers, sales directly from readers weren’t quite enough. To subsidize some the income lost from political patronage they turned to advertising. Businesses and individuals had been purchasing advertisements in newspapers since the 1700’s, but the early to mid 20th century saw the rise of a massive advertising surge, with major manufacturers and companies buying millions of dollars annually just to run ads in print. And as newspapers became more plentiful, advertisement value diminished, and more and more ads were needed each week to cover costs.
The first news outlets and web zines to blink into existence online typically turned to advertising to fund their projects. It was an understandable decision, the same one made by their dead-tree predecessors. In the early days, sites like Hotwired, Suck, Feed, and even major news outlets like the New York Times, would reach out to advertisers directly and sell tailored and considered full page takeovers and experiences. Packages were sold with only the most basic tracking of clicks and views, and advertisers bought into the idea that presence on various sites would lead to increased awareness if not direct sales, kind of like billboards on the side of the highway.
Ultimately, though, advertisers chose publishers based on page views. If Salon and Slate wanted to get out from under their investors, the best way to do that was to get more readers. Of course, acquiring a larger readership isn’t solely a business decision. It’s the editorial goal of just about any publication (like this one for instance) to engage new readers and spread the word about their brand. So Salon and Slate began experimenting with different formats, eventually each settling on posting multiple times a day. After the tragic death of Princess Diana, Slate slept on the story because of a regularly scheduled summer “skip week.” Salon, on the other hand, made it their primary editorial focus on the event. Readers trying to make sense of what was going on turned to Salon for understanding and catharsis, and the magazine began edging out the competition. It was a lesson learned for both publications; the immediacy and directness of the web medium lent itself – and held the expectation of – real time updates and analysis.
Eventually, each magazine found a voice that suited them: Salon the unapologetic leftist magazine that shyed away from no topic and Slate the op-ed corner of the web that organized the news and served it up for better understanding. Each strategy, though firmly rooted in editorial direction, had the very intended result of bringing in new readers. Salon would often bring audiences in with a tantalizing headline, hook them in with a scandal or edgy lifestyle tips, and then draw them to long form articles or investigative journalism. Slate would organize the news from multiple outlets and comment on it. These brought in audiences for both. And new readers meant more independence, and one more step away from investment.
But advertisers were always playing a rigged game. Large advertising networks like Doubleclick figured out a way to track users across sites, counting eyeballs and clicks and behaviors along the way. They ditched the awareness model and based value entirely on clicks and views, and the value of a single ad soon became (and still is today) a race to the bottom. Everyone made less money as the years passed by, and Salon and Slate were forced to bring in more and more readers, and blanket their sites with more ads, just to keep afloat.
There is an escape hatch, a holy grail on the web. As a media company or an internet company, you could always sell directly to your users.
Selling directly to readers online, though seldom tried, sometimes works. Here’s an interesting tidbit. The Wall Street Journal online, from its launch in November in 1996, has always been behind a paywall. Headlines at time turned the move into a zero sum game. They balanced the future of monetization on the web on the success or failure of the WSJ experiment. Many simply asked the question, content enough to pay for? For the WSJ at least, the answered turned out to be mostly yes. They brought on tens of thousands of subscribers in the first couple of months. 20 years later, in 2016, that number would climb to over 800,000. The site has always needed to run alongside these subscriptions, just like its print counterpart, but they’ve had tremendous success selling directly to readers. Its an effort not frequently replicated.
Salon and Slate, however, have each given it a go.
In February of 1996, Slate began charging its users around $20 a year for access to exclusive content hidden behind a paywall. It was, unfortunately, a failed experiment. After a year, they had managed to bring on 20,000 subscribers. Not a small number by any measure, but not nearly enough to offset the cost of doing business. Worse, after an initial influx of subscribers, numbers had gotten pretty stagnant. In March of 1997, they opened the site back up to everyone and suspended all subscriptions.
However, in 2001, after the failure of their IPO to maintain long term sustainability – and even with the undesirable results yielded by Slate – Salon turned to the subscription model as well. They began charging readers $30 a year for access to a section of the site which included exclusive columns and community features. Once again media outlets both applauded and condemned the move, predicting a new sweep of online pioneers experimenting with a diverse set of monetization tools. And once again reality was a bit more tapered. The service was a moderate success, eventually reaching about 100,000 subscribers, accounting for about half their revenue.
This story doesn’t have an end. Despite a number of ups and downs and segues, Salon and Slate are very much still writing the news. At the end of 2004, Slate sold to the Washington Post, an organization that has dealt with the pressures of news publishing economics as long as anyone in the world (and who has recently been subject to a different form of patronage which excluded the publication). They’ve also introduced a variation on the subscription model, as of a few years ago. Salon‘s subscribers, on the other hand, have greatly diminished, down to about 10,000 total subscribers. This year they tried something entirely new and somewhat bold, allowing users to lend their computing power to mine crytpocurrency in lieu of ads. It is yet to be seen whether this will truly pay off.
The business of publishing online continues to ebb and flow. It’s next chapter, unfortunately, looks to be a dark one, one where the interests of the tech elite rapidly eat away at its identity. Yet news publishers have always turned to the web for a unique audience, inexpensive distribution and a direct connection to its readers. I don’t see that going away anytime soon.