Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo


Unsupported browser: Your browser does not meet modern web standards. See how it scores »

{ action.text }

Who’s Paying the Bills?

Most of the cost of publishing a conventional magazine goes to buy paper, operate the printing presses, and distribute the finished product through the mail and to newsstands, according to Christopher Harper, a journalism professor at New York University. A webzine incurs none of these. At first blush, therefore, any revenue that a webzine can produce “seems like free money,” says Michael Mooradian, an analyst at Jupiter Communications, a market-research firm specializing in new media. Salon, which was launched in November 1995, began with one-tenth the capital that would have been required for a comparable national print magazine, asserts Salon founder David Talbott.

Nevertheless, whether webzines’ unique attributes will lead to financial success-and hence long-term survival-remains an open question. Writers, editors, and computer programmers don’t work for free. Slate has a staff of about two dozen, according to publisher Rogers Weed; Salon, says Talbot, is put out by 18 people. Thus maintaining a high-quality webzine requires a substantial flow of income from somewhere. The big webzines are still running on the momentum of their deep-pocketed founders-with Microsoft bankrolling Slate, and Apple Computer and Adobe Systems supporting the launch of Salon.

Print magazines make money in two basic ways: selling copies to readers and selling readers to advertisers. Neither source of revenue translates very well onto the Web. Internet users, steeped in an ethic of free information, are loath to pay for anything other than hooking into the Net itself.

Slate’s saga shows that the day when webzines will charge for subscriptions seems, if anything, to be receding into the hazy future. When Microsoft launched Slate last June as a free service, the company warned that the deal was only temporary. Starting in November, Slate readers were going to have to pay $19.95 per year for the privilege. As November approached, however, Slate backed down. Access would continue to be free until February 1997, Microsoft announced, because the company had been unable to perfect the software needed to keep billing records. Cynics scoffed at that explanation, suspecting that Microsoft’s real concern was a potential drop in readership.

And indeed, in January, Slate postponed this financial day of reckoning yet again-this time indefinitely. “Maybe in the future,” wrote Slate editor Michael Kinsley, “people will happily pay for access to premium sites” on the Web, as they pay now for premium cable channels. But Kinsley acknowledged that with the possible exceptions of pornography and financial information, that day has not arrived. “Even in our headiest moments,” he continued, “we couldn’t convince ourselves that people lust for political and cultural commentary the way they lust for sex or money.”

The analogy with cable TV is telling, says David Card, an interactive services analyst at the market-research firm International Data Corp. Premium channels like Home Box Office didn’t really take off, he says, until free TV and basic cable channels were glutted with very-low-quality programing. Only then were millions of people willing to pay for a service that they had been receiving for free. There is still plenty of valuable and entertaining material on the Web that costs the user nothing, Card contends. As long as that is the case, webzines will find subscription sales a tough path.

Web surfers have at least another year of free reading, analysts say. The only online publications that will be able to charge for access are those with gold-plated brand names that command an instant audience, says Jupiter’s Mooradian. The Wall Street Journal has already begun charging for access to its online interactive edition; Barron’s and ESPN might similarly get away with levying such fees for their financial and sports information.

Meanwhile, most webzines are trying to make ends meet by tapping into the explosively growing market of Web-based advertising. Companies spent $55 million on Web ads in 1995 and $260 million in 1996, according to Mooradian at Jupiter. The total is expected to top $1 billion this year. Web advertising has great allure because readers can do more than simply gaze at a picture or read the copy-they can also click through to the advertiser’s page, where they can request more information, download trial versions of a software product, or place a credit card order.

Such advertising appears in two basic forms: long-term sponsorship of a webzine’s department, and banner ads that appear on the top of pages anywhere in the webzine. A successful example of a sponsorship is the relationship between Salon and Borders, the national bookstore chain. In return for sponsoring Salon’s book review page, Borders gets a sweet prize: reviews are accompanied by links to the bookstore’s order forms. Click on the order form, fill in a credit card number and address, and within days the item arrives at your door. The bookstore, in turn, prints excerpts from Salon reviews on the bookmarks that it gives away to customers. Judging from Salon’s often-critical reviews, this cozy relationship has not seemed to compromise the webzine’s editorial integrity.

Still, webzines may have difficulty surviving on advertising dollars. A print magazine sells ad space by promoting the demographics of its readers. While publications like Slate and Salon attract an upscale audience-Salon, for example, claims that its readers have a median household income of $80,000-this profile does not stand out in bold relief from the Internet as a whole, which is still largely an affluent preserve. “Slate and Salon have great demographics, but on the Internet that’s no big deal,” says Mary Doyle, a new-media analyst at the market-research firm IDC/Link in New York. It therefore makes more sense for a company to place ads in sites that millions of people surf by-the Netscape home page, for example, or one of the major search sites such as Yahoo and Infoseek. In fact, Doyle says, webzines will skim off only a small fraction of the total Web ad revenue; 1996 advertising revenue for all webzines totaled a mere $13.5 million, she estimates, puny compared with the $61 million spent on ads at search sites.

Mooradian of Jupiter counters that webzines do have special appeal. A company selling Scotch, he says, is not going to find a general-purpose Web page very attractive as an advertising site, since so many Net users are under the legal drinking age. “A company like that is going to be much more likely to put an ad on Slate than on the Netscape home page,” Mooradian says. And Salon, which claims a readership that is 50 percent female, should attract advertisers who would otherwise dismiss the Web as an inappropriate medium.

Advertising is a numbers game, and Web sites are still struggling to come up with the solid numbers advertisers want-namely, how many people visit a site. One way is to have readers register. All the top webzines require registration to enter their forum, or to sign up to receive e-mail notification of what is in the webzine. Such registration is free to the user and gives the webzine its most reliable tallies of how many people are reading it. Slate, for example maintains about 15,000 people on its e-mail list. The webzine also claims that 50,000 to 60,000 different people visit the Slate site “on a semi-regular basis.” Salon says more than 27,000 people have registered for its “Table Talk” forum. These are small numbers by magazine publishing standards; if advertisement is to sustain webzines, the companies placing the ads will need to believe that the Web is providing an added benefit beyond what they could get in print. An advertiser needs to be convinced, for example, that buying space on a webzine will do the company more good than an ad that reaches the same number of people in print.

Other streams of income are also possible. Word, for example, licenses some of its articles to companies who want to liven up their own corporate Web pages. The Net access and web-page-design company that owns Word-ICon-also rakes in consulting fees for dispensing advice on how to set up an attention-getting Web site. Word functions as a promotional tool for its parent company and therefore does not need to make money in its own right.

0 comments about this story. Start the discussion »

Tagged: Web

Reprints and Permissions | Send feedback to the editor

From the Archives


Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me