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Content Comeback
The rebirth of a moribund Web content provider…and other alarm:clock news from the land of private venture funding.

It wasn’t long ago that online publishing was out of favor – unable to sustain the hype surrounding early entrants, such as Slate and Salon. Now content is experiencing a resurgence with the rising popularity of blogs and new low-cost online publishing models. What’s more, the surge in online advertising and some big acquisitions have helped.

We took notice of this revival when Beliefnet announced in June that it had raised $7 million from Softbank Capital. Founded in 1999, Beliefnet offers discussion forums, newsletters, and general information on religion and spirituality. It also has an online dating service, aptly named Soulmatch. A bona fide dot-com survivor, this New York City-based startup endured some hard times, including a Chapter 11 bankruptcy proceeding, from which it emerged in 2002.

CEO Steven Waldman, a former journalist, summed up the company’s short history in a November 2002 Slate article: “…we boomed, we busted, and then, unlike almost every other dot-com in our situation, we got back on our feet and have actually begun to thrive.”

One of the hurdles that tripped up many online publishers was that production and distribution costs, while much cheaper than for print magazines or newspapers, were not insignificant. Building an audience proved to be quite costly, while advertising revenues were non-existent. Beliefnet blew through $25 million in venture financing before its bankruptcy – it learned the hard way that a large online audience does not necessarily translate into revenues.

Online content providers such as Beliefnet also learned to wait for the Internet advertising industry to begin maturing. Now it seems like the pain might have been worth it. The purchase of financial news site Marketwatch by Dow Jones for $519 million in November 2004 signaled a revived interest in Web-only media properties. And the New York Times’s purchase of About.com for around $410 million in March 2005 turned heads. Both Marketwatch and About.com has experienced lean times.

As for other online publishers, we’ve watched privately-held companies like TechTarget, a technology news and information site, with astonishment. The company has raised $127 million from venture capitalists, including $85 million in 2004 alone.

The formula for success is different, of course, for every company. For Beliefnet, though, it might seem like a miracle. Eric Hippeau of Softbank Capital has joined its board since the recent investment. He sits on the board of another content-rich website, Yahoo.

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