Salon makes a go of premium service.
February 3, 2002 12:16 AM Subscribe
I think it does make sense due to habit. For example, I enjoy MeFi greatly. If I wanted to I could get the same info from Fark, BoingBoing, /., or any number of others.
Now pretend that MeFi went to a pay system. Would I pay? Hell yes. I might be able to get simlar links and discussions on other sites, but I'm rather attached to how things work around here. I've grown accustomed to the users (authors) and the interface itself.
I've tried all the above sites and more, but MeFi is the only one I come to regularly. Maybe the news isn't brand new. Maybe not all posts are insightful (mine are most certainly not), but it has grown on me.
Once people get used to a certain place, its characters, and its interface it becomes pure habit. I judge all similar pages against the mighty MeFi. Nothing ever comes close because this is the firts of its type that I gott hooked on and participated in.
posted by ttrendel at 12:36 AM on February 3, 2002
Habit or not, news and politics were a main part of the attraction to Salon. With both these sections closed off to all but 30,000 people the majority were suddenly left with a very much reduced publication. My guess is that a significant % of the remaining 3,770,000 readers (July figures) had visited Salon mainly to read content from the news and politics sections and therefore when those sections were closed they either stopped visiting or visited less.
It seems suspicious to me that Salon is not releasing current traffic figures but is instead referring back to July 2001 figures and calling them present day estimates.
I hope that is clearer.
posted by RobertLoch at 1:09 AM on February 3, 2002
posted by owillis at 1:19 AM on February 3, 2002
posted by ttrendel at 1:25 AM on February 3, 2002
posted by MrBaliHai at 7:23 AM on February 3, 2002
posted by dhartung at 9:35 AM on February 3, 2002
If advertising revenue remains at the presently level of $0.7 million last quarter, to breakeven they would need to get around 260,000 people to subscribe.
If they doubled present advertising revenue then this figure would be approximately 140,000.
They claim that they can reach profitability within a year or so. I'd be fascinated to hear what this prediction is based on.
To help make an assessment of their potential what I want to know is how damaging the introduction of subscription was to their audience levels so that a proper cost/benefit analysis of their decision to introduce subscription can be done. However they are deliberately preventing anyone getting the information required to do this. I mean it is not complicated, they just need to release up to date traffic figures.
Easy press like the above doesn't help anyone, well except Salon. Was nothing learnt from the dotcom bubble fiasco. Industry media, such as that magazine, has an obligation to nail a company down, not hype their spin.
posted by RobertLoch at 10:59 AM on February 3, 2002
I think they're driving people away. In one way it makes sense. A good chunk of their costs have to come from hosting and bandwidth which cannot be covered by the advertising revenue they generate (which anyone who runs a traditional advertising based website might agree with and is articulated very well in this Kuro5in piece). If they only had to service the 30,000 or so subscribers they could cut costs substantially. But, I still don't think they could make money. Besides the CEO I'm sure they're are more than a handful of executives making six figure salaries that (in aggregate) exceed the revenue generated by the site. I don't mean this to be a ding against paying people well but what you have is a business that cannot generate enough revenue to cover costs. Even if you disagree with Yahoo's moves you have to give them credit for trying to find creative ways to get paid for providing their services. Instead, Salon just attempts increasingly pathetic tactics to charge a higher than average CPM via annoying advertising techniques. It's obvious that they have no respect or concern about their users and only seek to squeeze every last ounce of juice from thier readers. And in reality, it's this same f-ck 'em attitude towards readers that opens the door for pop-up/under advertising, browser bugs, full page ads, spam, etc., etc. It's this mentality, that getting a higher CPM rate is more important than offending or frustrating users, that leads many to their own destruction.
I'm not bitter at Salon, though it might sound that way, I'm just relating what my feelings are as an outsider looking in. They are doomed and probably won't last another 18 months. I wish it were different because I really enjoy some of their content but . . . they are what they are.
posted by billman at 1:01 PM on February 3, 2002
I do think that a site like Salon could easily be profitable if they kept costs down. It's a common dot-com problem - salon.com probably would be profitable if it was, say, an editor, designer, general manager and 20-30 writers, all of whom are paid good but not exorbitant salaries.
Instead they have something like a hundred employees doing god knows what and the executive pay alone is over a third of that $3 million a year in subscriptions.
posted by adamsc at 1:30 PM on February 3, 2002
I think this problem is going to be even more pronounced for Salon. While Robert noted that a lot of those one-month Salon subscribers were just testing the waters for the hell of it and will certainly not renew (just like anyone who picks up a single issue of a magazine on a newsstand and decides he hates it), it's still going to be another 90 days or so until we start to find out what percentage of the original full one-year, $30-a-pop subscribers will be renewing ... and they're far more important right now than the one-month-at-a-time crowd.
My guess is that the churn on these subscribers is going to quite severe, for reasons unique to Salon. A LOT of people originally signed up for Premium subs for ideological reasons more than anything else: They wanted to show support for their favorite liberal publication in a politically-charged time right after the election mess; they wanted to show support for a web-based publication period; etc ... too many were signing up for reasons other than the one that usually matters: Whether they want to read the damn thing. These sorts of people were going to be very hard sells at renewal time anyway, and the way events have panned out over the last year, I think it's going to be even harder for them. Some of these subscribers are going to simply feel they made their political point already and don't need to do it again. Some are going to think their worse off economically now and can't afford a renewal. Some are going to be turned off by the many, MANY editorial changes Salon has undergone in the last year (far fewer of the name writers they loved, etc). Some are going to not feel Salon represents their own changed political feelings after 9/11. On and on and on, above and beyond the usual "I just never really got into it" churners.
To make matters even worse, the reality is that most people that wanted to subscribe to Salon Premium already have. The growth in the number of new Internet users is now zero; Salon's own advertising and free press last year made sure that every human being who might be inclined to sign up sure as hell knew the offer existed. They don't have any more doors left to knock on; that's why they started offering monthly subs in the first place, to get the remaining people that wanted to join but weren't willing to lay out $30 at one time.
In short, they're screwed as it is, as everyone has noted above, but they're REALLY gonna be screwed once the yearly subscribers start churning. I don't see how they're going to survive 2002. At best, they'll end up in some sort of messy Inside.com-esque buyout where someone grabs the name and the archives and maybe a couple writers and editors, and turns it into some sort of portal. And then that'll eventually fail too, just like it did at Inside.
posted by aaron at 4:06 PM on February 3, 2002
aaron I agree with you that it will be very interesting to see what happens when it comes time for people to renew subscriptions.
Adding to what you have said, there is also the factor of whether people will be willing to take out a years subscription come reknewal time if it looks like Salon's is on the verge of going out of business.
Personally I think that they will do very well to get 75% repeat, and that 50% is a more realistic target. Of course the fgure may be much lower as you imply.
It seems obvious to me that the thing that's behind all this distorting is that they are desperate for investment. They have $2.1 million in the bank, which gives them to about the early summer to live if they don't improve results. If this is the case then it is even more important for reporters to examine salon's business viability closely. Rose tinted glasses assessments just arn't good enough.
My hope is that that some big gun pins Michael O'Donnell down and asks him why it is that he won't produce present traffic figures. I think that the true answers it that the figures would show that more has been lost from the introduction of subscription, in terms of the viability of Salon properties as a marketing medium, than has been gained financially.
posted by RobertLoch at 5:48 PM on February 3, 2002
Ah well, isn't it true that most of the more influential opinion magazines can't make a profit anyway?
posted by Charmian at 5:57 PM on February 3, 2002
It depends exactly what you mean by editorially. For the 99% of people that haven't subscribed there is now no news or politics on view.
From that perspective the publication is now has a very different editorial feel for those that haven't subscribed.
The general amount of content produced appears to be in decline. Also some have suggested that the editorial slant has shift in the last 6 months further towards the left - whatever that means in reality. That I can't comment on as I don't subscribe or read in regularly enough to make an informed judgement.
posted by RobertLoch at 6:20 PM on February 3, 2002
posted by adamsc at 9:36 PM on February 3, 2002
As to churn, the New Yorker went through a period where it was contracting out a promotional PR blitz including borderline tacky television ads. After Tina Brown left, this contract was terminated (note: it had begun before her, around the time that Newhouse bought in), which saved the PR blitz fee, reduced the light-interest readers, and allowed the magazine to fall back to more natural and recurring subscription levels.
posted by dhartung at 10:23 PM on February 3, 2002
posted by adamsc at 10:59 PM on February 3, 2002
posted by Sidhedevil at 8:24 AM on February 4, 2002
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According to the traffic estimates just released by the company for the quarter ending in December 2001, Salon received 121 million page views, down from the 127 million for the previous term, and 3.8 million unique visitors.
The company claims to have had no decrease in unique visitors and to have seen only a 5 percent drop in page views, even after significantly reducing Salon’s free-access content.
Does it make sense that after closing off such a large portion of their content in October, that the number of pages viewed on Salon would only have decreased by 5%? I would also suggest that it is somewhat unlikely that this content massacre didn’t cost Salon the loss of even one reader, as they claim.
In fact it appears that these traffic figures are actually a rehash of a July 2001 audited report (see bottom paragraph). Salon conveniently didn’t bother to mention this. Worse still, no one bothered to ask them what their traffic estimates were based on.
Obviously the downside of introducing subscription is that you may loose advertising revenue due to a fall in overall traffic. So surely before announcing what a ‘success’ Salon’s latest subscription numbers are, it would make sense for this reporter to have first tried to find out what the true cost of this ‘success’ was.
Isn't this an obvious example of shoddy ‘press release’ journalism? Or am I missing something?
posted by RobertLoch at 12:20 AM on February 3, 2002