Trimming Fat, Avoiding Meat

Many money-losing Web publishers are slashing editorial staff to cut costs. But they may also be ditching their most powerful weapon in the battle to survive: original content.

Some readers say they’ve noticed changes. Dan Smidlapp, who works for a New York area publisher, says he has been a loyal reader for four years. He says he used to visit the culture and news site everyday from work — and sometimes again from home — but now checks it out only once every couple of days.

“It’s thinner, it’s shallower, it’s more mass market,” he says of today’s Salon, published by San Francisco’s Inc. (SALN). Since laying off 20% of its staff late last year and cutting back its original coverage, Salon isn’t the must-read it once was, Mr. Smidlapp says. “It’s just not as good.”

Salon remains a popular Web site, but like many Web publishers is trying to do more with less. Ad sales remain weak across the industry, and with readers still largely unwilling to pay for content, revenue has cratered. Moreover, most sites aren’t profitable, and are largely unable to raise new funds. As a result, sites are forced to cut back staff, including writers and editors — and the original articles they produce — but may be watering-down what drew readers to the sites in the first place.

Original content is “imperative” online, says Paul Grabowicz, director of the new-media program at the University of California at Berkeley Graduate School of Journalism. “There are so many sites that are just aggregating content almost automatically,” he says, and news ventures need to show they’re adding something extra to keep readers.

With smaller staffs, many Web publishers are running fewer stories and making less-frequent updates, and relying more on partners or news feeds. It isn’t easy to quantify how much coverage has been scaled back — columns are quietly dropped and tracking a reduction in updates can be difficult — but the trend is clear.

Salon, for instance, has reduced its travel and media coverage and has expanded use of wire stories to update its site. Salon didn’t return repeated calls for comment. It did say in the “Risk Factors” section of a federal filing last year that its long-term success in fact depends on the “name recognition and reputation of our editorial staff.”, which laid off more than 50 empoyees in April when parent Powerful Media Inc. was acquired by Brill Media Holdings LP, has dropped most of its music-industry coverage, as well as some regular television columns. The site is supplemented by articles from the Industry Standard and Brill’s flagship Brill’s Content magazine.

Financial-news site Inc. (TSCM), New York, has also made deep cuts, laying off 40 employees — including executive editor Jonathan Krim — in April after dropping 100 last November. The company hasn’t specified what portion of the layoffs affected the newsroom.

The site has dropped some regular columns, according to James Cramer, a co-founder and adviser to Chief Executive Tom Clarke. Mr. Cramer says the site is emphasizing its popular offerings while discontinuing less-read columns and features.

“There was a time when you threw money at the problem Vietnam-style. We found a smarter way,” he says.

Other sites have acknowledged original-content cutbacks. At New York Times Digital, the Internet arm of New York Times Co. (NYT), a spokeswoman confirmed that “Apartment Envy,” a regular online column on New York apartments, was suspended. The Industry Standard eliminated the Web-only “Just Managing” column, while The Wall Street Journal Online, published by Dow Jones & Co. (DJ), has ceased publication of several online-only columns and features.

The content cutbacks also come as several sites are turning to subscriptions to make up for lost advertising revenue.

In April, launched a premium version of the site, offering subscribers access to some additional content and fewer ads for $30 a year. already gets about one-third of its revenue from premium fees and Online Journal took in more than half of its first-quarter revenue from subscriptions. The New York Times is currently free, but has said that it would consider charging for some of its online content.

Pushing subscriptions while cutting back on original stories may be a tough sell, as general news or information will continue to be available elsewhere for free, says Geoff Lewis, former editor of and

“When [sites are] asking people to pay for it at the same time they’re cutting back on the original content — that’s really difficult,” Mr. Lewis says. But some publishers, like his former employer, may succeed by charging for specialized commentary and analysis, he says.

Many money-losing online publications have little room to maneuver. For starters, traffic is flat: reported an average 3.6 million unique visitors per month in the first quarter of 2001 — unchanged from a year earlier — while Salon said it had about 3.5 million unique users in March, down from 3.7 million a year earlier, when it “aggressively purchased traffic to acquire users.”

Meanwhile, revenue has actually declined for many sites.’s first-quarter revenue fell 19% to $4.4 million. For its fiscal fourth quarter, Salon reported revenue of $1 million, down 63% year-over-year, despite a 168% increase in ad impressions. The weak sales come at a bad time for Salon, which had only $3 million in cash as of March 31.

Meantime, investors have largely abandoned Salon shares, which have dipped as low as 22 cents apiece and are in danger of being delisted by Nasdaq. shares have fared slightly better, ending Monday’s regular Nasdaq session at $1.74, while Inc. (MKTW), a San Francisco-based financial-news rival, closed Monday at $3.22 on Nasdaq.

Advertisers, the lifeblood of most sites, say that the quality and quantity of the editorial is less important than whether sites continue to attract a steady stream of visitors, especially surfers from attractive demographic groups.

“A number of things go into site preference [for a sponsor] besides the depth of the editorial content,” says Brian McAndrews, chief executive of Avenue A, an interactive advertising agency.

Toyota Motor Corp.’s (TM) Lexus group, which recently started running prominent ads on Salon, says that the site’s business problems haven’t made it undesirable for advertisers. “If Coca-Cola’s stock goes down, do people stop drinking Coke? No.” says Chris Conard, national advertising manager for Lexus, which also advertises on a number of other lifestyle and news sites. “We still think [Salon is] a viable site,” she says.

But long-term, concerns may build. If is “having any kind of editorial issues, it may show up down the road in terms of what kind of people go there, and if they will still be able to draw the prospect we like to get. That remains to be seen,” says Ted Moon, senior manager for interactive media at Nextel Communications Inc. (NXTL). The wireless provider recently launched a trial of “superstitial” pop-up ads on

Generally, sites “can’t just rely on derivative stories and they cannot just rely on legacy media or collaborative and affiliated Web sites to survive,” says Sreenath Sreenivasan, a new-media professor at the Columbia University Graduate School of Journalism. “People will come and they will find you if you have stuff that no one else has.”

Mr. Smidlapp, for his part, says he will continue to peruse Salon, but he says he has no intention of paying $30 a year for the premium version of the site. “I would be sad to see them go,” he says. But “it’s just not worth it.”

Copyright (c) 2001 Dow Jones & Company, Inc.