Media Hack
Since the dawn of the dot-com, news publishers have split into two camps. One group followed the lead of The Wall Street Journal and charged for news, while the other aped broadcast TV by selling ads and giving content away free -- sometimes requiring reader registration, sometimes not.
But there is a third way that combines the two, which has drawn far less attention. Leading the way is none other than tiny, never-say-die Salon, which, although not known for its business acumen -- its stock price is 18 cents a share -- still manages to stay afloat, recently announcing its first profitable quarter ever (well, almost). Salon offers an ad-free environment for subscribers willing to shell out $35 a year, as well as a Site Pass that requires visitors who are allergic to paying for online content to sit through an advertisement before accessing the site.
Although I tune out most online advertisement, and, like 98 percent of the web population, refuse to shell out for content, I realize somebody has to pay my salary -- and those of reporters, editors, sales staff, webmasters, etc. That's why I'm intrigued by the success of Salon's Site Pass. Even someone as jaded as I am might be willing to take out a minute of my day to watch an ad if it means I can read stories I can't find anywhere else. (Especially when I can turn the sound off.)
Not that it's new, mind you. Salon has been offering it in various forms for three years. What's special is that Salon is, for the first time, inching toward profitability because of it. From the beginning, Salon treated business plans like seasonal plantings. When it launched in November 1996, it offered free content paid for by advertising. Then, it introduced a $30-a-year subscription model for premium material (sans ads) while the rest of the site came at no charge. That was followed by a choice between paying for content with ads or paying more for the content without them, which led to the present subscription/Site Pass combo platter.
While Salon has only about 85,000 paid subscribers, between 175,000 and 200,000 users visit each day using the Site Pass. According to Melissa Barron, Salon's senior vice president of sales, these ads receive a clickthrough rate between 5 percent for a typical campaign and 20 percent for a movie release -- with one spot inducing an astounding 40 percent of visitors to click on it during the presidential election. (The industry standard clickthrough is about 1 percent). What's more, 85 percent of users who start an ad watch it until the end.
Since it cuts through all the advertising clutter online, it is conceivable the Site Pass will catch on. The Economist recently adopted a similar model, and it's only a matter of time before more sites tear down their content walls and let in news-addicted cheapskates like me, provided we consent to sample an ad or two.
"It's an explicit arrangement between the advertiser and the viewer and is the purest form of advertising," said Dana Jones, founder of Ultramercial, which not only created ads for Salon and The Economist, but has done work for The New York Times, CNN, PBS and HBO. "You chose to accept the ad because you wanted to read the content. It is the exact opposite of deluging the public with advertising."
Jones said he came up with the idea while working in rock 'n' roll radio. Well aware of the impact that file sharing was having on the music industry, he wondered if there was a way to make Napster legal, so people wouldn't have to pay cash out-of-pocket, which they wouldn't do. Then it hit him: What if they had to watch an ad instead?
Although in its latest 10Q Salon places its Site Pass first on the list of what it needs to do to increase advertising revenue, which accounted for more than half of the site's total revenue of $6.6 million last year, it doesn't exactly trumpet the feature. In a recent note, editor Joan Walsh told readers that, "If you love reading Salon, value our independence and the writing that we do, then join Salon Premium now." Perhaps she forgot to consult the money side of the house about who her audience really is.
There are, however, potential pitfalls. Whether there is a subscription requirement or a Site Pass, there is still a wall around Salon's content -- and that means the blogosphere ignores it. Without this persistent cross-linking, relatively few read its words, and as history is being made -- or Googled -- every day, Salon's footsteps in cyberspace become fainter and fainter.
That said, reader feedback has been positive, according to Salon's Barron. "So far, the Site Pass and subscription has worked. Are we saying it's the only way for us to become profitable? I don't know. But the more options and layers we have the better. I could see us having three or four different types of offerings for Salon."
It sure beats the alternative.
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Adam L. Penenberg is an assistant professor at New York University and the assistant director of the business and economic reporting program in the department of journalism.
