The New "Three C's"

Consolidation, Cut-backs, Collapse

Anyone scanning the business and tech headlines these days might easily get the impression that the Internet is about to shut down altogether. Closed for business, lights out, everybody go home. It won't, of course, but there's more being lost in the current downturn than jobs.

"No matter how many times they do it, journalists find layoff stories of the online media kind among the most disconcerting to write," wrote Michaela Cavallaro on March 30. "How do you manage to calmly type a story about WSJ.com, the online version of the formidable Wall Street Journal, preparing to lay off staff, without breaking out in a cold sweat about your own job security?"

Indeed. Cavallaro was writing an entry on the WSJ.com layoffs for "Media Grok", a daily summary of tech-related business news for The Industry Standard, the magazine which itself had already laid off 69 people in February. And she's right. You can't expect to find a story on the ailing industry in an online publication like, say, Telepolis without suspecting that there's got to be a personal angle to it as well. So I'll be right up front and reveal mine right off. One of my few steady gigs as a freelancer these days has been doing what Cavallaro does. In October, right about the time The Industry Standard Europe was launched, I joined Tim Nott to become one of two "Euro Media Grok" writers.

On Tuesday, Standard Media International founder and chairman John Battelle sent out a memo announcing that the company was immediately suspending publication of the ISE. While the Web site will carry on -- which includes "Grok", so go subscribe, dammit -- the next issue of the magazine will be the last "for the foreseeable future."

Personal angle: It sucks, of course. What else would you expect me to say. But it does, and not just because there are suddenly well over fifty people suddenly out of a job. That's bad enough, obviously. And it's not just that, as the Guardian proposes, ISE chief executive Neil Thackray had only just began talks with potential buyers "when he had the rug pulled from under him" by IDG, Standard Media's largest shareholder.

But in his formal "adieu" to ISE readers, editor-in-chief James Ledbetter restates the case for a magazine like the one Europe is now losing. Few would argue that Europe is approaching the political and economic challenges posed by the Net, and increasingly, by wireless communication technologies in quite a different way than the US has. And while papers like The Financial Times or the FAZ or Libération, just to pluck a few examples out of the bookmarks, do an excellent job when it comes to immediate coverage of a particular merger, the hiring or firing of a CEO and that sort of thing, they're not so hot when it comes to context.

The ISE was, and just to point to one example, you won't find most daily papers pitting Future Shock author Alvin Toffler and Guardian columnist Will Hutton head to head to debate the very point of the which approach -- the American or the European -- will ultimately win out.

It's not just the ISE

Standard Media isn't alone in its current struggle to survive, of course. At the peak of the dotcom frenzy, the "Internet economy" magazines that set out in the mid-90s along the path originally blazed by Wired (Battelle himself is a Wired veteran, as are Business 2.0 editors James Daly and Russ Mitchell) began to take on weight and heft of ridiculous proportions. Ads from dotcoms eager to establish brand identity swelled the books so dramatically that they led to all-too-common jokes about the effort required to simply lift them, never mind read them.

Then, of course, the bubble popped and the scramble was on. As ad revenue dries up as quickly as it once flooded in -- Business 2.0 is selling less than half the ad pages it sold just one year ago -- the question on everyone's lips is not "whether" but "how many" and "which" of these magazines aren't going to make it.

So we're seeing headlines informing us that Gruner + Jahr has bought Fast Company and that Time Inc. is in negotiations to buy Business 2.0 and fold it into its own eCompany Now. In short, while Fast Company and Business 2.0 are hardly heroes of independent media, the strategy they're pursuing is to surrender to even bigger corporations while they still have something to surrender at all.

Time Inc., of course, is part of the largest media company in the world, AOL Time Warner. Can one really imagine a story critical of, say, AOL's privacy policies in Business 3.0, the title currently being floated for the 2.0/eCompany combo? It's about as likely as a piece on the virtues of Linux appearing in Microsoft-backed Slate.

Meanwhile, on the Web itself

Which provides us with a good opportunity to jump-cut from print to online media. It's been even more dependent on dotcom advertising. There's no need to list all the casualties since the Financial Times -- which has recently cut ten percent of the FT.com staff -- has done that for us. Scan the list and you find that it's not just the little guys, but the biggest of the big ones, companies such as CNN, NBC, CNET, Disney, News Corp. and AOL Time Warner, that are retreating from the online front.

And as if one layoff story tumbling after the next weren't enough, rumors of even more carnage to come continue to bounce across mailing lists and gossip sites like there was no tomorrow. Quite literally. The latest has Automatic Media, the company formed by the creators of webzine stalwarts Feed and Suck, and most recently, the communal weblog Plastic, running out of money and in dire need of an injection within two to six weeks -- or else. No comment from those in a position to make one on that front.

The supposed deathwatch circling over the thinning remains of Salon has been so prolonged and so unrelenting, the weirdest stories are being dreamed up. The latest had managing editor Scott Rosenberg being approached to abandon ship and take the helm at Wired, which has been without an editor since Katrina Heron announced her departure in March.

As it turns out, that job has gone to Chris Anderson, US business editor of the Economist, but while Wired owner Condé Nast was supposedly chatting up Rosenberg, so the rumour went, he changed the subject: Instead, why doesn't Conde Nast buy Salon?

The Wired rumour is all the more resonant in light of Salon editor David Talbot's outburst following yet another rumour that Salon has been actively searching for someone -- anyone! -- to buy it out:

Echoes of 1997 and an angry Louis Rossetto, on his way out of the picture:

The magazine, of course, went to Conde Nast less than a year later and Wired Digital was soon to go to Lycos (back when it was just plain Lycos without Terra).

And it all means... what?

The kernel of truth at the heart of these rumors is that the model Salon and most other online media have been operating on for years now isn't working. Banner ads, plus a little shop with coffee mugs and T-shirts on the side, simply aren't cutting it. Last month, Salon announced it'll give readers a choice: bigger, more intrusive ads or a premium, ad-free environment that'll cost $30 a year to enter. Neither choice is a proven success, and in fact, users have shown themselves to be mightily resistant to the very idea of paying for content. Most famously, Slate, whose readership isn't all that different from Salon's, tried and then abandoned the model.

The greatest hope for online media may still be micropayments, but as the Wall Street Journal reports, "consumer expectations for free content and merchant reluctance to audition a micropayment system have caused something of an e-stalemate."

All the more frustrating because, of "the three C's", content was supposed to have been king. You remember "the three C's", that holy trinity of content, community and commerce that were essential to any business plan back when you could utter the words "new economy" without smirking. None of them are faring all that well.

Now that the rule of the day seems to be to replace them with consolidation, cut-backs, even collapse, and now that the NASDAQ, that barometer of our faith in the medium, has returned to spring 1998 levels, we're faced with the same set of questions we were dealing with way back when they were still fresh: Will people read stuff online, enough to pay, somehow, for an online magazine? Can communities create the sort of emotional investment that can be translated into profits? Will putting a catalog online save enough money to make e-commerce worthwhile, even if we still have to ship the physical goods people order?

"But there will be Internet commerce," Rich Turner, New York bureau chief of The Industry Standard, blurted in a conversation a few weeks ago. "And if it isn't Amazon, it'll be Wal-Mart that figures it out."

What a telling addendum. Not that union-busting Amazon is exactly a hero of empowerment and generally "sticking it to The Man", but neither is the pioneer of a few undeniably innovative and fascinating features in the overlap of community and commerce Wal-Mart, either.

Obviously, no one truly needs it explained to them that regardless of what happens to the businesses and their models built on the Net, the Internet itself will chug along fine and "does not need to be saved". Very, very few people indeed have a problem distinguishing between a technology and a company.

But in the current atmosphere of panic and cut-backs and shut-downs as extreme, and in some cases, as unwarranted as the build-up that led to the bubble now bursting, it's not too hard to guess who the winners in the struggle to survive will be. The technologically savvy will find their free spaces to roam, but as for the majority for whom pointing and clicking is the full extent of the Internet experience? The multinational corporations already snapping up the carcasses left over of the endangered species of independent and semi-independent online media will be happy to show them exactly where to point and where to click.