E-Mags: Along for the Wild Dot-Com Ride
Time was, the beer-drinking sessions on the roof of the Industry Standard’s headquarters were a way for magazine staffers to unwind after a tough work week.
Not so anymore. The TGIF gatherings atop the red brick building have evolved into a coveted invitation-only event at the ad-rich journal, which chronicles the ebb and flow of the new economy. It’s a place to be seen and schmooze with other players on the high-tech fast track.
The Standard, though, is only one of a raft of magazines battling for dominance in this staggeringly lucrative new market, whose target readers are those looking for an edge in the warp-speed world of electronic commerce and technology.
E-mags, with names like Red Herring, Business 2.0 and Fast Company, are so fat with advertising they could double as doorstops. Last June, for instance, the biweekly Red Herring weighed in at a hulking 628 pages, half of them ads, and recently ran an ad of its own in the New York Times dubbing itself “the fastest-growing magazine in America.”
Meanwhile, the Industry Standard, the only weekly in the growing pack, published more ad lineage than any other magazine in the country during the first six months of the year. And newcomer eCompany Now, which Fortune magazine launched in June, is already boasting a circulation of 250,000 and a staff of more than 100. The list of titles goes on, with more in the works, in what has become one of the most competitive media wars in the United States.
If figures touted by the magazines are accurate, their readers are very rich, indeed. Red Herring, for instance, puts its average subscriber’s net worth at $1.8 million. The Industry Standard says the net worth of its average reader is $1.4 million.
Ground zero for this phenomenon is San Francisco, where the new economy permeates just about every facet of life. The city is now the most expensive place in the country to lease office space, and residential prices have skyrocketed as well, with most, if not all of it, tied to the revved-up dot-com community.
In the process, it has fueled a publishing boom on the West Coast as more and more magazines establish themselves in San Francisco rather than the traditional hub of New York. Even New York-based financial magazines are creating new publications in San Francisco because it is the center of the new economy.
At the heart of all this is money, vast amounts of money, fueling projects of every stripe. The e-mag is the place where fledgling start-up companies, flush with infusions of venture capital, place ads as part of a strategy to gain instant recognition by generating “buzz” about themselves.
The result is a cart-before-the-horse phenomenon in which the high-tech wired world is resorting to plain old paper as a way of saying, “Look at me!” The upshot is that e-mags are getting richer faster than any other class of publication in U.S. history. The number of ad pages in these magazines nearly tripled during the first six months of the year alone.
In the process, the number of jobs for editors and writers has increased at an unparalleled pace as the e-mags have opened bureaus across the United States, Europe and Asia.
“The great irony about all this Web-based, on-your-monitor info is that it creates more paper-based publications, not fewer,” said Guy Kawasaki, author and chairman of Garage.com, a company specializing in putting venture capitalists together with start-ups.
Or, as Dana Lyon, former publisher of pioneer e-mag Wired put it: “You really have to go to mass media to be seen. There are so many things online that you can’t just hope someone will click on your banner. You’ll get lost trying to live that way.”
It’s an E-Mag Eat E-Mag Kind of Business World
Predictably, with all the new magazines, each one has tried to define its own role in e-commerce, sometimes a hair-splitting exercise. And there is no shyness about putting down the competition.
Industry Standard editor Jonathan Weber, for instance, derides eCompany Now as “the Industry Standard for Beginners.” Fortune Managing Editor John Huey, instrumental in the founding of eCompany Now, categorizes the pioneering Upside as “sort of a shell of its former self.” Red Herring chairman Chris Alden says of Business 2.0: “You’ll never find a negative story in 2.0.” And Forbes ASAP, an e-mag published by Forbes, recently took a shot at Wired, calling it “the Saturday Evening Post of the digital age.”
The breakneck pace of the new economy has cooled somewhat since many dot-com companies went under last spring when technology stocks plummeted. Before that, the volume of start-ups able to attract investors was dizzying. Spending those investments quickly to create buzz became a part of the e-commerce culture.
Tom Bedecarre, the chairman of a San Francisco marketing firm specializing in the dot-com world, said it wasn’t uncommon to have start-ups with millions to spend--and in a hurry--before someone else claimed the market niche.
That, in turn, led start-ups to advertise in e-mags, with their relatively inexpensive rates and tightly focused readership.
“These publications don’t cost that much,” Bedecarre said. “Ten ads in some of these publications would be as much as two pages in the Wall Street Journal for a single day.”
Actual figures: A full-page ad in Red Herring costs $25,060 while a full page in the Wall Street Journal national edition is listed at $154,813, according to industry statistics.
The spend-quick mania has slowed, but there are still millions in advertising revenue to be had (at least for now), not only from start-ups but also traditional advertisers like auto manufacturers targeting the same audience--hip young people with money.
While these magazines are thick in size, their content tends to be uneven. And criticism of self-interest has also been leveled at the magazines with the claim that they have often acted more like cheerleaders than journalists.
“They are the Bibles of the industry, but unfortunately, these magazines are part of a circular phenomenon,” said Larry Pryor, executive editor of the Online Journalism Review at USC’s Annenberg School for Communication. “They want to pump up the industry. The more they pump up, the more revenue they get. I think they tend to be much more promotional in their attitude than they should be.”
But Pryor said that in fairness, there is some evidence the e-mags may be raising their standards and becoming more critical about the industry they cover.
“There are indications they are getting more savvy,” he said. “They are just as young as the industry they’re writing about, with all the foibles and flaws. It’s a maturing process.”
New Magazines Create a Journalistic Gold Mine
The oldest of the e-mags is Upside, founded in 1989, followed three years later by Wired. Red Herring debuted in 1993, and the rest arrived on the scene more recently, with Fortune’s eCompany Now being the latest offering. (It celebrated by throwing a bash at Pacific Bell Park, featuring the Canadian pop band Barenaked Ladies.)
The 30-year-old Alden, who is also Red Herring’s president and co-founder, recalls his first 64-page edition, produced in a spare room at his parents’ home in Woodside, one of Silicon Valley’s wealthiest communities.
“The original concept was that there was this fascinating world of entrepreneurs creating companies that were growing incredibly rapidly,” he said. The result was what Alden describes as “an early warning system” for business leaders who want to know what’s coming down the technological pike.
“If you’re at the Wall Street Journal or Fortune or Time, you won’t cover trends or ideas until there is a track record,” he said.
But having said that, Alden has hired people from the traditional media, ones he calls “up and comers.”
“They want to be at the beginning of a dynasty, not the end of one,” he said. “This is the hot place for journalists.”
He may be right. The magazines have created a journalistic gold mine. The Industry Standard alone went from a staff of 45 at the 1998 launch to 380 today, half of them in the editorial department. While editors aren’t divulging salaries, Weber, who jumped ship from the Los Angeles Times in 1997 to help start the Standard, said pay is competitive with any of the major national business press. Red Herring’s Alden said his magazine pays “above market, and we get above-average people.”
Weber contends many of his hires wouldn’t have considered business journalism in the past.
“Go back 15 or 20 years and business journalism was low priority and low prestige,” said Weber, who routinely brings his dog to work in the laid-back headquarters where there is nary a necktie in sight. “The glamour was all on the city desk and the foreign staff. That’s changed. Now business is the dominant institute in American life. This whole thing on a purely journalistic level is just a great story.”
Weber said one thing that helped e-mags succeed initially is that the traditional business media were based entirely in New York, leaving the West Coast relatively unmined. Not so anymore, as big-league business publications like Fortune are working hard to get in the game.
Fortune’s Huey said he recognized several years ago that the story of the new economy was increasing dramatically in importance, but that a major increase in staff to cover it would be unfeasible. So he began looking at the possibility of buying one of the existing e-mags. What he found were price tags too hefty for publications that didn’t exactly fit the Fortune vision. Instead, it came down to starting an e-mag from scratch.
“So that’s what we did, and it’s off to a great start,” said Huey.
One spinoff of the e-mags is a glut of hugely successful business conferences built around up-close exposure to the big names in the new economy. The Industry Standard alone has eight conferences slated this year, with even more being planned for 2001. Recently, 700 people paid $4,300 apiece to attend a weekend conference in Laguna Niguel. An additional 500 were turned away for lack of space.
“There are more conferences than there are days of the year to go to them,” said Business 2.0 publisher Michela O’Connor Abrams. “The Internet fuels the desire for people to get together more than ever.”
Bedecarre said he attended one conference recently in which he ran into a friend who is a high-powered venture capitalist.
“It was like Mick Jagger was walking through some college campus,” he said. “It’s an electric environment, the centerpiece of the gold rush mentality.”
Is there a conflict with magazines inviting speakers who might be the subject of stories? Weber, for one, says no, because no one below his level recruits conference speakers.
“It would not be very smart or perceptive on the part of people who agree to speak because they think they’ll get good coverage in the magazine,” he said.
As for changes that might be made, Samir Husni, a magazine analyst and professor of journalism at the University of Mississippi, thinks the e-mags have not done themselves any favors by becoming so bloated that it’s difficult to find content wrapped around the ads. He said a better model is Vogue, which only puts out one huge fashion issue a year. Any more, he said, is too much.
“No matter how much I wanted to stay on the edge of fashion, I wouldn’t have time to read it all,” he said. “The magazines need to play a gatekeeping role.”
Perhaps, but that is not likely to happen in a business that grew by 7,000 advertising pages in the first six months of this year, a virtual license to print money. Kawasaki, for one, thinks advertising dollars will shrink as the new economy matures.
And Fortune’s Huey thinks there are so many magazines that there will eventually be a shakeout. The ones left standing, he says, are ultimately those who can put out the best product. (“There’s a lot of crap out there.”)
“I think some of these other magazines and us are going to come up against each other,” Huey said. “It’s going to be a pretty good fight.”
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A Look at a Few E-Magazines
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NAME: Upside
FIRST ISSUE: 1989
FREQUENCY: monthly
CIRCULATION*: 205,000
PUBLISHER: Upside Media
DESCRIPTION: The granddaddy of the New Economy magazines.
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NAME: Wired
FIRST ISSUE: 1992
FREQUENCY: monthly
CIRCULATION*: 494,000
PUBLISHER: Conde Nast
DESCRIPTION: On the dowdy side but still one of the most popular of the e-mag genre.
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NAME: Red Herring
FIRST ISSUE: 1993
FREQUENCY: biweekly
CIRCULATION*: 300,000
PUBLISHER: Red Herring
DESCRIPTION: Calls itself the fastest growing magazine in the United States.
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NAME: Fast Company
FIRST ISSUE: 1995
FREQUENCY: monthly
CIRCULATION*: 538,000
PUBLISHER: Fast Company
DESCRIPTION: Self-proclaimed “Handbook of the Business Revolution.”
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NAME: Industry Standard
FIRST ISSUE: 1998
FREQUENCY: weekly
CIRCULATION*: 239,000
PUBLISHER: Standard Media,
DESCRIPTION: Most advertising pages of any magazine in the United States.
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NAME: Business 2.0
FIRST ISSUE: 1998
FREQUENCY: biweekly
CIRCULATION*: 209,000
PUBLISHER: Imagine Media
DESCRIPTION: Seeks to be the middle-of-the-road magazine for the New Economy.
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NAME: eCompany Now
FIRST ISSUE: 2000
FREQUENCY: monthly
CIRCULATION*: 250,000
PUBLISHER: Time Warner
DESCRIPTION: Celebrated its launch with a party at Pacific Bell Park featuring pop band Barenaked Ladies.
*
NAME: Forbes ASAP
FIRST ISSUE: 1992
FREQUENCY: six times yearly
CIRCULATION*: 810,000
PUBLISHER: Forbes
DESCRIPTION: Bundled with parent magazine Forbes.
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*Circulation figures based on several sources, including in-house estimates.
