The Quest for Online Profits

Media websites change fast as they try to figure out how to make money

| January-February 1999


There's a saying at Microsoft that goes something like this: If you're unhappy with your job, close your eyes and wait six months. After recently leaving a career in online publishing that took me to three different Web sites in as many years, including a stint at Microsoft's sidewalk venture, I can honestly say that, with respect to online media, truer words were never spoken. The field is careening through a toddlerhood of dizzying change, transformed each time a new philosophy for making money from the World Wide Web emerges. Considering that none of these plans has yet to yield a profit, the only thing I can surely tell you is that by the time you take your summer vacation, this article will be out of date.

Still, my days in the trenches have given me a certain perspective on this young industry and where it might be headed. I began my online career in 1995 as executive editor of the Utne Lens, this magazine's early presence on the Web. My next job was content coordinator for the online edition of a daily newspaper, the St. Paul Pioneer Press, at a time when the big news organizations were jumping into electronic publishing. Finally, as executive producer of twincities.sidewalk, I saw yet another financial strategy sweep the Web: the current emphasis on providing "services" like entertainment listings, classified ads, and electronic shopping.

In other words, in a few short years I've watched the field move from utopian dreams of an alternative virtual community to electronic versions of traditional journalism to the virtual marketplace it hopes to be today. The business model behind the latest incarnation is the oft-mentioned "portal" strategy. By adopting this approach, many media companies want to be gateways to the Web, entry points where users drawn by popular search engines bundled with other services will be exposed to lucrative ads. That's the theory. Time will tell whether the portal strategy proves to be any more viable than its predecessors.

What shape will the online media industry take tomorrow? A clue may lie in its beginnings. Way back in October 1994, Wired magazine launched HotWired (www.hotwired.com), the first Web site to feature both Fortune 500 advertising and original content. Others were soon to follow, including the graphically groundbreaking Word (www.word.com) and the intellectually interactive Feed (www.feedmag.com). Both were idealistic as well as creative guesses at what might eventually capture the attention of an as-yet-untapped market.



Of all these pioneers, Word perhaps had the most arty and audacious vision of what the new media could do. Combining sophisticated graphics with animation, sound, and text, Word hinted at a future in which online media were less about information and more about entertainment. An early example is an online documentary about a river trip through Guyana's rainforest (www.word.com/place/guyana/) first posted on Word in 1996; it includes not only diary excerpts from the three artists who journeyed there, but also an accompanying original score and links to artwork, footnotes, and related readings about the area's plants and animals.

As someone in the same young business, I was sure Word's playful commitment to a multimedia experience was the wave of things to come. But original content was still seen then as the way to make money. The near-term future proved far less creative than I had imagined, and original content was soon being viewed as an economic dead-end in online publishing. Around the same time, traditional news organizations, worried about losing their hold on the information business, were scrambling to get online. For the most part, these enterprises traded in nothing more than "shovelware"—the daily paper or the nightly news packaged in a multimedia frame.