On the Web, Small and Focused Pays Off
On any given day, WorldNet Daily, an investigative-news Web site, serves up an array of stories that you won't find anywhere else. Most of the tales are offered up as "exclusives," but all have a distinctly libertarian flavor. Think of The O'Reilly Factor online. One story running under the tagline "Your Government at Work" reveals how Oregon welfare authorities allegedly are trying to take an unborn child from its mother. Another charts farmers' protests against the federal government for refusing to release water from Oregon's Upper Klamath Lake, a refusal aimed at protecting the formerly obscure sucker fish. The cover story this month of WorldNet Daily's magazine, Whistleblower, was entitled: "Guns in America; Myth-busting research says firearms in more hands result in less crime."
A fringe site? Perhaps, but WorldNet Daily is thriving. In July, it attracted 462,000 visitors, who spent an average of 40 minutes on the site, according to Nielsen/Net Ratings. That's almost double the time that newshounds spend on the top 10 news sites -- a typical visit to MSNBC, for example, averages about 23 minutes, while CNN.com averages 26 minutes. If you think that so-called "stickiness" for a Web site is impressive, check out the Latest Articles page at conservative/libertarian discussion site FreeRepublic.com. Visitors, who call themselves Freepers, log an average of 2 hours and 32 minutes.
PLAYING THE MARGINS.
WorldNet Daily is also racking up nice revenues for an operation with a staff of just 20. It brings in between $250,000 and $300,000 a month from advertising, subscriptions, and book sales, says WorldNet Daily Editor-in-Chief Joseph Farah. It breaks even most months, he claims, and the site projects a profit by 2002. "The audience we seek is one that is disaffected with mainstream news coverage," explains Farah. "Our independence resonates well with an audience that feels they are not getting the story from CNN."
Sites like WorldNet Daily offer a glimmer of hope to the depressed world of online content, where, for the last six months, the only news has been of layoffs and closures. Salon.com, the much vaunted online magazine, came within inches of its financial life last week before obtaining a $2.5 million injection of funding. (See: BW Online, 8/7/01, "The Wolf At Salon's Door". TheStreet.com, with its on-again, off-again subscription model, closed Aug. 27 at $1.20 a share, down from its 52-week high of $9.
While both Salon (SALN ) and TheStreet (TSCM ) raised tens of millions of dollars in flashy IPOs, each has struggled to come close to breaking even. And while the audience continues to grow for online news at established national news organizations, including BusinessWeek Online, just about everybody is still struggling with the question of how to make any money off the business model. "If we learned one lesson, throwing money around to attract eyeballs is probably suicide," says Paul Grabowicz, who is the new media program director at the University of California at Berkeley Graduate School of Journalism. That's where the new crop of upstarts come in. They have three rules: Find a niche, target the disenfranchised, and keep costs low.
THUNDER DOWN UNDER.
Take Stephen Mayne, an Australian journalist who founded Crikey.com.au. His site's motto: "Bringing down governments since September '99." He's been known to dress up in a seven-foot green foam suit -- his site logo is a big green exclamation point -- to attract attention. But Mayne also is a serious journalist Down Under. He won Australia's version of the Pulitzer prize in 1999 for a 16-part series in Sydney's Daily Telegraph that chronicled his adventures as a loudmouth shareholder in 50 of the country's biggest companies. An earlier Web site, jeffed.com, was instrumental in bringing down the former Victorian state Premier Jeff Kennett, the Australian equivalent of a state governor and a man for whom Mayne once worked as a press secretary. Crikey.com, says Mayne, is a mix of news and commentary that takes aim at "bloated egos of political and corporate Australia."
Costs are nothing for Crikey.com. The two-man operation, which consists of Mayne and his technical guru, Con Christov, is making money. The site has 1,600 subscribers who pay $55 (Australian) for access to Crikey's body of work online, as well as periodic e-mail updates and a company T-shirt.
Mayne won't get rich off total projected revenues of about $66,000 this year for the Web site, including advertising. But the take more than covers the $10,586 (in U.S. dollars) it costs to publish and post content each year. Compare that to the $30,000 Salon.com spends every day. Plus Mayne has assiduously cultivated readership. He says he receives about 150 e-mails a day and answers every one. Someday soon, Crikey Media could evolve into a profitable business as Mayne turns his subscribers -- who include editors, cabinet ministers, and company directors -- into a high-end advertising base.
KEEPING THE FAITH.
Political scoops aren't the only topic that passionate, highly motivated Web surfers are seeking. Some are looking for the kind of spiritual solace found at Beliefnet, a multifaith news and community Web site. In addition to its busy message boards, online meditation, and advice, Beliefnet also publishes thoughtful, often controversial, articles about religion's role in the lives of celebrities. In June, the site featured an interview with Marilyn Manson in which the shock-rocker talked about his childhood experiences with religion and experiments with Satanism.
"We provide information and a service on the Web that is not found in the print world. In a way, it's marketing 101. New products succeed when they fit an unmet need," says Steve Waldman, Beliefnet's editor-in-chief. Beliefnet has 967,000 unique visitors a month, according to Nielsen/Net Ratings. Three million subscribe to Beliefnet e-mail newsletters, which include daily bits of Hindu, Jewish, or Christian wisdom.
Since the beginning of the year, Beliefnet's ad revenue has risen more than 300%, a veritable miracle in the current downturn. The company won't reveal revenue figures. But of its 20 major sponsors, more than 90% have renewed their contracts. The reason: For religious advertisers, such as multifaith dating service e-Harmony, Beliefnet delivers.
TALK OF PROFITS.
Not that these sites haven't also had to adjust to the downturn. WorldNet Daily recognized last summer that, though it published online, it wasn't really a tech franchise. So Farah closed down the technology division and partnered with a software company to provide WorldNet with publishing tools. The company also shut down its retail sales operation, which had employed 17 people. "We changed our strategy. We didn't lay off people and then make everyone else do twice the work," says Farah.
Beliefnet also laid off some editorial staff earlier this year, though Waldman declined to say how many. Still, investors appear to have faith in the site's future. In the next few weeks, Waldman anticipates closing a third round of financing that he believes will take the operation through to profitability in the summer of 2002.
Profits may sound miraculous for any content-based Web site right now, but given the smaller scale and narrower focus of these online niches, everything is possible.
"The smaller sites can survive on the media edge. It's even easier if they are willing to focus on costs," says Eric Scheirer, an analyst with Forrester Research. Moreover, niche sites' long-term success could eventually threaten big media's domination -- a concept that has been all but discredited since the Internet bubble burst.
WHY LESS IS MORE.
That's because gaining access to small sites is no more difficult than going to a mainstream newspaper on the Web. Before the Internet, bundling all kinds of content into one general newspaper was the only cost-effective way to serve an audience. Now, niche sites that define a passionate target audience can play in the big leagues. "The little news sites are stripping away pieces of what a newspaper does," says Berkeley's Grabowicz. "Mainstream news isn't dead in the water. But I'm troubled about how it will survive in the future."
After all, these sites fulfill the original promise of online-content pioneers. Think back to when the Web was young: The ideal was to create a bevy of niche sites for fly fishers, hot-air balloonists, even Jell-O wrestlers -- all maintained and paid for by aficionados. The niches would offer finely targeted audiences for advertisers and slowly draw dollars from mainstream publications.
The dot-com boom distorted that original vision with grandiose national e-zines that have almost all ended badly. For a handful of those who stuck to their niches, though, things are working out just fine.
By Jane Black in New York
Edited by Alex Salkever