They are a study of single-platform content plays in a multiplatform world. They have eschewed other line extensions, such as TV shows and print titles in favor of launching local and lifestyle-targeted versions of the newsletter. Their most valuable ad unit is a dedicated e-mail: an editor-written ad message, penned in the list's vernacular, that snares an effective CPM of $250-plus. They're not even destination sites; the largest, DailyCandy.com, falls below Nielsen/NetRatings' minimum reporting guidelines of 500,001 unique visitors for all months but October 2006.
"There are a lot of these flashy Web 2.0 companies out there, and I don't know how many are making money and are going to survive," said Catherine Levene, chief operating officer at New York-based Daily Candy. "What every company needs is a strong relationship with audience and marketing partners."
Off the block
Daily Candy, of course, a darling of the early 2000s, was on the block less than a year ago. Investors wanted to recoup money and Mr. Pittman, who dropped $3.5 million for a controlling stake in 2003, was reportedly seeking a $100 million price tag. It had to return some capital to shareholders -- some cashed out, some cashed in. It is not for sale today, said CEO Pete Sheinbaum.
Its various editions today boast a collective 2.5 million subscribers (900,000 unique) and has spawned a crop of imitators: In late 2004 a pair of recent college grads conceived a male-focused version, Thrillist.com, and sold the idea to Pilot Group for $250,000 in 2005; two years later they have 110,000 subscribers among New York, Los Angeles and national editions. That same year Ideal Bite launched as an e-mail newsletter targeting what it calls the "light green crowd" (the "person ... who wants to do the right thing but isn't sure what that is and doesn't want to give up some creature comforts," explained co-founder Heather Stephenson). Its subscriber base (which totals 150,000) is growing at a 12% monthly clip.
At Pilot, the main investment sector is broadcast-TV affiliates, although the firm has begun to invest in other online businesses, such as music blog Stereogum and Facebook's popular social-music application iLike.
"If you look at what people use online, all the tricks are nice but at end of day people first and foremost use it for e-mail," he said, adding that it's valuable to be in the space where people spend most of their time.
E-mail losing dominance?
Whether that will remain true is the question. Young people appear increasingly comfortable using instant messaging and social networking for communication.
"If we were less relevant in people's lives you wouldn't see the kind of growth we have," Mr. Shinebaum said. "We're younger, more educated, more female than we've ever been before."
Growth can also tempt expansion plans.
Ms. Stephenson recalled how "Inconvenient Truth" fueled Ideal Bite's growth -- and brought on offers to do a book and a calendar. "We had to step back and say, 'What is our core business?'" she said. "What's the best way to maintain brand integrity and service our needs? We decided to stay true to the plan and stick with daily e-mail."
Thrillist co-founder Ben Lerer credits Mr. Pittman's group for helping his company stay on track.
"It's hard to focus. You think just because you can do other things, you should," said Mr. Pittman, who was the embattled chief operating officer at AOL when it merged with Time Warner merger. "The hardest thing to do in a fast-growing business is to have restraint."