When PlanetOut Partners, San Francisco, orchestrated the merger of the two top gay sites, Gay.com and PlanetOut.com, in 2000, it was a survival move to prevent the two from cannibalizing each other, says Lowell Selvin, PlanetOut's CEO. "There had been a lot of rivalry and competition for ad dollars, but we put that behind us, and today we're a different company with a different business model," he says.
In 2000, the two sites employed more than 200 people altogether; today employees number around 100. The two sites combined generate 5 million unique visits each month including a regular base of 3.6 million registered users, says Mr. Selvin.
PlanetOut is now trying to make money through subscription matchmaking services and online commerce.
COMMERCE GROWING ROLE
Although the privately held company won't release figures, executives say advertising now accounts for less than half of revenue on the sites vs. 90% last year. PlanetOut's online store (kleptomaniac.com), linked from its main site, went from $50,000 in sales in 2000 to more than $2 million in 2001, the company says; videos, CD-ROMs, books and specialty apparel are hot sellers.
"We've always had a huge community of people chatting online that could be leveraged into profitability," Mr. Selvin says. "It's now the basis for services people are willing to pay for." Core advertisers remain, including American Airlines and IBM Corp.; new advertisers include Bridgestone/Firestone and Capital One.
Advertisers' cutbacks have affected gay-targeted dot-coms and magazines about equally, say gay media insiders.
"Pricing for online media has been thought of by media buyers and agencies as being somewhat high for what it's worth," says Howard Buford, president-CEO of Prime Access, New York, an agency specializing in gay-targeted advertising. "And there is a school of thought that it's very difficult to promote more complex products and brands online, but the reach of online is considerably larger than magazines."
Prime Access is part of a gay media alliance forged last fall among PlanetOut Partners; Rivendell Marketing Co., Westfield, N.J. (a gay media planning and buying service) and other gay media specialists to maximize online and offline media buys. "There are instances where a media buy really ought to have both an online and a print component, and we need to be able to steer people toward the best resources to accomplish that," says Todd Evans, Rivendell's president-CEO.
MAGAZINE MERGER QUASHED
At the moment, PlanetOut's new game plan doesn't include merging with a magazine publishing company. Before the merger with Gay.com, however, PlanetOut was about to merge with LPI Media, Los Angeles, publisher of the two leading gay magazines, The Advocate and Out. But PlanetOut's value plunged in the dot-com crash, undermining the deal.
"We decided to stick with what we do in publishing print and not get dragged down by the dot-com world," says Jim Franklin, president-CEO of LPI, formerly known as Liberation Publications Inc.
That attitude hasn't stopped LPI from creating its own Web resources, including a site to sell books, music, videos and apparel. LPI also is promoting its magazines online now, Mr. Franklin says.
PlanetOut also is pursuing offline ventures and reports positive results from Out & About, a travel newsletter it acquired in 2000. PlanetOut wants to cut its dependence on ads with more direct marketing services plus content-sharing and cross-promotions with AOL Time Warner's America Online, as well as Microsoft Corp.'s MSN.com and Yahoo! PlanetOut is the primary provider of gay-targeted content on AOL.
"We're spending a lot less money promoting our site on those big portals, and we're getting lots of traffic from them," Mr. Selvin says.