Journalism is not at all subject to a market test. Huzzah!!
In the past two weeks, journalism -- to be more specific, the craft of magazine journalism -- has been sending very mixed signals about its future. The full or near collapse of such Internet news-and-feature sites as Apbnews.com, Salon.com, TheStreet.com and CBS Marketwatch seems an indication that deficiencies in audience, audience loyalty, advertising and, most importantly, revenues make for very bad businesses -- no matter what the first-round financiers said.
Yet just as these houses of cards are about to be blown away, we discover even the castles of the print world -- the New Economy magazines -- are made of crepe paper. Business 2.0, Red Herring, Upside and The Industry Standard all have weak circulations, according to Fortune (an admitted competitor). Yet they are all so thick with ads that two of the monthlies are moving to every-other-week frequency, others are spinning off flanker titles and those not public are planning offerings.
These signals aren't just mixed. They're internally contradictory. Unfortunately, the net result (get it?) will probably be a complacent magazine industry that still refuses to rise to the challenges it faces.
The collapse of the Web zines shouldn't be a surprise. They made the mistake of going, or planning to go, to the public markets for capital. Yet none had business models that could sustain investors' desires for quick and large returns. For the most part, they've been deprived by the Net's giveaway culture of a major source of income: circulation. Ad revenues, fragmented across so many sites, couldn't possibly make up the shortfall. The other putative sources of revenue -- notably transaction commissions and sponsorships -- haven't materialized.
Essentially, these sites are niche magazines. Just as one couldn't possibly imagine The National Review going public and satisfying investors, so one should never have expected Salon to do so. If Time Inc.'s Money couldn't make it as a standalone company, it was looney to think CBS Marketwatch could.
Yet in the face of these failures, the second oldest medium, print, is thriving -- if it covers the faltering newest medium. Red Herring's 628 ad pages in June were more than twice Vanity Fair's, prompting a fishy decision to double its frequency. Business 2.0 has already made the move. Yet their paid circs are sub-200,000. Half The Standard's 150,000 circ is controlled, as is most of Upside's.
The old guard in the old media crow about the contradiction. To them, it shows they remain the gatekeepers to the mainstream audience, and anyone who wants access has to cough up a toll.
But if these New Economy publishers go public, most will fail, too. They are sustained by a single ad category -- dot-coms -- that's crumbling or consolidating like mad. What's more, these advertisers aren't even advertising to would-be customers; as Fortune points out, desperate dot-coms are blowing what's left of their early financing to reach a tiny audience of venture capitalists. Their theory: If they advertise, they'll appear real; if they appear real, they'll attract new investors.
Nothing wrong with that. What's wrong is most of these rags are unoriginal. When the inevitable shakeout happens, they'll have no unique value proposition to sustain them. Red Herring and Business 2.0 have simply conjoined the path-breaking Wired and Fast Company franchises. Upside is almost unreadable. Of the bunch, only The Standard -- the best out-of-the-box weekly startup I've ever seen -- performs a real, needed service. Whether it can sustain investors' desires, especially in the face of the rapid expansion it's planning, is another matter.
This lack of distinctive value also marks the Net zine failures. The public isn't crying out for The New Republic-on-the-Web; nor is a crime-news operation a far leap ahead of the Fox Network. Net business news? Why not open a pizza parlor in Brooklyn?
All publications, whatever the medium, must ask themselves the questions Jack Welch forced on GE's divisions. Can we be No. 1 or No. 2 in our field? Can we change the game and transform our industry? The evidence shows few in -- or from -- the journalism world are testing themselves thusly.
Mr. Rothenberg can be reached at email@example.com.