E-Zines

E-zines are magazines published electronically, most often on the World Wide Web. The terms e-zine and Web zine typically refer to the same thing. Initially, a "zine" referred to a niche magazine targeting a small, unique market. However, as the number of mainstream publications that made their way to the Web grew throughout the late 1990s, the term e-zine grew to encompass both niche and mainstream magazines that were published via the Internet. In addition to online content, most e-zines offer interactive features, such as the ability to search current and archived articles for a particular topic or keyword. Many also house message boards, which allow readers to respond to articles. Some e-zines rely solely on advertising to make money, others charge subscription fees, and many rely on both revenue sources.

One of the most well-known e-zines, Slate, is published by Microsoft Corp. Roughly 2.5 million unique readers log on to Slate—which covers news, politics, and culture—each month. The e-zine was created in 1996 by Michael Kinsley, a former New Republic senior editor and co-host of CNN's political commentary program, Crossfire. Readers initially were charged a $19.95 monthly subscription fee. Eventually, the site grew to include MySlate, a site personalization feature, and a discussion forum known as the Fray. In 1999, Slate's managers realized that they were spending more money attempting to recruit paying subscribers than they were securing in subscription fees. According to Slate publisher Scott Moore, as quoted in a September 2001 issue of Econ-tent, "I projected what would happen to our audience if we made Slate free, given that we could take advantage of the distribution power of MSN. I modeled what that would do for our advertising potential, and it looked like there was a lot more upside with that strategy than continuing to slug along selling subscriptions, so that's what we did and it has paid off." Along with traditional banner bars, Slate also relies on larger advertisements and sponsorships agreements, whereby the e-zine posts links to other sites.

A major competitor to Slate, Salon is perhaps a more typical e-zine as it does not have access to the deep pockets and marketing reach of a firm like Microsoft. Salon was created in 1995 to cover political and cultural issues. Its writers included the likes of radio host Garrison Keillor and social activist Camille Paglia. An initial public offering in 1999 raised $35.6 million in capital and resulted in Adobe Systems holding a 15-percent stake in the site. Access to the e-zine was free, as Salon relied solely on advertising to generate revenues. Consequently, Salon was particularly vulnerable to the downturn in online advertising the e-content industry began to see in 2000. That year, the firm lost $19.2 million on sales of $8 million. In response, Salon began working in 2001 to develop and market a subscriber-based site with increased content and no advertising. The e-zine also began cutting costs by laying off marketing employees and implementing a 15-percent pay cut. According to BusinessWeek Online writer Thane Peterson, Salon also was at a disadvantage because it lacked the name recognition of online magazines published by industry giants like The New York Times, Newsweek, and Time. "Established print magazines can constantly remind readers to log onto their Web sites, so, like Slate, they require far less marketing expense than an independent like Salon. "

Another well-known e-zine, TheStreet.com, was created in response to predictions that the number of U.S. households trading stocks electronically, 1.5 million in 1996, would grow exponentially throughout the late 1990s. Hedge fund manager and New York magazine columnist James J. Cramer and New Republic Editor-in-Chief and Chairman Martin Peretz created TheStreet.com in November of 1996. Cramer and Peretz believed that many individual stock traders would be willing to pay for immediate market information, and they charged a monthly subscription fee of $12.95 for access to their financial e-zine, which included performance reports profiling Wall Street analysts, news and commentary on current trading activity, and other articles written by Cramer himself, as well as by Michael Lewis, a senior editor at New Republic.

Shortly after its inception, TheStreet.com began adding interactive features, such as the ability to track mutual fund and stock portfolios in real time. The 30 articles published each day were grouped into four sections: Fund Watch; Company Watch; Truth Serum; and Market Facts. Most articles totaled 800 to 1,000 words, compared to the 1,500 to 2,000 words typical of articles in most businesses publications, a fact which reflected the widespread belief that attention spans for online content were shorter than for print content. In 1998, subscriptions accounted for roughly 70 percent of total sales, while advertising from Charles Schwab, Ameritrade, Fidelity, and other brokerages accounted for the remaining 30 percent. When the firm conducted its IPO in 1999, the starting share price of $19 jumped to $75 during the first day of trading. The following year, TheStreet.com decided to make a general version of its site available for free in an effort to gain a mass market. To meet needs of more active investors, the company offered additional stock analysis content on a new site, RealMoney.com, which charged a monthly subscription fee of $20. A third site, TheStreetPros.com, was designed solely for industry professionals and charged a monthly subscription rate of $40.

Like most other e-zines attempting to reach a mass market, TheStreet.com found profitability elusive. Cost cutting efforts were launched in 2000, and the firm also began pursuing ventures not related to the Internet. Some analysts believe that the most successful online content providers will be those that use the Internet as one of many distribution vehicles. Other analysts believe that smaller, more specialized e-zines, particularly those that offer unique content, are more likely to remain viable contenders. According to an August 2001 article in BusinessWeek Online, "While both Salon and TheStreet raised tens of millions of dollars in flashy IPOs, each has struggled to come close to breaking even. . .just about everybody is still struggling with the question of how to make any money off the business model. . .that's where the new crop of upstarts come in."

Two niche e-zines that came close to profitability in 2001 were investigative news site WorldNet Daily, with roughly 20 employees and 450,000 visitors each month, and community-based spirituality site Belief-net, with more than 950,000 monthly users. In fact, during the first half of 2001, while most other e-zines watched advertising revenues slow to a trickle, Belief-net saw advertising sales grow 300 percent. Like most other e-commerce business models, the e-zine likely will continue to evolve as upstarts find new ways to succeed.