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Sunday, February 16, 2003

End of an Era?

The announcement that Salon may be on the point of closing has taken me by surprise. Presumabely those following this particular end of the internet media field have been expecting the news for some time. I must admit that the failure to find a workable business model since the cash from Wall Street dried up had left me wondering how they were making ends meet. Of course all this blogging can't have helped them. At the same time, if they are going, this must be some kind of bad news for the more conventional press who are looking to try and find a way to survive in the online world of the future. I'd love to see a breakdown of new subscriber data on 20 to 30 year olds for some of the household names in quality US newspapers. At the same time, although I regret the loss, I must also admit that I have never been exactly a regular reader, even if I have found some of their stuff intelligent and highly readable, especially in the arts. Like the Industry Standard, we will mourn their passing, they will be sorely missed.

Salon Media Group, a formerly high-flying US online media company, has warned that it is in danger of going out of business within the next two weeks. In a filing with the Securities and Exchange Commission on Friday, Salon said it has been unable to pay most of its bills since December, including its rent. If it cannot increase revenues or raise money, it would be unlikely to survive beyond February. In spite of critical acclaim for the quality of its content, Salon's readership has largely shunned its pleas for payment. The company said it was considering new ways to raise money, for example, by selling $5.6m of advertising rights with Cablevision Systems, a deal that might net about $1m. It is also trying to attract additional investors. Salon was bailed out twice last year by John Warnock, the co-founder of Adobe Systems. But the patience of Mr Warnock and other investors may be reaching an end. The online advertising market continues to be weak and Salon's 47,000 paying readers are not generating enough revenue to cover operating expenses. Salon said it could cut costs further to a break-even point but that would affect the quality of the online magazine and its viability.The company went public in mid-1999 as part of an innovative "OpenIPO" pioneered by W.R. Hambrecht that allowed small investors to purchase shares at the initial public offering price instead of limiting such stock to large institutions. However, the company's shares fell after its debut and continued to decline. Salon was delisted from the Nasdaq in November.It is one of the few survivors of a group of leading online magazines. Cnet's News.com and CBS Marketwatch are profitable ventures but they are specialist publications focused on technology and business news.

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