Be it earthquakes or the New Economy apocalypse, San Franciscans are accustomed to treading on the rubble of yesterday's talk of the town. But some collapses are more symbolic than others, and last Friday's news that the Industry Standard would cease publication was the dotcom equivalent of the Transamerica Pyramid toppling over.
Here was the great skeptical herald of the Internet age, the irreverent chronicle of digital business, which this year won a prestigious journalism award for its coverage of the AOL Time Warner merger. Last month, when the Standard played host at one of its conferences to the digital powers that be, Microsoft CEO Steve Ballmer and rival Sun boss Scott McNealy squared off over Microsoft's controversial new Windows XP operating system.
Compared with the frothy content plays of the era, the Standard stood as a solid foundation, pulling in $158 million in ad revenue in 2000--and actually turning a profit, albeit briefly. How could it fold so suddenly? Could the publication that had adroitly skewered all those bogus dotcom business plans have been brought down by the same shortcomings?
In a word: yes. Like dotcom flameouts Kozmo.com and Webvan, the Standard followed the mantra--first popularized by Amazon.com founder Jeff Bezos--of Get Big Fast. Hundreds of reporters were hired. A New York City office opened. A second magazine, Grok, was launched (though quickly abandoned). Conference costs spiraled. Lease commitments for tony office space were more than $50 million. "We were very aggressive," editor in chief Jonathan Weber said last Friday from the magazine's suddenly empty offices. "We took funding from venture capitalists and had a high-growth strategy. It's clear from hindsight that wasn't the best idea."
So when dotcom-driven advertising dried up--and ad revenues fell 62% from January through July this year alone, according to the Publishers Information Bureau--cash reserves quickly followed. Weber unleashed regular showers of pink slips but not fast enough to help. Last Tuesday plans for a second round of financing fell through. IDG--the technology trade-magazine giant based in Boston that owns 85% of the Standard--decided to pull the plug.
But why not sell? The owners of Business 2.0 cashed out with a $68 million deal to turn the title over to AOL Time Warner (parent company of this magazine), which merged it with eCompanyNow. Some insiders at the Standard claim its managers had lined up a couple of potential buyers, but one obstacle may have been the Standard's large controlled circulation--copies given free to the industry. In any case, there had long been tension between the corporate cultures of IDG (East Coast, infotech oriented ) and the Standard (West Coast, business oriented). At some point, there was bound to be a nasty split.
The Standard's demise underscores the challenges confronting the last few mainstream New Economy journals: Red Herring, Fast Company (bought last year by Gruner & Jahr), Wired and Business 2.0. Their ad slump is not as severe as the Standard's, but is still daunting (20%, 31%, 32% and 44% drops from January through July, respectively). But Fast Company and the Herring are older, more established magazines with lower costs, and Conde Nast's Wired and AOL Time Warner's Business 2.0 have potential subscription draws and advertising leverage from the many properties of their parents.