Why Wired Misfired (March/April 1998)
by Janice Maloney (Columbia Journalism Review)
Maloney, a Time contributor, has been covering technology for ten years.
Wired magazine, the self-proclaimed leader of the digital revolution, and its parent, Wired Ventures, Inc., have undergone so many shakeups in the past year that the question comes up: Is Wired tired? Among other things:
* Louis Rossetto, 49, co-founder and visionary of Wired magazine, the media company’s flagship, and c.e.o of Wired Ventures, stepped down as the magazine’s editor and publisher in December, announcing also that a c.e.o. search has been under way. (His title now is editorial director of Wired Ventures.)
* Co-founder Jane Metcalfe, 36, Rossetto’s business partner and significant other, remains president of Wired Ventures but has relinquished some of her managing duties.
* Both these moves came after a failed attempt to take the company public (and after two top-level editors, John Battelle and Russ Mitchell, left Wired magazine).
* Wired Ventures’ online news and software division, Wired Digital, has laid off more than fifty people out of 190 in the past two years, including its executive producer, award-winning journalist David Weir.
* Wired’s plan to launch a series of foreign print editions, including Wired UK, was suspended; its television programming arm put on hold; and its book division scaled back dramatically.
Rumors of a sale of Wired Ventures, in parts or whole, are floating through the e-world. The company is reported to be circulating a prospectus via investment banker Lazard Frères & Co. Advertising Age reports that the prospectus says Wired Ventures last year had revenues of $46.5 million, with an operating loss just over $13 million. (That’s much improved from the year before. In 1996 Wired had an operating loss of $25.6 million on operating revenues of $36 million.)
All this from an outfit that seemed to have such a sure touch. To his credit, Rossetto five years ago saw the need for a consumer magazine that embraces technology, not from the bits and bytes perspective but from a socio-cultural, life-style view. It was an instant success. Today more than 375,000 people subscribe, and they are an advertiser’s dream. The average reader is an educated guy in his late 30s, early 40s, who earns $120,000 a year.
Alas, in doing so much to bring technology into the mainstream, Wired attracted the attention of mainstream competitors. Slowly, collectively, they are chipping away at Wired’s market share and advertising base.
The San Francisco-based magazine, however, is hardly in jeopardy. In fact, it is the raft keeping the rest of Wired Ventures afloat. Wired magazine has been in the black for the past four quarters. Its staff has been rebuilt with some heavy-hitting talent: Katrina Heron, 42, an ex-New Yorker and Vanity Fair senior editor who had been editor-at-large at Wired, is now editor-in-chief. Dana Lyon, 42, replaced Rossetto as publisher. Martha Baer, 36, who returns to the magazine as managing editor after a tour at the online division, completes the triumvirate, which is known inside Wired as the babe-ocracy.
Already the magazine’s in-your-face, surfer-magazine look has been toned down to what Lyon calls "radical simplicity." How will the new team change editorial content? Too soon to say. But the March issue seemed like typical Wired fodder. The cover story, "Carbon Copy," was about human cloning.
If Rossetto’s ambition had been only to create an innovative and profitable magazine he’d be home free. Other magazines would be writing profiles about him and Metcalfe and their vision and chutzpah, rather than tougher pieces like the one that appeared in February 1997 in Upside, a high-tech consumer magazine that portrayed the pair on the cover as an apple-eating digital Adam and Eve. But Rossetto wanted to build a New Media Empire. Empires cost a lot of money.
Wired Digital, for example, lost about $10 million last year, says one former executive. Andrew Anker, c.e.o. of Wired Digital, quit in February. Together with Rossetto and key editors at Digital, Anker had built a staff large enough to generate original content — at one point more than half of the 360 employees of Wired Ventures worked in the online division — and there was never a question about the merit of throwing bodies at a problem. New media was, well, new, and no one fully understood what form of content would thrive on the Web.
At the point Wired Digital was started, "the idea of electronic, commercially supported publishing was so thrilling, it seemed like an incredible opportunity," says a former executive. "I don’t know how you would have found out it was a bad idea until you tried it."
As the problems inside organizations like Wired Digital have come to light, people’s confidence in online publishing has been shaken and investors who were so willing to pony up millions initially are now saying: Show Me The Money. This is forcing online publications like Wired Digital to re-evaluate business strategies. Wired insiders say Digital’s new focus will be on providing services to its subscribers rather than journalistic pieces. Currently, Digital plans to continue pushing its search engine, called HotBot.
It turns out, says one former executive, that "the Web is about intent, not content. People use it to research cars and access critical information. They don’t want to read online."
Because of its hipper-than-thou attitude, Wired has become an organization many technologists and media critics love to hate. But the company has been fearless, recklessly so from a bottom-line perspective, in its exploration of new forms of media. Its people may go down in history as the team that led the market research for online publishing. From their mistakes and successes, digital publishers like C/Net, Microsoft, Salon, and The Wall Street Journal may learn not only what kind of content works online but how to make some money with it.
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