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In
early 1994, when most people were busy listening to Green Day or
watching “Beavis and Butt-Head,” two forward-thinking media
professionals attended a magazine launch party at the Waldorf Astoria
hotel in New York, where they struck up a conversation about the future
of publishing. Walter Isaacson, then an editor at Time Inc., and Louis
Rossetto, founder and publisher of Wired magazine, discovered they had
the same problem. They were putting content from their magazines on the
Internet, but they were tired of being at the mercy of online services
like AOL and CompuServe, which provided the publishing platforms but
also reaped the monetary benefits.
It was a hostage situation, at best, and both Isaacson and
Rossetto wanted more control. They knew it was time to develop their own
“electronic networks.” But how?
“We wanted to get out of the grips of the proprietary
online services,” Isaacson recalled in a recent phone interview with
International Business Times. “So Louis and I talked about, if we went
on the Internet, how should we do it? And we both agreed to do the Web.”
That October, two of the Web’s earliest commercial ventures launched into existence: Pathfinder, a portal for Time Inc.’s online content, and HotWired, an online companion to Wired magazine. As Isaacson recalled, “We both came online within the same week.”
The Internet, and publishing, would never be the same.
It’s been 20 years since Pathfinder and HotWired dragged
the media industry -- sometimes kicking and screaming -- into the 21st
century. As 2014 comes to a close, it’s worth looking back at two
tumultuous decades of Web publishing -- what worked, what didn’t and
what lessons today’s digital publishers can learn from those early
ventures, which were as financially precarious as they were innovative.
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It’s hard to imagine now, but in 1994, even being on the
Web wasn’t a foregone conclusion. At that time, the Internet was a Wild
West of competing protocols -- Gopher, FTTP and others -- and the
then-nascent World Wide Web was just one option.
“The Internet was just a thing,” said Andrew Anker,
HotWired’s co-founder and former chief executive. “You had a bunch of
different ways you could interact with it.”
But the Web, a system of linked hypertext documents, enjoyed a key advantage with the 1993 launch of the NCSA Mosaic,
an early Web browser developed at the University of Illinois. The
browser not only made it easier for non-techies to navigate the
Internet, its graphical interface was perfect for translating
magazine-style content to the digital world.
“As soon as we saw the Web, and all the things it could do,
we knew that was going to be it,” recalled Julie Chiron, a former
HotWired editor who was part of the team that launched it.
Show them the money
Pathfinder and HotWired may have launched around the same time, but they weren’t on the same playing field. The former, proposed
by Isaacson in March 1994, had the financial backing of Time Warner,
one of the world’s largest media conglomerates. But that cushion,
Isaacson admits, didn’t always lead to the most innovative thinking
about what the Web could be.
“We put old wine into new bottles,” Isaacson said of the
Web’s early days. “We just dumped the magazine online instead of
creating communities. That was one of the philosophical disputes at the
beginning of the era of putting ourselves on the Web.”
The folks at HotWired, meanwhile, didn’t have the luxury of
philosophical debates. Their parent company, Wired Ventures, was barely
a year old, and the small team tasked with creating its new online
presence knew it had to make money, and fast.
“From the get-go, there was an attempt to figure out how to
translate the advertising model to the Web,” said Chiron, who was
trained in print media and said working for HotWired “felt risky” at a
time when many of her peers were carving out careers at traditional
newspapers or magazines.
“Wired magazine itself was a startup,” added Anker, who
helped create HotWired’s original business plan. “As a startup, it’s
like -- it has to be a business. So my big insight into the process was,
‘God, all the stuff that works on the print side -- in advertising --
can be translated to the online side.'”
Thus marked the birth of the ad-supported Web, an ecosphere
that continues to this day and has enabled the creation of Silicon
Valley giants like Google Inc. and Facebook Inc. In a way, you can thank
-- or blame -- HotWired for the Internet that we know and love.
HotWired has been credited with running the world’s first banner ads.
(As Internet lore tells it, the very first banner was an ad for
AT&T asking, “Have you ever clicked your mouse right here? You
will.”) At that time, most advertisers didn’t even have their own
websites, so the early ads would click through to microsites set up by
ad agencies.
For a while it all worked swimmingly. Advertisers loved the
new metrics and interactivity that Web ads provided; they loved being
able to know, for the first time in history, how many people were
actually looking at their ads. A digital gold rush followed and, as
Isaacson recalled it, “People from Madison Avenue came over with bags of
cash.”
But the good times didn’t last. By the end of the dotcom
bubble in 2000, HotWired had been gobbled up by the search engine
company Lycos, and Pathfinder had been phased out, deemed an expensive
flop by Time Warner.
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Old ideas, new spin
For people outside of media, it can be hard to explain why
the high profit margins of print’s golden age didn’t follow the
transition to digital. Ad-supported newspapers and magazines were highly
profitable, so why not ad-supported websites?
Isaacson crystallizes the mathematics perfectly, calling it
the law of simple supply and demand. Consider that in 1994, there were
only about 2,700 websites, according to
Internet Live Stats. Within a year, that number skyrocketed to 23,500,
and by 1997 it was over 1 million. Once advertising space becomes
unlimited, the amount of money publishers can charge for that space --
known as costs-per-thousand impressions, or CPMs -- becomes diminished.
“We could watch it happening,” Isaacson said. “The number
of possible avails for advertisers goes up exponentially, but the amount
of advertising dollars is relatively flat -- there’s only a limited
number of cars Chevrolet is going to introduce, et cetera. So when the
avails are going up exponentially, and the advertiser revenue is staying
flat, at a certain point the CPMs collapse, as they did.”
Today many of the biggest players in digital media have
moved away from the display ad-based model of the 1990s. Social-focused
brands like Vox Media and BuzzFeed Inc. have won the hearts of
advertisers and venture capitalists, in part, with diversified business
models that include video production and native advertising divisions.
The web-publishing darlings of the moment, social-focused
brands like Vox Media and BuzzFeed Inc. have won the hearts of venture
capitalists, in part by putting new clothes on an old idea: So-called
native ads that look, feel, behave and -- ideally -- spread like good
content. Legacy media companies like The New York Times Co. are
investing heavily in sponsored content divisions as well, despite concerns that such techniques threaten to dissolve the traditional wall of separation between journalism and advertising.
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It’s certainly a new golden age of media startups, but will
it last? Isaacson isn’t so sure. “What that does is dig yourself out of
a hole by making the hole deeper,” he said of sponsored content. “Once
you do that, everybody else can start doing native and sponsored, so the
CPMs for that will collapse -- and you will have prosecuted yourself.”
If Isaacson sounds cynical about digital advertising, he’s
no cynic when it comes to the technology behind it. His latest book, “The Innovators,”
chronicles the digital revolution and the people who made it happen. At
the same time, he’s surprisingly forthcoming about the mistakes
publishers made in the Web’s infancy, and some of the paradoxes that
online publishing presented. He speaks of the “original sin” of putting
content online for free, but admits it probably couldn’t have happened
any other way.
“There’s a certain American logical fallacy that says,
‘There’s a solution to every problem,'” he said. “It may be that there
was no way could’ve charged anything for going online, and yet there’s
no way we could’ve made it sustainable with advertising.”
Today the healthiest media companies cling to subscription
models, which is why the TV industry clings to its “bundle,” a package
of channels it sells through cable providers. Outside a bundle, media
must prove it is indispensable to the consumer each billing cycle; in a
world of proliferating free options, this is increasingly difficult to
do.
HotWired’s Anker said it’s easy to look back with hindsight
and question what went wrong about the early days of Web publishing,
but he prefers to look forward. Twenty years ago, the Web as a
commercial venture had barely been explored. Today Anker runs a company
called Tugboat Yards,
which creates tools that help online publishers monetize their
audiences, and he said any workable strategy for digital publishers will
likely include a combination of ad and subscriber revenue.
In 1994, that wasn’t even an option. “Even if we wanted to
launch with user-pay, you literally couldn’t even take a credit card at
that point,” Anker said. “So it was sort of impossible.”
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