Online players come of age

Mark Day
April 27, 2010

As appeared in The Australian on October 21, 2004.

FOR years the talk has been of the world wide web becoming the communications platform for the 21st century – a free and anarchistic means by which any of us can have a voice unconstrained by the traditional barriers and costs of publishing.

The theory is fine, but as old-fashioned publishers such as Rupert Murdoch once famously pondered, ``How do you make money out of it?''

It's happening. New and sustainable businesses are being built and the dawn-to-dusk commitment of new media entrepreneurs is delivering profits where once there were only dreams. Take the most famous antipodean web publisher of them all, Stephen Mayne, of He recently doubled his output for the sole purpose of accommodating more advertising and he's no longer deep in debt. Instead he's deep in thought about how to take his business to the next level.

Or blogger Tim Blair, who describes himself as ``one bloke with a laptop''. He got started on a whim and now has a worldwide audience, a flow of voluntary financial contributions and a firm idea of the next step.
Then there's Richard Ackland, the former Media Watch host, who abandoned the printing press in favour of the internet and has had potential buyers sniffing around, kicking the tyres of his nicely profitable online law journal, Justinian.

Together, they show internet publishing is a work in progress, with as many models as reasons for being.

Richard Walsh, the former head of Kerry Packer's Australian Consolidated Press magazine publishing house, was one of the first to get into internet publishing in 1999. For seven months, he and partner David Salter put out the Zeitgeist Gazette, a daily commentary of 5000 or more words.

``We were too early,'' Walsh tells Media. ``In those days people were passionate about the net being free and it was against the spirit of the net to ask for paid subscriptions.

``With the bravado of pioneers we thought we could convince people to pay $2 a day for our service, but it came unstuck. We thought we could get 1000 subscribers at $500 a year. Even 500 would have been encouraging enough, but we got between 100 and 200. Like setting out for Broken Hill and realising at Lithgow we didn't have enough petrol to make it, we singed our fingers and let it go.

``Our subscription rate was ungettable then and is ungettable now. We also learned from a journalism point of view that people don't want long reading experiences. We were giving them something big every day, when the maximum length should have been 700 to 800 words. And it probably would have been better as a weekly. We were miles and miles ahead of the market, but it was a fun thing and we don't regret a day of it.''

At the time the Gazette folded, Mayne's Crikey was six months old and unsustainable on subscription income of less than $10,000 a month. Mayne had learned the high-priced model wouldn't work, so he sought subs at $55 a year.

``They were the dark days,'' Mayne says. ``Then Steve Price, then a Melbourne radio announcer, sued us for defamation, and we indulged in violin marketing – playing the sympathy card – as we engaged in a 14-month struggle. When he took out an injunction to prevent the sale of our house, the $10,000 a month became $30,000 a month. In the past six months it has kicked up to $40,000 a month, about a quarter of which is advertising, which includes about $US1000 [$1400] a month from Google – so our annual income is around the $500,000 mark.

``The ad at the top of our daily email is sold out for months ahead at $350 a day. We recently started putting out two editions a day solely to accommodate the demand for that ad spot because there are plenty of people who recognise that we have the best email list in the nation.

``We send out our emails to 5400 subscribers a day, but it is the quality of that list which counts. About 140 of them have Parliament House addresses, so if you want to hit the hill, you can best do it through us.
``Our research shows we have a subscription base of rich red raggers – household incomes strongly over $120,000, 70 per cent managerial-professional, voting 75-25 in favour of Labor. It's a powerful list.''
Mayne says he employs seven people but cannot afford to pay regular media rates. ``If we suddenly started paying commercial rates, we'd be back in the red,'' he says. For this reason he finds it hard to put a value on his enterprise.

``Crikey is not professionally managed. It operates from a spare bedroom downstairs at home. I have put in 70 hours a week for five years and I'm worth less today than I was before I started.

``But we are better known than any other independent e-zine in the world with the possible exception of Salon, which has burned $US30 million.''

Mayne says his passion is still sharemarket activism, but the demands of editing Crikey keep him away from running for boards or asking tricky questions at annual general meetings. As his fifth anniversary approaches next February, he says he must decide whether to hire an editor or take on a partner.

He does not expect an offer to be taken over from any large publisher. ``We play the outsider game so aggressively by attacking the big players I don't think I could sell to them, nor do I think they'd want us,'' he says. ``But a joint venture is a possibility because I think there is scope for city-specific editions of Crikey, particularly in those cities with just one daily paper.

``We have a lot of ambition, a known brand, but limited capital. We're thinking about the next step.''

Also thinking is Blair who started writing his witty, sardonic and fiercely right-wing web log (blog) in 2001. ``It was a spur of the moment thing,'' he says. ``I had no plan; no ambition. I had just begun freelancing and it was something that just grew. I was hired by The Bulletin on the strength of the blog.

Blair says he was getting 20,000 to 30,000 hits a day before he turned off his counter. ``It was a distraction,'' he says. The numbers are enough for him to get regular advertising and a monthly cheque from Google for links to his site, and voluntary donations keep coming, mainly from the US. ``It costs me nothing, it's a fun thing to do and I guess it's made me a bit of a media brand,'' he says. ``But I still pay the rent from my mainstream jobs.''

Blair sees a role for bloggers in the large publishers' websites. ``Media organisations are slow to exploit their new publishing services,'' he says. ``We could ramp up what they do because newspapers' sites attract a different readership than those who choose to read a hard copy and they use the medium differently. Bloggers are involved with their audiences in a way the mainstream sites are not.

``Margo Kingston's Web Diary role on The Sydney Morning Herald site was a major tactical error. They put her online to get her out of the way – now she has a worldwide exposure.''

Richard Ackland's Justinian and its smaller brother, the Australian Gazette of Law and Journalism, began life as hard-copy magazines. In 2001 he made the leap to web publishing only, charging the same as the magazine subscription – $295 a year.

He lost about 40 per cent of his clients at first but also dramatically altered his costs by eliminating printing and distribution. He kept hammering former clients with emails and today has 90 per cent of his former list of about 3000, which gives him an implied annual income larger than Crikey's.

Ackland admits he has had potential buyers sniffing around – ``kicking the tyres''. ``It's big enough to support itself – and me,'' Ackland says. ``And the flexibility allows a better service. In the old days you had to get all your stories together before you printed and that means many were stale or out of date. Now when a good yarn comes in, you whack it on the web almost as it unfolds.''

But some habits die hard. Many old codgers of the law still yearn to hold their information briefs in their hand, so Ackland is planning to relaunch Justinian next week.

His new web design will provide a facility for clients to easily make printouts of the journal. Maybe the net is coming the full circle.