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Taking the plunge: Slate creates the circ model for Web-only magazines - periodical

Direct - May 15, 1998

At the dawn of the World Wide Web, it was assumed that, in the new medium, publications would flourish and content would be king. Remember that? But people just don't seem to want to pay to read screeds on their screens. Still - ever so slowly - publishers are beginning to charge for their online magazines. None has done so with more apprehension - or more publicity - than Slate (www.slate.com).

The magazine, which launched in June 1996, began selling its annual $19.95 subscriptions Feb. 18 and closed the gate to non-payers March 9. Within the first month it had signed up about 17,000 readers, just shy of its first quarter goal of 20,000. For that reason Slate is calling the sub launch a success, though by traditional magazine standards, it's pretty modest. (In pre-pay January, about 270,000 unique individuals visited the site.)

Perhaps more important than the numbers is the event itself. Just as Slate has been an innovator in the small field of highly capitalized (that's Big Daddy Microsoft Corp.) Web-only content, it may be setting the rules for Web-only circulation. True, it has the examples of subscription pioneers such as The Wall Street Journal and The Economist, but they're online versions of land-based pubs. (Slate has a weekly print edition, for $70 a year, but only a few hundred people partake.)

The magazine, edited by former New Republic editor and "Crossfire" co-host Michael Kinsley, features smart, witty articles on politics, culture, economics and the like. It also provides summaries of what's in the newspapers, what was shouted on the Sunday morning talk shows and what critics are saying about current movies, books and other cultural phenomena.

So far the subscription figures won't blast the publication into the black. Slate's operating costs are reportedly about $5 million. Before going paid, it made its money on advertising and affiliate relationships, such as with America Online's Newsstand.

"We know it's going to take time to get to the numbers we want," says circulation manager Linda Leste, who was a Microsoft product manager (and prior to that an account manager for Saatchi & Saatchi) when she joined Slate in November. "It's typical for a magazine to take five years to get to profitability. We have the same struggles. We're happy with [the 17,000 subscribers] for a start."

No one could accuse Slate of leaping into the subscription arena without looking first. It had always planned to charge. It almost did, in early 1997, but changed its mind. The timing wasn't right. "We gave people a year and a half to get familiar with the Web," says associate publisher Colene McBeth. "We feel people are moving more to a model now where they're going to pay for valuable content. That's why we waited."

Slate first needed to identify its potential audience, determine the best avenue of communication and develop the most cost-effective offer.

"There's a long-term perspective here," says Tom Feegel, managing director of NetResponse, the Arlington, VA Web agency Slate hired to help with its subscription work. "We're looking to establish the foundation of a subscriber for the magazine going forward."

Right now the goal is to focus on those who came to the site before it started charging. Slate has enjoyed an enviable reader demographic. A study done before the subscription launch found readers' median income to be $80,000, with more than a quarter of them reporting a net worth of $250,000. Eighty-six percent have college degrees; more than half have postgraduate degrees. In addition, readers visit the site 1.8 times per week and a third spend a weekly average of 45 minutes there.

Future audiences to examine, Feegel says, include international - because Slate has many foreign readers - and people who use e-mail but not the Web.

Through focus groups and its regular online surveys, Slate "quickly found that people love the sophistication and credibility of the news and news analysis," Feegel says. "They view it as a convenience and a time-saver."

Indeed, Slate is pushing its convenience: It tries to distinguish itself from print publications by offering e-mail services, such as sending the table of contents or the news summaries to subscribers.

Slate was also careful about its original pitch. It emphasized how inexpensive a subscription was, and that the magazine just wouldn't make it on advertising revenue alone. It appeared (to an outsider, anyway) to be counting on its audience's loyalty to stay in its rarefied fold. Editor Kinsley's frequent messages about the switch were funny and nearly apologetic.

It also had response deadlines to instill a sense of urgency. Those who subscribed by March 9 got a guaranteed lifetime renewal at the introductory price. Slate is testing a choice of premiums - a Microsoft Virtual Globe CD-ROM or a Slate umbrella - at the launch.

The current advertising campaign is strictly virtual. "We're thinking at first of trying to keep things in the medium, to keep it so they can respond in a similar fashion to how we've reached them," says Leste. Response rates to e-mail pitches have been very high, between 16% and 20%, according to Feegel.

As for the Web, Slate is testing a few dozen banner ads. One reads, "For less than the cost of a donut, you get Slate for a week. Slate for less than 40 cents a week. Subscribe now." The mag is targeting sites similar to itself - those covering news, politics, arts and entertainment, economics and technology. The sites include Business Week, CNN, Excite, Infoseek, The New York Tunes and USA Today.

"We're starting with the sites that look like they'll be most sufficient" for reaching the targeted audience, says circulation manager Leste. "We'll be learning and adjusting as we go along."

Slate will eventually launch an offline campaign, which will test all media, including direct mail.

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