Salon.com Relaunch Features New Emphasis on Growing Revenue

During the latter part of 1995, Apple (AAPL) executive Richard Gingras was in the process of overseeing the dismantling of his company's ill-fated eWorld offering, when David Talbot and a small band of journalists bolted from the Hearst-owned San Francisco Examiner to launch an online magazine called Salon (SLNM).

Using some unspent marketing dollars, Gingras supplied the group with a small bit of seed funding and some laptops, printers and servers, plus access to several major investor prospects.

One of those original printers, affectionately known as "Gingras," was still in operation four years later, by which time the company had made a name for itself in high-quality journalism, and was about to go public, via the auction method, OpenIPO, as pioneered by W.R. Hambrecht.

Over the years, Salon has continued to deliver high-quality content, but for the most part, it has produced quite miserable results as a business.

Now that appears to be on the verge of changing, and the person responsible is none other than Richard Gingras, who was named CEO of Salon Media Group this past May, and immediately went to work on a goal of transforming the staid old magazine site into a state-of-the-art software product.

Six months later, using a "graduated launch" strategy, Salon is migrating its visitors over to a new user interface that, according to Gingras, is already resulting in a spike of at least 25 percent in engagement metrics.

The company is monitoring the new platform's performance closely during this rollout, and plans to make an official announcement on November 10.

In crafting the re-architecture of the site, Gingras drew on the year he spent as a high-level consultant at Google (GOOG), and the deep access he was given to the search giant's data, which is, of course, the best indicator of how users behave online available anywhere in the world.

Thus, the new Salon presents headlines and articles optimized for search (SEO) in a blog-like format that allows users to scroll down and see the most recent items first -- in the context of a topic page that also is index-friendly for Google.

In an unusual move, an ad unit floats down in the right column with the user as (s)he scrolls. This replaces the "pagination" model, where the ad unit refreshes every time the reader clicks to continue reading. Salon is opting to improve the user experience here, and hoping to keep advertisers happy via the floater.

Every piece of content will reside at a fixed URL, which enables search engines to drive traffic to it long after an article first appears.

The production tool developed in-house is based on a "widget" system that allows editors to enter all of the key editorial and SEO elements, including their best guess for how long each content item's "shelf life."

The key element in this entire system is that human editors will make the decisions, not algorithms. After a year of evaluating how algorithms benefit (but also limit) the performance of Google News, Gingras is probably better-suited than anyone in this business to understand how important a well-informed human editor can be to the success of an online content operation.

And he's coming down squarely on the side of the humans, while also automating every conceivable part of the production process to try and make that human labor, which is relatively expensive, as efficient as possible.

At the same time, probably the most intriguing part of Salon's redesign from a business perspective is the newly prominent role given to Open Salon, the user-generated-content (UGC) blogging service that the company says currently hosts 35,000 bloggers and attracts one million unique visitors per month.

Salon's UGC cred got a big boost earlier this year from the movie "Julia and Julie," which featured the success of former Salon blogger Julie Powell.

In the new design, as much real estate is reserved for Open Salon as for the site's original articles, with a feed of related news headlines drawn from Google News rounding out the topic page content mix.

Here's how the business model works for Open Salon. The content, first of all, costs "pennies per page," according to Gingras, and each page contains five ad slots, three reserved exclusively for the blogger, and two for Salon. The advertising network being used currently is Google AdSense, but that choice is currently under review.

"We think about five percent of the 400 or so blog posts each day are up to our quality standards," says Gingras. These are the ones that rise to the top of the page as rated by the community, which is rich with writers and artists, including cartoonists from The New Yorker who post work that doesn't make it into that famously elite magazine's content mix.

"We're planning to find ways to compensate these contributors," says Gingras. "I'm not Arianna Huffington. I don't believe in making money off off of their content and not sharing it with them. If we are able to monetize, it, they should be able to benefit."

Open Salon's urban footprint is such that the company believes it can attract high-quality advertisers. There are a thousand bloggers in San Francisco, for example, and another thousand in New York.

"Salon is a lifestyle brand," says Gingras. "It conveys a certain intelligence, a challenge to the status quo, an edge that advertisers like."

Part of the company's evolution will soon include a vertical foray into the food space, with the addition of Francis Lam from Gourmet to develop quality content there.

Gingras indicated that further development of "softer" content is also in the works, moving a bit away from the site's heavy reliance on politics and news content in the past.

Most of the incremental growth to traffic Gingras is betting on (he'd like to double the site's current 5 million uniques per month over the coming year) will be landing on these topic pages, courtesy of search engines.

But the home page at Salon is more important than for most sites, because 45 percent of its visitors bookmark the site and open their visit there. Given these numbers, it's my opinion that the existing home page needs to be redesigned in order to become more aligned with the topic pages. (Gingras simply allows that it is a "work in progress.")

"The key to attracting premium advertisers is engagement," says Gingras. "And Salon has been about community and engagement from the beginning. Thus its name."

But advertising alone rarely generates enough revenue for an online media company to be profitable, so it is interesting that one of the efforts under way at the company is a "Salon Store" (that name is not final), which will launch around Thanksgiving and feature smaller, edgier products that could appeal to sophisticated urban buyers during the upcoming holiday season.

"It's an experiment," says Gingras. "I haven't even attached any numbers to it yet. We just want to launch it and see how it performs."

By branching into ecommerce, Salon is following the lead of media companies the Telegraph (U.K.), which reportedly harvests up to a quarter of its revenue via ecommerce these days. Under the model Salon is implementing, vendors will sell directly to consumers via the Salon Store, with the company keeping between 15-30 percent of the price of the product.

Salon has been hiring staff lately, after laying off a few editors, and the hires are telling -- engineers, product people, and merchandisers. It's still a small company, with a total workforce of 45.

In an intriguing bit of sidelight news, Salon's major benefactor William Hambrecht was recently named to the Board of Directors at AOL, where CEO Tim Armstrong is also a Salon investor. As we've reported here, under Armstrong's leadership, AOL is hell-bent on a high-quality journalism model not at all dissimilar from Salon's, though on a far larger scale.

This all causes me to wonder whether a closer affiliation between the companies might eventually result, but if so, nobody's telling me about that, for now...
(Disclosures: I worked as a consultant with Salon's founders on the business side in 1995 to help launch the company; and returned as a senior content executive in 1998 for two years. I first met Richard Gingras as we were launching Salon, and worked for him briefly at Excite@Home in 2000.)
Related Bnet links:

Salon Replaces its CEO; Hires Veteran Gingras
The Numbers Behind Salon's Layoffs
Salon: In the Arms of the Angels
Is AOL On a Mission To Save Journalism?
AOL's Business Model: High-Quality Content to Scale
AOL's Business Model: Part Two