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SAN JOSE, Calif. - Of all the technology magazines that emerged during the dot-com boom, Salon.com - one of the Web's first "zines" - was always living precariously, perpetually close to going out of business.
Now, a decade later, Salon could be having the last laugh. Although it still teeters on the edge of financial viability, the progressive Web-based magazine is very much alive, while other boom-era magazines like Industry Standard, Business 2.0 and Red Herring are dead or reinvented as much leaner versions of their former selves.
Salon plans to celebrate its 10th anniversary with a party in San Francisco Thursday night. Salon owes its survival to cash infusions from loyal deep-pocket readers like John Warnock, the founder and co-chairman of Adobe, and Jann Wenner, the founder of Rolling Stone, who don't want to see the site go away.
"Salon is a small, but courageous voice," Warnock said this week in an e-mail. "I have always liked their writing and the topics they will address. The world needs more Salons."
With both its hard-hitting, left-leaning political coverage and trendy cultural stories, Salon has cultivated a loyal readership, many of whom see the site as a hipper version of the New Yorker on the Web. A table in the lobby of its San Francisco offices in the Rincon Center is full of journalism awards.
"People love our political reporting," said Salon's editor-in-chief, Joan Walsh. "Our cultural reporting helps subsidize that."
Salon has always lived on the edge. Walsh joined Salon in 1998 as news editor, after being warned by founder and then-editor David Talbot that the media organization was about to be vilified. Salon had just published a report disclosing Representative Henry Hyde's extramarital affair of 30 years ago, and the Webzine was denounced by House of Representatives Majority Whip Tom DeLay, R-Texas, on the floor of the House.
Salon's San Francisco offices received a flood of faxes, hackers attacked its network and it got a bomb threat. It also came under assault by some journalists, including Salon's Washington correspondent at the time, who argued the story did not merit publication.
The moment was key for Salon, a Web site that began life in 1995 with wry stories observing culture, politics and technology. It targeted a literary but technologically savvy bunch, chronicling the beginnings of the Linux movement and blistering tales such as "How the Internet Ruined San Francisco." It offered provocative fiction and business stories with humor, such as a 2000 story "My dot-com business mags have fallen on me and I can't get up."
But the Hyde political scandal drove a huge increase in Web page views, with a 50 percent surge in one day.
Salon then beefed up its political coverage. At the time, Walsh said, Salon could have become the liberal version of the Drudge Report, but instead it decided to become more than a scandal sheet.
"Salon went from being a really literary magazine to realizing that the opportunity on the Web was about news," Walsh said. "We went from the craziness of the Hyde story to IPO planning.''
It went public in 1999, in a closely watched initial public offering on Wall Street. The offering was managed by investment firm W.R. Hambrecht, which is now another one of Salon's biggest investors.
Bill Hambrecht's daughter, Elizabeth, became Salon's chief executive in February, after co-founding Asiacontent.com, in the late 1990s.
In 2001, Salon began charging subscribers, in a move to boost revenue. In 2002, it was de-listed by the Nasdaq when its stock fell below $1. In 2003, it warned it was close to shutting down. Its accountants have warned, and are still warning, about its "ability to continue as a going concern." Reporters were ready to cover its last day in their former swank offices that took up two floors in a shabby section of San Francisco's South of Market district.
In March 2003, Hambrecht and Warnock led a round of funding, and infused another $800,000 into the struggling firm, providing serious life support. Hambrecht and Warnock each have a controlling interest in the company, according to recent regulatory filings.
Now, a decade since Salon's Web site went live in November 1995, it is still alive. It is not exactly thriving, but it is now benefiting from a rebound in Internet advertising. Revenues jumped to $1.65 million in the third quarter ended September, up from $1.25 million in the year-ago period. In January 2004, it received another $800,000 from two investors, Warnock and Wenner, who also joined Salon's board.
Walsh said the company is hiring again, restaffing its Washington bureau and doing great journalism. It has 65 employees, 40 in editorial, with bureaus in New York and Washington.
An August report on post-traumatic stress plaguing Iraq war veterans helped lead to a policy reversal earlier this month by the Department of Veteran Affairs. A poignant story of an American soldier who killed an Iraqi journalist received widespread praise.
The company is still losing money and its paid subscribers dropped to 77,400 in the third quarter, down from 80,600 in the second quarter. Hambrecht said the company is close to generating positive cash flow from operations.
Walsh said the number of readers is up, based on recent count of about 2.3 million unique visitors per month. Salon has also morphed along with the Web, adding blogs and a monitored forum for readers to post letters themselves. Its SitePass system, which debuted in 2003 and admits visitors after they watch a full-screen ad, has also boosted ad revenue. Big names like Audi, British Airways, and Warner Brothers advertise on the site.
"People's patterns now are tuned to the Web," Hambrecht said. "There is clearly a shift that has happened ... It's been a challenging decade but we are firmly here. We feel like the company has definitely refreshed."
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(c) 2005, San Jose Mercury News (San Jose, Calif.). Distributed by Knight Ridder/Tribune News Service.
