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The content that would be king

If content is truly king, as even Bill Gates once proclaimed, can Salon.com be magically transformed from pauper to prince overnight?

If content is truly king, as even Bill Gates once proclaimed, can Salon.com be magically transformed from pauper to prince overnight?

Despite its anointment, content's domain in cyberspace has not always been eminent. For the most part, financially successful content sites have been focused on specific topics--technology is one that comes to mind--while the demand for general-interest publications has been less bullish.

So Wall Street's reception of Salon.com, one of the first established Web magazines, could provide an important indication of content's coming of age on the Internet.

A content site has no guarantee for success even if it draws tons of traffic, especially if it relies almost solely on advertising for revenue. This has long been the case for predecessors in the pulp world: Manhattan tabloids may grab subway straphangers with headlines like "Headless body found in topless bar," but those aren't necessarily the consumers coveted by advertisers such as Saks Fifth Avenue.

Yet Saks may very well want to grab readers of a publication such as Salon, in paper or pixel form.

Salon could make it on the high end of what I call the "Tiffany-Target" evolution of content that started in newspapers a few decades back. The theory is that newspaper economics have followed the consumer retail market, where American shoppers have gravitated toward opposite poles: prestigious labels (Tiffany) and discount outlets (Target), with some specialty stores in between (Home Depot).

Left holding the bag, as it were, are department stores that have tried to be all things to all people (Macy's).

Parallels to the publishing business aren't perfect, but some clear gravitational trends are undeniable there too. While Nobel-prize titles still top bestseller lists, more prosaic how-to books have increasingly become staples for publishers on the nonfiction side of the aisle. Again, the two driving forces in both retail consumption and publishing are prestige and pragmatism.

Newspapers have seen similar changes, as "high-end" national publications such as the New York Times and Wall Street Journal continue to thrive while the more utilitarian neighborhood papers have boomed in circulation with the post-World War II migration to the suburbs. In the middle, and in decline, have been regional newspapers that provide neither cachet nor very local, block-by-block news. (Macy's, by the way, is typically one of the largest advertisers for papers in this category.)

If history is any guide, readers on the Web will become similarly magnetized to opposite fields. Whether any publication benefits from this division depends, as always, on timing.

Wired magazine, for example, had all the makings of success, covering a hot niche topic and acquiring coffee-table status--often residing next to Vanity Fair at newsstands, distinctly apart from its blue-collar computer trade brethren. But it tried to go public long before .com mania infected the masses. I would bet that even with its much-reported internal problems, Wired Ventures might be able to make a go of it in today's market frenzy.

At the same time, however, I would not be so confident about the chances for Microsoft's Slate, whose editorial direction is perhaps closer to that of Salon. Although Slate clearly wanted to be known for its Saks appeal (sorry), it has been largely forgotten since its celebrated beginnings three years ago.

Salon has maintained a firm footing on the front lines of the virtual frontier but is almost painfully realistic about its prospects on the Street. "The offering involves a high degree of risk," the company stated in its IPO filing, as first reported by my colleague Jeff Pelline at News.com. "We lack significant revenues, we have a history of losses, and we anticipate increased losses."

So much for irrational exuberance.

Moreover, the broadly cast Salon does not cover a specific topic or issue, something that all advertisers seek to maximize their chances of reaching the right readers. On any given day, it will publish articles on anything ranging from politics to sex--or, lately, both in the same story.

Nearly all other Web content companies that have gone public are dedicated to a particular area of coverage, such as the stock market. That kind of specialization also naturally lends itself to other income possibilities, such as real-time stock quotes, company research, brokerage services, and other forms of e-commerce.

The relative limits of its business model are precisely what make Salon.com a perfect test for the Web's development as a literary medium. And I, for one, am unabashedly rooting for its success.

News.com managing editor Mike Yamamoto reads way too much for his own good.