Wenner's Online World, Circa 2009 (Profitable?)

Some ten and a half years ago, on one of my frequent visits to Manhattan, I stopped in to see my old friend and former boss, Jann Wenner, at Rolling Stone. We talked for a while about the ascendance of the web and Jann’s lackluster efforts (as of then) to take his premier rock and roll brand online in any meaningful kind of way.

I was remembering this conversation yesterday as I read Peter Kafka’s interesting post stating that Wenner has been making money from his web site for the past five years. Although he doesn’t cite any named sources, Kafka’s track record is strong enough that I’m willing to take him at his word, for now.

According to his post, the way Wenner is turning profits online is by licensing his brand and offloading almost all of the costs of running the Rolling Stone site to the licensee, RealNetworks.

According to Kafka, this has resulted in profits in the range of  “several” millions of dollars a year. That’s not really all that much cash, except that Wenner Media is a privately-held company, with Jann and his ex-wife Jane as the primary and probably the only stock-holders, and we are in the middle of a recession.

Every little bit helps.

The larger kernal of business-model truth here is something that other old media brands might want to consider. There is a lot of brand equity locked up in a product like the St. Louis Post-Dispatch, say, or Newsweek magazine. But it has proven exceptionally hard for print publishers to adapt to the new economics that the Web has presented, and thus to monetize that brand equity online.

(Of course, I’m aware that these two examples are from publicly-traded companies, and therefore this analogy is imperfect, but I’m talking about brands here, not the difference between private v. public companies.)

Part of the reason most print publishers have failed online is that they are not optimized for web content production, with all of the iterative software development processes required to keep up in a rapidly evolving technological environment.

It makes sense, therefore, to outsource the entire cost and technology structures to a company with the relevant expertise, and to recoup what you can via licensing fees. Your risks are lower and the upside, while hardly mind-boggling, tends to be steady and predictable, both good things in bad times.

Over time, as the situation calms down, you may even be able to develop enough internal expertise to compete in this space on your own, but at least until then, you’re adding to your company’s cash flow, not depleting it.

Plus, with mobile coming alone, it may prove true that, for media companies, this whole computer-based online era, where people access news at stationary desktop units, will turn out to have been little more than a painful transition stage to an era where people use their mobile devices to access media brands wherever and whenever they wish.

That, of course, will require a whole new set of decisions.

Whatever else you might say abut Jann Wenner, he has always been a pretty savvy media exec. He has survived at the peak of his very competitive niche for four decades and counting.

Finally, back to that 1999 meeting of ours. He thought out-loud about hiring me to help reshape his web strategy, but it’s probably best for both of us he didn’t, because a little bit later, I wrote what I thought was this rather sweet tribute, which, it turns out, he utterly hated.