Kurt Andersen ~ press ~ Washington Post

THE WASHINGTON POST

May 3, 2000

Point and Clique

At Inside.com, Media Superstars Hope to Out-Scoop Giant News Rivals And Put People In the Loop--For a Price

By Howard Kurtz

GIVEN THE POWERFUL ambitions of powerful media to alter the Internet landscape, the setting here on a forlorn block off 12th Avenue, filled with warehouses and loading docks, hardly suggests a vision of the future.
A hand-operated elevator delivers visitors to a 13th-floor loft, framed by concrete walls and grimy industrial windows, that seems a Hollywood-like set for a dot-com company: mostly young people in flannel shirts, jeans, Yankees caps and the occasional earring, noodling over gleaming iMacs on makeshift wooden-slab desks.

But the creators of Inside.com, an entertainment and media Web site that debuts in the next week, are hardly penniless geeks. The founders--former Spy and New York magazine editor Kurt Andersen, ex- Spin editor Michael Hirschorn and former Brill's Content publisher Deanna Brown--have met this morning with their Wall Street investors, who are bankrolling the fledgling operation to the tune of $28 million. Raising the money in this e-biz age, says Andersen, is as easy "as getting laid in 1969."

For all the advance buzz, the trio faces a series of daunting questions: How much "inside" information about their core areas-- television, movies, music, books, and newspapers and magazines--do readers really crave? Can their modest staff beat the big media goliaths with real-time scoops? And can their financial plan--in which most of the material is reserved for $199-a-year subscribers-- make money where so many others have crashed and burned?
"It's the great $64 million question about our business model," says Andersen, 45. "The conventional wisdom is you can't do it."

"We're selling insecurity and opportunity," says Hirschorn, 36, meaning that media honchos would die before appearing out of their cyberloop. "The really exciting, must-have information for a relatively small group of people."

While the other partners constantly talk about "New York and L.A.," Brown, the 36-year-old CEO, maintains that "the notion of being inside is very sexy to an insurance broker in Kansas, as well as someone who's in the business."
For all their chatter about being "platform agnostic" and about "aggregating eyeballs," "triangulating cost," "crossover opportunities," "unduplicated readers" and the "post-bubble economy," the Powerful Media players have stocked their start-up with top talent from the Old Media. These include reporters and editors from Time, the Wall Street Journal, the Los Angeles Times, USA Today, Disney, Variety, Hollywood Reporter, the New York Observer and Rolling Stone.

One thing is certain: Inside.com won't have trouble getting noticed. Not only are Andersen and Hirschorn longtime laborers in the Manhattan hype factory, but the Wall Street cash will fuel a $10 million marketing campaign--including ads in such magazines as Vanity Fair and the New Yorker, online ads, billboards, 200,000 pieces of direct mail, even faxes served with menus at appropriately chic restaurants in New York, Los Angeles, San Francisco and Seattle.
There's nothing understated about the Web site's self-promotion. In one release, Inside.com promises "searching, deep, market-moving analysis," along with lots of "inside dish," while also "giving professionals the information they need now to do business better and smarter." Whew.

"This is not some kind of quick-sprint, pump-and-dump IPO play," Hirschorn insists. But that doesn't mean the company won't go public down the road, as its 45 full-time employees must fervently hope, since they are all the proud owners of stock options.

For more on the Web site itself, click here. Oh, wait. You can't do that in print. So here's an old-fashioned description.

The opening screen is clean and spare, not terribly exciting. To draw in the user, it relies on headlines and departments: Inside Dope, Daily Digest, Power Index, Ratings, This Morning's Talk Shows, Mogul Astrology (say wha?) and--very important--Today's Gossip. The page will be automatically customized for subscribers, based on their interests.

Andersen and Hirschorn plan to code each story, labeling it a 90A or 75B or 40C, which will determine both how high it's displayed on the home page and how long before it vanishes to a secondary page. "Information has less value at 5 p.m. than at 10 a.m.," Hirschorn says.

The key to Powerful's plan to attract 100,000 paying subscribers within three years lies in one word: data. The site will bombard visitors with all sorts of hot-stuff lists: TV ratings. Box office numbers. Big-selling CDs. A roundup of movie reviews, electronically searchable so that you can find whether the New York Times has written more favorably than The Washington Post about Columbia Tri- Star releases. Summaries of network newscasts, by television analyst Andrew Tyndall, so you can calculate whether ABC, NBC or CBS is devoting more air time to the presidential campaign. The latest traffic figures, provided by Media Metrix, for all manner of news and entertainment Web sites.

"This is more of a business tool than a consumer magazine," Brown says.
Other bells and whistles for the let's-do-lunch crowd will include the tracking of all entertainment projects under consideration by the networks, and of many book manuscripts in various stages of pre- publication--which Hirschorn says his wife, an editor at St. Martin's Press, would use to scope out the competition.
"We're interested in the people behind the books," says Sara Nelson, a former staffer at America Online and the Oxygen Network who heads the books unit. "The authors, the agents, the editors, the publishers, the back-office workings, how the deals are made, where they're promoted, who's making the movie. A lot of the coverage is a little bit dry."

For those who care more about their portfolios, Powerful has cut a deal with SmartMoney.com to provide a "map" of media and entertainment stocks--red or green, depending on the day's market action--that would-be traders can click on for more information.

Therein lies a clue as to why the founders believe that media professionals (and their companies, which will get a discount for bulk subscriptions) will feel compelled to pay up. In the print world, the New York Times can't include interesting stories from the Los Angeles Times or USA Today. But Inside.com can link to these stories, even in such rivals as Variety, or buy what it likes from other Web outlets, as in the case of SmartMoney. This may produce the sort of one-stop shopping that was a secret of the Drudge Report's early success.
And there will likely be more deals. Powerful Media has talked to all the networks about possible partnerships, and has a preliminary agreement with Fortune to produce a page of material for each issue. The editors would like to buy their way onto Yahoo! or some other popular slice of cyberspace. They are looking for a partner to produce a print magazine. These relationships, they say, will not deter them from aggressively covering the media companies involved. And they hope such content will help them attract 1 million nonpaying visitors (about the same level as Salon or Slate), who will have access to less than 20 percent of the material.

Industry celebrities of varying degrees of luminescence will also be a presence on Inside.com. Show-biz manager Bernie Brillstein will write an advice column. Comedian Harry Shearer and "Homicide" producer Tom Fontana will file dispatches from the field. James Bond screenwriter Bruce Feirstein will host a weekly message board. They, too, will get a piece of the action if the company goes public.

Still, the site's reputation will probably rise or fall on the strength of its original reporting. Kyle Pope, a former Wall Street Journal reporter who signed on to cover television, says he and four colleagues will outnumber the Journal's TV team, but that they will have to file far more stories, sometimes even hourly.
"Do we have enough people to do that? I don't know," Pope says. "Having the spotlight on you is great, but also a little bit horrifying. The question is, are we going to have something people come back to day after day? Month after month? We're really worried about this, making sure we don't get expectations so high they're impossible to hit."

Craig Marks, who covers music, sees a clear opening. "The music sector is underserved by what exists out there," says the former executive editor of Spin. "We will translate the gobbledygook from the new media world and the gobbledygook from the old record world and create a new, higher form of gobbledygook."

History is against Inside.com, since consumers have grown so accustomed to free material on the Web. Over the past year, both Slate and TheStreet.com, which had been charging for access, were forced to abandon the idea.
Some rivals scoff at the new company. Peter Bart, editor of Variety, calls some of Powerful Media's claims, such as those about its planned book database, "preposterous."

"The economics of that operation don't make sense," Bart says. "This audience is very well attached to some established brands, such as ours. It's a very crowded marketplace. I appreciate their bravado, but I'm not scared."
James Ledbetter, New York bureau chief of the Industry Standard magazine, says Inside.com has "a staff of all-stars" and that "I have no doubt they can and will put out a very solid and interesting journalistic product." But, he says, "there's no record of anyone creating content, outside of the Wall Street Journal and pornography, that a large group of consumers is willing to pay for. If anybody can do it, these could be the guys. I'm not sure anybody can do it."
The idea for Powerful Media was born in 1998 when Andersen sent an e-mail to his friend Jim Cramer, a Wall Street trader who is co- founder of TheStreet.com, suggesting that his business site expand to cover media and entertainment. Instead, Cramer introduced Andersen to his money men at Chase Capital and Flatiron Partners, and agreed to invest some money as well.

Last year, Andersen's pal Hirschorn--they worked together at New York magazine--called with a "wacky idea" for a similar Web site. Andersen was finishing his novel "Turn of the Century"; Hirschorn was looking for a new gig, since he'd just been fired as Spin's editor. They sought advice from Brown--who'd worked with Hirschorn at Esquire- -on making a pitch to venture capitalists.

Brown had worked at Conde Nast, Time Warner, Hearst and the New York Times Co., and launched four start-ups.

"I was their dream date," Brown says.

The money men liked Brown. "They just thought she was God," Andersen says.
No sooner was the office set up last fall on West 26th Street than Andersen and Hirschorn began luring journalists to a Web site that didn't yet exist. "I was frankly astonished at how willing and eager people were to talk to us about leaving their jobs," Andersen says.

"There was some fear we had to overcome ourselves of giving up the printed word for the digital screen," Hirschorn adds.

But the Net seems to exert an almost magnetic pull. One recruit, David Carr, editor of Washington City Paper, puts it simply: "I was afraid of missing out on something cool." Carr describes his new job as covering "the whole process of how old media makes its way in a different age."

Chris Peacock left his post as editor of Fortune.com. "It was probably the best job at Time Inc.," he says. "But I'd been doing the same thing for 2 1/2 years." (That's an eternity in Internet time.)

Kim Masters quit Time to cover Hollywood for the new venture. "There's a limited appetite for what I cover in some of these general- circulation magazines, like Time," says Masters, a former Washington Post reporter. "Kurt and Michael do understand this kind of news. It's also nice to be part of a new, we're-making-it-up-as-we-go- along place."

And then there are the financial incentives. "This does give me a chance to roll the dice," Masters says.

During test runs in recent days, the staff has run into plenty of technical bugs, even in putting up a video clip of a forthcoming cable film. "Everyone's trying to get up to speed doing journalism while getting up to speed learning the levers and switches and dials of the hardware," Andersen says. "That makes it more intense than usual."

Sounding wary of the hype they have unleashed, Hirschorn cautions that the site will debut with perhaps 30 percent of its eventual smorgasbord. "This will be more like a restaurant than a magazine," he says. "It will emerge as we go along."