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BizReport : Internet : January 25, 2001


Exclusive Interview with Alan Meckler, Chairman and CEO of Internet.com

Through the ups and downs of the Internet revolution, Alan Meckler has been quietly amassing a content empire that has become Internet.com, a network of 164 Web sites, over 300 e-mail newsletters, over 400 online discussion forums and more than 100 moderated e-mail discussion lists. Internet.com is among the most financially stable content players, boasting positive operational cashflow and $60 million in cash, which it has been using to buy up other content properties at bargain-basement, bubble-bursted prices.

by Michael Grebb, Special Correspondent

Internet.com targets only the small universe of technology and Internet execs, commanding lower traffic than major portals but above-average CPMs for access to its hyper-targeted audience. It's a targeting philosophy that Meckler has honed since he began publishing trade newsletters in 1971. Meckler, who spends about 80 days a year traveling abroad to oversee Internet.com's editions in several other countries, took time out of his busy schedule to give BizReport his take on the future of Web content and why Wall Street has it all wrong.

MG: It seems that advertising-based Internet companies have fallen out of favor. What would you say to that?

AM: Even though everyone is saying that the advertising model can't work, overall in 2000 there was healthy growth in online advertising. And the predictions are that online advertising will surpass all mediums by 2004. If we're to believe the consulting organizations, it's a fairly bright picture. But obviously because of the expectations-and because of the nature of the Internet bubble-nobody can satisfy anybody anymore. And of course there are a lot of failed businesses out there, because they really weren't good business people. I think that everybody online has seen some softening, but on the whole we have had tremendous growth. In 1999, we did $16 million in revenue, of which the overwhelming majority was advertising. The consensus of the six houses that follow us is somewhere in the neighborhood of $48 million for 2000. So are we having a problem? No. We're growing, and we're one of the few companies that is cashflow positive on operations.

MG: If you're doing so well, why is the whole online content sector so beaten down these days? Wall Street and venture capitalists seem skeptical about content on the Internet.

AM: The key issue here is that content sites are all lumped together. We have content for professionals. In our case, we have huge traffic. Wherever you go in our network of Web sites and newsletters, it's all related. It's like the Three Musketeers-all for one and one for all. That's the great strength, and that's how you really make money in this business. There really hasn't been an article on that anywhere. And there hasn't been an analyst on Wall Street that has understood that.

MG: Are you saying that content sites that don't adopt a targeted, vertical model are in trouble?

AM: That's right. What they have to ultimately do is admit to the Street that, 'we've really examined our business and we've found that 20 percent of what we do brings in 90 percent of the revenue… therefore, we're getting rid of 80 percent of the content. We're just not going to cover it.' It's the history of content publishing anywhere. If you take all of the great trade publishing companies of the world, there are very few that ever conquered more than a handful of industries. That's what's happening on the Internet. The great opportunity in content is huge, but, just as we learned in print, he who specializes makes money.

MG: Doesn't specialization make it easier to charge subscriber fees rather than rely wholly on advertising? Why haven't you gone that route?

AM: If you have specialized information that someone can't get anywhere else, then people will pay for it. Now, we think we have a lot of information like that, but there are computing and Internet-related sites that have pieces of what we have. So if we tried to charge, we wouldn't be successful.

MG: Speaking of those other sites, you seem to be buying up a lot of them. What's your ultimate expansion strategy?

AM: Well, this market is a terrific opportunity for someone like us. We're not burning any money on operations and have about $60 million in the bank. And the values have come down. We recently bought most of the content properties from EarthWeb for $500,000. Those were properties that a year ago were probably valued at many hundreds of millions.

MG: And Internet.com's stock is down as well. Are you and other content companies being unfairly punished?

AM: I think the problem is the public markets and the Internet-bubble prices put pressure on people to be profitable right away, and the expectations were that they would be--based on the valuations. But they were false expectations based on Wall Street analysts that really know nothing about content at all… there are very few that understand what's really going on. Most of them were doing something else and moved over into Internet, and then decided that they understood how people use information.

MG: So you think there are still plenty of content opportunities on the Internet?

AM: I think the opportunities are greater than ever, especially in the content space where you make money vertically rather than horizontally.

Tags: Internet.com










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