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February 15, 1999
Web posted at: 12:44 p.m. EST (1744 GMT)

by James Ledbetter

(IDG) -- After nearly a year as one of the Internet's few paid subscription sites, Microsoft's highbrow Web zine Slate (www.slate.com) is going free, effective this Friday morning.

In a candid letter to subscribers, Slate's new publisher Scott Moore reduced the decision to two basic principles of Web economics: There's more advertising now than ever before and very few consumers are willing to pay for content. Moore cited market surveys showing that about $1.8 billion was spent on Web advertising in 1998, and predicted $3 billion in 1999, which, he said, "should continue a healthy 50 to 60 percent annual-growth rate for the next several years." At the same time, Moore noted, "paid subscriptions for content (other than smut and investments) simply have not grown as expected."

In an interview with The Standard, Moore called Slate's paid distribution period "a very worthwhile experiment" from which the magazine had learned a great deal. "On the Internet, if you don't learn, and change your strategy based on what you've learned, you're toast," Moore added. He predicted that the magazine would get "a substantial jump" in Web traffic, but declined to offer a specific target.

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It is not the first time that Slate has changed its publicly announced business plans. Slate's initial plan to charge subscribers was delayed for several months until March 1998; sources at the Web zine say the company held off because it did not feel it was likely to secure its target number of subscribers. After it began charging, Slate was able to sign up approximately 20,000 subscribers, but that number did not grow fast enough to justify continuing to charge for subscriptions. Indeed, Slate has slowly moved toward a free-distribution model in recent months, establishing free areas on its Web site.

According to Slate editor Michael Kinsley, the lure of building a mass audience via free distribution was irresistible. In a Q&A distributed to Slate readers, Kinsley claimed that "10 to 15 people visit our free areas every month for each one paying subscriber." Slate will continue to charge for some services, including e-mail newsletters and access to its archives.

Can Slate survive in the jungle of the free Web world? "Well, that's hard, too," said Tom Baker, business director of the Wall Street Journal Interactive Edition, one of the few successful paid content sites on the Web. "There's a huge amount of ad inventory out there, chasing not that many dollars." Baker said he thought that Slate's upscale, educated reader profile might be attractive to advertisers, but "the lesson here is that it's really hard to make money publishing a magazine of opinion, and even harder to do it on the Web."