"Launching an online magazine today is like starting a print magazine in a market where only 10 percent of the people are literate The good news is, next year, 20 percent of the people will be literate."
— Steve Johnson, editor of the webzine Feed

"Why did we do it?" repeats John Milne, publisher of the Maclean Hunter's The Medical Post. There's a healthy pause before he answers. "We felt we had to. We took a look at what was happening in the workplace and we decided we had to be there — both as a service to our readers and in order to capitalize on opportunities as they emerged."

Such reasoning is typical of the frontier mentality driving most magazines onto the Internet: simply publishers have taken a gamble and set their flags in the drifting sand, all the while hoping for the best. Now, almost three years after Canadian magazines first started to go online, that initial toss of the dice appears to be showing some dividends. For not only are publishers venturing on to the Internet with webzines, they are also exploiting the technology for such disparate pursuits as brand extension and circulation fulfillment — all efforts geared, of course, to pulling money off the Net.

But it's the Holy Grail of revenue from Internet advertising and subscriptions that remains the chief quarry of magazine publishers, and that typically necessitates a webzine where the traditional print rules don't always apply. To develop a successful online magazine, therefore, publishers must be innovative, as willing to experiment and take risks. And like any ancillary pursuit, a good webzine demands an investment of time, patience and money.

"[The webzine] is an investment, and it's an investment for the foreseeable future that we are prepared to make," agrees Milne, again echoing the words of other publishers. "We recognize it is important for our readers and to our advertisers. Granbted, it may not always be easy but money can be made on the Web — especially if the magazine can exploit its niche in this brave new medium.

On March 7, the major webzine Slate held its breath and took the plunge into the world of subscriptions, closing its site to the public and granting access only to those who paid the US$19.95 a year. Within 10 days, the Microsoft-owned site, was just 4,000 subscribers to its initial goal of 20,000.

The move cost Slate a large chunk of its audience; before the subscription drive began it had almost 180,000 readers a month. The drop was entirely expected, and considering that Playboy's webzine only has about 24,000 paying readers, the numbers are impressive.

While the folks at Slate aren't saying how much it is actually making, most analysts agree that it — like most online magazines — will take a while for webzines to break even. But owner Bill Gates seems content to wait. After all losing a few million dollars is nothing when you're worth more than $60 billion.

Other webzine publishers, meanwhile, can't afford to be so patient.

In the past year a number of high-profile U.S.-based sites have shut down because of a lack of funds, the latest casualties including, Spanker and Total New York. Here at home, The Convergence and the Canadian version of CNET — one of the top technology news and information sites — also rank among the more high-profile closure. With all these crashes, it can be easy to overlook the more successful webzines. And there are many, even here in Canada.

Journeywoman, for example, began life as a print publication six years ago this month, it evolved into a Web-only magazine devoted to women's travel issues. Publisher Evelyn Hannon admits that when she moved the publication online she knew little about the Internet, or what worked at what didn't. But by sticking to what she liked, Hannon was able to develop a site that quickly attracted both international attention and a loyal, growing group of international readers. By the end of July, Journeywoman had almost 90,000 readers, meaning the number of readers had doubled in five months.

Because Journeywoman is a "mini-organization," it could do some things other publications may not be able to, Hannon says. "For me it wasn't a big deal to go from hard copy to the Internet," she Hannon. "I wasn't going to lose a fortune. I could afford to push the envelope."

And that she did. In keeping with the site's clean aesthetic, she has refused to run any advertisements using graphics. Instead, Hannon approached corporations to sponsor the content with the understanding the writer is free to comment as she wants. In return, the sponsors get a small thank you at the end of articles. And travel companies, such as the Dutch airline KLM, are still agreeing to these terms.

As a result, Journeywoman has "been making money since the moment [the magazine] went online," says Hannon. "It's not huge amounts of money, but it's very comfortable."

There's no real doubt that profitable Web sites will become more common. Major sites like Yahoo!, Amazon.com and Netscape are already beginning to turn a profit by developing "portals" designed to guide users to other sites, while also offering services like free email and creating an online communities. These high-traffic sites differ slightly from online magazines, however, in that most of their money is made by selling space for links to other sites. They're also trying to lure advertisers, and this is where partnerships with magazines — which can offer access niche markets — are key.

In Canada, several high-traffic portal sites have teamed up with magazines, including Start.com Canada, Canoe and Sympatico.The latter is even conducting simple e-commerce by letting users subscribe to any one of the CMPA's titles listed on its "Magazine Market" section.

"It's important to partner with a big entity. More so for Canadian Web sites" says Doug O'Neill producer of TV Guide's webzine, simply because sites like Sympatico and Microsoft can offer a vast online readership, which in turn drive up advertising revenues. This is especially true for consumer magazines, where the target audience is a composed of a broad range of people.

Portal-type sites don't have to be limited to the consumer books, though. In the trade magazine world, for example, Nickle's Energy Group, a site produced using content from some of Southam Inc.'s natural resource publications.

"We've combined a number of our sources, but almost all from the newsletter side for our first push on the Web," said says the site's group publisher Rick Charland noting that he's now developing a plan to do the same for his magazines.

According to Charland, the "prime purpose" of Nickle's Energy Group is to create an Internet marketing presence for its associated print-based titles. Through the sire, users can purchase subscription renewals and reports, as well as submit ads and news releases. Such brand extension has paid off, with the site starting to turn a profit within a year of its January 1995 launch. "Just based on subscriptions [to the newsletters], it's more than paying for its cost," says Charland "And that's not factoring in the inquiries, the new subscriptions, and the new sales as a result of it."

Maclean-Hunter's BizLink is another example of a portal-type Web site can benefit publishers. Launched in September 1995, BizLink hosts most of Maclean-Hunter's business titles, which have recently started to develop additional content exclusively for the site.

"Initially, none of our publications had the resources or expertise to [create Web sites], so we could do it collectively, with less money and more quickly," says Doug Dingeldein, manager of business development and new media, for MH's business titles. "The second thing was that we really didn't have a clear idea how to make money on the Web, but in order to even think about that we had to give our people something to play with."

For publishing houses with more than one related title, this linkage of separate webzines with in one master site is a quick and powerful way of increasing brand recognition and ad revenue, as the reader stays within the overall site. "The idea is that we could make the whole greater than the sum of its parts," Dingeldein says.

And even without a dedicated sales staff, BizLink is beginning to generate some revenue. The regular sales people, who sell Net ads alongside the print ones, "are starting to ramp up," says Dingeldein. "It's peer pressure, too. As Doubting Thomas' see colleagues across the hall bringing home a $10,000 ad with no cost, that kinda gets their attention."

Like most sites, BizLink generates revenue through Internet advertising, in particular through banner ads — the long, thin graphics at the top and bottom of Web pages. According to a study by the Internet Advertising Bureau of Canada released 59 percent of Internet advertising revenues were generated by these ads.

But with advertisers paying a CPM about $35 or so on average, it's hard to make a lot of money, — especially given the small readership of most sites. The climate is improving though.

"The biggest problem — and this goes back to the medium being so new — is that people are buying it on faith or they're not buying it at all," says The Medical Post's Milne. "I think interest and acceptance will grow, and within the next couple of years companies will be adding Internet funds to the overall budget."

With last December's formation of the IAB Canada and the appearance in Canada of ad networks, the level Net advertising in here is indeed likely to grow. In the same IAB Canada study, for example. it was found that revenue from Internet advertising increased to almost $10 million in 1997, up from $1.6 million in 1996. This year, IAB Canada expects revenue to more than double to $22.9 million, and then double again in 1999 to $56.9 million. Globally, many analysts believe 1998 is the year Net advertising will break the $1 billion mark.

Many also believe much of this revenue will be generated by professional Internet advertising agencies such as ClickThrough, DoubleClick Canada (run by former Shift publisher, Wendy Muller), NetForce (jointly operated by Sympatico and Canoe), and VBN. These Canadian outfits all use a form of the banner ad, and each has special tools designed to make those ads more effective and therefore more lucrative for both the magazine and the advertiser. They also offer other services such as customer tracking and the monitor of ad effectiveness.

Perhaps best of all, such agencies typically offer sales staff who are literate in online sales, and who can reach a broad range of advertisers — including clients that magazine sales staff may not have considered, such as computer software manufacturers.

"Month over month [our magazine clients] are very happy with the momentum," says ClickThrough president Jay Aber. "Some of our sites are sold out, and by and large everyone's seeing very large increases in revenue over the last six months."

As technologies improve and more people become comfortable with the notion of making purchases over the Internet, electronic commerce another revenue stream that should quickly expand. Indeed, the chill embracing e-commerce is slowly beginning to thaw.

Last year, of the 31% of Canadians online, AC Neilsen found that 13% had purchased something online. While the figure translates to only 4% of the Canadian population, it is an increase, albeit slight, over the previous year. The astounding financial success of Amazon.com's online bookstore is also proving that people are willing to buy things online. Along with Barnes & Noble, Amazon.com has partnered with a variety of webzines, through which users can now buy books. For every book the online magazine sells the booksellers share the profit with the referring site.

Clearly, such simple e-commerce can be an effective means to increase revenues, and some magazines have already taken note. Canadian Living's Web site, for example, has an entire section called "Canadian Living Marketplace" that is devoted to selling recipe books, gifts, cookware, etc. The items are placed in an electronic "shopping basket," and then when the reader has finished, the purchase can be made online via credit card.

Even the ultimate vapourware, the concept of microbilling may, in time, gain wide acceptance. Essentially, microbilling entails charging users a small fee to read an article online. One test project involved Military Miniatures, a magazine about model planes and soldiers, which sold articles to readers for 2¢. "They've had a tremendous amount of success and [they've] seen an increase in traffic at their Web site," observes Gary Craft, a new media analyst with BancAmerica Robertson & Stephens.

Some other sites, meanwhile, are charging users micropayments to access their archives. For example, Editor & Publisher has a U.S.$9.95 monthly subscription fee, and every time a user wants to read a back article, $2 is debited from that account. For the most part, though, microbilling remains the ultimate vapourware — much touted but yet to fully materialize.

As with Hannon's Journeywoman, sponsorships are starting to become a part of a webzine's overall revenue-generating strategy. When Saturday Night launched its Web site, for example. Absolut vodka began sponsoring the site's navigation menu bar. ClickThrough's Aber predicts that once banner ads are established as a given, sponsorships will become in turn become more prevalent.

And though sponsorships can imply the blurring of the line separating advertising and editorial, Hannon's Journeywoman and other sites have demonstrated that editorial content needn't necessarily become advertorial pap.

In the end, Journeywoman may still be a rarity — in that it's a profitable webzine — but is by no means unique. After almost three years online, Canadian trade and consumer publishers are becoming increasingly comfortable with the digital environment. The ability to earn money online is no longer in doubt as more than a quarter of Canada's population is wired, and ad revenue is potentially doubling every year. Says BizLinks' Dingeldein: "[People] are starting to see there's real gold in dem dar hills…"

The challenge now lies — as it does with every publishing venture — in attracting readers and presenting them with informative and interesting content. "The publishing community has got to recognize that this is an area they must invest. And only time will tell us what return will be made on that investment," says The Medical Post's Milne. "I don't see the number of sites shrinking — or the level of activity declining — I see it growing."