INTERNET
A Powerful Media Buzz


Kurt Andersen starts a Web site for showbiz heavies

By Devin Gordon
Newsweek, April 17, 2000

 

Architecture fans adore the landmark Starrett-Lehigh Building's distinctive skyscraper-turned-on-its-side look. And with cheap offices the size of gyms, it has become the address of choice for hot New York Internet start-ups, including a Martha Stewart Web operation. So it was only a matter of time before Kurt Andersen showed up. One of the city's most connected movers, Andersen has his finger Krazy Glued onto America's pulse. Spy, his humor monthly, spoofed celebrity in the late 1980s. Under his direction, New York Magazine chronicled Yuppie excess in the 1990s. And last year, his novel "Turn of the Century" did the same for our info-obsessed moment. Now Andersen is betting he can make money on the Internet by tapping into the bottomless craving for inside dish on one of the country's chief exports: the media and entertainment business.

Next month Andersen's Web company, Powerful Media, will launch Inside.com, the most anticipated journalism venture since what's-her-name introduced Talk. Using $25 million of painlessly raised cash and a staff plucked from Vanity Fair, Rolling Stone and The Wall Street Journal, it will attempt to combine savvy reporting with databases so voluminous that no executive whose livelihood is books, music, movies, television or the media will be able to drink his or her morning latte without logging on.

But to succeed, Andersen will have to overcome some Internet gospel: people don't pay for content. Along with his co-founder, former Spin editor and fellow Harvard alum Michael Hirschorn, Andersen has crafted a business model—based on a mix of free and paid material—that has yet to turn a profit anywhere. Then there's the competition. "It's nice to have some new boys on the block," says Variety editor Peter Bart. "But we've been here for a long time." (Tellingly, though, Variety will relaunch its Web site this month after a costly overhaul.)

Of course, the X factor in all this is Inside.com's Web site, which hardly anyone outside the Starrett-Lehigh Building has seen. NEWSWEEK, however, received a glimpse, and it looks promising. The main page features a news section for breaking stories and another for analytic pieces. But the crowning touch is the subscription content. Inside.com has 50 deals in the works with outside companies, such as movie-box-office tracker Exhibitor Relations, that will help create giant industry databases. The highlights include a "book tracker" following every manuscript in the business from opening bid to its on-sale date at Barnes & Noble, a TV database listing advertising rates for every show on the air and a cross- industry "job tracker" noting all major comings and goings. Plus, the subscription price ($19.95 a month) is about the same as Variety's. "I'll definitely use it," says Random House senior editor Jonathan Karp. "There's nothing like that out there now."

But skepticism reigns about whether Inside.com can attract enough paying customers to stay afloat. "The fact is, it's tough to nearly impossible to build a revenue stream on subscriptions and advertising," says Jupiter Communications media analyst Patrick Keane. To have a chance, Powerful Media CEO Deanna Brown estimates they'll need more than 100,000 subscribers within a few years. (Andersen and Hirschorn declined to be interviewed.) The lofty figure has invited unkind comparisons to TheStreet.com, whose cofounder, James Cramer, is an old friend of Andersen's and a Powerful Media investor. Since its ballyhooed IPO last May, TheStreet has had a hard time attracting new subscribers, and its stock price has plummeted. Brown claims TheStreet went public too early and vows that Inside.com won't make the same mistake, though it plans to go public eventually.

The site's backers are betting that Andersen and Hirschorn can create something compelling enough to attract a following. "If those two wanted to start a bowling magazine, I would've given them money," Cramer says. With credibility like that, they're in a different league from most Web start-ups.

 

 

 

 

© 2000 Newsweek, Inc.

 

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