Wednesday, May 17, 2006

Shuck 'n Jive

After the house of cards known as John Battelle's "Industry Standard" magazine collapsed, you can guess who didn't show up at bankruptcy court to see who would buy his wreckage for pennies on the dollar.

Many of us did show up, because we didn't exactly have a lot of other things to do that week.

I found an interesting account of that day, as part of a generally compelling article by a former editor of the magazine.

The write-up is by Todd Wooley (cheers, mate!) in the Colombia Journalism Review:
The opportunity to do such work, free of corporate penny-pinching and with a minimum of newsroom politics, had begun to attract reporters and editors from The Wall Street Journal, Newsweek, and The Washington Post. Of course, the generous salaries were no small lure. As the good times rolled on, management bestowed such dot-com goodies as massages, gym memberships, and subsidized childcare. In this new California Gold Rush, it was not out of place to return to the office from a day of reporting, get a massage, and walk into the newsroom to find the editor-in-chief handing out four-figure bonus checks to celebrate a profitable quarter. Reporters, myself included, grew accustomed to jetting around the country, staying at hip hotels, and dining at chi-chi restaurants. If we ourselves weren't awash in dot-com millions, our reporting life-style offered a reasonable facsimile. "You don't know how good you have it," James Fallows, the Atlantic correspondent and Standard columnist, told us in wry understatement as we sipped a fine California Merlot at a January 2000 editorial-retreat-ski-holiday in Lake Tahoe.

But there was one perk I wish we had never received: stock options. The thud of those packets of potential riches landing on our desks was, in my opinion, the death knell of the magazine. Like the companies we covered, the Standard wanted to turn its cachet into IPO cash. That strategy would dictate an unsustainable spending spree to position the Standard as a diversified global "information services" company. If you wanted to justify a double-digit share price, simply publishing a profitable magazine wasn't going to cut it.

Yes. And how familiar that nightmare scenario sounds today.

You see, young Mr. Battelle's latest operation is also built on an IPO or buyout House of Cards.

Little birds who have examined his Federated Media contracts tell me that there's a prominent provision for buyout -- those websites that commit to Battelle's latest folly will get some kind of reward "when" he sells off the pretend company. Very interesting.

Or, I should say, "Bubble 2.0"?


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