In another sign of the difficulty of making money with content on the Web, magazine powerhouse Conde Nast is shutting down Swoon.com and Phys.com, two of the company's five flagship sites. Both have been around for more than three years.
In a separate move, Conde Nast will create individual sites for all 16 of its magazines. For years the company has resisted creating sites for popular magazines such as GQ, the New Yorker and Glamour, preferring to produce sites that focus on a certain topic and using content from several Conde Nast magazines. Now the company will create such sites, but Sarah Chubb, president of CondeNet, the company's Internet division, says the company does not expect to make much money from them.
Though traffic was strong for both Phys and Swoon, the company decided to close them because they did not present enough e-commerce possibilities, according to Chubb. CondeNet just celebrated its fifth anniversary with ads promoting Swoon and Phys, among other sites.
The closings will not result in layoffs. The 11 full-time staffers who work in the editorial and production departments of Phys and Swoon will be moved to other positions at CondeNet, and eight freelancers will probably be offered other jobs. The technical and ad sales staffs for all of CondeNet's sites are combined.
Phys, a fitness and health site for women, "did extremely well with advertising, but there's not a direct endemic connection for e-commerce," Chubb says. "We could do a deal selling [exercise] equipment, but that's a very tough, low-margin business." Swoon, which is about sex and relationships, had no significant e-commerce possibilities either, according to Chubb. Nevertheless, Swoon appeared to have a loyal following: More than 170,000 people subscribe to its daily horoscope, and the site carries more than 80,000 active personal ads. Swoon had 8 million page views in October, and Phys had 5.5 million, according to Chubb. (Measurement firms do not track the sites separately.) The decision to shutter the sites represents another dose of pessimism directed at Web advertising, and this one comes from one of the nation's leading magazine publishers. Conde Nast is discarding two brand names it has been building for at least three years. The decision indicates that content sites supported mainly by advertising - which is the revenue model for the vast majority of content sites - are going to have a tough time bringing in enough advertising to create the kind of profits old-media companies would consider significant. Conde Nast, which is owned by Advance Publications Inc., is privately held.
Chubb says the closings are not a sign that ad-supported sites are impossible to pull off, just that they have to be big to survive. "I believe in Web advertising, but you need size, and Phys didn't have it," Chubb says. "Phys did well with advertisers, but it was not big enough to break the line between treading water and breaking even and making real money."
CondeNet's decision to keep running its three other flagship sites - Epicurious, Concierge and Style, which debuted in September - is based on its belief that the sites can bring in solid revenue from commerce and other sources. Epicurious has promising commerce deals with Dean & Deluca and Williams-Sonoma Inc. (WSM) , and its television program about cooking, which appears on the Discovery Channel, has been profitable for the past two seasons, Chubb says. "We can see financially a good future for the site," she says. Style's shopping channel, which will be run by Neiman Marcus Inc. (NMG) , launches next week.
Observers have long clamored for a site for the New Yorker, but the company is tight-lipped about what that site would be like, refusing to divulge whether it would make current and past articles available, or whether it would charge a fee for that content. Eight of Conde Nast's magazines already have some Web presence; areas devoted to Self and Conde Nast Traveler, for example, can already be found on Phys and Concierge.
Building sites for each magazine won't be very expensive, Chubb says, but she also doesn't expect them to be major revenue sources. The sites are meant to bolster the relationship between the magazines and their readers. "They look great," she says, "and they help us sell subscriptions."