Burn Rate

by Michael Wolff

  “What was that?” Viebranz said, not smiling.

  “I’m just trying to say that while this certainly may be a mass medium, right now it’s pretty focused. You’re going to go out there with Time magazine when what people really want is sex, drugs, and technology. You have to see what’s out there. It’s strange. It’s very peculiar. It’s not like what you’ve seen before.”

  “Early adopters,” said Viebranz.

  “It’s changing very quickly,” said Walter.

  “You’ve got to see it,” I said, meekly insisting. “The voyeurs. Alt.sex.voyeurs. You can find out what room to request in a hotel for the best view.”

  “Really?” Viebranz said.

  I was annoying Walter.

  Out in San Francisco, Wired magazine was laying the groundwork for a Web presence of its own. While Wired’s vision was transcendent—it believed it was truly inventing a new medium and through that medium a new way of life—its efforts were more like Time’s than not.

  Both Time and Wired, separated by coasts and sensibility but united as print publishers, shared two assumptions. They both wanted to stay out of the business of providing people with connections to the Internet, and they both believed they could create a revenue stream selling advertising on the Web.

  As they each in turn expressed it, the goal was to be CNN (creating shows for the cable system) rather than TCI (wiring the nation’s homes).

  Eschewing the business of Internet access was both visionary and, I couldn’t help thinking, arrogant. Neither Walter Isaacson nor Louis Rossetto wanted to be involved in an aspect of the business, of the medium, that seemed lesser, and certainly dirtier (technology was, in the end, to both Walter and Louis, just nuts and bolts) than creating content. Each saw himself positioned beyond delivery, saw himself in an almost utopian context where he could deliver a message unfettered by the chief bugaboo in the media business—distribution. Indeed, Time would almost disdainfully turn aside the chance to be one of Netscape’s early backers.

  “Content,” Louis had said (with a growing hauteur) as we sat in a noodle restaurant in Times Square in the spring of 1994, “is king.”

  “Content,” Walter said as he stood at the head of the long table in Curt Viebranz’s conference room, “is king.”

  Which brought both Louis and Walter, at nearly the same time, to begin to believe that the Web could be an advertising medium. This is an important and not necessarily inevitable moment. Almost right up until Wired made this dialectical breakthrough—that users prefer to accept advertising rather than pay for the cost of content and that the Web is a part of the Net where advertising will be acceptable—most people who knew anything at all about the medium would have considered advertising on the Internet an unlikely outcome.

  “We don’t want to do anything to offend the community, of course,” said Judson.

  I had, myself, been on the receiving end of the opprobrium of the Internet “community”—that population of science and computer students and professionals and Johnny-come-lately geeks who’d been using the network, largely undisturbed, over the past ten years. We’d posted, at least half innocently, a series of messages to a variety of newsgroups about one of the books we’d written and published about the Net. For instance, to the newsgroup alt.spankers, we wrote, “We have described this group in our new book NetChat in the following way: ‘If spankers had their own nation, alt.spankers would be its congress. . . .’ ” Within hours these postings, construed as thinly veiled advertisements, unleashed an attack upon our motives that included a vigilante with the nom de guerre Cancel-moose deleting all our messages on more than a hundred newsgroups, a torrent of hate e-mail messages that shut down our mail server, a place on an official-seeming Internet blacklist, two columns of censure in the Wall Street Journal, a general threat that we would be forever associated with the hated green card lawyers, and, indeed, a rather virulent attack by Louis himself. “The Net,” he wrote in an e-mail, “is a community, it has standards, and it has the right to enforce them. . . . What you did was a more sophisticated variation on what Cantor & Siegal did, and I think you got what you deserved.” All of which caused young people in our office to publicly confess in various online forums to their association with us.

  But Wired’s stature in the Internet community, and Time’s stature in the advertising community nearly overnight made advertising part of everyone’s plans for the Web.

  (“What’s your business model?” “Oh, advertising.”)

  Why not? The Web had the feel of radio and television and cable broadcasting. Certainly the Web seemed to mirror the competing interests and the lack of clear business models of early broadcasting.

  Even “dial-twisting,” the practice in the early days of radio of sampling and seeking, was regarded at both Time and Wired as the equivalent of Web surfing. And the assumption was that on the Web, as happened in radio by the 1940s, users would settle into specific habits and favor specific content selections. In other words, the Web would become a predictable world for advertisers—and there is no more important virtue for an advertiser than predictability.

  Oddly, I don’t remember anyone asking, “What if the Web doesn’t become a mass medium?” Or “What if people use it differently from television or radio?” Or “What if advertising doesn’t deliver an economical return?” Or “What really is it that makes media, as we know it?” The shared faith that the medium would outlast its own infancy allowed everyone to overlook, or avoid, the most taxing, and interesting, questions.

  There was a kind of tutorial going on among the editorial select at Time Warner. Walter was the master. He in turn had sought out almost anyone with an Internet expertise that came to his attention. “We did a Barry Diller,” said Judson, meaning that, like Diller, who after he left Fox went on a literal and emotional journey talking to experts in new technologies (from which experience he decided to buy QVC), Isaacson and Judson sought out the experts in the new medium. The Internet savants of the moment included people like Brewster Kahle at Wais Inc., an informational retrieval company; Spry’s David Poole, creator of Internet-In-a-Box; and the McGill University team that invented Archie, the search protocol. The fact that each of these technologies and approaches to the Internet would be moribund within the year is, well, Internet irony.

  Walter went out to Wired to visit with Andrew Anker, who was leading HotWired, Wired’s Web effort. “Walter acted somewhat like an anthropologist or biologist,” recalled a HotWired staffer. “Lots of poking and prodding and dissecting of the subject under study. Made some people here feel like lab animals.”

  Walter returned from his journey of technological discovery to mobilize 1271 Sixth Avenue, Time’s headquarters. Overnight “digital” and “cyberspace” became part of the Time lexicon. Time ran a series of cover stories about the new digital generation. (It recalled Time’s embrace, in 1967 or so, of the counterculture.) Elite editors from across Time, Inc.’s titles were assigned to the Online Content Committee, which in turn reported to the Online Steering Committee. There was a cascade of memos: how Entertainment Weekly would go online, a structure for Sports Illustrated online, thoughts for a health and fitness node (“node” was a Time word that, fortunately, did not catch on in cyberspace) . . . kids . . . games . . . shopping!

  Once the decision had been made at Time to focus on the Web rather than on one or another of the online services—the magazine would still maintain a presence on AOL and CompuServe (the online services thought so little of the Internet that the exclusivity clause in their agreements with various Time, Inc. magazines specifically allowed Internet use)—my job became to explain the technology of the Internet to Time Warner and to warn, like a forlorn prophet, that you had to create for the medium and not just slap a magazine online.

  For the former, since Internet technology was serious Greek to me, I had to call up Weird Stan, my friend the data visionary (decamped to Plum Island, Massachusetts), to get a little lowdown before each meeting of th
e Steering Committee.

  For the latter, it was easy. I wrote my memos:

  “I think we have to face head-on the perhaps uncomfortable circumstance that this audience which has not bought Time, Inc.’s products on the literal newsstand may not want them on an electronic newsstand either.”

  And:

  “The online medium is not only an information tool but a communications tool as well. To date, its driving engine has been the explosion in e-mail use and in chat. In terms of system appeal, content may well take a back seat to . . . functionality. We have to be able to say our service not only has the following content but does the following things.”

  I argued passionately: “People don’t want to read newsmagazines anymore. They want an application that will read a newsmagazine for them. If we think television took its toll on reading, trust me, you haven’t seen anything yet. We’re looking at this as an information medium. But in a profound way, this medium is going to represent the death of information presented in an appealing and literate way.” Take that, Walter.

  “It’s extraordinary. You can say anything,” I said to Alison.

  “Of course, you’re a consultant.”

  “But while everyone is very respectful of my opinion, they don’t particularly listen to me.”

  “Hello?”

  “It’s interesting but frustrating.”

  “You don’t have to be a consultant. You can do what they’re doing just as well as they’re doing it. It’s the Web. That’s the point you’re always making.”

  “But do I really believe it?”

  Actually, this was, at that moment, a sentiment—that the Web was Gutenberg redux, a democratization of media—that many people in different spheres of interest were starting to take seriously.

  Unfortunately, never having created a Web whathaveyou, indeed, there never having been a successful Web thing (there were no words, really, to describe what a Web presentation was or what it was supposed to do; “site,” to designate a place, “product” because that was the word used in the software business, later “channel” in a desperate attempt to recall television, but never a word to express what we wanted this whathaveyou to do or to be), I could hardly say that I knew how to do it.

  Which leads me back to wondering, at this late date, Why did Time Warner become the first major organization, among the first organizations of any kind, to plunge headlong into this medium?

  Why did Time Warner choose to start and operate a business based on a technology it had no firsthand knowledge of? What made it assume that its talents were relevant to this technology? Why did Time Warner, with little to prove and everything to lose, want so desperately to be first?

  The reason that was often given, and one that seems honest enough, was that Time Warner was doing this to learn. “Technology is destiny,” Walter said. While clearly not really believing this, he nevertheless believed that technology was a big factor and could be an interesting advantage for those who knew a thing or two about it.

  But the more conventional approach to learning about technology—making an investment in a company on the front lines of this technical development—Time Warner rejected, forgoing its opportunity to be an early investor in nearly all of the initial, and wildly successful, public offerings. Instead of losing $50 to $100 million of its own (and, no doubt many would argue, learning too little too late), it could have turned some relatively modest seed capital into a billion dollars of market value and a position of high influence within Silicon Valley. (In Time Warner’s defense, all of these companies were seeking investments at valuations that seemed absurd, at least until the public started buying; then those early valuations seemed like giveaways.)

  It was certainly interesting to see a large company plunge so precipitously into a business it knew nothing about. The word must have spread quickly up and down the Silicon Valley peninsula that there was a new dumbest in the business, because a whole series of executives and salesman arrived on Time’s doorstep to pitch technologies that would shortly be headed to the ash heap.

  Conference rooms filled up with highly intelligent, well-educated, nicely suited-up Time editors and executives who listened intently and gullibly to presentations from networking companies and search engine companies and hosting facilities.

  Granted, it was impressive how quickly and comfortably Time men picked up the technology terms (“html,” “routers,” “frame relay”) and lingo (“drill down,” “achieve ubiquity”). And disconcerting, because I had seen them go from zero familiarity to conversational expertise in a matter of weeks; it was a Ponzi scheme built on talking the talk.

  Even with my scant knowledge, I knew that a mess of plans were being made on the basis of assumptions about technology that were comically haphazard. It was often a cascade of misunderstandings or knowledge synapses: a wonderful, patrician, 1950s-style Time editor having a weighty discussion with the salesman from WAIS, the search software company, and throughout the discussion helplessly confusing the client–server relationship; a determined Isaacson acolyte insisting to a programmer that while something may not be possible now, it would surely be possible in the next twelve months or so (“Wouldn’t it?”). They treated technology like a service arm of what they were trying to do. Technologists were vendors; they were like printers. Their attitude toward them was, “We don’t have to understand what you do, we just have to understand what you provide and how we work with you.” I was worried enough to recruit Weird Stan to come with me to a meeting, a gentlemanly conclave of Time editors respectfully giving their attention to a West Coast salesman. Weird Stan’s few exchanges with the salesman seemed, well, weirdly inappropriate at the meeting, as though two doctors had suddenly started to operate in the middle of the country club.

  Afterwards, Weird Stan took a highly censorious position: “These guys are really fucked.”

  But technology alone was not going to stop them. Large organizations are used to being dependent on a technology structure that they don’t understand and that predictably malfunctions. This dependence is annoying, even frightening, but tolerable because these organizations are not, fundamentally, in the technology business. Likewise, Time Warner did not see itself, even a small part of itself, as going into the technology business. No one characterized Pathfinder as a software product. What would be the point of that? Isaacson, Judson, and everyone else at Time Warner would have openly admitted they knew nothing about technology. Nor did they particularly want to. After all, Content was King. What Walter & Company were going to deliver was a whole new way to access the mother lode of content that Time was producing every day. Who wouldn’t want that?

  In the fall of 1994, Curt Viebranz announced he was leaving the New Media group for one of the senior slots at HBO. This seemed right. Of all the people involved in the launch of Pathfinder, he seemed the least ready to don T-shirt and cap. He never really talked the talk. His departure left Isaacson and Judson indisputably in charge. Isaacson, in fact, would hold both the church and state positions at Time New Media.

  Pathfinder launched in October 1994. It was unveiled at the Time Warner annual meeting by Jerry Levin and Walter (Judson wasn’t there, but his mother, a TW shareholder, was in the audience). Levin pronounced it a natural evolution of Time Warner’s plans to be the leader in interactive media. Overnight, Pathfinder became the most popular site on the Web. It had a real audience. It was selling real advertising. Everything about it was real. It was professional, businesslike, managed. It had real executives, it had a growing staff (soon to reach one hundred people), it had professionally written content. It had a sales force! And it had promotion. It had Time behind it! It had users. Traffic!

  There was an astounding (and, as it turned out, astoundingly brief) moment when it appeared that Time’s bet would pay off massively, that Time would tame and own the Internet. This period, the first part of 1995, may have been the most purely optimistic moment in the development of the Internet business. Whatever you were doi
ng, you couldn’t do it fast enough. Interest seemed geometric. Every day offered a doubling effect—sites doubled, e-mail doubled, traffic doubled, friends-who-didn’t-want-to-hear-about-the-techy-thing-you-were-doing-but-were-now-saying-hey-can-you-show-me doubled.

  Judson flowered.

  His raison d’être was target marketing. At Time, he had gained minor renown for his role in creating the “selective bind-in.” (As a magazine headed down the bindery line, it suddenly got your name on it in a customized ink-jet spray and a special ad earmarked just for you—or, in reality, your zip code.) There was no higher calling for a marketer than to create an efficient one-on-one relationship with the consumer. Out of one hundred prospects, one buys. If, however, by using special knowledge about these prospects you can increase that ratio to two or three buyers per hundred prospects, than you’ve potentially changed the economic basis of your business.

  What Judson understood and, quite likely, understood before any other professional marketer in New York, the capital of professional marketers, was that the Internet, with its communication and data properties, would help define the universe of a product’s buyers and therefore vastly increase the probability that a likely buyer would buy in some unimagined way.

  In a nutshell, this was the fear—the veritable apocalypse—foreseen by the early Internet community.

  The devil, though, comes in many guises. There was the Web—which, to true Internet hands living in the world of telnet protocols, s-key encrypted passwords, and ftp sites, was a vulgarity (“Why do you find pictures necessary?” Weird Stan kept asking me) and easily shrugged off as irrelevant to the real Net. And then there was Bruce Judson himself. He was so boyish and enthusiastic and eager to please and likable (in his too-big suits, he seemed a kind of vaudevillian tramp on Sixth Avenue) that, well, what the hell, sure, go ahead, if Bruce wants to do a little marketing.

  Within a few months, Judson goes from being an executive without a computer on his desk to being an Ivy league (Dartmouth and Yale Law School) Ziegfeld for the Internet. There’s not a conference he doesn’t speak at. Not a technology executive he doesn’t know. Not a marketing or technology reporter he doesn’t harangue. Not a marketing group he doesn’t preach to: Interactivity is the future; strange and wonderful new capabilities and economies are coming to the marketing business. What’s more, his sheer manic energy, a geeky kind of energy, him sweeping along in his flapping suits . . . talking . . . talking . . . so excited he can’t keep from interrupting you . . . “WHAT? WHAT?” he shouts in your face . . . are just perfect for this incredible thing that’s happening, exploding.