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The Cash-Out Effect
When Andover.Net went public 60 days ago, the 49-employee Massachusetts Web publisher raised $72 million, an astonishing amount of money when you consider the dismal history of pure-content Web companies in going public.
To put the amount in perspective, Salon.com raised $26 million in its June 1999 IPO and dropped 50 cents off its initial price during its opening day alone. Regardless, expectations were so low for the online magazine that "today was a victory for Salon," the Washington Post declared.
After its IPO, Andover.Net was handed a wallet stuffed with investor funds to pursue the goals stated in its S-1: buy more technology sites, improve its content and protect the trusted reputation of its most popular site, Slashdot, which receives 46 percent of its Andover.Net's overall traffic.
"We provide an independent, unbiased source for content, much of which comes from the Linux/Open Source community itself," the company stated in its S-1. But Andover.Net was mindful that it could incur the wrath of its visitors with corporate deal-making. "Our reputation may be harmed if the Linux, and more generally Open Source ... communities do not approve of these transactions," the company warned prospective investors in its S-1.
In an industry where the term "money-losing" is invariably followed by "web publisher," Andover.Net could afford the luxury of editorial credibility. There was no need for line-blurring advertorial deals like HotWired's decolorization for a printer company or exclusive bookseller links on nytimes.com.
After seven weeks of unbiased, trusted independence, Andover.Net sold itself to server manufacturer VA Linux for roughly $1 billion. When the ink dries, Slashdot and its 1.2 million daily eyeballs belong to a company that publisher Rob Malda turned down flat last year.
"Whoever became involved, they had to be 'Outside' the linux/open source world to a certain degree," Malda wrote in a June 1999 article explaining why Slashdot was sold to Andover.Net. "We didn't want anyone to think that a company might buy us simply to gain an advantage in the story select."
With new inside owners, Malda and the Andover.Net staff don't want anyone to think VA Linux has gained an advantage, nor do they want to believe it themselves. On a percentage of traffic basis, their site represents $414 million of Andover.Net's purchase price -- more than the worth of the New York Yankees -- but Slashdot will treat VA Linux no differently than companies that spent zero million dollars to buy them.
Promising complete editorial freedom and the parent company's respect for its adopted child, Slashdot asks readers to believe that the next VA Linux security hole or poor benchmark will be reported with the same zeal as if Microsoft or LinuxOne was the villain of the piece.
As much as I respect Editor-in-Chief Robin Miller and the work of Malda and his cohorts, there's no way Slashdot can be trusted to report objectively on VA Linux and its competitors. When dozens of good story submissions are turned down every day, Slashdot will look like a tout when it picks a positive VA article. Negative stories about competitors will smell like FUD.
Andover.Net disregarded Malda's well-known wish for Slashdot to remain out of a Linux company's hands. Now that VA Linux must justify paying $900 million for a company whose primary asset was Slashdot, how much patience will the company and its shareholders have if a story in its own publication thrashes its stock price?
A few weeks before the buyout, Slashdot entertained discussion on the AOL Time Warner merger, and the conclusions tended to be anti-corporate and calamitous. "Are consumers really well-served when one company controls more content and access than any other company in the world?" contributor Jon Katz asked.
Two-thirds of all Linux and open source traffic on the Internet now passes through VA Linux, according to the company.
Andover.Net betrayed Slashdot's founders by selling to a Linux company and removing its greatest asset -- editorial distance. Anyone who believes that Slashdot is still an independent voice about the stuff that matters should get back to me when Microsoft buys VA Linux.
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