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Salon: Pay Up or Get a Sponsor

Having racked up nearly $80 million in losses since its inception in 1995, San Francisco-based online culture and politics site Salon announced on Wednesday it would require readers to either subscribe to the site or watch multiple-screen rich-media advertisements to gain access.

"Even in the glory days of online publishing, advertising alone couldn't pay the rent," wrote Salon's editor, David Talbot, in a note to readers posted on the site. "And now, with the entire media industry still suffering an advertising swoon, it's even more impossible to make ends meet on ads alone."

In April 2001, Salon instituted its subscription program, which gave access only to readers paying a minimum of $18.50 a year for access to the site with ads and $30 for ad-free viewing. Non-subscribers, however, still had access to about 80 percent of Salon's content.

Now, non-subscribers wanting to view any of Salon's original content will need to earn an 18-hour pass by agreeing to view a sponsor's multiple-screen advertisement. Wire stories the site carries from the Associated Press will remain free.

The move comes two months after Salon experimented with such a system. After signing up fewer than 50,000 subscribers in 18 months, Salon in November began offering a day pass to its premium content to readers willing to click through a four-screen advertisement for Mercedes-Benz designed by Rancho Palos Verdes, Calif., ad company Ultramercial.

Michael O'Donnell, Salon's president and chief executive, said the time was ripe for Salon to make the move, as paid content becomes more common on the Web and advertisers look toward opt-in advertising strategies.

"[Consumers] realized the content does cost money and the notion that everything being free on the Web is just not reality anymore," he said.

In addition to Ultramercial, O'Donnell said Salon plans to run ads using a variety of formats, including interstitials, Point.Roll ads, and streaming video. He said Salon had lined up four to five other advertisers to sponsor access in the coming months. O'Donnell said the site would run house ads for its other premium services, such as its personals section, if it does not have a sponsor lined up.

Mercedes has returned as the initial Salon sponsor, with a four-screen ad that touts its new E Class sedan running for the next week. Using repurposed photos of the car, Mercedes' agency, Critical Mass, designed the ad with interactive touches, such as the ability to mouse over different parts of the car for further information. The ad series ends with an option for the reader to submit an e-mail address for further information.

The Ultramercial is the same one the company ran previously. According to O'Donnell, about 90 percent of readers chose to view the Ultramercial and the rest choose one of Salon's subscription options.

After the initial success of the month-long Mercedes campaign, O'Donnell said Salon was satisfied that readers were willing to make the explicit trade of intrusive advertising for free content or pay their fair share with a subscription.

"We feel now is the right time," he said. "The users are ready."

Dana Jones, Ultramercial's founder, said Salon is simply making explicit a bargain that's remained unmentioned throughout the history of free media: ads pay the bills.

"The value proposition has never been made very clear," he said. "The reason why you're going to be able to read what you want to read is because the advertiser is paying your way in."

Salon's financial condition for the last year has been perilous. In its last financial reporting period, Salon reported taking in just over $1 million in revenue and racking up a $1.4 million net loss in the three months ending Sept. 31. With cash running out, the company secured $200,000 in financing on Dec. 31.