Economy tests Web femmes’ fortunes

Huffington, Brown's sites yet to show a profit

If the Wall Street pundits are right and the layoffs, shutdowns and buyouts of 2008 were mere temblors compared to the Krakatoa-esque eruption awaiting us in 2009, what does that bode for the Ladies Who Launch, online doyennes Arianna Huffington and Tina Brown?

Depending on whom you ask, the Huffington Post and the Daily Beast appear especially sheltered or scarily vulnerable in the face of economic Armageddon.

Neither site has yet to show a profit.

Reed Phillips, managing partner of media investment firm Desilva and Phillips, points out that they’ll have to forge ahead in the red without the boost in readership driven by last year’s election campaign.

“If I were in their shoes and I hadn’t made a profit yet, I would be planning for the need for more investment or having to make some cost reductions,” says Phillips.

The most likely boost in revenue would presumably have to come via advertising, but reading the tea leaves isn’t easy: In December, media firm WPP forecast a 0.2% decrease in overall ad spending for 2009, but also a 5% increase in Internet ad dollars. (Of course, its pre-recession estimate was a 16% web increase, but still…)

And HuffPo did scare up $25 million in additional financing in December. But it’s hardly in retrenchment mode.

“A crisis is a terrible thing to waste,” Huffington says of the current economic catastrophe, noting that old-media’s problems are new-media’s opportunities.

While she can’t say when her site (which has lately been retagged as an “Internet newspaper”) will be in the black, she’s using the capital injection to add personnel, including a citizen-journalism editor and a congressional reporter.

Although HuffPo’s 4.5 million unique visitors in September marks a whopping 474% jump over the previous year. And Huffington remains bullish on biz in the post-McCain-Obama landscape, noting that political news accounted for only about half of her site’s traffic. “Expanding beyond politics has always been part of the plan,” she says, noting the steady growth in the other sections (e.g., Entertainment, Business, Living, Green) that have been introduced since its 2005 launch.

Over at the Daily Beast, which bowed Oct. 6, chief funder Barry Diller has postponed even the announcement of an advertising plan until after the holidays, while Brown has said the quality of the site’s content and cachet of its contributors will function as a de facto marketing plan. She and Diller insist they’re honing the editorial content before trolling for ad bucks.

An industry insider points out that the site is well-poised to weather even a deep downturn, as ad dollars will continue to gravitate to the well-heeled types who largely constitute the site’s unique visitorship, estimated at 1.4 million in only its second month.

In other words: Like the rich, it appears that luxury cars, upscale travel and top-shelf beverages will always be with us.

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