to charge for ad-free content

Embattled plans to make users pay for an ad-free version of its online magazine, the company announced in a letter to readers this morning.

          Embattled plans to make users pay for an ad-free version of its online magazine, the company announced in a letter to readers this morning.

          Users who don't mind viewing ads online will continue to be able to access the site for free, the company says.

          Salon, which attracted 2.7 million unique visitors in February, hopes to convert 1 to 2% of its current readers to a paying subscriber base of readers who are willing to shell out $US30 a year for a "premium" version of the site's current offerings. The premium version will include staff-written stories that will not be available to free users, the company says, but it remains unclear exactly what the nature of premium content would be, and what additional costs Salon would have to assume to create that premium content.

          "At the beginning, you will see a relatively small percentage of content on [deemed as] premium," says Scott Rosenberg, Salon's senior VP of editorial operations. "You will not see huge swaths of our stuff disappearing behind the [subscription] gate."

          Along with the launch of its premium version, Salon plans to begin selling larger ad spaces – similar to those recently added to CNET and Disney's networks of sites – on its non-premium version. The hard-to-miss expanded ads will allow Salon to charge more for CPMs, shorthand for "cost per thousands" of viewers, the standard measurement by which online ads are sold.

          The two initiatives are in part designed to appease the "hundreds of thousands" of Salon readers who over the past few years have asked for a version of the site devoid of niggling banner ads, says Salon spokeswoman Dayna Macy.

          But more important, the decision to offer a subscription version of the site helps the company add another line of revenue at a time when every media company, online or off, is facing a sharply declining advertising market.

          In a February Securities and Exchange Commission filing, Salon reported that it has cash reserves to fund three to six months of operations. The company has indicated in previous SEC filings that it is seeking another round of financing to continue operations beyond that time.

          But the companies that have created successful businesses by making users pay for content remain a fairly small group. Outside of the online pornography and online videogames businesses, to date only two companies – Consumer Reports and the Wall Street Journal – have managed to attract users to premium online content in high numbers.

          "The industry is in a very different place now," says Rosenberg. "At this point, Salon has a pretty wide readership of people who really care about their daily fix of Salon."

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