Special Electronic Extra Edition

A COOK Report Exclusive

Gordon Cook
Editor and Publisher



Editor's Summary

On Friday October 14, 1994 Alan Meckler remade MecklerWeb into very the hardcopy-publishing, vertical-market, advertising- based structure that Chris Locke, its creator had said could never work in the new electronic world of the Internet. Indeed MecklerWeb will now be run on the very attributes of print publishing that Locke set out to prove no longer viable when he created it. In this surprising turn of events Locke and his staff are free to find a new home for their vision under a different name. MecklerWeb, as one of the most talked about accomplishments of the commercial Internet has now the purpose of supporting - by the very advertising that Locke told earlier listeners could not succeed - only the three narrow vertical markets (CD ROM, virtual reality and Internet) that are the core business of Mecklermedia.

With the official opening of the MecklerWeb server under contract with DEC taking place as recently as October 5, 1994, this was, for us, a surprising development. It doesn't seem unusual to think that companies would want to wait until the server was operational before signing for the $25,000 entry fee and for what could easily be another $25,000 in support services necessary to get them up and running. Having invested ten months of intensive effort, Mecklermedia, which was just about to start receiving the benefits, got cold feet and pulled the plug.

Of course Alan Meckler doesn't see it this way. He has his own point of view which we give below as faithfully as possible. Still it seems to us that he is taking quite a chance in remaking radically the venture by which he admits Mecklermedia is known to the public. Locke, he asserts, is free to take the original MecklerWeb concept elsewhere.

Those interested in the financial success or failure of Mecklermedia as an organization should now be asking whether the enormous difference in what Locke started and Meckler proposes to finish will be noted? If it is noted the question then becomes one of how rapidly any existing support for Meckler's new focus will dissipate.

Locke for sure is convinced that the differences are well understood. And he also maintains first that there is demonstrable proof that major corporations are prepared to act on the opportunity of what he has proposed and second that the outcome for these questions will soon be a new home for his team and his original ideas.

What happens next should say a lot about the savvy of the commercial internet market at this juncture.

Our view is one of surprise and dismay that Alan Meckler couldn't maintain faith in the vision that caused him to give Locke a platform from which to launch MecklerWeb. Mecklermedia did execute a successful initial public offering last spring. It presumably has a few million dollars from that still in the bank. We are mystified as to why Meckler apparently feels that he lacked sufficient resources to give the initial form of MecklerWeb a longer trial. Our interviews with Meckler and Locke follow.

Alan Meckler's Position

Wondering how things were going now that MecklerWeb was up and launched on October 5, 1994 and realizing that we had never talked directly with Alan Meckler to find out what he thought about Chris Locke's creation we decided to give Alan a call. We stumbled into a major story. The day before, Alan told us he had decided that the MecklerWeb model would be harmful to Mecklermedia if not changed. Consequently he had removed the implementing team from the job and was reorienting the direction into something more suitable for his company. MecklerWeb was having a mid course correction. The concept that Locke had created and implemented was being replaced by a model that focused on advertising in narrow vertical niche markets. He and Locke were parting -- amiably he hoped.

Meckler: The original model was horizontal with a large range of subject domains. I have been watching the development of his market and I have honestly come to believe that the future today at least in the kinds of services MecklerWeb is offering is in a kind of more vertical market. I think it is going to develop much like the magazine industry. For a magazine to be successful today it must be vertical. Internet World now with 100,000 circulation has shown us that. I believe that the horizontal approach, at least in terms of the resources which Mecklermedia can bring to bear is too demanding for us to support. So what's happening is that Chris is officially leaving

Meckler: We have had a difference of opinion and professional change in looking at this in more vertical terms. Chris will be with us until the end of the year and a consultant thereafter. But it could end up that he will surface somewhere else.

COOK Report: Is he free to take his model elsewhere? What happens to the partners he has assembled.

Meckler: Well MecklerWeb exists. It is still there it is just that it is going to evolve into a more vertical model. If you look at MecklerWeb right now I think that you will find only six or seven companies that are up on it. And Mecklermedia by far has the most content there. It would be quite a while before we could get the core partners up onto the web. Everyone will have a choice about what they want to do. We will not try to shun any of the partners or suggest that they don't want to be involved. But their positioning will be different than in the other model because of the thrust that we will take.

That thrust will take advantage of the cachet of our three magazines - CD ROM and Electronic Publishing; Virtual Reality; and the Internet. Why would anyone go to MecklerWeb rather than up on our own server. The answer is because we would offer a well publicized magnet.

COOK Report: OK. This is certainly an interesting development. In the idea of a free marketplace there should certainly be room for this model to be tried. But I am curious as to where that leaves what Chris had told me over the summer was a sort of interlocking web of agreements with a number of very prominent companies. If Chris wants to call this original concept LockeWeb is he going to be free to continue to work with the core partners both technology and otherwise to find out if they want to continue to work with his different vision?

Meckler: Yes - he will be able to do that. There is a lot more to this focused on relationships that are still in the process of development that I am not presently at liberty to talk about.

COOK Report: What is your position on the use of the name MecklerWeb?

Meckler: Well it is a common practice for companies to remake themselves and keep their old names. For example Greyhound is a company that has nothing to do with buses any more. Apart from this change with MecklerWeb we have changed in the last couple of years from a company that was Library-professional to one that is Consumer-professional.

COOK Report: How do you feel the commercial internet market is going to perceive the change in direction you are embarking on?

Meckler: We have had tremendous press in the last two weeks.

COOK Report: Locke's pretty effective at reaching the press.

Meckler: Indeed. The problem we have is that Mecklermedia has become known as MecklerWeb. This spring the whole story was that we were an exciting company because we have consumer magazines and trade shows in three of the hottest high tech areas. And by the way there is this little thing we are starting called MecklerWeb. And what has happened is that the tail, MecklerWeb, is now wagging the dog. I have meticulously gone out of my way in all announcements to project no revenues from MecklerWeb. In fact I have said if MecklerWeb were run for a year from September 1 1994 to September 1 1995 and it didn't sign up any customers, it could loose anywhere from $850,000 to one million dollars. At the time I really didn't think this could possibly turn out to be what happened, but now I am no longer confident. The piece that was in the Wall Street Journal about 10 days ago where it was announced that we had our first paying customer, Arthur Andersen Consulting, Jayne Levin was quoted as saying I don't think the model will work. I don't see why anyone would pay $25,000 with all the other things that are happening out there.

I am not suggesting that the Locke model can't work. What I am saying is that it is the wrong model for Mecklermedia to have bought into. We don't have either the resources or the time to find out.

But MecklerWeb does exist and the main content there initially will be Mecklermedia including the text of its magazines, trade show programs, books and magazines. And what we will start doing is to sell advertising space. For example in about three weeks you will be able to view about 10 different sections of Internet World. We will sell sponsorship of those sections. Now let's theoretically say that IBM decides it wants to be the sponsor of a back article. The IBM logo will appear and it will say that IBM is the sponsor of this section. And in the tool bar throughout you will see the IBM logo. You will click on the IBM logo and obviously that click will take you back into their server and show you whatever IBM wants as an advertisement. For a smaller sponsor we will still be using Ogilvy and Mather.

We honestly believe that the new MecklerWeb will attract more attention than the old MecklerWeb. Now also don't forget that we can replicate what we do with Internet World both with CD ROM World and Virtual Reality World. You are also talking advertising in the magazines saying that you ought to visit our Internet web site. Our trade show programs will be up. the full content will be listed along with the 90 or so companies that have already signed up. We will also allow companies who have signed up for the shows to have interactive advertising with people who will attending the shows.

We will sell space a la the Locke model but it will be much more vertical. Under this model newsletters and magazines will come on. We think that the cachet will be technology and publishing. It does not have the ability to be an explosive revenue maker initially, but it will succeed over the long term because we can support it adequately.

COOK Report: But what will happen to the staffers that Chris has recently brought on like Jane Brown, Jason Blumming and Bill Washburn?

Meckler: They are all being taken care of in one form or another and some are staying with us. The details haven't been worked out yet. We are having meetings over the weekend and on Monday and Tuesday. Some of them will be let go.

COOK Report: Chris has positioned MecklerWeb as supporting those companies who put marketing data out there as opposed to what is consider to be traditional advertising. Do you reject he need to emphasize marketing information?

Meckler: I think we are talking about a combination. I think the paradigm is alive and well because I think that different organizations are taking different philosophies about what information other than plain advertising they want to put up. And we are also going to sell this by the month, not by the year.

COOK Report: What disruption to the image of MecklerWeb that has been built up in the press may be brought on by these events?

Meckler: Mecklermedia has been damaged by the hype and build up that MecklerWeb has received. Why? Because there tends to be an expectation in the press that there should be a stampede of paying customers. Now here we are six weeks later and we only have one paying customer. I think that this is a let down. I think the Locke model may work but that it needs a year and things are moving so rapidly now that we don't have a year.

There are some people who have worked on MecklerWeb that are not at all convinced the Locke model is correct but are absolutely certain that the one we are now moving to is correct for our company. I am not at all saying that the Locke model can't succeed at a company like EDS for example.

I think the new model will work in 60 days or less. I have had market research done and have tested the waters. I believe that in less than 60 days we will have numerous sign ups.

COOK Report: Please elaborate on your comment about testing the waters.

Meckler: We have done so on a confidential non disclosure basis with several companies whom we believe should be taking positions on MecklerWeb in the vertical market we have been describing. While we have not forced the issue for sign ups, we feel that we will have numerous signups with significant companies. I am so confident about this that I decided to go ahead with the reorientation.

We are a company that feels it must have a major web service and one of the reasons we are particularly beholden to Chris is that we are now positioned in this market far ahead of our competitors. We believe that we can go into the black by the second quarter of our fiscal year with this new model.

COOK Report: Did you ever seriously consider divesting yourself of MecklerWeb?

Meckler: Yes. But the fact is that now MecklerWeb is Mecklermedia. We are joined at the hip forever because of what has happened in the press. Who is going to acquire it if they don't have the name MecklerWeb? But how under these circumstances could we possibly give up the name MecklerWeb?

Locke can go off and try his ideas elsewhere under a different name. I don't think that Chris would disagree that to do the model he wanted would require a lot more capital than we believed as recently as August 15th of this year. We realized then that the man power requirements to implement it were going up.

Also I believe that what is happening now may be working against the model. Because all the web development that is occurring at such a rapid rate, the average decision maker for major corporations is now saying that if commercial web space can be bought for $2000, why should he pay us $25,000? Understanding the subtleties of the differences is too difficult. My belief is that there are a lot of hot shots out there who are going to come out with new models almost every week and that the costs of doing this are gong to be driven way way down. You can see why I as CEO of Mecklermedia have to say I am not going to let anything get in the way of Internet World magazine. This is basically a philosophical difference between Chris and myself. I believe he will be successful in whatever he does and that this is basically a friendly and amicable change.

COOK Report: But if you had given it 180 days from now why wouldn't it have succeeded?

Meckler: Well you have to understand that launch for us was really June 1. From June 1 through the summer we had a tremendous number of expressed interests in excess of 285 companies. They all knew what the deal was. But we really couldn't try to sign anyone up until the last days of August and the agreement with DEC. I took the majority of those 285 phone calls and based on the interest that those people expressed at a very high level, and based on the fact that Anderson in essence signed up in July and that there was not one other company that was ready to sign up as of this date, I believe I have made the right decision.

Chris Locke's Response

COOK Report: We just spoke with Alan Meckler on a regular follow-up to our previous coverage of MecklerWeb. To my great surprise, I discovered that there were major changes coming down with respect to the focus and direction of the system. Meckler says you have an amicable disagreement on this, but I'd like to get your impression of what's going on here.

Locke: Well, Alan and I certainly disagree. As to how amicably, you'll have to draw your own conclusions.

COOK Report: Meckler told me he is changing the focus of MecklerWeb to concentrate on the narrow vertical markets related to Internet, CD-ROM, and virtual reality. These markets, of course, coincide with Mecklermedia's magazines in those areas. He says the new plan is to sell companies in these markets the opportunity to advertise on a monthly basis. How do you feel about this?

Locke: This new direction Mecklermedia is articulating for MecklerWeb amounts to announcing system of the same name that bears little resemblance to what we have labored for the past year to design and implement with the help of many generous partners.

MecklerWeb was founded on several principles, many of them contrary to the received wisdom about markets and marketing in conventional media. We said that, on the Internet, advertising was not the opportunity many imagined it to be. We said it wouldn't work here, period. Instead, we said that "corporate content" was not an oxymoron; that companies possessed genuine knowledge that would be of real and immediate value to the audiences now assembling in this medium. We said that companies wishing to build new business relationships with these potential micro-markets could accomplish that only by offering their insight, experience, knowledge and perspective -- without charge -- to people who come to the net looking for something other than the hand waving and hucksterism that have characterized the mass media. We said companies could learn much from the environment of open discourse that has developed on the Internet, and that they would gain much by contributing to it. We said it was time that the private sector gave something back to the community that has created this unparalleled resource with little thought of personal gain. All this is well documented.

COOK Report: Where has Meckler been on this all along? How could he have not perceived the essence of your model in over 10 months of development? Why this sudden and radical disagreement as to direction?

Locke: I have kept Alan Meckler appraised of everything I have done with respect to MecklerWeb from the very start. I have made no major decisions without his express approval. The current "disagreement," as you put it, is very recent, and is based on unilateral decisions Alan has made without any discussion with or input from me. I was not asked for advice or consent. In fact, I'm as surprised by these developments as you are, and I certainly have played no role in framing the direction they represent.

COOK Report: In talking to me, Alan Meckler characterized the current MecklerWeb-Mecklermedia relationship as "the tail wagging the dog," where MecklerWeb is the tail, I take it, and Mecklermedia the dog. He indicated that Mecklermedia is now largely identified with MecklerWeb, rather than the other way around, and that the parent company has lost visibility for its other offerings in the traditional publishing and trade show areas. He specifically said he felt MecklerWeb and Mecklermedia were indissolubly joined at the hip because of all the press coverage MecklerWeb has generated. All this was given by way of explanation as to why he has now decided to refocus the system on vertical advertising, disband the current MecklerWeb development team, and run the system himself.

Locke: Well, this is a rather odd complaint, don't you think? Mecklermedia has gained enormous visibility it would not have enjoyed without the MecklerWeb initiative. It would be impossible to say how much Mecklermedia's business has grown as a direct result. It's true we put the parent company on the map, not only in trade publications, but significantly, in the international business press. Is there some reason we should we now apologize for that? I think most companies would have found another way to thank us for what we've accomplished in this respect.

Our reward in this case is to have our model expropriated to the diametric opposite of everything we believe to be desirable and workable in this medium. We, in fact, have delivered on precisely the promise we offered Mecklermedia in the earliest phase of this, last January. And we have hit -- square on -- the window of opportunity we defined back then.

We have very clearly articulated the MecklerWeb model and philosophy in the pages of Information Week and Mecklermedia's own Internet World magazine. We told it in numerous personal appearances to industry groups and conferences, not least of which was Mecklermedia's Internet World trade show in San Jose last June. In bits and pieces, we told the same story -- consistently from the very start -- to writers at Fortune, Forbes, Business Week, The Wall Street Journal, The New York Times, The San Jose Mercury News, The Economist, Folio magazine, Advertising Age, PC Week, Infoworld, The London Sunday Times, The Financial Times, and others too numerous to recall. The first publication to tell our story -- and in great depth -- was The COOK Report, beginning in February and again in June. I think our plans were very clearly laid out in both those issues. We even used a slot on NBC Nightly News to flame those lawyers from Phoenix for attempting to wreck the Internet. We touched millions with the notion that something very different could happen here.

The visibility Mecklermedia has received through these various media channels has everything to do with the fact that MecklerWeb had something genuinely new to say, and said it very effectively. I don't see how Mecklermedia's 180-shift on the advertising issue delivers on the innovative approach to commercial Internet development we have been preaching from the rooftops for the past 10 months.

COOK Report: Meckler seems to think that your model involves the need for more capital than Mecklermedia can -- or is willing to -- provide.

Locke: No argument there. Mecklermedia has been reticent to put its own money into this from the very beginning. We had a small budget to work with before June 1 and I spent very little of that. In fact, other than salaries for myself and four team members -- who have been aboard, on average, for about two months -- the major investment has been in terms of resources contributed by our outside partners. What happens to the ROI on these partners' investments under this new model? The upsell they were all looking forward to is largely gone.

COOK Report: Speaking of your business and technology partners, how do you think they will react to this change? Meckler seemed to feel that Ogilvy & Mather, for instance, would react positively. It is an advertising firm after all, as he said.

Locke: First off, to the best of my knowledge, MecklerWeb's partners have no knowledge of what's happening here. I learned of Mecklermedia's intentions myself only in the final hours of business on Friday, and it's still the weekend. I will not presume to speak for them -- I never have -- but I do know, definitively, that this "new MecklerWeb" is not what they originally lent their names to.

To take the case of Ogilvy more specifically, let me say that this firm has few if any clients in these vertical areas. I find it hard to believe that Ogilvy & Mather Direct, in return for all the terrific and quite substantial work they have contributed to the MecklerWeb initiative, will be excited about now being able to sell value-added services only to Internet, CD-ROM and virtual reality vendors. In themselves, these hardly constitute real markets compared to the very broad Fortune 1000 market and it's equivalent worldwide, upon which we focused MecklerWeb from the start.

COOK Report: Alan Meckler says he has had market research done that indicates that his new model will generate numerous signups, whereas yours has generated only one customer so far, Andersen Consulting.

Locke: As to any market research, that's news to me. When Meckler told me last Friday (October 14) of this latest and most radical change of course, the MecklerWeb server had been officially up for eight business days -- we announced it to the world on October 5. While we have had many hundreds of serious corporate requests for more information, all of these companies -- with the exception of Andersen Consulting -- demanded to see proof that we'd actually bring the server up. This seems entirely reasonable. In contrast, expecting to see a flood of prospect-to-client conversions in less than two weeks of operation, seems, well... unreasonable. The MecklerWeb team and Digital Equipment have many dozens of pre-qualified near- term prospects. But now we may never know how many would have come aboard in the first 30 days or the first quarter. Mecklermedia has effectively torpedoed its own offering just as it was coming online.

COOK Report: But why?

Locke: That's an excellent question to which I wish I could give you an adequate answer. Frankly, the logic escapes me.

COOK Report: According to Meckler, MecklerWeb "hype" has damaged Mecklermedia's position in the commercial internet marketplace because of excessive expectations. How do you respond to that?

Locke: What hype? We did exactly what we said we would. Granted, the system on Day One did not reflect the totality of our vision, but then webservers differ in this respect from the launch of hardcopy magazines, for instance. As everyone who knows anything about the net understands, these things grow, organically and continually. They are not put forth as whole cloth, but rather evolve in direct response to real-time audience feedback. On a shoestring budget, and with the support of many staunch allies, we have brought off quite a coup we think -- and critically, we have offered mainstream business an option in this medium that is infinitely more viable than advertising.

COOK Report: Meckler indicated that he agreed with Jayne Levin's comments in the October 5 story on MecklerWeb in The Wall Street Journal to the effect that few companies would become clients at your prices when they could accomplish the same thing through other and cheaper means. If that's the case, Meckler seems to have every reason to want to back out of the service you have defined.

Locke: Well, it depends on what Ms. Levin meant by "the same thing" -- I can't recall her exact wording I'm afraid. If she meant that companies could put up their own home pages or web servers without us, well, of course that's perfectly true. But what we are offering is something far more important: getting found by self-qualifying market sectors. Having a home page hardly guarantees you that. I don't want to recap our entire model here, but this is absolutely central. We aren't selling disk space or fractional T1 connectivity or storefronts in cybermalls. Instead, we are selling audience access to corporate knowledge bases in order to encourage new business relationships that will lead to increased share in fiercely competitive global markets. The marketing people who have been calling us in droves appear to understand this implicitly, even if Jayne Levin and Alan Meckler clearly do not.

COOK Report: Meckler seems to feel that what will ultimately work on the Internet will take much the same course as developments in the magazine industry. And here he was referring to the focus on advertising to vertical markets. Any reaction to that?

Locke: This isn't the magazine industry. Nor is it electronic publishing. Metaphors like that are highly misleading. In radical contrast, take our positioning of MecklerWeb as an opportunity for major corporations to concurrently engineer products and services in real-time collaboration with highly influential online segments of their current markets, and thus achieve lasting advantage with respect to global competitors. We have seen light bulbs go on when we unpacked this to the top management of very large corporations. Our "sell" involves powerful issues that have played in boardrooms for the past decade, easily, and on which many millions of dollars have already been spent. Many companies deeply understand what we are saying, and are extremely turned on by the opportunity -- especially since nobody else is offering it as far as I can see. It ain't about advertising in any possible sense of that term.

But yes, the sales cycle is probably more than two weeks. Should we therefore throw in the towel in less than that time? That's what I believe is called a rhetorical question.

Gordon, go back to that piece you wrote on MecklerWeb in your February issue of The COOK Report. It's all there. What I said was that traditional publishers simply don't get it. It seemed for ten months that Mecklermedia was an exception to that assessment. I guess not.

COOK Report: What do you see as the net result of all this?

Locke: It would be sad indeed if these decisions by Mecklermedia were to be interpreted as representing a failure of the vision MecklerWeb presented to the world. Pointing to the fate of MecklerWeb as proof that people in fact want advertising on the net would be odious, to say the least. Mecklermedia's contention that there is insufficient interest from corporate clients is countered by all our experience to date -- and I know that Digital Equipment Corporation has been deluged with calls as well. The vision we put forth has, in fact, generated genuine and substantial enthusiasm in mainstream corporations around the globe. As far as I can see, the "new" MecklerWeb offers that enthusiasm no place to express itself to the enrichment of the global Internet community.

COOK Report: So what now? Is your team in fact disbanding, or are you planning to keep working together on the same model you have been promoting?

Locke: The model is not dead by any means, and neither is the team that proved it could work. We are currently looking for an organization that has the guts and vision to help us evolve what we have begun. In fact, we are talking to quite a few already. Unlike Mecklermedia, these are very large companies. Their interest is genuine and motivated not only by a "do the right thing" mentality, but also by very real business considerations. For the right outfit, building on what we have accomplished could well represent a savings of six months in terms of time-to- market with highly lucrative Internet-mediated business content services. Given the nature and tenor of our talks with such firms so far, we have every reason to be optimistic about the outcome.

As in everything we have done to date, we are betting on the intelligence, good will and integrity of the Internet community to decide which business models it will ultimately elect to support. This is not only a free market, it's an unprecedentedly savvy one.

Gordon Cook
Editor and Publisher


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