Ignore the clichi-mongers who will write that the sale of Wired magazine to Condi Nast, announced late Thursday to its staff, is the end of an era. The move is more like the dramatic conclusion to act one of the digital industry's highest-profile cliffhanger. What will happen in act two, as the fate of Wired's online properties unfolds, remains an intriguing mystery.
What is unequivocally finished is Wired founder Louis Rossetto's dream of turning the Wired brand name into a unified multimedia empire spanning the Net, TV, books and magazines. The Wired empire reached its high-water mark in the summer of 1996, when Rossetto attempted to take the company public twice -- but failed to persuade Wall Street that it was worth valuations in the hundreds of millions of dollars.
The problem for Wired back then was that it was perceived as a print publishing house with a trendy magazine in tow that expected, arrogantly and unreasonably, to be valued by the astronomical formulas being applied to hot Internet public offerings like Netscape's.
Ironically, in the wake of the Condi Nast deal, the new Wired Ventures -- having packed off its print flagship to join S.I. Newhouse's glossy armada -- really is an all-Internet company now. The roster of online enterprises operated by its Wired Digital subsidiary is estimable: a high-quality search engine, Hotbot; a smart digital news service, Wired News; and HotWired -- the once-proud site that pioneered Web publishing, but was downsized last winter to become largely a "how to" center for Web developers.
The sale of the print magazine for a reported $80 million means that, even after the company pays off some creditors, there's likely to be a significant war chest left to expand and improve these online properties. But what will hold them together?
The old multimedia-empire vision depended on the concept of synergy -- the idea that the company could use its magazine to sell its Web sites, its (ultimately abortive) TV show to sell its magazine, and so forth. But what kind of synergy is left to be exploited by a digital news service, a search engine and a Web-developers' tool site?
At first glance, not much. Then again, HotWired has a long history of launching odd-fitting sites and departments -- dedicated to subjects like mixed drinks, alternative medicine and low-budget travel -- and later shutting them down or spinning them off. The current roster at least shares a common utilitarian focus.
Other big questions hang over Wired Ventures' future. It's unclear what role, if any, Rossetto will play in leading the company. On Friday Wired Digital staffers were mostly either in the dark or unwilling to speculate about the company's plans.
Scenario-based prognostication is an old tradition at Wired, so it seems an appropriate way to approach these questions. Here's a trio of plausible scenarios for the future of Wired's Web sites:
Reinvestment. Wired takes its new money and plows it back into the Wired Digital business. This is the company's official line. Wired Digital has been selling lots of ads -- it reported $3.4 million revenue in the first quarter of 1998 and says it expects to be profitable by the fourth quarter. If the company's financial performance doesn't flag, it may try to package its search, news and "how to" sites into one big bundle -- a kind of "portal"-style home for its Web-savvy clientele. Then again, the all-in-one, we-do-it-all-for-you portal model being pursued by search engines, Microsoft ("Start"), CNet ("Snap") and many other big Web companies isn't meant for the Web-savvy -- it's a strategy tailored for novices' needs.
Liquidation. If the company doesn't stay on track to profitability, or if its investors get restless, or if they just have a falling-out, it's quite possible that Wired Ventures will instead try to sell off its different Web businesses one by one. In this liquidation scenario, the HotBot search engine -- which by most accounts generates the largest share of Wired Digital traffic -- is the best bet to draw a good price. A related possibility would be for Wired Ventures to negotiate a merger with any number of possible partner companies.
Public offering. In the longest-shot scenario, Wired Ventures makes some hard choices -- perhaps shutting down some of its content business, and maybe bringing in a new high-profile CEO -- and returns to the stock market once more. As long as the market continues its infatuation with search-site stocks, HotBot might have a shot at reversing the company's IPO jinx. But the market in Net stocks is highly cyclical and notoriously fickle, and if Wall Street comes to its senses at the wrong moment, this approach could once more leave Wired stranded.
Whichever of these scenarios -- or other unforeseen futures -- comes to pass, the sundering of Wired magazine from its online siblings leaves them in a position of uncertainty and opportunity. What will Wired's brand name mean in a world where its online presence charges forward under current management -- while its higher-profile, paper manifestation is controlled by the folks who own the New Yorker and Vanity Fair?
For the Wired Web sites, leaving the magazine behind means losing its dubious inheritance of utopian rhetoric -- but also potentially losing its cachet. Wired has a rich history and an enviable reputation among the Internet's most dedicated users. Now Wired's name is truly up for grabs.