We're here, we're queer, we're media moguls

Is PlanetOut CEO Megan Smith building the gay and lesbian AOL Time Warner?

By Lydia Lee
Published April 3, 2000 4:00PM (EDT)

The gay and lesbian portal site PlanetOut announced about 10 days ago its intention to merge with Liberation Publications, publisher of two of the gay community's leading print magazines: Advocate and Out. The deal will not only make the five-year-old Internet company one of the biggest players in gay media, but yet another experiment in combining "real world" media with online companies, a la America Online Time Warner.

PlanetOut, under the direction of CEO Megan Smith, already serves up daily news, an Internet radio show called "Homophonic" and numerous discussion boards and chat rooms to its 485,000 registered members. It also runs the gay and lesbian sections of AOL (which owns a stake in PlanetOut) and several major portals including Yahoo, Netscape and Lycos. A mechanical engineer by training, Smith, 35, did a stint at MIT's Media Lab and led product development at the pioneering handheld computing firm General Magic before joining PlanetOut in 1996.

PlanetOut just announced a merger with Liberation Publications, publisher of Advocate and Out magazines. What are your plans?

We really want to be the pervasive brand in this space, and there really aren't many ways to reach gays and lesbians. There are only seven gay and lesbian publications with national distribution, and the Advocate and Out are 87 percent of that distribution. So it's a great way to reach more people, in all the places they are.

It's also a great way to augment our content offerings. We get lots more great content for our site; we're going to offer our users subscriptions to these publications, and we can then offer combined packages of print and Web advertising to our advertisers.

With our merger with Advocate and Out, we have phenomenal content -- it's our own AOL Time Warner deal, since we're merging the dominant online and print properties. We're going to run the Advocate.com Web site and add its content to the PlanetOut site. And on the portals, we're going to bring Advocate and Out with us.

Are you planning on going public? Do you think the market is ready for the first gay IPO?

It's one of the options we're considering, but we haven't made any official announcements about it. We've gotten phenomenal response from analysts, and we've satisfied venture capitalists on the same kinds of questions that you'd get if you were going public -- so the answer seems to be yes, the market is ready.

Has the corporate world been accepting?

Actually, one of the most closeted areas, the banking sector, has been amazingly open to PlanetOut. We're the first company focusing on the gay and lesbian community that has run the gantlet and gotten venture backing. I think it's because they can see we're supported by top-tier companies like AOL; AOL owns 12 percent of us. We have 200 advertisers on the site. There have been a handful of advertisers that have turned us down, but the good news is that I can count them on one hand.

What are the biggest challenges for online communities today? It seems like there was a lot of interest in communities like GeoCities and TheGlobe.com which has since petered out.

There was a lot of focus on the early communities, but they also were very general places, like IRC [Internet Relay Chat]. Since then, it seems that people have found different homes on the vertical portals.

Is there anything really different about running a gay portal as opposed to say a black portal or a women's portal or some other target demographic?

We're all basically in the same business, running a version of AOL that's vertical. You're going to want to offer your members a lot of the same basic services. The gay community does have some unique requirements, it's really hard to find domestic-partner-based auto insurance, for example, or a friendly travel agent.

We started an organization called Communities Inc., which included NetNoir, Thrive and Latino Link, among others. It was a way, when we were all starting out on AOL, to share information. We'd have a conference call every week and talk about how to build a business and figure out what was working and how to attract customers.

How do you handle privacy issues? America Online got a lot of flak for giving up the identity of that gay guy to the military, and I'd assume that keeping your users' identities secret is more critical for PlanetOut than for most other sites.

Yes, it's really important. You can lose your job and your house for being gay in this country, and overseas, in some countries, you can be subject to capital punishment. We actually broke that story about AOL, even though they're a partner of ours. We post our privacy policy up front, and some members share a lot of information with us but it's entirely optional. About 30 percent of our users let us share their name and contact info with dot-orgs like PFLAG [Parents, Family and Friends of Lesbians and Gays] and advertisers.

Kathy Levinson, the CEO of E-Trade, made a big contribution to the "No on Knight" campaign, but she didn't feel comfortable speaking out about California's gay-marriage ban in public. Why don't we see more gay and lesbian heads of corporations as spokespeople?

You'll have to ask her about it, but I think she felt that in the case of the Knight initiative, it was a direct attack on her family. She's been with her partner for 20 years, they have two kids; I think she wanted to do something and could contribute financially. Kathy Levinson is an investor in our site and is also on our board. But with her high-profile job, the safety of her family was an issue. I think she got death threats, personal attacks.

I can't really think of any other CEOs that are out -- there are a couple, but at smaller organizations. It's probably because there's no employment protection. You can be fired in 39 states for being gay. Most people don't know that and are pretty surprised to hear it. So it's sort of a Catch-22. At PlanetOut, we work not only to produce better media that includes them, but a place to connect with other people. Many people come out first online -- I think that's true for the younger staff at PlanetOut that have come out.

Has the PlanetOut site been the focus of homophobic attacks?

Our mail is 2 percent hate mail, 40 percent love mail. We might move a random homophobic message that appears in the middle of a discussion to the homophobia discussion board where it might be more appropriate. But we don't censor the messages.

The Internet community, the investor community, our user community have all been very accepting. Just look at the Academy Awards, where Hilary Swank won for portraying someone like Brandon Teena. The world is really changing. I really believe in what Hilary Swank said about not only accepting diversity but celebrating it.

Is it hard to sell the site to advertisers?

The gay and lesbian community has very attractive demographics, but they've been very elusive. We're talking about $450 billion in consumer buying power in the U.S. alone. They're more likely [than the average American] to have 401Ks, for example -- this makes them very attractive to E-Trade. But it's been hard to reach people in the closet.

When we sell advertising, people aren't aware of the demographics, but once they find out, they're extremely interested. We have slightly more disposable income because there are less children in our community.

The Internet has made it so that PlanetOut can reach out to a very dispersed group of people and create products and services, which have never been able to get the distribution before, for them.

Does the site generate revenue from anything other than advertising and sponsorships?

We have e-commerce programs -- kind of like super-affiliates. We have a PlanetOut Visa card. Another product is PlanetOut Access, an Access affinity program like the AARP. They have great benefits, like Hartford domestic-partner auto insurance. It's hard for gay and lesbian couples to get insurance -- it can be a lot more complicated. There's also licensing and syndication, where we run the gay and lesbian sites for different portals.

I saw this documentary on PBS about very conservative gay Republican men being lumped under one umbrella with hippie lesbian women. How does your site bring together the different sectors of the gay population?

The group hangs together over basic civil rights, but there's a lot of distinct communities. That's the nice thing -- we're not limited to a certain number of pages or chat rooms. There's a really strong woman's community, and a really strong teen group. PlanetOut's users are 38 percent women.

And there's not only 16 million gay and lesbian people, but their family and friends. And we also have a group of consumers we've nicknamed "Hip Urban Straight" -- for someone who's looking for a cool restaurant, for example. Five percent of our audience is straight.

Do you ever find that you have to tone down the more extreme aspects of gay culture in order to appeal to a more mainstream audience?

Not really. Groups find their homes in different part of the sites -- there might be one with a more political view, one with more of a family-centric view. And you can put different skins on the site -- if you go to My PlanetOut you can customize the site and it can be flaming pink if you want. And with our NextCard deal, you can get 10 different plastics -- you can have a more-out card and a less-out card. Visa's probably not going to put naked people on the card. But maybe half-naked people!

What are your favorite gadgets?

Cell phones. Also tiny laptops, those are fun. The gay community are very early adopters of technology, which is why you see advertisers like Sony on the site. I think in general there's a strong interest in fashion, in trendy things -- we like to play with new stuff.

Lydia Lee

Lydia Lee is a San Francisco writer


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