Former ACP managing director Richard Walsh and Media Watch executive producer David Salter form a powerful duo, but their internet newspaper The Zeitgeist gazette will fold after six months. Zeit’s Melbourne Correspondent Terry Maher explains why.
For journalists, if not the wider community, the death of a newspaper is always a sad event. But in this e-day and cyberage, when a superlative little online paper like The Zeitgeist Gazette is pronounced stillborn after only six months on the job, you are left looking at a much-more modern e-commerce tragedy – perhaps fraught with dire warnings for other webzine start-ups like Crikey and others, yet to be conceived.

The ZG (and its sibling publications The ZeitWatch Express and The Zeitgeist Weekly) is not dead yet (as the editor is fond of repeating). There is still a faint chance that some filthy-rich bubbledotcom geek will walk in the doors at Kippax Street in Sydney’s Surry Hills before five o’clock this Friday and throw a bunch of IPO megabucks on the table to keep the ZG show on the superhighway. I doubt it, but the megabuck geek had better get there before 5pm, because we’re off to the pub for the wake and the ZG spirit might be a tad hard to revive later in the evening.

What makes ZG so grouse from a strictly e-commerce point of view is that it provides continuous, consistent content in a new economy age where we are continually told that content is king. If telstra.com is prepared to throw $67.5 million at Brian Johns for a ho-hum ABC online feed into the telstra.com portal, then surely the ZG has to be worth its estimated $500,000 a year running cost to someone with an eye to the awful truth about how bubbledotcoms really work. The awful truth is that Amazon.com has never made a profit from selling books online but its revenue and share price work in reverse direct proportion to its staggering losses.

From my Melbourne eyrie, I don’t have inside knowledge of the Zeitgeist Gazette Pty Ltd finances, or the business plan, but I have an inkling that your classic bubbledotcom start-up is highly prized only if it can manage to lose as much money as possible in its first year. ZG is not a classic, bubbledotcom start-up by any means of the imagination but when Stephen Mayne told the Crikey launch that ZG had a thousand subscribers at $500 a head, I felt well pleased with the healthy $500,000 e-commerce cash flow that I thought was coursing through the ZG veins to its vital organs. Stephen had supposedly got this information from a visit to the webzeit HQ in Surry Hills in January. Maybe it was wishful thinking or nudge-and-wink stuff but my impression is that half that number of real subscribers to ZG is closer to the awful truth.

The awful truth is that unscrupulous journos from Fairfax, News Ltd, ACP and the ABC trashed the ZG webzeit by passing around genuine subscriber and contributor passwords among their mates as if they were free drinks at a PR piss-up. The economics of a high quality, user-pays service provider can not survive such a concentrated spaming by bludging sycophants who like to see their mates’ names in the paper – even when they are getting a serve – but don’t want to pay for the privilege. I piss on them from my grave!

ZG started with working capital of $350,000 and takes $100,000 of that to its grave. If the webzeit drew 500 genuine subscribers at $495 an eyeball, it appears to have spent $500,000 on its brief existence ($250,000 in working capital and $250,000 in subscriptions – although one would expect a minor part of that subscription capital might need to be refunded). I doubt the second half of the first year would also cost $500,000 once establishment costs were out of the way.

And had it made its birthday, one likes to think the webzeit could have easily survived its second year with 1000 genuine subscribers kicking the can and the virulent, vituperative toerags who call themselves Sydney journalists, doing the right thing for a change.

Obviously, more money needed to be spent on marketing what was always a word-of-mouth publication (yes Virginia, it is “published” or “posted” every day at 3.00 on the Internet at www.zeitgaz.com.au and never missed a deadline). My personal view is that the paper was far too Sydneycentric for its own good. Sure, we all like to think of our home town as the centre of the universe but the global village doesn’t begin and end at the Sydney Pale. And Mr Macawber could have told you that the wider your source of income, the more happiness will descend on you.

But I’m not here to bury ZG, but to praise her! ZG is a one-stop, up-to-the-minute digest of all that’s witty, wise and woeful in the day’s media. The Zeitgeist Gazette (it means “spirit of the times”) celebrates the brilliance of the moment; it pillories the banal, the ugly and the self-serving, and distils this all into a snappy – and often irreverent – electronic newspaper that takes no longer than your afternoon coffee break to consume.

Here is the text of the media release that announced the end of my world on Monday, February 28:

The managing director of Zeitgeist Gazette Pty Ltd, Richard Walsh, announced today that after six months of daily publication the Sydney-based internet newsletter, The Zeitgeist Gazette, will post its last edition on Friday March 10. The Gazette, co-edited by Walsh and former Media Watch Executive Producer David Salter, has never missed its 3pm deadline. Its content is a blend of current affairs, social commentary, media criticism and satire.

The company effectively began operations on July 1 last year and launched its daily newsletter on August 23. It was founded with working capital of $350,000 and still has funds of over $100,000. Its subscription base has built steadily and continues to do so. Walsh, who was previously CEO and Publisher at Australian Consolidated Press, admits that the rate of growth has been slower than was originally hoped. He believes The Gazette needed enough capital to see it through a second year, but that is not available at this time.

He said today: “Given our limited resources, it’s remarkable that we have had such significant impact and so quickly established ourselves. We have had wonderfully encouraging feedback and David has become widely recognised as a significant independent commentator on media issues.

“The disappointment is that literally in the last few weeks we have been presented with some interesting possibilities for expanding our reach and increasing our revenue. However, we would need more time to explore such opportunities and our low capital base does not allow us that luxury.

“It’s been tremendous fun” says Salter. “Not so much the getting up at 5 every morning, but the stimulation of being able to write freely on a wide range of subjects.”

All subscribers will be offered a refund of their outstanding subscriptions and the Gazette’s staff of three will be paid their full entitlements. “I’m not related to the Prime Minister,” said Walsh, “but there will be no need for Peter Reith to come in and bail us out.”

For further comment: Richard Walsh & David Salter (02) 9280 1377 or (0419) 174723

Nobody Screws Soccer Like Seven

Some people (Mark Westfield in the Oz on Friday) think the awful truth is that Kerry Stokes is a dickhead who just happens to be in the right place at the right time: “Kerry Stokes is Australia’s luckiest media proprietor. He’s demonstrated to all but a handful of gullible media analysts that he has no idea what he is doing as executive chairman of the Seven Network, yet he is about to become immensely rich. He finds himself, serendipitously, in the right place at the right time,” says Westfield.

Of course, Westfield was talking about a possible $2 billion bid for the Seven Network by Telstra.com. Stokes, who started life as an orphan in the Carlton slums, will walk away with a clear profit of more than $440 million if Telstra offers, and he takes Telstra’s shinny shilling for the shares he started buying in Seven when Christopher Skase went walkabout and Ivan Deveson stopped returning his calls.

The awful truth is that one of the minor sports in the enormous Channel Seven sporting armoury that includes the Olympic Games, the AFL, Rugby Union and tennis, is causing no end of aggravation to the charmed “rich and famous” lifestyle of Kerry Stokes. All yesterday (Saturday, March 4) irate soccer fans picketed the Seven Network head offices in Sydney, Melbourne and Perth to complain about lack of coverage for the code on Seven’s screens. The national action group called STAND (Seven Talks And Never Delivers) is also planning to blockade an Age-sponsored media seminar he will be speaking at on March 28 at the Melbourne Convention Centre.

What’s come back to bite Kerry Stokes on the butt is that back in August 1988, one of his minions did a “minor” $25 million deal to buy the exclusive rights to televise soccer in Australia for the next 10 years. (SBS previously held the rights and made the game the centre of its sports programming at a cost of only $500,000 a year.) At the time, it was small beer for Seven in its never-ending battle with Nine for sporting supremacy in content on both free-to-air broadcasting and pay TV. Seven had thrown its lot in with Optus Vision having been frozen out of the PMT (Packer, Murdoch and Telstra) consortium that became Foxtel. Then Soccer Australia chairman David Hill (not dead yet Ed.) hailed the agreement as “the biggest single leap forward for soccer in the history of this country.

“For soccer to realise its potential as mainstream sport, it needed the backing of a major commercial channel and this move, without doubt, will increase the popularity of the game in Australia. The partnership will involve promoting the game on a national basis and we are happy for Channel Seven to coordinate all of the coverage,” Hill said. Wary National Soccer league club officials, concerned about the length of the deal and its impact of live telecasts on attendances, were comforted by a so-called escalation clause which supposedly gave Soccer Australia a share of Seven’s advertising revenue if audience figures exceeded a threshold. “We have also instituted a review mechanism in the arrangement where we can re-examine the agreement instead of an unchangeable contract,” Hill said.

Having bought the rights and promising to televise “more than 100 matches in the next 12 months,” Seven promptly dropped the whole deal into the bottom draw. In a separate deal, Seven handed over free-to-air coverage of the NSL to the ABC for the first four years but kept the pay-TV rights with its C7 network on Optus Vision. What’s got the STAND demonstrators on their tippy-toes is that Seven have not even mentioned “the World Game” since signing the deal, let alone showing any games on the Seven Network. Harold Anderson, Seven’s director of sports, denies the STAND claim that Seven is doing a disservice to the code by not showing its games: “The onus is on the sport to develop its game to a point where it will work on a commercial network,” he said.

So why, the sudden turnaround? Why piss $25 million up against the wall if you have no intention of earning of quid out of it? Stokes might be lucky but he is not stupid. The awful truth is probably a lot closer to Stokes making sound preparation for another round of turf wars with the evil PMT forces over AFL rights than any fancy conspiracy theory against the round-ball code.

AFL free-to-air, pay-TV and Internet rights are all up for grabs at the end of next season. Seven is shitting itself that it will miss out on all or part of this top-dollar sporting cornucopia that draws six million bums on seats each year and countless eyeballs in its visual forms. Seven has already paid the AFL $20 million for first rights of refusal to the new rights and guaranteed that it will bid a minimum of $100 million to the free-to-air rights alone.

Seven’s whole strategy is predicated on it holding its AFL turf in the next war. It has put up most to the $460 million to build the AFL’s new Docklands Stadium in Melbourne and has committed another couple of hundred million dollars to building its new digital studios next door to the new wired studio with grass. If Seven misses out on the AFL rights in 2002, it will be little more than a Streetcar Named Desire after the Olympics.

Packer (James) has made no secret of his desire to wrest the AFL rights from Stokes’ Seven and make a name for himself in Melbourne now that he is chairing the family’s new Crown jewel. James is being advised by his best Melbourne mate, Eddie McGuire, who runs the top-rating Footy Show on Channel Nine as well as being president of the Collingwood Football Club. Packer has recently appointed Ian Johnson, the Channel Nine boss in Melbourne, to run the family’s new Crown Casino heirloom. The AFL rights, or partial rights, would fit like a glove and only cause minor programming problems with Channel Nine’s NRL commitments in Sydney and Brisbane. High need / deep pockets.

Murdoch (Lachie) is desperately trying to lay-off his billion exposure to his family’s National Rugby League franchise with a little bit of diversified AFL action after the disastrous cash-draining ARL/Super League wars. With no free-to-air TV, would settle for all the AFL pay-TV rights on Foxtel and the Internet rights for News Interactive. Is a partner with Seven in the Docklands Stadium and the News Ltd papers are major supporters of the code in Perth, Adelaide, Melbourne and Hobart. Owns half of the Melbourne Storm NRL franchise which would be perceived as threat by the AFL. Has a market capitalisation of $100 billion which talks all languages. High need / deep pockets.

Telstra (Little Johnny) wants the WAP and Internet rights for itself, wants the pay-TV rights for Foxtel (50%) and wants to buy Seven to get the free-to-air rights or, buy the free-to-air rights to get Seven. High need / deep pockets.

So, the awful truth is that seeing soccer on Seven is less likely than seeing flying pink elephants until the AFL rights are settled. Rightly or wrongly, the AFL sees soccer as its greatest potential threat.

But if , and only if, Seven loses the AFL turf war with PMT it can always pull out and dust off its soccer rights. If I was STAND I’d be sitting on my hands and praying for a PMT carve-up of the AFL that left Stokes’ Seven with only one round ball to play with.

Sticking To The Union

To get the new $460 million Docklands Stadium in Melbourne up and running for the first game of footy this Thursday night (March 9) has taken a lot of interesting last-minute deals. At the top end, Stadium Operations Ltd sacked chief executive Jacques Merkus at the 11th hour and replaced him with AFL operations manager, Ian Collins. At the bottom end, the AFL promised a massive blackmail payment of 10,000 hard-to-get footy tickets to the truculent unions if they finished the job on time.

The AFL deal, that surely helped Collins get his new job, was to offer the workers about five tickets each if they would take up their tools and work. The 10,000 free tickets are said to have a face value of $140,000 but are conservatively worth twice that amount on the open market where most would have ended up. Just for a moment, the unions toyed with the idea of doing something useful with their ill-gotten gains. The proposal, supported by three of the four unions on the site, was that they devote the footy ticket money to building a technical school for East Timorese children. But when it went to a vote, the deal fell through because the plumbers refused to play ball: “My members have earned the tickets,” said Tony Murphy of the Plumbing Union.

Flack Attack On Kortlang

The Hun reported last week that Exhibition St spin doctors Gavin Anderson & Kortlang have quickly descended from the Bracks Government’s good books to the black books because GAK has Yallourn Energy, the Master Builders’ Association as clients. According to Damon Johnston in the Hun, new ALP state secretary David Feeney personally went to tell GAK that the consultancy “was not welcome at government functions” because Brackslustres’s difficulties on the industrial relations front were perceived to be the handwork of GAK.

The move came as a surprise to GAK as three months earlier Feeney had been having a grand old time at a GAK bash at the Old Melbourne Gaol to celebrate Labors’s stunning rise to office. The awful truth is that Feeney shouldn’t have been at that event in the first place as GAK consultants Ian Smith, Tania Price, James Tonkin, Mark Triffitt and Chanmali Wimalaratha are all former Kennett Government staffers.

Peter Fray

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