They were all there, spread out around New York's sumptuous Waldorf-Astoria Hotel ballroom like merchant princes of the high Renaissance, waiting to have their portraits painted. Over here was a table for lieutenants of media mogul Rupert Murdoch. Over there sat top-ranking executives from Dow Jones & Co. Reg Brack, the president of Time Warner magazines, stood to introduce the guest of honor.
He was William B. Ziff Jr., winner of the Magazine Publishers of America's coveted Henry Johnson Fisher Award as executive of the year. Ziff heads a closely held family empire that dominates America's US$2 billion computer magazine industry, extending its reach into online services and promising to be a major player in the digital age.
At 63, with a personal worth estimated by Fortune magazine at $1.5 billion, Ziff is far more than a simple magazine honcho. He is a market maker whose prosperous and powerful computer magazines go a long way toward deciding which products live and die in the information-driven computer age. The seven magazines owned by his family's Ziff-Davis Publishing Co. pull down nearly $700 million a year in annual advertising revenue and reach more than three million readers in the United States alone. Ziff-Davis's PC Magazine, with a circulation of one million and annual revenue of $281 million, is the largest computer magazine in the world, the ninth largest magazine of any kind in the US.
The long-time sovereign of this empire, Bill Ziff is second perhaps only to Bill Gates as a prime mover in the $70 billion personal computer industry that has changed the way we work, think, and communicate. But while the publicity-shy Ziff has long been a power behind the scenes, he is unknown to a public whose buying patterns his company helps shape.
On this glittering night in 1992, redolent with fatted-calf success, Ziff might have murmured a few homilies, accepted his award, and sat down, marinating in self-satisfaction.
But Ziff was not satisfied. Instead, he delivered an idealistic call to arms. He recalled the golden years of family publishing, when honor, not money, was everything. "From the cynical point of view of a modern Wall Street analyst, our industry was then run by eccentric amateurs engaged in their lives' work for the uneconomic reason that they enjoyed it," he said. "I didn't like the '80s. I'm glad they're over."
Ziff's Waldorf-Astoria speech, with its lofty claim to the moral high ground, galvanized his peers. Quoted, debated, reprinted, it was a billionaire's celebration of the simple virtues.
But poignant though it was, Ziff's speech was contradictory. The system has been very good to Ziff. He expertly worked the system and grew ever richer during the 1980s, when his company - long a publisher of solid but formulaic magazines such as Stereo Review, Popular Photography, Modern Bride, and Car & Driver - sold off its old titles, plunged into the computer magazine business, and soon came to dominate it.
The contradictions extend to his current magazines: PC Magazine, PC Computing, PC Week, MacUser, MacWEEK, Computer Shopper and Computer Gaming World/Kids and Computers. Although Bill Ziff has an expansive - even philosophical - intellect, Ziff-Davis magazines are impersonal, dry, and narrowly focused. They rarely take hard looks at the long-term meaning of the technologies they chronicle in mind-numbing detail. Always informed, they are seldom inspired. Instead of sharing the spirit of the visionaries and entrepreneurs who created the personal computer industry, Ziff-Davis covers computers as if it were tracking widgets or pork bellies. It's a business, nothing more, with so many units to be stacked, rated, and sold.
In the executive suites at Ziff-Davis this reductionism is considered necessary. Ronni Sonnenberg, president of the Ziff-Davis Domestic Publishing Group, explains: "The number of products in this industry can't be compared to anything. It's important for people to know about the products. They can't do that without major informational vehicles."
In the 1980s, Ziff became the Henry Ford of informational vehicles, cranking out, with astonishing precision and regularity, narrowly focused, demographically correct, advertising-driven magazines perfectly tuned to the booming computer market. Ziff's formula to capture those vertical markets (many in the computer trade press call it simply that - the Formula) is devastatingly simple: product, product, product. Be the last word on the product, and your magazine becomes a place advertisers can't afford not to be. If an advertiser's IBM PC-compatible product is purchased by MIS executives at Fortune 500 companies, you either advertise in Ziff's PC Week or you wither on the vine. If your product is Mac-based, then advertising in MacWEEK is more valuable to your business than shelf space at Egghead Software. And so it goes, for all the Ziff titles.
This peculiar relationship between advertising and editorial has drawn fire from media critics. Perhaps the most public, and embarassing, example was a particularly harsh rebuke from ABC-TV correspondent Britt Hume, who in a 1990 column took former PC Magazine editor John Dickinson to task for consulting with Microsoft, a major advertiser.
Within Ziff-Davis's parent corporation, Ziff Communications, more contradictions abound. Although Bill Ziff is a man of considerable charm, the culture of the company he spawned is described by many both inside and outside the firm as ruthless and manipulative.
Ziff's corporate clout inspires fear, not only among people who work there, but among people who used to and people whose products live or die according to a thumbs-up or thumbs-down from Ziff-Davis. No one at Ziff-Davis below the top management level agreed to be named in this article; one Ziff editor wouldn't allow a reference to geography or gender; otherwise: "I'll be identified and called on the carpet when this article comes out." Even ex-employees often begged for anonymity. "I might want to work there again someday," one sheepishly explained. This environment is quite a comedown for often-idealistic journalists who signed on in the belief they were joining an equally idealistic, even visionary, enterprise in the most pulse-pounding, protean business in the world.
Yet, while Ziff and the company he ran personally for 39 years are feared, they are also respected. Every one of the two dozen people I interviewed for this piece expresses admiration for Ziff's publishing acumen and Ziff-Davis's exacting standards. To a person, they expect Ziff-Davis to be a force in the global information explosion for years to come, well into the lifetimes of the third generation of Ziffs to lead the family empire. That generation has already arrived in the persons of Dirk Ziff, 29, and Robert Ziff, 27, both of whom joined the family business last July, following in the footsteps of their father and grandfather.
Bill Ziff Jr. retired as chair and CEO in November 1993 in favor of his former No. 2, Eric Hippeau, having assumed the title of chair emeritus. With formal leadership passing to a new generation, industry watchers wonder what direction Ziff-Davis will take and just how the moves of this powerful company will roil the computer world.
The Prince
Bill Ziff Jr. has led a life so dramatic, it could easily inspire a big-budget Hollywood biopic (a remake of Citizen Kane springs to mind). He was born in 1930, three years after his father, Bill Ziff Sr., co-founded the Ziff-Davis Publishing Co. with his partner, Bernard Davis. Based in New York, Ziff-Davis began as a publisher of profitable if nondescript magazines. Radio News was an early title.
As a young man, Bill Jr. went to Heidelberg, Germany, to study philosophy. But in 1953, when Bill Jr. was 23, his father died. "The company was much, much smaller, and it was not doing well," he recalls. "I thought I would have a 20- or 30-year apprenticeship. It didn't turn out that way."
Bill Jr. rushed back to Manhattan, where Ziff-Davis still keeps its corporate headquarters at One Park Avenue, and took over the family business. In 1955, he bought out the Davis family.
Today, the Ziff nerve center is comfortable but unprepossessing; the only perks a visitor sees are an intimate, wood-paneled executive dining room, and Bill Ziff's office, a light-filled space graced with exquisite pieces of African and pre-Columbian art. Corporate headquarters look like the digs of the company Ziff-Davis used to be: a middling, old-style New York publisher in a workaday part of midtown.
Long considered something of a recluse, Ziff is warm and welcoming when I meet him on a metallic-gray Manhattan morning.
He is a heavyset man of medium height, with pale skin, salt-and-pepper hair, and small, alert eyes. Ziff expounds at his leisure, a man used to an audience. As he talks, Ziff-Davis's head of corporate communications, Greg Jarboe, takes notes, as he will do throughout every personal interview I conduct with Ziff-Davis executives. But Ziff doesn't need to write anything down. He has a photographic memory. It allows him to quote the great poets verbatim whenever he likes, which is often, a fact invariably noted by star-struck profile writers.
Bill Ziff may have been born a media prince, but he had to work to keep the castle, and his philosophy studies helped little. Although some cite Ziff's study of great thinkers as the source of his commercial success - and his Machiavellian streak - Ziff himself downplays the idea. "I want to avoid the pretension that studying philosophy provides special insight. That's pure nonsense. But it does provide a willingness not to be too oriented toward the zigzag line of the moment or interpret things as victories or defeats."
Prince or not, philosopher or not, the young Bill Ziff was prescient. He saw the age of narrowcasting and niche publishing coming. Long before the giant Humpty Dumpty general-interest magazines like Look and the weekly Life and Saturday Evening Post tumbled and cracked, Ziff cranked out titles targeting highly specific audiences in search of nuts-and-bolts information. Car & Driver, Flying, Stereo Review, and Popular Mechanics were leading Ziff-Davis titles. Dependable, a little dull, by-the-book, they were the magazines in the glove compartment of your father's Oldsmobile. Steady growth ensued. The family business survived, and prospered, in the 1960s and 1970s.
In 1982, crisis struck. Bill Ziff was diagnosed with prostate cancer. His doctors told him it was terminal. His sons Dirk and Robert were teenagers, way too young to take the helm. Ziff sold off most of his magazines - unloading 24 in all - in 1984. Some went to Rupert Murdoch and some to CBS, for a combined total of $712.5 million. The money went into a family trust that Ziff's sons say they have never touched. (They now run Ziff Brothers Investments, with assets estimated by the Los Angeles Times at $1.2 billion.) Ziff held onto a handful of small, lackluster ventures like PC Magazine that big-time buyers had barely heard of and didn't want.
But a funny thing happened on the way to mortality. Ziff didn't die. He stayed away from the office, quietly fighting for his life. He didn't want employees, who didn't know he was ill, to see him look and act weak. Ziff survived. Today, he declares himself to be in good health.
Gradually, Ziff went back to work. This time, he turned his attention to the brave new world of computer magazines, tapping the millions he had salted away to finance the company's renaissance. Bill Ziff, media prince, was about to become Bill Ziff, media phoenix and legend.
The Formula
Bill Ziff reinvented Ziff-Davis, replacing the company's old consumer-magazine titles with new magazines - some he launched and some he bought - that tracked the surging personal computer industry and supplied hard information to help consumers decide just which high-tech products to buy.
Some pundits equate Ziff-Davis titles, past and present, with Consumer Reports, but that is misleading. Consumer Reports, published by the nonprofit Consumers Union, does not accept advertising, lest it prove a corrupting influence. Ziff-Davis magazines, which can run to hundreds of pages, are fat with ads. Flipping through the pages of PC Magazine is a far cry from scanning the thin, austere issues of Consumer Reports.
Computer Publishing and Advertising Report estimates that Ziff-Davis's annual US ad revenues are $662 million (the private company does not reveal its profits). Total global revenues are believed to be nearly $1 billion. Ziff's flagship, the 13-year-old PC Magazine, is published 22 times a year and has a paid circulation of a little more than one million. In just a few years, Ziff-Davis overtook and passed its archrival, the Boston-based International Data Group, to become the largest publisher of computer magazines in the US; it trails IDG on a global scale but leads in important markets such as Germany and the United Kingdom.
Bill Ziff rebuilt Ziff-Davis by hewing assiduously to the Formula. Simply put, Ziff-Davis magazines create advertiser-friendly environments. Many Ziff titles work under the rubric of "controlled circulation": The magazine is mailed free of charge to qualified readers, the kind of readers advertisers would kill to reach. For example, to qualify for a free subscription to PC Week, you have to be a manager that makes purchasing decisions for a certain number of PCs (estimates range from five to fifteen machines to qualify). That guarantees that a company's ads are being seen by people with the power to buy product. Ziff salespeople know the power of controlled circulation and use its formulaic results relentlessly when pitching accounts.
Because of this formula, the writing in Ziff titles tends to focus on informing a manager's buying decision. It turns a blind eye to philosophical and political implications of technology. When, for example, PC Magazine published the likes of highbrow authors John Updike and Paul Theroux in its early issues and saw no great bounce in circulation or revenue, Ziff-Davis promptly revamped the book, returning to its familiar focus: product evaluations backed by meticulous testing in state-of-the-art laboratories.
When it comes to scrutinizing the computer industry as a whole, Ziff-Davis magazines are usually timid or uninterested. In 1993, IDG's PC World, PC Magazine's direct competitor, published a major feature story on repetitive stress injuries from computer keyboards. Such critique is seldom seen in Ziff magazines. It's not part of the Ziff Formula. And the Formula usually works - with significant exceptions, among them now-defunct Ziff titles such as Corporate Computing and PC Sources.
Ziff-Davis sees advertising, not just editorial, as a way to deliver consumer information. As such, the company is known for its aggressive pursuit of ad dollars and its highly disciplined sales force.
Says a former Ziff executive: "(Salespeople at Ziff are) the most knowledgeable in the business and are also considered to be the most arrogant. They come in and say 'Let me tell you what your business is.' In many cases if people had alternatives, they wouldn't go with Ziff." But, given Ziff's enormous clout, not advertising with Ziff-Davis would be suicidal.
Former Ziff business-side executives speak of the Ziff corporate culture as a virtual corporate cult, with ultimate power derived from Bill Ziff. (There is, as yet, anyway, no cult surrounding new Chairman and CEO Hippeau.) Jeannine Barnard, who recently resigned as publisher of IDG's Nextworld, was advertising director at Ziff's MacUser before she left to join the competition. According to Barnard, Ziff-Davis is driven by a mentality "similar to the Japanese belief that business is war." This results in a detail-oriented, hands-on management style and enforced conformity that has its advantages but can be frightening.
"They're not flexible at all, and they don't have to be," Barnard says. "Bill Ziff would say, 'The computer market direction is X,' and everybody had to believe X with their entire being. It's a military model. You can't work there if you're not a good little soldier.
"They only play to win, and they only want to win big markets," Barnard continues. "You can take a lot of pride working for an organization that does it right and gives you all the resources, tools, and marketing support you need to be successful."
But this marketing wizardry comes at high cost. For sales meetings, business staffers would be whisked off to exotic locales for three-day intensives. Recalls Barnard: "Dinners are planned every night as a group. Everything you do, you do as a group. You're not encouraged to go off on your own and reflect on the information and compare it with other information. You are never allowed to be critical. There was never anyone in the organization who would openly disagree with Ziff, and if there was, he wouldn't tolerate it."
This is in direct contrast to Ziff's self-assessment. "You need to find trustworthy people and trust them," he says. "Anyone who needs to impose his view every time they think they're right is a bad manager, a bad father, a bad friend."
Compulsory group-think is in direct contrast to the culture one would expect to find at a group of magazines headed by an intellectual. Here, one might logically think, curiosity, independence, plain-spokenness, and a willingness to challenge conventional wisdom would be welcomed.
But Barnard's assessment is seconded by Dan Ruby, former editor-in-chief of MacWEEK and now publisher of Nextworld. "He was definitely untouchable. He was set up on a pedestal." In contrast, says Ruby, IDG is loosey-goosey, decentralized. "It's more of a federation of businesses that ultimately report to (IDG Chair) Pat McGovern. People leave you alone, so long as you produce."
Hippeau, speaking in his New York office, gives the Ziff corporate culture a gentle spin. Before going to Ziff in 1989, Hippeau was publisher at IDG's InfoWorld. "The companies are very different," he says. "At IDG, each unit is almost stand-alone. There are various missions and cultures. That could be good or bad, depending on who you are. For them, it kind of works. We try to strike a balance between what is centralized and decentralized. Our publications are very much run by their management."
The War
Present and ex-Ziff-Davis employees make it clear that no matter how brightly executives such as Hippeau, Sonnenberg, and Ziff's sons shine, the brightest light is Bill Ziff Jr. Past employees describe Ziff as brilliant. Says Dan Ruby: "He's a genius, no doubt about it."
Genius expects to get its way, and woe be unto those who disagree. Such a fate befell staffers at MacWEEK, now owned by Ziff but founded as an independent publication by Michael Tchong in 1987 to cover the Macintosh from San Francisco. Short of cash, Tchong went into partnership with Ziff in 1988, when Ziff-Davis - late in breaking into the Mac market - bought half of MacWEEK. It acquired MacUser the same year.
MacWEEK was an alternative-culture SF Bay area periodical. Bernard Ohanian, senior features editor in 1987 and 1988, remembers it as the "Berkeley and Birkenstocks" of Ziff. Ruby, who was editor then, says, "We were funny and irreverent. We had a little ragtag crew out here." Ruby recalls Ohanian, who came to MacWEEK from the political journal Mother Jones, running stories on desktop publishing in El Salvador and the staff brainstorming to come up with headlines copped from rock lyrics.
MacWEEK's office culture abruptly changed when Ziff bought in. At first Tchong was happy to have Ziff's money and marketing expertise. But before long, staffers began speaking of co-workers who "got Ziffed." Just what getting Ziffed meant varied. To some, it was getting screwed or getting passed over. To others, it was going corporate and becoming a company drone with no life outside of work.
In keeping with the new corporate culture, what Ohanian calls "an intense battery of psychological tests" were set up for incoming staffers. Ziff's Jarboe demurs, saying: "They're not tests; there's no right or wrong answer. If you say your favorite color is blue, you're not wrong. It's merely a helpful tool." Input, tests - the written forms were new and disconcerting to MacWEEKers, who hadn't experienced anything like them before.
Another conflict arose when Ziff decided to move MacWEEK's offices from urbane, urban San Francisco to blandly suburban Foster City, where Ziff publishes PC Computing and MacUser.
After some 30 MacWEEK employees signed a letter of protest, Ziff backed off, and MacWEEK stayed in San Francisco. But the hang-loose staff had won a battle only to lose the war.
As time went by, several venturesome staffers, including Ohanian and Ruby, left the company. When Ruby left, MacWEEK staffers wore buttons to his going-away party that read "Ziff Happens." Publisher Tchong was unhappy with the buttons and asked that staffers not wear them.
But eventually, Tchong left MacWEEK, too.
"In the beginning, I did not feel heat, but eventually there's always heat," Tchong says. The cause of the heat? Creative differences. Ziff-Davis, he says, was slow to understand the Mac market and slow to appreciate cultural differences between New York and the West Coast, where much of the digital age was being born. And then there was that top-down management style.
"Bill has an autocratic style, even though he intellectualizes it very well," Tchong says. "He'd speak for five or six hours, virtually uninterrupted."
In 1991, tired of listening, Tchong left the publication he had started on a shoestring. At his exit party, staffers dusted off the buttons left over from Ruby's farewell bash. This time, though, Tchong didn't balk at the message "Ziff Happens."
The $10 Million Solution
If Ziff-Davis is concerned with managing internal dissent, it is downright obsessive about projecting an image of expertise and above-the-fray objectivity to its three million readers - or, as promotional material for PC Magazine calls them, "brand specifiers." To this end, Ziff-Davis has built elaborate laboratories where hired testers put products through their paces, forming the basis of the product evaluations in its magazines.
Ziff maintains a lab at its New York headquarters for PC Magazine; a second lab in Foster City for PC Computing; a third, the MacUser lab, also in Foster City; and a fourth, the mammoth ZD Labs in Foster City, for all its magazines. There are more labs in Europe.
The labs are real laboratories where serious testing goes on, but they have their theatrical aspects, too. As one former Ziff editor remembers the MacUser lab: "It had glass-paneled walls and was located off the lobby right where you walked in, and it was always shown to advertisers. At the push of a button, the glass darkened. This was supposed to ensure secrecy around the products. The advertisers loved it."
Ziff's pride, though, is the ZD Labs. Bob Kane, the lab director, calls it "the mother of all labs." It's easy to see why. For one thing, it's big. At 31,000 square feet, "it's the largest independent computer-product testing center in the country - only Microsoft's and IBM's are larger," according to Kane. He adds: "We have 180 PC-type machines, 80 Mac-type machines, and 32 miles of cable in this building." In one room, Ziff engineers built a simulated model of the French telephone system.
Under ZD Labs's testing system, vendors know their products are being tested; Ziff asks them for samples. After testing, ZD Labs ships them back. "That's a difference between us and Consumer Reports," Kane says. "We don't work blindly with vendors. We don't presume to be so arrogant as to think we understand everything about the product."
Ziff-Davis's major-domos are well aware of the power of reviews to make or break a product. Hippeau points to critiques in the computer press of Lotus Development Corp.'s Jazz for the Mac market. "It got a bad review; it was taken off the market. If computer magazines hadn't given it a bad review, the buyers would have taken a longer time to realize its faults. The vendor realized it was time to face reality."
Ziff's labs have, on occasion, given mixed reviews to industry powers. Apple's Newton didn't fare well. Neither did what Jarboe describes as IBM's "Micro Channel architecture, which arrived as part of the PS/2 product line. ZD Labs tested it and couldn't find out what made it so special." Tests reported in PC Magazine in 1987 slammed the product. "We essentially took on the biggest computer company in the industry," Jarboe says proudly.
On other occasions, small companies got big boosts from Ziff. Back in 1990-1991 the Canadian-produced CorelDraw, a graphics package for Windows, won awards from several Ziff magazines.
"It came out of nowhere," Jarboe says. "Now it's the major drawing package in the Windows category."
Given their clout, Ziff-Davis tests are detail-oriented in the extreme, with little left to chance. At the PC Computing lab, ensconced in another building rising on the flat Foster City landfill, testers sit in a glass-paneled room, trying out a software program for usability and performance. Their body language and facial expressions are recorded by wall-mounted video cameras, and their verbal comments and commands are captured as they follow a tightly coordinated script prepared by the magazine. Testers are recruited through newspaper ads, according to PC Computing Editor Bill Roberts, and the resulting videos are available to vendors.
"It's not a perfect science, but it's more scientific than you might think," says Roberts.
Traditionally, journalists try to eliminate bias and outside influences by building a metaphorical and ethical wall between the business department and the reporters and editors who are expected to write without fear or favor. In the vernacular of the media biz, this is known as separation of church and state and is a means of ensuring that editorial coverage is just that, not hidden advertising or influence peddling. Asked about separation of church and state, Jarboe cites Ziff's "lab-based journalism" as the guarantor of the wall. And referring to the price tag for ZD Labs, he says, "We spent $10 million building the wall."
The Wall
Ziff-Davis executives are proud of what they insist is the complete editorial independence of their magazines. There are the labs, with procedures adjusted for international magazines that Ziff publishes or runs as joint ventures with foreign partners. And there are the feisty personalities of top Ziff editors, such as Michael Miller of PC Magazine, Dan Farber of PC Week, and Maggie Canon of MacUser. Moreover, as they themselves point out, Hippeau and other key Ziffers began their careers as editors.
Still, outsiders raise questions about the apparently cozy relationship between editorial and advertising. Such questions were sharpened in the summer of 1992 after a nasty and very public squabble between Ziff-Davis and Will Zachmann, a columnist for PC Magazine and PC Week.
At the source of the commotion were published Zachmann columns critical of Microsoft and its powerful chairman, Bill Gates. Zachmann railed at Microsoft's approach to IBM's competing system, OS/2, based on a leaked Gates memo. As Zachmann sees it, he was entitled to raise the issue. "I'm not a journalist, I'm an industry analyst who writes columns. I put my opinion in the columns."
Microsoft was not amused.
"Gates got pretty ballistic about it," says Zachmann, by telephone from his Massachusetts home. "At a PC Magazine editors' day in Seattle two months later, he could talk about nothing else." Just after Zachmann returned home from the meeting, he says, his telephone rang. "It was a guy I won't name from Microsoft, offering to 'help me' with future columns about the company," Zachmann claims. "I hung up the phone and said, 'What the fuck is going on here?' " Zachmann declined the help and bridled when his editors suggested he write about more general topics.
When Zachmann's contract with Ziff-Davis - a 4-year-old agreement that paid Zachmann $130,000 per year for his columns and consulting work - expired, it was not renewed. Now gone from Ziff-Davis, Zachmann fumes, "They're in bed with Microsoft every which way from Sunday."
When the dispute with Zachmann went public, Mike Edelhart, the executive vice president of Ziff's Centralized Operations Group, snorted to reporters that Zachmann's j'accuse was "nonsense" and that his columns "had become boring." Today, Ziff-Davis is reluctant to even discuss the Zachmann fracas. When I asked Ziff-Davis to comment on Zachmann's charges, the company responded, in part:
"PC Week, PC Magazine, and Ziff-Davis have always been committed to the principle of editorial independence. Our columnists and reviewers are free to express their opinions without any influence by advertisers."
The Zachmann fracas wasn't the first time Ziff-Davis has been blasted for cozying up to advertisers. In July 1990, the ABC TV correspondent and syndicated columnist Britt Hume raked PC Magazine for allowing then-editor John Dickinson to confer with Microsoft on how to fine-tune its Word for Windows program and then brag about it in print.
Observed Hume: "Thus, we have this 'independent' magazine's editor helping a company he is supposed to be covering develop its product .... You'll never guess who wrote the cover story on graphical word processors. That's right. The same John Dickinson who gave Microsoft all the advice on what the program should be. You will not be surprised to learn that Word for Windows gets a glowing review. Indeed, it gets an Editor's Choice designation."
So, is the wall between editorial and advertising really solid? Or is it more like a permeable membrane, filtering out some toxic influences but letting others through? If any get through, the consequences are serious: Millions of dollars worth of purchasing decisions could be wildly skewed by nod-and-a-wink understandings between computer-magazine publishers and their advertisers.
An editor who has worked for both Ziff-Davis and IDG, and who asked not to be named, observes: "Integrity is pretty high on the whole in computer publications, more so than in a lot of industry-specific publications. Nevertheless, you talk to industry people on the phone all the time. They become more and more important. You take their calls and you listen to them. The mission of the magazines is to help promote the market. They make no bones about it. That alone compromises journalistic integrity."
For its part, Ziff-Davis stoutly maintains that a wall is a wall is a wall. J. Scott Briggs, president of Ziff-Davis Publishing Co. and head of the corporation's new Consumer Media Group, declares that in Ziff-Davis's story conferences, "the words 'advertiser' or 'our market' never enter the conversation. Otherwise, you lose all moral suasion or rectitude.
"But at the same time," he continues, "you have to be practical, fair, and honest. Where it gets real fuzzy sometimes is where you have a large advertiser who's not getting any editorial coverage. When that happens, something's out of whack. If the product's lousy, kill it and put it out of its misery. If the advertiser goes away, that's fine. But to pay no attention at all - I think that's wrong." So, attention is paid, but never, Briggs and other Ziffers insist, is it bought and paid for.
Maybe, but claims of editorial integrity have been tarnished by several Ziff employees, past and current, who have encountered situations they found compromising (though not worth losing their present or future jobs over by going on the record). Two employees recounted tales of major advertisers sitting in on PC Week's editorial meetings during the late 1980s and early 1990s. Sam Whitmore, PC Week's publishing director, and the magazine's editor-in-chief at the time of the alleged editorial/advertising meetings, flatly denied such meetings took place. "I have been here ten years and nothing like that ever happened."
And after hearing of the allegations, the current editor of PC Week, Dan Farber, dismissed them as impossible under his watch, which began in 1993. "I have one thing in this business, and it's my reputation as a journalist. That kind of thing simply does not happen here."
The Dynasty
The message came through on ZiffNet at 6:48 a.m., Nov. 9, 1993: Bill Ziff Jr. was retiring. "The time has come," he wrote, declaring, "I have the most absolute faith" in Eric Hippeau. Well, maybe. Or at least until Dirk or Robert Ziff are ready to step into the top job.
In-house maneuverings would merely be the stuff of gossip were Ziff-Davis not so huge. But its every move shakes the computer market. And even with its $1 billion revenues, Ziff-Davis is not through growing, not in magazines and not in electronic publishing.
For his part, Hippeau promises a steady-as-she-goes transition. Speaking in his New York office with a slight, soft accent that recalls his native France, the 47-year-old, Sorbonne-educated Hippeau radiates serenity. "The transition is as seamless and as smooth as anything. I've worked very closely with Bill for years. Over the past two years, I started to manage the business."
Ziff's sons, too, avoid roiling the waters. Tall, diplomatic, Ivy League - Dirk has a Harvard MBA, Robert graduated first in his law school class at Cornell - the young Ziffs are quick to praise Hippeau. "I worked at PC Week when Eric was at InfoWorld. He drove us nuts. He was taking market share from us," Robert says.
The Ziff sons acknowledge differences with their father. Bill Ziff played very close attention to the bottom line, to be sure, but his attention took the form of building market share and chasing rapid growth, whether big profits rolled in right away or not. Now, with the computer industry - and, hence, the computer magazine business - reaching a plateau, the Ziff sons allow that they want to milk the company's major franchises for bigger profits.
"We have achieved market dominance in a maturing market," says Dirk. "The growth of the '80s was unprecedented – it was a comet out of the skies. Now, we have to adjust to a more normal situation in our core business."
Unlike many companies, Ziff, with 4,000 employees worldwide, has avoided recession-related layoffs. But with the hypergrowth years over, the company, once famed for its hang-the-cost style, is said to be scrutinizing expenses much more closely. Recalls Gina Smith, a former senior editor at Ziff's PC Computing who now edits IDG's Electronic Entertainment, "When I was there in the '80s, there was no limit to how much money you could spend .... I'd turn in receipts and they wouldn't be high enough. They'd say, 'Where'd you go, McDonald's? We want you to impress people."'
Yet, while Ziff is priming the pump for profits under the new regime, it is quick to sink recurring rumors that the firm is preparing to go public. "Why bother?" Dirk shrugs. "You're asking for trouble. We have plenty of liquidity. We're able to grow in other areas because of our cash flow."
The Future
Whether public or private, Ziff is throwing major resources at new projects. The company is expanding its trade expo business, launching a new online service called Interchange, entering into a joint venture with the Walt Disney Co. to start a new magazine called FamilyPC this fall, and preparing to launch a new consumer magazine on its own.
The latter venture is the creation of Scott Briggs's new Consumer Media Group, which in January opened offices in San Francisco's Multimedia Gulch neighborhood, where, he avers, "There's such cool stuff happening."
Ziff has had spotty success with magazine launches, folding some books after brief runs or simply buying up titles that others started. "We were late to the Mac market and had to buy our way in. It's always more expensive to buy in later," Robert Ziff acknowledges.
Perhaps the most spectacular recent belly-flop was Corporate Computing, launched in 1992 and killed in 1993. Robert Ziff, the only inner circle member who describes himself as a technophile, wrote a column for Corporate Computing and took its loss hard. Asked what went wrong, Robert, who works on new projects and strategic planning, sighs. "We made a fundamental boo-boo. We thought there was going to be a gradual falling off (of mainframe use). But people were pitching out mainframes and buying PCs. We thought: It can't happen that fast. Can it? BOOM! If you misjudge the market, you're toast."
At least a few prominent Ziff-watchers think the company could be burned again. Ziff-Davis has put millions into Europe - it won't say how much - and even in-house boosters admit that results there haven't been what the company wants. Observes Hippeau: "No one counted on there being a recession in Europe; that slowed down everyone." Still, he maintains, "I wouldn't characterize it as a loss, it's an investment. Germany is the first country to show a return. We're very much on track. And we're not done investing in Europe."
Even so, Hippeau cautions, "None of us should lose focus on the fact that everything starts in the US. We are twice the size of IDG in the US."
Michael Tchong, MacWEEK's founder and former publisher, chides Ziff-Davis - and Bill Ziff personally - for failing to come to grips with a fast-changing market, starting in the late '80s with the ascent of the Mac. According to Tchong, Ziff underestimated the Mac's graphic arts market, and his formulaic approach to magazines won't fly as markets converge and become more complex.
If Ziff execs feel any lack of confidence, they don't show it. Over lunch in the firm's executive dining room in New York, Briggs ticks off Ziff's successful launches and waxes enthusiastic about its forthcoming, still-unnamed consumer magazine. "I launched PC Week. We've launched seven publications in Europe in the last two years. I'd say we do our share of launching."
Of the consumer title, expected to hit newsstands this fall and edited by John Dickinson, Briggs would say only "It will be as hip as Wired but product driven." The magazine - tentatively titled Digital Home - "is vital to Ziff-Davis," Briggs says. "Therefore, we will do it right."
"Right," according to the Ziff marketing formula, means launching only after heavy consumer research, targeted testing with sample issues on magazine racks, and creation of an editorial policy that emphasizes useful information, generally free of controversy. In any case, if Ziff runs true to form, the company will take no chances on what promises to be a multimillion-dollar launch. Ziff, historically neither a risk-taker nor a computer-publishing innovator, will be cautious.
Last October, Ziff formed an electronic information division. In January of this year, it announced the impending birth of Interchange, a network offering e-mail, games, discussion groups, and compound documents with matched visuals and sound. Interchange, with some 30,000 testers, will carry advertising and compete with, among others, CompuServe, Prodigy, and AppleLink, where Ziff already offers text from its magazines via ZiffNet. This way, Ziff hopes to steal the march on IDG, which is also planning an online venture.
Still, just whose opinion will carry the most weight as Ziff-Davis enters the 21st century?
Bill Ziff swears it won't be his. Heck, he's retired. "My information has deteriorated really rapidly," he says. "This is a young man's game."
Sitting in his art-filled office, recovering from a winter flu and wearing a snuggly sweater, he sings the joys of retirement. He and his wife, Ann, will travel, he says. He'll lose weight. He'll pursue longtime interests in architecture, landscaping, literature. He's looking forward to transforming himself from Citizen Ziff, publishing mogul, to just plain Bill, retired guy, though people who know Ziff wonder whether a man so used to being in control can let go for long.
"My experience with cancer was a good teacher," he muses. "I learned I was dispensable. I feel that everyone can get along just fine without me." The challenge now is "to find out just how good I am at just living."
So, William B. Ziff Jr. is leaving, albeit at a pace to be determined. And he is leaving just as his company faces its biggest challenge in a decade. "I didn't like the '80s," Ziff said in his Waldorf-Astoria speech, "I'm glad they're over." Maybe so, but when the '80s ended, so did the hypergrowth that made Ziff the most powerful unknown publisher in America.
The new Ziff Communications is no longer able to surf the rising tide of '80s prosperity. Its intriguing new enterprises are still untested. And just when creative thinking is most urgently needed, the company's best brain is calling it quits. Powerful as it is, Ziff-Davis will have to reinvent itself yet again to keep the clout its patriarch amassed in an era he despised.
As Wired went to press, Dirk Ziff resigned from Ziff-Davis Publishing to devote all his time to running Ziff Brothers Investments. His departure adds another element of uncertainty as the company tries to transform itself into an information provider for the '90s and beyond.
