__ Web veteran Candice Carpenter now has a rival from hell - Nickelodeon diva and Oxygen creator Gerry Laybourne. __
The offices of iVillage on lower Fifth Avenue in Manhattan's Flatiron District are a claustrophobe's nightmare. To get from the street to the headquarters of the Internet's "women's network," you walk down a long, dark, narrow hallway before riding in a slow, dark, and even narrower elevator to the fifth floor of what feels like the narrowest office building in New York.
The office interior screams cramped and chaotic. The reception area, such as it is, comprises a small desk with two tiny chairs, which edge into the only traffic path between the front and back ends of the floor. Sitting in one of the chairs, I instinctively pull in my feet every time someone walks by, to avoid tripping them. If I lean too to the far left I will tumble through the open office door of the CFO; an additional somersault will roll me into the office of the CEO or the editor in chief. As Silicon Valley venture capitalist Ann Winblad is fond of saying, I have seen this movie before - at the multiplex in Start-Up City.
But there's an element missing - some crucial component, either in the screenplay or the set design or the acting - that's giving this flick the look of straight-to-video. It takes a while before I figure it out: There's an enthusiasm vacuum, and it's been filled by pure, unadulterated nervousness.
"I have a question," says chief executive Candice Carpenter, quizzing me before we even take our seats at the tiny conference table in her office, "about whether you are coming into this with a bias." A slim, dark-haired baby boomer in her 40s, the single mother of two kids, Carpenter peppers her conversation with "like" and "you know." (Talking about advertising categories, for example, she says, "Six months from now all our packaged-goods people will be in. You know, like, off-the-shore in.")
"Because someone now is coming out of old media to declare that this is important, it makes the space more valuable?" she continues. "Or you're sure she'll win?"
My interest, I tell her, is only to understand why women's programming is suddenly a hot content category on the Web.
"OK, got it. Alright. That's good," Carpenter says. "That's a more interesting reason to talk about this than Gerry's announcement."
"Gerry" is Geraldine Laybourne, the rival from hell. Only a few weeks earlier, the children's television goddess - she oversaw the development of Nickelodeon in the '80s - had left her job as head of Disney's cable TV operations to launch a cable and new media firm called Oxygen Media, in direct competition with Carpenter's iVillage. Which meant that after toiling for more than three years; after selling a raft of big-ticket sponsorship deals; after raising more than $67 million from an eclectic collection of investors - America Online, the Tribune Company, TCI, Intel (Carpenter's sister-in-law sits on the Intel board), the National Bank of Kuwait, the ubiquitous Internet financiers at Kleiner Perkins Caufield & Byers - and racking up more than $65 million in operating losses; after dreaming about an IPO, which the company would formally unveil in an SEC filing in mid-December 1998, iVillage had been surpassed overnight by an old media superstar.
When Oxygen announced in late November a partnership with Oprah Winfrey and Hollywood producers Carsey-Werner for the launch of a women's cable network, it only underscored the dramatic shift taking place in new media. Coming on the heels of NBC's investment in the relatively unknown Snap and Disney's acquisition and consolidation of Infoseek and Starwave behind its new Go Network brand, the uneven battle between Carpenter and Laybourne suggests that the era of the Old Web, when an unknown start-up could grab a major presence or even create a new brand with the power of a Yahoo! or an Amazon.com, has ended.
Carpenter makes a brave show of it. She even cheers the news that America Online, her top backer, sold Laybourne control of three of its own women-related sites - the health-oriented Thrive, Moms Online, and the more general-interest Electra - and their combined 53 million monthly pageviews, in exchange for a piece of Oxygen. "I told them when they called me," Carpenter says, "'This is a great choice, this will be a great competition!'"
But Carpenter's ebullience can't mask the reality: On the New Web, the Old Media are winning. Indeed, iVillage's S-1 filing duly notes this when, under "Risk Factors," it devotes an entire section to its dependence on America Online for traffic and cites AOL's investment in Oxygen.
The Old Web: If you close your eyes, you might dredge up a few sepia-toned screenshots from that bygone era. The Old Web was a place where the unemployed, the dreamy, and the iconoclastic went to reinvent themselves. The Old Web was Jerry Yang and David Filo turning themselves from penurious graduate students into paper billionaires inside of three years. The Old Web was Wired magazine proclaiming that, thanks to Jim Clark, Marc Andreessen, and Mosaic, "Prodigy, AOL, and CompuServe are all suddenly obsolete" - a statement that would prove both eerily prescient and staggeringly wrong.
The truth was, of course, that the distinctions between "old" and "new" media were never as stark as the experts made them out to be. Much of the Old Web was liberally sprinkled with refugees from old media (they had to come from somewhere, right?), like Kevin Wendle, one-time president of CNET's television division and executive producer of CNET Online, who was a graduate of Barry Diller's boot camp at the Fox Network. Or George Bell, another television producer, who was tapped to run Excite.
But for the most part, old media and the Old Web were like yin and yang, the latter flourishing not because the former didn't "get it," but because audiences were so small that old media couldn't afford to pay attention to it. That was a dangerous lapse. Time Warner's monumentally botched Pathfinder and Rupert Murdoch's failure with Delphi left a gap filled by the search engines - or portals, as they're now construed. For its part, media retailer Barnes & Noble is painfully aware of how Amazon.com stole its march on books.
Having learned from their mistakes, old media are now crafting the New Web. The New Web isn't about dabbling in what you don't know and failing - it's about preparing seriously for the day when television and Web content are delivered over the same digital networks. It's NBC's Snap and Disney's Go. Now that the Web audience is approaching a scale they understand, old media find they can buy software and talent (engineering, advertising, editorial) off the shelf, and focus on doing what they know best: building brands, aggregating content, and cross-promoting everything, everywhere.
If the New Web doesn't absolutely require an old media link, "it's certainly a big help," says Lisa Allen, a senior analyst at Forrester Research. Ex-Microsoft dealmaker Peter Neupert agrees. "There will be more deals," he says. "They make sense for the TV guys."
The temporary quarters of Gerry Laybourne's Oxygen are in midtown Manhattan, on the Avenue of the Americas, on the 22nd floor of a building that previously held offices for Sony. The Harley-Davidson Cafe is downstairs; the Time-Life Building, Carnegie Hall, Radio City Music Hall, and Black Rock are within a five-minute walk. Inside, the offices boast the start-up's requisite accoutrements - but all are tastefully upscaled. The receptionist's desk is a door sprawled across trestles, but instead of unfinished sawdust-filled fiberboard, it's solid wood, stained a dark mahogany - or is that cherry? - set atop a pair of sprawling tubular steel (not aluminum) legs. In place of the $100 plastic-and-polyester Ikea desk chair is a black, mesh-and-metal, ergonomically correct thousand-dollar Herman Miller Aeron. The receptionist's computer is, of course, an iMac, which fills the same role in the New Web that PowerBooks once played in the New Hollywood.
Which is not to say that Oxygen isn't experiencing normal start-up jitters. A few minutes after Gerry and I begin talking, her husband, Kit, who is also a television producer and partner in Oxygen, stalks into the conference room where we're meeting and holds up a piece of paper with the new seafoam green and white logo on it. "We have a fuckup," he announces. A ghost of the logo keeps appearing when test copies of the new letterhead are faxed. After a brief consultation with his wife over whether it was the printer's error, he heads out to solve the crisis.
"Just one of the things we have to deal with now," she says, "besides the wrong Xerox machine! I'm cutting corners, and I got too slow a Xerox machine, and everybody was so mad!"
Laybourne, whom I had first met when she was still at Disney, reminds me of a second-grade teacher. She is what Jerry Seinfeld would call a low talker, a husky-voiced 51-year-old who can command your attention by speaking in a voice just above a whisper. Her power over listeners - in her case not 8-year-olds but boardroom suits - comes from making them feel like her co-conspirators.
Early in her career, Laybourne, who holds a master's degree in education from the University of Pennsylvania, worked for a nonprofit organization that published guides to educational media; in the early '80s, she landed at Viacom, where Bob Pittman put her in charge of its cable network for kids. A roaring success, Nickelodeon is among the most valuable media brands of the post-broadcasting era, and is now one of the cornerstones of the Viacom empire.
In 1996, after 16 years with Nickelodeon, Gerry was rewarded with a big-ticket job at Disney, running the company's cable operations, which, thanks to Disney's acquisition of ABC, included not only the Disney Channel but stakes in the A&E network, E!, the History Channel, and Lifetime. (ESPN is in a separate unit.) In the process, she shattered a glass ceiling and became one of the most powerful women in television. Laybourne transformed the Disney Channel, a little-watched premium service, into a basic cable channel that saw its ratings rise 150 percent and its subscriber base double during her tenure; she was also praised for resuscitating ABC's Saturday morning kids' programming.
But during her two years with the company, Laybourne was frustrated in her attempts to get new projects off the ground, like a 24-hour cable news channel of the sort that would later help revitalize NBC and Fox. "I didn't know when I took the job that Rupert Murdoch was going to pay $10 a head to get subscribers for Fox News," she says. Disney wasn't willing to get in a bidding war.
Insiders say that in the baroque world of Disney management, Gerry, fascinated by the Internet, was also frustrated by losses in turf wars with online chief Jake Winebaum. One former Disney colleague, who heard the tale from both sides, adds, "They definitely clashed. Jake just wants to be the Internet guy, and anything that got in the way of that he blocked." Another former Disney manager, who now works for a different children's network and remains an unabashed fan of Laybourne (calling her a "genius"), says, "I don't think anyone at Disney gets along with another person. It's such a volatile, cantankerous kind of place. Most people spend their time politicking."
Although Laybourne officially remains on friendly terms with Disney, she sounds happy to be free of the bureaucratic mousetrap. "I am just grinning from ear to ear," she tells me, "in case you didn't pick up the difference between our two interviews."
When Laybourne announced she was leaving Disney, the first call she took was from the team at Carsey-Werner, the powerhouse producers of The Cosby Show and Roseanne. They'd approached her in the past to explore projects at both Disney and Nickelodeon but had never settled on the right idea. Now they were trying again, and Gerry was receptive.
"She was talking about a venture in uphill terms," says partner Marcy Carsey. "'This can just be an Internet venture, or if we really want to bite off big ideas, we can do a fusion - an Internet/cable venture.'"
Although they saw themselves as a "natural partnership," as Carsey puts it, each had fears to overcome. Carsey-Werner had always shied away from aligning with a studio or a network, the path followed by most other independent Hollywood producers. And Laybourne had grown used to elbow room at Nickelodeon; losing that at Disney had contributed to her frustrations. "We circled each other for a while, because neither of us had ever had partners before," says Carsey. When they finally agreed to a deal, their next step was to seek out a third "natural" partner. So they made what Carsey, with appropriate reverence, calls a "pilgrimage to Chicago" to see Oprah Winfrey. After several meetings (the schedule attenuated by Oprah's involvement in the release of her movie Beloved) the three parties agreed to join forces to build the Oxygen network, with Laybourne handling the broad management responsibilities, and Carsey-Werner and Oprah's Harpo Entertainment Group developing programming and bringing their libraries of hits with them.
It may look like a television company, but this television company has a more focused vision than most of Hollywood - or New York - for the future of TV. In Laybourne's projections, digital cameras, set-top boxes, and production techniques are allowing producers to give birth to ideas on the Net, then quickly develop them for broadband. With today's digital cameras, she says, "you can get in the face of people with interesting things to say, without any expense. I think we will take advantage of that, and we'll figure out what that programming is." What it won't be is America's Funniest Home Videos: "This is not about a bunch of people around the country with cameras sending in stuff."
Laybourne's attempt to reach beyond the clichéd "convergence" spin we've been hearing since at least the early '90s is a claim that consumers have already crafted a "jerry-built" form of convergence "where a Web-savvy mom sits at her computer and runs a QuickTime movie for her kid in the corner while she does email." Oxygen will build on top of that - using real-life experiences contributed on bulletin boards and chat rooms, for example, to generate ideas for programs. "Everything on TV has to figure out how it relates to the Web," she says.
Make no mistake about it, though: The root idea remains televisual, with all that depressingly implies. The mass audience, in the Oxygen formulation, is women who cite Oprah, Katie Couric, and the ABC daytime talk show The View as smart, worthwhile TV. But one hypothetical show Gerry describes is What Are They Thinking?, a reality-based sketch comedy show based on stories posted on the Web, because "funny things happen in our lives everyday." Until it's produced, the line separating that concept from more puerile fare dismissed by Gerry, like America's Funniest, is hard to see.
Unsurprisingly, this New Web vision has captivated Oxygen's partners at America Online. Even before making the deal with the Laybourne partnership, AOL had announced a televisual evolution, with plans for future services like AOLTV, to compete with television and cable Internet services like WebTV and @Home.
AOL downplays the inherent conflict in its separate investments in Oxygen and iVillage. "We think competition is very good for our audience, and what will end up happening is Gerry and Candice will figure out what their strengths are, and each will develop unique programming," says Barry Schuler, president of AOL interactive services, in a pleasant, I-am-the-cat-who-ate-two-canaries voice. But privately, people close to AOL management say Oxygen is the favored partner, and that Schuler's boss and Laybourne's old colleague Bob Pittman is not a Carpenter fan. "We love iVillage, and Candice is a very talented executive," responds Pittman, although he also says, "I don't deal with Candice day to day."
Since the dawn of the Old Web, the battle for eyeballs has been focused on categories the media community traditionally thinks of as male: technology, finance, sports, news, sex. The dawning realization behind the interest in Oxygen, iVillage, and other women's services is that the majority of US consumers is being left out. When Laybourne showed me her briefing book, the one she uses to educate men (specifically men who control ad budgets), she noted that in 1997, while women were responsible for 70 percent of household spending, only 35 percent of magazine ad dollars targeted them. "Even if we change it 5 percent, we have a huge business," she says.
Meanwhile, the online women's audience is growing faster than the overall rate - AOL says 52 percent of its subscribers are women.
These are some of the statistics the folks at iVillage and Women.com Networks, the San Mateo, California-based based Web service targeting the women's market, have cited to justify their own business models.
But asked to name competitors, Laybourne mentions neither of those Old Web start-ups. "It's the big media companies," she says.
While Laybourne prepares for the future, the nervous world of the Old Web is merely trying to hang on. As AOL's Barry Schuler says, looking at the recent past of new media, "The trick for content players is being there - surviving."
It's a trick iVillage knows well. Its secret - perhaps the central secret for Old Web companies that have had to tack continually against the currents of technology and consumer acceptance - lies in morphing.
Back in the spring of 1995, when Carpenter and her colleagues first created the company, the women's audience wasn't even a major factor in their planning. The goal was to build online sites aimed at baby boomers.
Although she wasn't a twentysomething, Carpenter had a prototypical Old Web entrepreneurial résumé. In 1995, she was an unemployed media executive whose career path had taken an unexpected sideways turn. After building a Time Life video business from nothing into an operation with approximately $100 million in annual sales (which earned her a reputation inside the company as a "super direct marketer," according to one former colleague), Carpenter had accepted an offer from erstwhile media mogul Barry Diller, who was then running the QVC home-shopping channel. Diller hired Carpenter to run Q2, an upscale companion to QVC that was supposed to diversify the company's audience beyond the cubic zirconia crowd.
For Carpenter, it was a big mistake. When Diller wasn't distracting himself with unsuccessful bids for Paramount Communications and CBS, he was busy torturing his subordinates. "There is a kind of boot-camp, crazy-zen-master aspect of Barry," Carpenter says, "that in a small dose I found helpful." As it happened, the doses weren't always small. Carpenter remains a minor legend in the wide circle of underlings who've been hazed by Diller, for she's said to be one of the few ever to stand up to him and demand that he stop. Stewing through a debate one day, Diller, according to one who was present, was about to burst before a glance at Carpenter drove him to temporarily check his temper. "I know I can't yell," he said.
Diller, though, turned out to be better than no Diller, as Carpenter learned when he lost control of the company in the wake of his failed run at CBS. "The minute Barry left, the party was over," Carpenter says. The new QVC management had little interest in Q2, and Carpenter soon followed Diller out the door. In January 1996, Q2 was reabsorbed by QVC's Pennsylvania operation.
Carpenter had had only scant exposure to the online world, but Ted Leonsis, president of AOL's Services Company, hired her anyway as a consultant because he thought she could contribute ideas for electronic commerce. And happenstance, after all, was the genesis of many a new media career in 1994 and 1995, not just at AOL but across the Old Web, when the medium needed not rules but rulemakers. Anyone willing to put herself forward as an expert was instantly accepted - because who had the authority or the experience to question your cred?
"It was a great time to be at AOL, because you really just had the run of the place," Carpenter remembers. "There were so many people who wanted help, and if you were willing to be helpful ... You know, it's very different now - you walk in there, and there are security badges and they're signing you in now. Back then, it was the Wild West."
When Leonsis declared himself the online Brandon Tartikoff and began to distribute seed money to content start-ups through the company's Greenhouse effort, Carpenter saw her opportunity.
Leonsis, whose enthusiasm was often more developed than his proposals, was at one point trying to convince an old media company to create original family-oriented content for him that wasn't just repurposed from another medium. When that company showed little interest, fortune's wheel spun in Carpenter's direction. "I said," he recalls, "'Candice, today's your lucky day! You want to be an entrepreneur, here's your big idea!'"
Carpenter, by now aware of AOL's case of corporate attention deficit disorder, made one demand to Leonsis: that he demonstrate the seriousness of his proposal by committing roughly 10 times his going Greenhouse rate. It was insurance against being ignored. Leonsis wrote her a check for $2 million, joking to Carpenter that he had only one reservation: "I think you're too old."
Carpenter and the colleagues she began to gather around her thought they saw what AOL's early partners had not: a new form of communication springing up on the Net that relied as much on users as on publishers for content. "When we looked at what was on AOL, the stuff that really worked was not Time magazine online. The stuff that really worked was the Gay and Lesbian Forum, whole new areas, lots of interactivity," says iVillage cofounder Robert Levitan. Like other Old Web inventors, Levitan himself had scant online experience - he had run a video production company in North Carolina before Carpenter hired him to help her with her AOL consulting gig. Nevertheless, in the credential-free world of the Old Web he was soon running iVillage's advertising sales.
AOL money in hand, Carpenter and Levitan invited a third cofounder - Nancy Evans, the founder and editor in chief of Family Life magazine - to help them figure out how to turn "community" into a suitably baby-boomerish content idea. Their first effort was Parent Soup, a place to trade advice and interact with experts on child rearing.
Two million dollars creates its own buzz, and the scale of AOL's commitment helped attract attention and more money. "Community" was the hot Internet trend of 1996 (presaging the "push" trend of '97 and the portal trend of today), and iVillage was awash in publicity. It's the circular logic of a Ponzi scheme, where the presence of other people's money convinces the next person in line to chip in. The real product, for the company, becomes generating alternating waves of enthusiasm and fear among investors, calibrated to secure additional funding rounds.
"iVillage has always been successful, but their success has always been due to projecting an impression about something that's always just over the horizon," says a veteran Silicon Alley entrepreneur familiar with the company's finances.
iVillage has morphed from chasing baby boomers to broad-based community to women - what its SEC filing labels "one of the most demographically targeted audiences" - in three years. Editor in chief Evans explains the last transition, saying, "Our numbers were simply coming up women" - adding, as if it's a coincidence, that "many of our advertisers were also trying to reach them."
Today, iVillage has been repositioned as "the women's network." In the first nine months of '98, it achieved $9 million in revenue. Of that, 82 percent came from advertising, via 73 million monthly pageviews of "channels" devoted to parenting, money, relationships, fitness and beauty, books, shopping - a roster mimicking categories traditionally mined by women's magazines. "Following the audience," Carpenter calls it.
Critics suggest it's something else. "I think they've created something out of effort, not out of organic interest," says Fred Wilson of the Silicon Alley venture capital firm Flatiron Partners. Asked to assess iVillage's strengths, Women.com founder Ellen Pack pauses slightly before saying only, "I think they're great marketers." Indeed, even iVillage insiders cite Carpenter's seductive skills as a marketer as the key element in the company's success. Ex-employees like to talk about the time Carpenter, Evans, and two other iVillage staffers traveled to AOL headquarters to offer an audience of young execs a live demo. Leonsis's crew of channel managers knew they would be pitched on how a (now defunct) iVillage section called Vices and Virtues, a chat and bulletin board space, would allow people to explore the tension between the good and bad in their lives. But they probably didn't expect the iVillage women to invite them to offer up reveries to match the iVillager's list of personal escapades and fantasies - including Carpenter's own prostitution fantasy.
Carpenter says her goal was to illustrate what demographic surveys showed: that those who join health clubs are also likely to be the biggest purchasers of Häagen-Dazs ice cream - and that seemingly buttoned-up career women could have a "dark" side.
Of course, that was then, when sex talk could build a whole new medium. When CompuServe was bigger than America Online. When Gerry Laybourne was still running Nick at Nite. These days, that sort of pitch isn't enough. Advertisers are looking for more sophisticated sponsorship appeals, investors are looking for a prime-time-size audience, and Old Web companies can't compete on sheer brass alone.
Explaining why AOL handed the three women's sites it owned to Oxygen (buying out partner Time Inc.'s share in Thrive to accomplish it), Barry Schuler hints at one possible fate for iVillage when he says, "The best route for these little properties is to try and consolidate into bigger properties that can have more critical mass. The whole market is really in a consolidation phase."
A few days after Oxygen announces its new cable channel, iVillage makes its own deal. NBC, the old media company that already convinced Microsoft to underwrite the costs of producing the MSNBC cable channel, and snapped up a stake in Snap from CNET at a discounted price, has gone bargain-hunting again. For no money down, it will become the second-largest shareholder in iVillage, gaining a reported 10 percent of the company in exchange for $25 million in on-air promotion of iVillage's sites. It will also integrate iVillage material into Snap. In the funhouse-mirror world of Internet stocks, where even unpromising money-losers like the Globe and EarthWeb can look attractive, iVillage, which lost nearly $33 million in the first nine months of 1998 on only $9 million of revenue, was able to use the NBC deal as a boost for its own S-1 filing on December 11. According to the filing, the capital raised from an IPO would sustain iVillage for another year. But will money alone be enough?
"My belief," says AOL's Barry Schuler, surveying the women's new media landscape, "is in the people who build a brand and get an audience habituated around their content." Whether it's Oxygen or iVillage, the content of the future must attract enough audience loyalty, he adds, that "when it's available on a set-top interactive box, they'll go there for it." In other words, it has to be a television network.
Welcome to the New Web.
