for sale - The Well

According to BBC News Online Salon Magazine has hung a for sale sign on The Well , the 4000 member community it bought in 1999 for $5 million (£2.75 m). [note: the following comment is my own]

In it's filing with the Securities and Exchange Commission (see page 14 ), Salon says that the community is expected to generate around $500,000 in revenue in the year to March 2006.

Current membership fees at the Well are $120 a year for an "essential" membership and $180 for a "complete membership". If all the users of the Well were on the lesser membership, that would equal $480,000 per year in revenue. But surely a lot of members, enticed by some additional functionality and a prestigious email address (the well offers complete members the use of a yourname@well.com address), have taken out the complete membership. There's also advertising on The Well and, with it's good demographics (wealthy, educated, well connected), I'd imagine that it's charged at a premium. I find myself wondering how many of the reported 4000 current users, down from 6000 when Salon purchased the Well in 1999, are free accounts given to influential oldtimers to try to keep them as users. Surely if all, or even a high percentage of, accounts were paid then The Well would have higher revenues than reported in the SEC filing.

So who will buy this once influential 20 year old community? The Well could be sold to a commercial concern like several other community websites, including Craigslist (to ebay), MySpace (to Fox), and Flickr (to Yahoo) have been sold in recent months. What would the reaction of Well users be if they were swallowed up by Amazon or Google? How about Newsweek? What if it was Shell Oil or the Republican National Committee? And that's part of the problem. The Well's members aren't likely to go along with it's sale to just anyone.

The best hope for the future of the Well, at least if it is to retain it's current membership and feel, seems to be for the current members to band together and each stump up the cash they'd need for a one year membership and purchase The Well themselves. That way The Well can become a non-profit community owned and run by it's members - a somewhat novel situation these days.

Comments

[gail]

Minor correction: There are no ads on The WELL. (Unless a member puts an ad on their own well pages, and then that's not revenue to The WELL. Sell to the RNC? Now there's a sci fi plot line! yowch.

[RobinH]

I know the Republican National Committee example was a bit extreme, but I wanted to illustrate that, although the Well might be for sale, the users aren't likely to accept just any purchaser. If the wrong company or person were to buy the Well, I reckon it would simply disappear, the users re-emerging somewhere else a bit like many users of ElectricMinds migrated when Howard Rheingold left that community. Don't worry - I haven't heard any rumours that Bush and his gang are looking to buy the Well! ;-)

[Paul]

(Disclaimer: I'm a Well member.)

Where did the idea that there is "advertising on the Well" come from, anyway?

Also, on "free accounts given to influential oldtimers to try to keep them as users," this is probably not a very big number. Many such oldtimers are Well "hosts," which means they get a free Complete account in exchange for overseeing a particular area. As with any online community, the number of highly active users is relatively small compared to the total userbase. Those "influential" people tend to stick around because they like it, not because of a $15/mo subsidy. It was also common back in the day to comp journalists. I don't know how many of those are still around. But between hosts, old comps, and the preponderance of new users who are at the $120/yr level, I think the discrepancy you're seeing is probably accounted for.

[RobinH]

Hi Paul. Thanks for taking the time to comment. I was, briefly, a Well member in around 1995 or 1996. I tried it out but it wasn't for me. Anyway, I don't remember there being any ads on there, as both you and Gail point out. The SEC filing states that "The assets of The Well are predominately $0.2 million of goodwill." My guess is that the BBC journo who wrote the article that alerted me to the sale saw this line and assumed it meant "advertising" because, in his article, he wrote: "Salon said the community is expected to generate about $500,000 in revenue to March 2006 from its 4,000 subscribers and advertising." (What on earth is "goodwill" in an SEC filing anyway?)

The point of my blog entry wasn't that something fishy was going on. I do, however, find it just a tad bit strange that, when you work out the possible annual revenue generated by the Well, the total, FOR ONE YEAR, is equal to what Salon expects to get from it's sale.

So someone buys the Well, hopes nothing breaks for a year, keeps the current user base, and they've made money. There are plenty of 4000 member communities that have little, if any, overhead other than some server hosting / bandwidth costs. That seems like a good purchase - practically a no brainer even. Or is it? Are users likely to stick around if the scenario I wrote about above (acquisition by the RNC or an evil corporate) buys the Well? I doubt they are.

And that's exactly the problem with trying to sell an online community. It only exists so long as it's users continue to call the place home and, when they move away, investors are left with something of little or no value. That's why I reckon the users of the Well and Salon would be wise to sit down around a table and do some business together - and after they've bought it, Well users can add some google ads and amazon associates links to help pay for their shiny new (actually, rather old) purchase. ;-)