Nick Denton Mon, Apr 14, 2008 at 7:26 AM

I'm amazed we've managed to keep a lid on this news; that, given your naturally gossipy natures, must be a first! We're spinning off three sites: Idolator, Gridskipper and—this one may be a surprise—Wonkette. There were indeed some rumors about Maura Johnston's music blog late last year; they were true of course. For reasons that I'll explain below, both it and our travel and politics sites have better commercial futures outside Gawker than within. (Excuse the corporate lingo: some of it is unavoidable.) But, first, the facts, which will be hitting the wires later this morning, or as soon as you leak this email. Go ahead!

* IDOLATOR is going to Buzznet, a music-focused web and social network. Buzznet recently acquired Idolator's chief rival, Stereogum, and received a big investment from Universal Music Group. * GRIDSKIPPER isn't going far: it's being taken over by Curbed, the network founded by Lockhart Steele, in which Gawker Media is a shareholder. * WONKETTE is being spun off to the managing editor, Ken Layne, former founder of one of the web's very first news sites, Tabloid.net. The title will become part of the Blogads network of political sites, which includes Daily Kos, among others.

Why these three sites? To be blunt: they each had their editorial successes; but someone else will have better luck selling the advertising than we did.

Music audiences are fragmented across genres; Maura's Idolator gave Stereogum a good run, but a group with a whole array of music sites will command more attention from record labels than we could. In the case of Gridskipper, our urban travel guide, we could never match Curbed in attention to city-specific content and advertising. As for Wonkette: political advertisers are a strange breed; they don't come through the same agencies our sales people deal with.

I'm relieved we've found pretty decent homes for the three sites, and most of their writers, but we're gutted to lose them. Idolator's Pop Critic's Poll was a tremendous coup—and Patric's bleeding-heart logo for the site was one of my favorites. Gridskipper is so far the most sophisticated travel blog: it entirely deserved its inclusion in Time's list of the 50 coolest websites.

And Wonkette is one of the brands with which the company is most associated; people will be shocked that we would ever part with it. The political site has won an array of Bloggies and other awards; it introduced the word ass-fucking into the dictionary of political abuse; the founding editor's slippers are even on display in the new media museum in Washington, DC. And Ken and his team have brought a new liveliness to the site this election season—validated by the record traffic of the last three months.

So why not wait, at least till the election? Well, since the end of last year, we've been expecting a downturn. Scratch that: since the middle of 2006, when we sold off Screenhead, shuttered Sploid and declared we were "hunkering down", we've been waiting for the internet bubble to burst. No, really, this time. And, even if not, better safe than sorry; and better too early than too late.

Everybody says that the internet is special; that advertising is still moving away from print and TV; and Gawker sites are still growing in traffic by about 90% a year, way faster than the web as a whole. But it would be naive to think that we can merely power through an advertising recession. We need to concentrate our energies, and the time of Chris Batty's sales group, on the sites with the greatest potential for audience and advertising.

The dozen sites that remain represent some 97% or our 228m pageviews per month, and an even higher proportion of our growth and advertising revenue. (Key facts are below, in case anyone asks.) We'll be able to devote more attention to breakouts such as Jezebel and io9, as well as established titles such as Gizmodo and Kotaku, which are becoming utterly dominant in their domains. And, then, once this recession is done with, and we come up from the bunker to survey the internet wasteland around us, we can decide on what new territories we want to colonize.

Both Noah and I are around to answer any questions. On email, IM, or phone. I'm 917-XXX-XXXX and Noah is on 917-XXX-XXXX.

Regards

Nick

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GAWKER MEDIA KEY FACTS
* A dozen sites, Gizmodo first launched in August 2002, most recent,
io9, in January 2008
* Gawker, Gizmodo, Kotaku, Lifehacker, Jalopnik, Deadspin, Defamer,
Jezebel, Valleywag, io9, Consumerist, Fleshbot
* A record 18 "Bloggie" nominations in 2008, way more than any other
blog collective (one of those was for Idolator)
* Audience of 29.7m unique visitors a month for the whole network, up
82% at annualized rate (http://www.quantcast.com/p-d4P3FpSypJrlA)
* Each individual site has at least 1m uniques or, in the case of io9, soon will
* Pageviews of 227m in March — 219m if you take out the three sites
being spun out — up 89% on a year earlier (Sitemeter)
* For those who measure these things, Gawker is the web's leading
independent blog group

And now for the Kremlinology: Karin Gilford, head of Yahoo Entertainment, seems like the big winner here. Amy Iorio, the widely disliked executive whose team launched women's site Shine, loses out. Moore's mostly winnowing the number of direct reports he has — which should give him more time to call old pals in Redmond. And Rogers? Got out while the getting was good.

No, this is about the twisted dynamics of the music industry. Selling unprotected MP3s is all the rage now, even though label executives have insisted for years on copy-protected formats, like the kind Apple sells through iTunes. Forget Jobs's propaganda about Apple wanting to "free" music from copy protection. He doesn't care one bit about the digital-rights management software, or DRM, that record labels insist on. And he knows that most consumers don't care about the issue. He just wants to sell iPods, and his customers just want to buy them.

What Jobs does care about is other music stores having something Apple doesn't. The labels have been favoring competitors like Amazon.com with licenses for MP3 files — because they now fear Apple more than they fear piracy. And Jobs knows that DRM doesn't work to stop piracy, anyway. But what it does do is lock music to devices, because hardware manufacturers can't risk breaking the DMCA's circumvention provisions.

So Apple needs a new hook to win the labels back. Selling subscription music would allow Apple to lock down its music once more. According to reports of the proposals Apple and the labels are considering, iPod buyers would pay anywhere from $20 to $100 to get all the music they can download. Ah, but they'd have to download it from iTunes, onto an iPod.

Bundling music would give Apple a huge edge over the competition. Nokia's also proposing an all-you-can-hear music plan. But for all of Nokia's talk about cell phones replacing MP3 players, only 7 percent of cell-phone owners listen to music on their handsets. Amazon.com could try a subscription plan, but it's hard to see how it would make money, since it doesn't have the iPod's hefty profit margins.

Jobs comes out on top, again. Apple sells more iPods by giving the record labels what they want — copy protection and revenue — without having to share the iPod's profits. The compliant tech press corps will hail his plan as genius, forgetting he ever said anything about consumers wanting to own their music. The losers here are the musicians. Apple and the labels will divvy up subscription revenues, and the artists' cut will likely be smaller than what they'd make off of by-the-song sales. But since when has anyone asked their opinion about how to run the music business?

(Photo by AP/Paul Sakuma)

"Hustler," Simian Mobile Disco

"Loose," Spank Rock & Benny Blanco

"Frank Sinatra," Miss Kittin

"Lazer Life," The Blood Brothers

"Flux," Bloc Party

The short clips we posted are newsworthy and will not be taken down. But the letter itself is informative. In it, Simmons's lawyers say that the video was filmed by Traci Anna Koval, and that a company Allied Industry bought the rights from her in 2003. Is Koval the woman in the video, referred to as "Elsa" by GenesSecret.com? Unclear. Here's the letter:

Update: Gene Simmons's lawyer has confirmed the sex tape's authenticity in a cease-and-desist letter sent to Valleywag. With Simmons's identity established, we've shortened the excerpts to the bare minimum: Simmons's face, unquestionable; the activity he's engaging in, unmentionable.

The short version: record label 2.0. Some "newfangled" profit-sharing scheme. Lodwick's charm has managed to hook an entire artist on the premise. Too bad three fatal words have killed Normative before it even got off the ground. "We will promote our albums in new ways that are hundreds of times more efficient; ways that record labels don't understand, but are obvious to a seasoned Web entrepreneur." Spicy.

Sarkozy said Internet service providers should automatically disconnect customers involved in piracy. (AT&T has privacy advocates all fired up after proposing a less-stringent plan.)

For the rest of us, and at least one major record label executive, the numbers suggest the recording industry should stop trying to plug the Hoover Dam with bubble gum. Change has come.

(Photo by kyle simourd)

But then Coulton quit his job and started the Thing a Week project where he produced a song a week for a whole year. And now he's famous! And doing a show on February 22 in San Francisco.

Whatever. Here's what you really need to know: Timberlake's label is participating in a Pepsi Super Bowl promo that's giving away 1 billion songs, in MP3 format, through Amazon's music store. Sure you could rip Timberlake's songs from a CD yourself, or purchase the PG-rated iTunes version, but the masses have never been able to purchase the superstar digitally without annoying restrictions on the use of the tracks.