February 26, 2003

AN INSIGHTFUL COMMENT on the demise of Salon and many other dot-coms:

The biggest thing that killed the dot-com boom was the exorbitant cost structure the companies put in place, especially in real estate.

Let’s look at the major epicenters of dot-com activity: Boston, Manhattan, San Francisco, and Seattle. What do those cities have in common? Some of the highest rents in the country (as well as inflated costs of living, which required higher salaries).

The great benefit the Internet was supposed to bring was the complete de-emphasis of physical location. Salon could have found a home in, say, Springfield, Mass., where rents are cheap, there’s a strong supply of intellectuals (the Five Colleges in Hampshire County), New York and Boston are close at hand, and the cost-of-living is lower.

The fact that sites which avoided getting the priciest digs (I’m looking at you, Kuro5hin) have survived and maybe even thrived is a testament to the folly of Salon, Inside, Slate, and all the other online media startups.

InstaPundit, of course, survives largely via low overhead.