Sweet! Is Sugar the future of publishing?

November 19, 2009: 10:34 AM ET

The women-centric collection of sites is shaking up the web -- and traditional media.

Lisa Sugar's celebrity blog morphed into an online empire. Photo: Sugar Inc.

The state of affairs in publishing is beyond depressing. Unless, of course, by publishing you mean the shiny new online-only startups who are behaving as if it were boom times for journalism. An example is Sugar Publishing, the 3 1/2-year old blogging company that focuses on young women. Run by the husband-and-wife team Brian and Lisa Sugar, the San Francisco company has 12 sites, 114 people, and boasts an online audience that's approaching that of Time Warner's (TWX) People.com (almost 8 million monthly visitors in October for Sugar versus 12 million for People, says comScore).

It gets better. According to Brian Sugar, his little company will be profitable this quarter as well as all of next year. What's more, only half the company's revenues come from advertising against the work of its journalists -- a shocking figure given that traditional media companies get, well, all of their revenues from their scribbling. "Editorial is a marketing expense to drive people to something bigger," he says.

Sugar started as former ad-agency media-buyer Lisa Sugar's dream to be a writer. In 2005 she created a celebrity-oriented blog, PopSugar, which, once it started picking up steam, told her marketing-veteran husband that she was on to something. By this point the online world already was littered with sites that mimicked what trade publications have done forever. Sports sites also were plentiful. The "women's" category was wide open. Sugar added additional sites, focusing on fashion, beauty, food, mommying, and the like. Along the way the company attracted a venture investment from Sequoia Capital -- which is doing pretty well these days, despite what you might have read in a certain traditional business magazine.

Generalists, not specialists

Two broad themes define what's cool and exciting about Sugar: the way it does journalism and how it makes its money. According to Brian Sugar, every staff writer is trained on how to do everything it takes to produce a  blog post, from writing and Photoshop to editing videos. That is so antithetical to how it works at big-time magazines, where specialization rules. Sugar's money-making tactics also signal a break from the past. It recently bought a company called ShopStyle, whose site allows users to shop for products they like and takes referral commissions from retailers. ShopStyle is so popular that Sugar licenses it to other sites, creating a lucrative revenue stream for Sugar off the audience of other online publishers. Sounds like Google's (GOOG) AdSense, right? Sugar calls the licensing product ShopSense.

More is in store. The company is rapidly building out its video capabilities. It plans to launch a video game on Facebook next year. (Shopping and gaming have similarly addictive qualities to them.) It has sites in the U.K., France, and Germany and plans to open in fashion-conscious Japan next  year. The company also provides a platform for its users to create their own blogs on Sugar's sites. Brian Sugar says a quarter of the posts on Sugar's sites are "curated" from blogs on its platform.

Not everything works for Sugar, but online it's easy to thin the herd. Sites devoted to politics (CitizenSugar) and recommendations (SugarLovin') flopped, so Sugar killed them.

Sugar is a nascent success and an example of what magazines may become. It doesn't provide an answer to the question of what will become of long-form journalism, because it chose a segment that wasn't exactly bubbling over with ponderous feature stories to begin with. All the same, that something is working in publishing these days, and that's at least some hopeful news.

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About This Author
Adam Lashinsky
Adam Lashinsky
Senior Editor at Large, Fortune

Adam Lashinsky is a San Francisco-based editor-at-large for FORTUNE, covering Wall Street and Silicon Valley. Lashinsky joined FORTUNE in 2001, after two years as a contributing columnist. Prior to joining FORTUNE, Lashinsky covered Silicon Valley for TheStreet.com and The San Jose Mercury News. A Chicago native, Lashinsky holds a B.A. in history and political science from the University of Illinois at Urbana-Champaign.

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