Onion, Inc.

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Onion, Inc.

536 Broadway, 10th Floor
New York, New York 10012
Telephone: (212) 627-1972
Fax: (212) 627-1711
Web site: http://www.onion.com

Private Company
Employees: 50
Sales: $7.0 million (2004 est.)
NAIC: 511110 Newspaper Publishers; 511130 Book Publishers; 511199 All Other Publishers

Onion, Inc. serves as the holding company for a number of ventures that developed out of the popularity of the satirical newspaper the Onion. The print edition of the newspaper is distributed in Madison, Wisconsin; Boulder and Denver, Colorado; Chicago; New York City; and Minneapolis-St. Paul, Minnesota. The electronic edition of the newspaper is updated every Wednesday on the company's web site, www.onion.com, which also sells merchandise and a series of best-selling books produced by the company. Onion, Inc. also broadcasts on the radio through the Onion Radio Network, syndicated by Westwood One. Approximately 320,000 copies of the Onion are distributed each week. The company's web site averages 3.6 million unique visitors and more than 30 million page views each month.

1988 Start-Up

From its start, the Onion offered its satirical perspective on events surrounding it, picking its birthplace as its first subject. The print edition of the Onion, the first of a handful of media that generated revenue for Onion, Inc., was started by two University of Wisconsin students, Tim Keck and Chris Johnson. In 1988, the pair, with the help of fellow students, printed the first edition of the Onion on notebook-sized paper and distributed it for free, offering their mocking view of campus life and the college town supporting it. Advertising in the newspaper consisted of coupons for the two staples of student life: draft beer and pizza. One year after its debut, the "newspaper," improbably, was acquired. "A bunch of college kids in Madison, Wisconsin, were putting out copies of what they thought was good satirical humor," the publisher of the Onion remembered in an October 23, 2002 interview with ContentBiz. "It was good enough that entrepreneur Scott Dikkers bought it from them to run as a formal publishing company. I'm not sure what the amount of the sale was, but I'm sure it wasn't much."

The intervention of Dikkers, whose financial resources were not revealed, did not lead to an immediate transformation of the Onion into a "formal publishing company." Dikkers's goal of having the Onion delivered to doorstops nationwide alongside issues of the New York Times was, like the Onion itself, tongue-in-cheek. The printed tabloid did develop, however, a small but loyal following, as Dikkers, with the help of Peter Haise, a 1990 graduate of the University of Wisconsin, developed a brand of topical, parodying humor, that proved to be exportable to markets outside Madison. In 1994, the Milwaukee edition of the printed tabloid debuted, distributed, like the Madison version, for free. The most important achievement during this early period in the Onion 's development, one only known to the enclaves of readership in Madison and Milwaukee, was the quality of work produced by Dikkers, Haise, and several other writers. The writing was humorous and well received, attracting a cult-like following that would find acceptance from a much larger audience not long after the expansion into Milwaukee. The catalyst for this transformationthe development from a cultish print tabloid into a publication known nationwidewas the emergence of the Internet.

1996 Debut on the Internet

The Onion was just the type of entity to benefit from the public's embrace of the Internet. Dikkers and Haise could never realistically hope to distribute the Onion nationwide alongside copies of the New York Times, but they potentially could reach the same readership base electronically through the Internet. The two editors launched their web site in 1996, producing an electronic version of the Onion at the address www.theonion.com (rights to www.onion.com were purchased in October 1999 to redirect misdirected attempts to locate the site). A presence on the Internet meant everything for the irreverent, witty editors, giving them a soapbox neither could have dreamed of in 1989. Distribution of the printed version expanded into the Chicago market in 1998, but the effect on the Onion 's development paled in comparison to the benefits realized after the launch of the web site. "The Web site is the driving force for all our business now," Haise acknowledged in an October 11, 1999 interview with Advertising Age.

The Internet represented the lifeblood of Onion, Inc.; the reasoning for the move onto the World Wide Web represented the crucible of its success. Haise explained the thinking behind the launch of the web site: "We always found the most success [by] creating the shortest distance between our product and our customers," Haise explained in his October 11, 1999 interview with Advertising Age. "Our goal was to get the Onion in front of as many faces as we possibly could. We'd had challenges getting the Onion on already crowded newsstands, and the Internet presented an exciting opportunity for bucking the traditional distribution system." Haise explained the company's rationale and strategy further, saying, "We eschewed interactivity to begin with, and we in no way promoted the launch. We didn't want to be in your face. We wanted readers to feel as though they were discovering the product, which always makes them feel closer to it and, potentially, more loyal."

The Onion' s presence on the Internet gave the Madison-based writers exposure to the world. The capability to reach potentially billions of readers as opposed to hundreds or thousands of readers did much to solidify the Onion 's existence, but equally as important as the exposure to a vast readership was the exposure to potential advertisers. Onion, Inc., like any company, needed revenue to survive, and securing advertising dollars was the way the company survived. By 1999, there were 20 marketers advertising on www.theonion.com, paying between $10 and $30 per thousand impressions to put badges and text links on the web site's front page. Companies such as American Express Co., Warner Bros., and the publishers of Rolling Stone were paying Onion, Inc. to advertise on www.theonion.com, major corporate entities that would not have entertained marketing in an alternative publication distributed for free in markets such as Madison and Milwaukee. The revenue obtained from advertisers enabled Onion, Inc. to post $4.5 million in sales in 1999. Venture capitalists became interested in the band of Madison writers, inundating their company with offers of cash to greatly accelerate expansion.

The revenue generated by Onion, Inc. at the end of the 1990s owed its existence not only to advertising dollars, but also to the blossoming Onion brand. The company diversified, delivering its signature satire through other media. The ability of the writers to branch out and express their creativity through different channels was directly related to their presence on the Internet. In the first half of 1999, Onion, Inc. released its first book, Our Dumb Century: The Onion Presents 100 Years of Headlines from America's Finest New Source. The book, published by Crown Books, contained headlines created by nine writers at the Onion who offered their take on the events and mores that shaped the 20th century. A story dated July 28, 1953 carried the headline: "CIA Subdues Fruit-Hatted Peoples of Lesser Americas." An August 16, 1966 headline read: "Democracy Flowers Around Globe After Bombing of Vietnamese Village." A headline from 1960 announced: "Soviet Space Program Ahead in Dog-Killing Race." More than 80,000 copies of the book were sold in four days leading up to its release on April 1, 1999, forcing Crown Books to order a second emergency printing. Our Dumb Century quickly became a New York Times bestseller, becoming the first of a series of best-selling books written by the Onion 's staff. Several months after the release of Our Dumb Century, Westwood One began syndicating Onion Radio News, a feature that was aired on 45 radio stations nationwide.

A Move to Manhattan in 2000

The beginning of the 21st century brought significant change to Onion, Inc. In 2000, Michael Schafer, chairman of the $1 billion Schafer Cullen Capital Management fund, acquired a stake in the company, eventually becoming its majority owner. "For years," Schafer said in an August 7, 2004 interview with the Chicago Tribune, "they had done a great job using a little cash here and a little cash there to keep it running, but that's not a long-term strategy. It just needed some discipline on the business side." The year also marked the relocation of the editorial staff from Madison to New York City, where they occupied a former warehouse in the Chelsea section of Manhattan. The move, made at the end of 2000, put the writers near the site of the following year's catastrophe, an event that tested the boundaries of satire in the aftermath of devastation.

The terrorist attacks of September 11, 2001 silenced the comedy world. For painfully obvious reasons, those who normally applied a humorous slant to news events could find nothing humorous in the deaths of thousands and the losses suffered by thousands more. David Letterman and Jay Leno, the two comedic oracles of late-light television, did not refer to the attacks. Saturday Night Live and Jon Stewart's The Daily Show aired re-runs, as writers and producers pondered when, how, and if to touch the subject of the attacks. In the wake of the attacks, the writing staff at the Onion struggled with what their response, if any, should be. "At first, we were at a bit of a loss," Robert Siegel, the editor-in-chief at the Onion, said in an October 1, 2001 interview with the New York Times. Siegel explained that if he and his writers avoided the subject "we would have looked painfully irrelevantit would make us ask why do we even exist if we would resist weighing in on the biggest news story since Pearl Harbor."

Company Perspectives:

Every week, three million readers turn to the world's most popular humor publication for a much-needed dose of Onion satire and entertainment coverage. In a history spanning 15 years, six popular books, and 10 Webby Awards, the Onion has attracted legions of loyal fans drawn to its scathingly funny commentary on world events, human behavior, and journalistic convention.

The Onion, the first of its ilk to do so, responded directly to the attacks in its September 26, 2001 edition. Instead of writing a single article about September 11th and its aftermath, the writers devoted the entire issue to the subject. Headlines in the issue included: "U.S. Vows to Defeat Whoever It Is We're at War Against," "Hijackers Surprised to Find Selves in Hell," "God Angrily Clarifies 'Don't Kill' Rule," and "Dinty-Moore Breaks Long Silence on Terrorism with Full-Page Ad." The public's response was overwhelmingly positive, drawing a deluge of e-mails from readers applauding the effort. The October 8, 2001 issue of the Los Angeles Business Journal hailed the issue, saying it "wildly succeeded, mixing irony and anger into a hilarious parody that validates the Internet's role as a breeding ground for brave content no traditional media outlet would touch."

The writing staff at the Onion distinguished themselves in 2001 and enjoyed themselves in 2002. For the Onion, a newspaper that mocked the practices and tone of traditional newspapers, nothing could deliver more pleasure than a legitimate newspaper using one of its fabricated stories as legitimate news. In its June 26, 2002 edition, the Arkansas Democrat-Gazette did just that, using a piece written by the Onion writers two weeks earlier. On the front page of its food section, the Arkansas Democrat-Gazette informed its readers that the U.S. Department of Agriculture (USDA) had added a new food group to the USDA Food Pyramid, a food group called "fixin's." The head of the USDA, Ann Veneman, was quoted, announcing, "We recommend five to eight servings from the fixin's group, which includes such hearty sides as coleslaw, mashed potatoes, steak fries, baked beans, and macaroni 'n' cheese." That same month, the Beijing Evening News took the bait as well, informing its readers that members of the U.S. Congress intended to quit unless the U.S. Capitol building was replaced with a newer, nicer building.

By 2004, Onion, Inc. presided over a fiefdom of satire. The company served as the corporate parent of the print edition of the Onion, its electronic version on the Internet, book publishing, The Onion Radio Network, and merchandise sales conducted through the web site. Together, this quiver of businesses produced roughly $7 million in annual revenue, a total, according to majority owner Schafer, that was expected to increase 25 percent annually to reach $21 million by 2009.

Schafer's sanguine financial forecast was based, in part, on the company's plans for expansion. In 2004, the Onion entered the Minneapolis-St. Paul market, the first time the newspaper entered a new market since the editorial staff moved to New York City. Short-term expansion plans called for entry into the San Francisco, Boston, and Austin, Texas, markets by 2006, followed by debuts in Atlanta, Georgia, Washington, D.C., and Ann Arbor, Michigan.

Principal Subsidiaries

The Onion A.V. Club.

Principal Competitors

National Lampoon, Inc.; News Corporation; Yahoo! Inc.

Key Dates:

The Onion is first published in Madison, Wisconsin.
The Onion begins distribution in Milwaukee, Wisconsin.
The web site www.theonion.com is launched.
The Onion begins distribution in Chicago.
Our Dumb Century, a book compiled by the Onion 's writers, is released.
The editorial staff relocates from Madison to Manhattan.
The Onion begins distribution in Minneapolis-St. Paul, Minnesota.

Further Reading

"Big Apple Welcomes Cheeseheads," St. Louis Post-Dispatch, January 25, 2001, p. B6.

Gilbert, Jennifer, "The Onion Transforms Satire into Big Success," Advertising Age, October 11, 1999, p. 68.

Kirchen, Rich, "Hardly the Onion," Business Journal-Milwaukee, May 18, 2001, p. 2.

Lazaroff, Leon, "Satirical Weekly 'The Onion' Takes Root in Minneapolis/St. Paul," Chicago Tribune, August 7, 2004, p. C3.

Loftus, Peter, "Is It OK to Laugh Yet?," Capital Times, September 28, 2001, p. 8C.

"The OnionHow the Web's Most Beloved Humor Site Stays Profitable," ContentBiz, October 23, 2002, p. 32.

Owen, Rob, "The Onion Peels Back 100 Years of Media Pretensions," Star-Ledger, August 1, 1999, p. 4.

"Peeling Back the Century," Capital Times, June 4, 1999, p. 13A.

Porges, Seth, "Read It and Weep," Editor & Publisher, November 24, 2003, p. 18.

Romell, Rick, "The Onion Moves Its Newspaper Writers from Wisconsin to New York," Milwaukee Journal Sentinel, January 26, 2001, p. C3.

Salkowski, Joe, "Web Site Keeping Sense of Humor Throughout Tragedy," Los Angeles Business Journal, October 8, 2001, p. 19.

Schwartz, John, "Seriously, People Seem Ready for a Good Laugh," New York Times, October 1, 2001, p. C15.

Tatge, Mark, "A Funny Thing," Forbes Small Business, January 31, 2005.

Turner, Lance, "Goofing Up," Arkansas Business, July 8, 2002, p. 26.

Jeffrey L. Covell