A TANGLED FASHION WEB SITE
Byline: Lisa Lockwood / with contributions from Vicki M. Young / Jacob Bernstein
NEW YORK — The abrupt departure of Fashion Wire Daily founder Brandusa Niro this week has observers once again questioning whether the Web site will ever make money, or will it soon follow the path of so many other dot.bombs?
As reported, Lynn Krominga, a former consultant and Revlon executive, took over as chief executive officer this week, replacing Niro, who founded the site in 1999 and had served as editor in chief and ceo. Godfrey Deeney, as reported, will succeed Niro as editor in chief.
Niro said she terminated her contract “for good reason” and is owed in the six-figure range in back salary and expenses. She told WWD she’s hoping it can be settled amicably and she won’t have to take legal action.
While it’s still foggy how the site has survived this long, some sources believe that Niro’s departure is a good thing.
“FWD is a really great idea, but Brandusa had absolutely no business sense, was irrational and was in over her head,” said one former staffer. “She would rehash the stuff you read in WWD and the New York papers. Even the New York Post doesn’t use a lot of FWD’s stuff. The people who read Fashion Wire Daily are the trust-fund publicists.”And, of course, those who borrow their friends’ passwords.
The site’s business model is based on syndicating fashion stories to newspapers around the world such as the New York Post, Associated Press, London Times, L.A. Times and International Herald-Tribune, and selling subscriptions. Krominga claims they currently have 20 full-time employees.
According to Krominga: “I’m hoping [that becoming profitable] is not that far out. We have an amazing editorial team soon to be led by Godrey [Deeney], and Jennifer Greylock on the photography side. They have the knowledge and expertise to raise the bar of the editorial coverage, and I can start immediately on the financial strength of the company.”
With its insipid reviews, pirated scoops and warmed-over features, observers believe the site no longer has any cachet with the fashion crowd. The site has made a habit of rewriting other newspaper’s articles, even from publications that are not particularly reputable.
“I remember they used to pick up stories from the European tabloids, and Italian newspapers that were rumor-prone. It would be a wild story about a major designer going bankrupt and they would run it as though it was going to happen the next day,” said one observer.
“The place has been riddled with inaccuracies since day one, ” said one fashion publicist. “Their journalistic integrity was second to their desire to make news first. Most of what they broke was pathetically inaccurate.”
Lisa Marsh, fashion reporter for the New York Post, said: “The site has definitely gone downhill in the last two years. You used to be able to sign on, and the site would be updated twice a day. Now there’s new information once a day, if that, and much of their coverage is them rehashing stories that have already appeared in the Post, Women’s Wear Daily or the Times.”
“I’ve had whole stories literally ripped off. And then when you call them about it, they don’t apologize, they offer you a job,” said Marsh.
“You just don’t get the kind of salient information that you’ll get at a site like Hintmag.com,” said Amy Spindler, style editor of the New York Times Magazine. “They send it to me, so I read it, but it’s not my first source for industry information. As a Web site, it’s just not well set up to cruise around.”
Richard Johnson, editor of “Page Six” at the New York Post said: “I don’t even really read it.”
Mickey Boardman, an editor at Paper, said: “I used to go on to FWD but you have to pay for it. If there’s something I really need to read, I’ll call a friend that has a subscription and have them e-mail me the story.”
The site, which has been a revolving door for reporters and executives ever since it was founded, has perennially had its share of problems with its payroll. “She [Niro] put her husband in charge of the books and he screwed up the payments,” said a former staffer.
According to sources, the company laid off some staff in recent months, and was still having financial difficulties at the beginning of the year. The scuttlebutt among current and former contributors was that Niro had been on the verge of losing her job in early December.
Her husband, Giorgio Niro, left the company on Tuesday. The company’s masthead at its Web site listed his job responsibilities in “operations.” When contacted, Giorgio Niro declined to specify his responsibilities at his former employer. Giorgio Niro also disclosed that he had neither a specific title nor an employment agreement at the site. “I’m looking forward to finding other opportunities in a media company doing something similar to what I was doing in the past,” he said.
Sources concur that one of the site’s problems was that Brandusa Niro wasn’t a journalist.
“She had some decent people on the staff, most of whom have quit. She put her finger in everything. She would take copy and change it. She had her own agenda. She had a bone to pick with certain publications and designers,” said one former staffer.
“She thought she, Patrick [McCarthy, chairman and editorial director of WWD’s parent Fairchild Publications] and Anna [Wintour, editor in chief of Vogue] were the triumvirate of fashion in New York. She has no editorial background. When Joe [Dolce, former editor in chief] left, things really fell apart. She tried to be biting and witty and cutting edge, but it came out bitchy and mean and childish. Even when they broke stories, she’d screw it up.”
For example, FWD ran an interview with Kate Betts immediately after she was fired from Harper’s Bazaar; however the interview was conducted prior to her leaving. The site claimed it knew when it did the interview she was going to be let go.
The site’s financial backing has always been shrouded in secrecy. Niro said that several weeks ago, its initial investor, Dr. Avraham Kadar, a Mount Kisco allergist and immunologist, took majority ownership of the site.
According to Niro, the way she and Kadar first met was that Kadar had been her doctor and she spoke to him about her plans to launch a fashion Web site. He, in turn, wanted to be an investor. Kadar has invested in several high-tech startups, including Brainpop.com, an educational animated movie Web site.
When a call was placed to Kadar’s Mount Kisco medical practice Thursday, WWD was told he was seeing patients and couldn’t be reached for comment. A FWD spokeswoman later said that Kadar was busy with patients the next few days and would sit down and talk about the site in a few weeks.
MacAndrews & Forbes and Orama Partners, who have made investments in the site previously, are still believed to have ownership stakes. Officials could not be reached for comment. MacAndrews, a holding company owned by Ron Perelman that also has a majority stake in Revlon, has participated in financing rounds in other dot.coms. The company invested $1.1 million in August 2000 in WeddingChannel.com and an undisclosed amount in E7th.com, a business-to-business site that is no longer operating.
How Niro fell out with her main investor is still unclear.
Niro said the main reason for her departure was that she was asked to waive compensation and stock rights. “I obviously disagreed,” she said.
Asked about this, Krominga declined to comment on personnel matters.
“It’s a very painful thing for me,” added Niro. “I adored my editorial staff; they’re so talented. It’s hard emotionally. It’s an attachment and it’s your concept.” As for her next step, Niro said: “I hope I don’t have to sue them. I have every intention to settle this in the most civilized manner. I’m not a belligerent person.”
Meanwhile, still pending is the lawsuit filed in May 2001 in a state court in Manhattan by Marshall Lester, the site’s former president, seeking $508,750 for back pay and expenses owed under his consulting agreement, which also granted him stock options and performance bonuses. The lawsuit charged that the nonpayment was a “breach” of the consultancy agreement. The lawsuit has not gone to trial yet. Assuming Lester wins on the merits of his claims, any potential recovery would depend on the site’s financial condition.
“My case is not resolved, but we expect to win,” said Lester on Thursday.
Some observers question whether the new management changes at FWD would bode well for Style 24/7, the weekly fashion tabloid which went on hiatus after several test issues. It is published in conjunction with American Media Inc., and could provide another revenue stream for the site.
Steven Aaron, publisher of Style 24/7, said: “Overall, the change will bode well for the magazine. Everyone has written off the magazine. The plan still calls for it to move forward. I don’t mind waiting. If it launches in the summer, instead of the spring, it’s OK. The situation with Fashion Wire Daily certainly won’t negatively impact the plan.”
Asa Graves, print media and information services analyst at Wachovia Securities, observed that Internet-focused companies looking to expand into print often have a hard time making the transition.
“Generally, the ones that do both and have staying power are the ones with the print base first because that is the more established franchise.”