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Seven years after its shoestring launch, profitable DailyCandy has nearly 2.5 million subscribers and a valuation of $130 million. But the…

Seven years after its shoestring launch, profitable DailyCandy has nearly 2.5 million subscribers and a valuation of $130 million. But the collection of newsletters about style and trends may be getting a taste of what happens once your own trend-setting phase passes. Or, as the NY Daily News puts it, “Must-read for fashionistas, Daily Candy’s e-mail fights to stay in with the in-crowd.”

Some quick history: Dany Levy launched DailyCandy in early 2000 with $50,000 in savings and raised a total of $250,000 from family and friends; the site basically was a subscription conduit for the real product — the newsletters. In 2003, when DailyCandy had about 285,000 subscribers, former AOL/TW exec Bob Pittman and his Pilot Group invested $3.5 million for a majority share. Last year, after an outright sales effort failed to gain traction, they found an investor who put enough money in to give the company that $130 million and allow the original investors to cash in partially.

Among the issues that gave prospective buyers pause back then: growth rates, sustaining margins and how to make more money without a lot of web traffic. It’s hard to get a really accurate picture from outside. The Daily News cites industry sources that estimate 2006 profits of $11 million on revenues of $19 million. The number of editions is up to 13 from 11 last year. The media kit offers the subscriber number of 2.4 million — 95 percent women, 67 percent under 35. None of that really shows what’s happening to the readership or the kind of churn DailyCandy sees. It may simply be a matter of some people continuing to get various newsletters but not paying attention or acting on them as they once did. Levy hits the right pragmatic tone, telling the NYDN long-time subscribers outgrow brands and she’s looking for the next generation. Left unsaid, if the next gen doesn’t materialize, that’s the time for concern.

  1. Geez, tough crowd. Daily Candy is one of the great success stories in local new media. Keeping content from going stale and managing churn is not a phenominon unknown to other subscription operations. It is local, it is vertical, it is targeted, it informs around lifestyle. Maybe the product needs a few added elements, probably on the web site. But did you say $11 million on $19 million? All of us working in local look forward to managing that problem.

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