Don't ask, don't tell: The

military rule on gays should

also be applied to the press and

presidential candidates. When

Senator John McCain revealed his

method for checking out gay

servicemen in Vietnam —

"Well, I think we know by

behavior and by attitudes. I

think that it's clear to some of

us when some people have that

lifestyle." — gay-rights

activists howled about

stereotypes. The Uncle Tom's

— sorry, Log Cabin

Republicans — were quick to

leap to the gaydar-endowed pol's

defense. But McCain raises a

good point: Wouldn't it be

easier if you could just always

know?

Certainly, had it been able to

psychically divine its target

market, Out magazine would be

better off now. Launched in

1992, Out debuted to raves, even

in white-bread venues like Time

magazine. But it's one thing to

impress one's friends in the

media and quite another to win

over actual readers. How do you

sell a subscription to Out to

someone in the closet, after

all? And how do you convince

lesbians — hey, the girls

have got bucks too — to pick

up a magazine laden with gay

male fashionista beefcake?

With circulation slumping,

executives fleeing, and quality

dwindling, the gay (and

not-so-lesbian) monthly is on

the block, looking for a buyer

who can carry its US$5 million

in debt. Conceived as an

advertiser-friendly vehicle, Out

just isn't pulling in the paid

pages like it needs to.

The situation looks bleak, but

we may just be witnessing the

setup for a gay version of the

AOL/Time Warner happy ending.

For while Out struggles, its

Internet cousin, PlanetOut, is

rolling in the dough, having

raised $16 million from Sand

Hill Road VC firms, America

Online, and a bevy of private

tech investors (a surprising

number of whom are straight).

Even so, CEO Megan Smith

concedes that the company is

"nowhere near profitability."

Already, though, it reaches more

gays and lesbians than Out ever

did: Despite its name, PlanetOut

is targeting the "openly

closeted" — people who get

by on the principle that, on the

Internet, nobody knows you're

queer.

That's a principle observed in

the breach, as AOL's incompetent

outing of Timothy R. McVeigh to

the Navy's witch-hunters

revealed. But still, it's much

easier to come out when all you

have to do is log on.

You've heard the jokes about

queer cards — the kind that

get revoked for bad fashion

choices, not for blown credit

limits. But PlanetOut is offering

its own financial vehicle,

through a co-branding deal with

NextCard. You can also get

domestic-partner-friendly

insurance and car rentals

through a PlanetOut membership

card. Next thing we know,

PlanetOut will offer group

buying discounts on certified

queermobiles like the VW Golf

(if you need any convincing that

the boys in that da-da-da

commercial are gay, ask John

McCain) and the lesbomotive

Subaru sports-ute.

So what held Out back while

PlanetOut prospered? Their

histories seem curiously

similar, up to a point. Michael

Goff, a protégé of

magazine-design impresario Roger

Black, co-founded Out in 1992

but left four years later in a

disagreement with its financial

backers. (One major point of

disagreement: how much Out

should spend on the Web. Goff

lost that argument.) Around that

time, he hobnobbed with Tom

Rielly, a tech sales exec who

co-founded the nonprofit Digital

Queers. They ended up going

in different directions: Goff first

headed north to Redmond, where

he ran various new-media ventures

at Microsoft, and now splits his

time between New York and LA as

part of the Accelerator Group, a

new consultancy. Rielly went on

to found PlanetOut.

Goff's successors at Out faced

turmoil: Sarah Pettit was ousted by

Out president Henry Scott, who

replaced her with James Collard,

editor of the Brit gay rag

Attitude. Collard lasted barely

a year, after redesigning the

magazine and letting the

circulation slide to a scant

110,000. Scott took the helm

briefly, offending many by

declaring that Out was only

shedding undesirable "poor"

subscribers, before high-

tailing it to Connecticut. Now

Executive Editor Tom Beer is

running the show while the

magazine waits to be sold off.

At PlanetOut, Rielly tried

giving up the helm, taking

$3 million from Sequoia Capital,

Yahoo's funders, and welcoming

balky Sequoia VC Mike Moritz to

the board. That was Rielly's

first mistake; letting Moritz

install consultant Jon Huggett

as CEO was his second. In an

interesting parallel to Scott's

female troubles, Huggett drove

out operations director Megan

Smith and editor Karen Wickre.

The staff rebelled against

Huggett, and Rielly —

recovering from a dark spell in

his life — rode into town to

rescue his baby. Rielly paid off

Moritz and Sequoia and brought

back Smith, who now runs the

company.

(It's worth pointing out that

under Sarah Pettit, Out

magazine's circulation reached

its peak of 135,000. And PlanetOut

is growing like wildfire under

Smith, suggesting a very simple

rule for gay media success: Just

let the lesbians run things.)

Still, Smith acknowledges that

PlanetOut isn't profitable yet

— but hey, it's a Netco!

Out, at least, has some cash

flowing in from subscriptions.

And those undesirable po' folks

who haunted Scott's media

daydreams may sink gay media

ventures that put too much faith

in conspicuously queer

consumption.

Take the cautionary tale of

Tzabaco. Once a humble clothing

store in the bucolic Northern

California town of Healdsburg,

Tzabaco was never the same after

queer Cisco millionaire David

Ring discovered it. He and

partner Stu Harrison moved the

business to the slightly less

rural burg of Petaluma, bought

the rainbow-tchotchkes catalog

business Shocking Gray, got

advice from venture capitalists

and lawyers, and set about

building a mail-order business

for all things queer. After

sponsoring every pride event in

sight and tossing donations to

good causes like teen-suicide

prevention, Tzabaco abruptly

folded up shop online and

offline. (It's hardly

coincidental that Tzabaco's Ring

leader was a PlanetOut board

member during its tumultuous

early days.)

One investor who stuck with

PlanetOut is America Online.

Back when it was still

pay-by-the-minute, AOL owed a

fair amount of its chat revenues

to gays and lesbians looking to

connect. Could PlanetOut imitate

its corporate benefactor's

merger shenanigans and swallow up

Out magazine? It's got the cash

on hand, but that money's

probably better spent on

prettying up the company for its

initial public outing on Wall

Street. The main difference

between Out and PlanetOut is

that investors are willing to

pony up capital for an Internet

play; most don't care whether

the Web site on their monitors

has a pink tinge. (Last we checked,

the ticker symbol OUT was

still available.)

And PlanetOut's a more perfect

advertising vehicle than Out

ever could have been: Build a

chat channel for the boys,

another for the girls, and give

them both gay-rights news and

celebrity gossip. PlanetOut can

target them by gender, ZIP code,

outness, and kinks and

mass-customize a unique version

of the gay experience.

Still, PlanetOut's commercial

vision disappoints. Queers were

among the first to find the

Internet, and in the early '90s,

it often felt like a secret

club. Then, the gathering place

was an obscure Usenet newsgroup

called soc.motss — an

acronym-happy way of appealing

to people who dug members of the

same sex, whatever sex that was.

As the newbies poured on,

soc.motssers discovered, to

their horror, that most of them

were straight. Even so, the Web

was a good thing: What better

way to tell your coming-out

stories to all, in relative

safety?

David Bohnett, queer founder of

GeoCities, saw his homepage

provider as a way for gays and

other communities to find each

other online and share personal

details of their lives. The new

wave of queer sites are less

demanding: They just want their

users' credit card numbers.