Some reporters stayed on to keep the service running while it seeks new funding. And in further bloodletting in the online news business, CBS Internet group announced this week it is laying off 24 of its 100 staff. Analysts said the upheaval highlights the fact that so-called "dot-com" stand-alone news sites that have mushroomed on the Web rely on money from venture capitalists looking for quick returns. The new companies have no safety net. Another problem with the fledgling news sites, the analysts said, was that they relied heavily on advertising revenue when electronic commerce was the real money-maker on the Internet.

"There is a trend that all over-expanded pure-play online start-ups are having trouble and it's rippling through the area of Internet content, like these two guys," said David Card, an analyst with Jupiter Communications. "APB and Salon have to reassess their scope as there is not so much easy money out there." John Pavlik, director of Columbia University's Center for New Media, agreed: "It is intensely competitive, especially if there is no parent company to fall back on. Venture capitalists become impatient. There has been such tremendous growth in the online environment, maybe they (news sites) have just gotten bigger faster than they can be commercially supported.

"It took USA Today 10 years to become profitable, but it had the deep pockets of Gannett Co while it was finding its market," he told Reuters. "APB does not have deep pockets behind it."

In a statement from its San Francisco headquarters, Salon.com's chief executive officer and President Michael O'Donnell said the 20 per cent cut in the 2001 operating budget was a move "to reduce costs while continuing to grow revenues.