Monday, February 9, 2009

Prediction #3: The Future of Magazines

Newsweek is attempting to reinvent itself and its business model in an effort to charge more for its services and increase its reader generated income. NY Times article here. This is a good plan. At least it is as good as a plan can be in these times. Through the redesign, Newsweek will work to emphasize photography, also a good strategy. Playing to the strengths of the medium.

In the end, magazines are going to have to provide a product that is compelling enough to the reader that they will pay fair value for it. And that value has to be enough to cover its production. This is a step in that direction, and I applaud Newsweek for going for it. What we can hope to see is stronger, more targeted titles with higher subscription and newsstand prices. How high? I dunno. The market frequently pays $15-20 for 80 page over-sized matte finished high end photo magazines. Imagine if they were produced by an organization as strong as Newsweek.

In other news, Time Inc reports 20% drop in advertising revenue. Ouch. How many magazines can survive that, and for how long? Time Inc is the one stop shopping source for magazine advertising. If they are hurting that bad, how bad must it be getting for competitors? AdAge article here.

2 comments:

Jason/ARCHETYPE said...

So is the end of print near? I'd hate to think so, but that's exactly what I'm hearing.

Maybe Microsoft CEO Steve Ballmer was right after all.

Aric Mayer said...

It is a good question, one that's been hanging out there ever since the internet took off. I don't think print is over by any means.

What has to happen is a return to value based business models where the magazine itself is worth the price that must be charged for it to be profitable.

When the industry decided to chase after advertising revenue over subscriber revenue, success became measured in terms of rate base, not in terms of consumer satisfaction. The pressure was to increase the rate base by attracting more subscribers and charging more for ads. Subscriptions are offered cheap and so consumers buy magazines cheap and don't value them. Content is watered down. The whole system suffers.

What has to be paid for is the content. Right now we have the sense that online content should be free. Therefore the magazines are faced with a worse environment online than they are in print. The ONLY source of acceptable online revenue in the minds of the audience is advertising. Relying on advertising as the income generator is what has created this whole problem in the first place.

In print or online, publications are going to have to charge what it takes to make them profitable, and they have to be worth paying for to survive.

We need to leave behind the stock market investor driven business models that require magazines to grow each year and accept that it is a mature industry. Each title will have a cap on its potential market and will have to be satisfied with establishing and maintaining a loyal reader base rather than growing on an infinite curve. It is possible to be profitable in those conditions. It's just not possible to grow forever.

In the end I think consumers like reading print in its own right and therefore there will remain a market for it. Print should adapt to meet its own fullest potential through design and materials. There will be significant print/online symbiosis, though.