“If what we have isn’t valuable and no one wants to pay for it, maybe we don’t have a business.”
–Jim Malkin, CEO, SourceMedia @ FOLIO: Growth Summit
Let’s be honest for a second, put our egos aside, and admit one thing: a notable percentage of magazines currently being published could fold tomorrow, and few people beyond their respective mastheads would notice.
Don’t believe me?
Pop Quiz, hotshot: Pick any magazine, first one that comes to mind, and check its subscription rate.
What’s the most you would pay for a 12-issue subscription? If it’s less than $29.50, I’d argue that you won’t miss it much when it’s gone because you don’t place much value on its content. Further, if it’s being sold for less than $29.50, I’d argue that its publisher doesn’t place much value on its content, either, so why should you?
Most magazines are advertising platforms whose readers are defined as “targets”, valued in quantity over quality; when the advertising revenue stream dries up, the magazine usually folds, readers be damned.
It’s a business model that has ruled for decades, built upon a smoke and mirrors combo of deeply discounted, often unprofitable subscriptions; expensive newsstand distribution; and deceptive metrics long accepted as industry standards.
THE BUSINESS MODEL IS BROKEN
The most recent example of this flawed approach is Condé Nast Portfolio, a much-ballyhooed new entry that attempted to muscle its way into a crowded business magazine marketplace that arguably didn’t need it, doing it the old-fashioned way and failing despite having a “total and verified circulation of 449,005.”
“Our timing proved to be terrible in terms of building a big ad franchise from scratch,” group publisher David Carey told the Associated Press. “We saw where we are and where we want to be in 18 months. The gap between those two points was becoming bigger.”
As a result of the closure, more than 85 employees will be let go…
Billed as a business publication with big, bold articles and dynamic visuals, Condé Nast reportedly spent more than $100 million to launch Portfolio in April 2007. The magazine watched ad pages plummet 60.9 percent during the first quarter, according to Publishers Information Bureau figures.
With advertising revenue less reliable than ever — overall ad spending declined another 15.1 percent in Q1 2009 (Bernstein’s Research) — this prolonged and brutal economic downturn will claim even more magazines before the year is over, requiring the rapid development of alternative revenue streams and pitting those still standing in an intriguing, high-stakes game of “Outwit, Outplay, Outlast”.
One of the seemingly obvious steps to take would be to raise the deeply discounted subscription rates that were formerly subsidized by advertising, sending a clear message to readers (and advertisers) about the true value of the content being published. While most magazines would undoubtedly lose subscribers, the ones they retained would be more profitable, more engaged, and more responsive to relevant advertising and direct-to-consumer offerings.
Unfortunately, that decision brings up the one question so few publishers want to answer, but can no longer avoid: how much is their content really worth?
YOU GET WHAT YOU PAY FOR
In Part One, I criticized Fast Company and Inc. for their combined subscription offer of $15 for 10 issues of each magazine, effectively telling me that my eyeballs are worth more than their content.
Both are magazines I’ve picked up at the newsstand on occasion, at full price, so I’m probably going to fill out that subscription card because it’s such a great deal, effectively 20 issues for the price of 3. Chances are good that between them, I’ll buy three more issues on the newsstand over the next year, so while I probably won’t be one of their most engaged readers, I really can’t lose.
For most of their advertisers, though, unless they’re in it for brand recognition and have some long-term plan to engage me, I’m pretty much dead weight, fluffing the rate base they’re paying to reach, usually via ill-conceived, short-term interruption campaigns.
As seen in the image above, The New Yorker and Portfolio were offering a similar combo that devalued the former at $1/issue and the latter at $.83/issue. Both are prestigious, award-winning magazines that aim[ed] a bit higher than the average editorial mission, but were priced as commodities instead of the premium offerings they aspired to be.
Of the magazines I noted in Part One, I’d align them most closely with The Atlantic, which currently has a one-year, 10-issue subscription rate of $29.50.
To answer my own pop quiz, which magazines would I pay $29.50 for a 12-issue subscription?
- The Atlantic: Probably; I already renewed for 3 years @ $39.95, before their redesign and rate increase, but if they once again locked down their online archives for subscribers only, I’d consider the higher rate.
- Gourmet: I wouldn’t, but my wife might; especially for a subscribers-only online database of recipes and book deals.
- Garden & Gun: It’s a great lifestyle magazine with a literary bent, featuring excellent writing and photography designed specifically for the printed page. It’s more of a newsstand magazine for me, though I’ve picked up every issue since I discovered it, but I could imagine its core audience paying $29.50/year for a subscription as long as the content remained top-notch.
- Fast Company and Inc.: These are the kinds of magazines people are thinking about when they say the Internet is killing print. They’re primarily advertising vehicles with solid content, all of which can be found on their websites for free. They’re also not must-reads for serious business people like the Harvard Business Review which sports a $99/year subscription rate, a $16.95 cover price and still has a solid advertising presence.
- Wired: It’s a fun, somewhat self-indulgent magazine, but not at all a must-read for anyone. Also, why isn’t it free?
CONTENT + CONTEXT = VALUE
I’m a firm believer that Content is King and Context is its equally powerful Queen; always has been, and always will be.
I also believe the idea of individual blogs killing off newspapers and magazines is an exaggerated notion that’s making a lot of marketing savvy individuals good money on the conference circuit but doesn’t really hold up to scrutiny.
My definition of a magazine is pretty simple: a curated collection of content, branded under a clear editorial mission and vision, and packaged to serve a clearly defined audience or community according to their needs and preferences. It’s a platform-neutral definition by design that puts the reader first, requires investment relative to its scale, and is a concept publishers need to come to terms with as quickly as possible.
The magazine industry is at a critical juncture, and the decisions being made now and over the next 12 months will determine who survives as more than a hollowed-out shell to be sold to a competitor, if not shuttered outright. An old boss of mine known for her turnaround skills had a philosophy about allocating resources that I’ve come to embrace: if it’s not performing, don’t be afraid to take it behind the shed and put it out of its misery, and dedicate those resources to something new, or to make something already profitable even more so.
I’d argue that it’s way past time to take the ad-supported business model behind the shed for a little talking to, and to start focusing on increasing the value, true and perceived, of the content we publish.
More on that later this next week ASAP…