Oh, to be the Economist

When newspaper people in the U.S. aren’t wishing they were the Wall Street Journal – “well, they can charge” – they aspire to be The Economist.

Dream on.

I just got email announcing The Economist Group’s latest financials.

* Operating profit up 26% to £56m
* Revenue up 17% to £313m
* Full year dividend of 97.3p per share, an increase of 8%
* The Economist’s worldwide circulation grew 6.4% to 1,390,780 (July-December 2008 ABC). It was named Magazine of the Year by Advertising Age and topped Adweek’s Hot List for the second year running
* Economist.com’s performance has been strong, driven by a strategy to make it a place for intelligent debate; advertising revenue is up 29% and page views 53%

The good news is that quality still sells.

The Economist is to the rest of the news industry as Apple is to Google. In What Would Google Do?, I argue that Apple is the unGoogle. It violates practically every one of the 40 rules I set out. But it succeeds. Why? It’s that good, uniquely good. There’s room for one such company, probably, in any industry – and that spot isn’t always filled (name me the Apple or The Economist of phone companies, airlines, cable companies, or retail).

In news, the Economist is the exception that proves the rules. It doesn’t have the individual voices and brands that succeed elsewhere on the internet; it has a single, institutional voice (but a charming one). In a sense, it’s a general-interest publication in the age of specialization (and every other general-interest product, from Time to the metro daily is failing). It has built a strong online product but it’s still not known for that; it’s a magazine (pardon me, newspaper) that still relies on and succeeds in print.

The problem for the rest of the industry is that they can’t all break the rules as The Economist does because they’re just not that good. You have to be great to the The Economist or Apple and if you fall short, you fall all the way. And staying great is constant work.

I was at The Economist’s offices in New York last week for lunch with editors. Don’t think that they are resting on their laurels. They, too, are trying to understand The Economist’s role on the new media age (my advice: they have just about the smartest crowd anywhere and I hope the company asks how that crowd can be empowered to connect, share, and create). But it’s a nice perch from which to be wondering what to do next. While other publications are looking for a limb to grab onto as they fall, The Economist is looking for the next higher branch.

  • http://knackeredhack.com knackeredhack

    Jeff,

    I’ve often wondered whether the main reason The Economist is so successful is that it was a collaborative place long before collaboration was fashionable. I just hope in their efforts to connect with me, their reader, they don’t lose touch with one another.

    Tim

  • http://www.andrewspittle.net/ Andrew Spittle

    Just to throw another company out there to answer your “name me the Apple or The Economist of phone companies, airlines, cable companies, or retail” question: Virgin Airlines. I think in terms of excelling in a niche Virgin does a tremendous job. Sure, they may a little more expensive (Apple) but they offer comfort and service, particularly for business people, that has no rival (The Economist). Just thought I’d throw that out there.

  • Paul H

    Southwest. It’s their way or the highway (or another airline) and they have been a true standout in the airline industry for the last 38 years.

  • http://www.familygreenberg.com/index2.php Brian Greenberg

    Jeff – since I only seem to post when I disagree, I thought I’d chime in here as well: this is a brilliant observation.

    @Andrew Spittle, Paul H: I think before we brand Virgin (or any other company) as the Economist of their industry, we should look for the tell-tale qualitative signs: rising market share in a declining industry (or, at least, rapid growth that far outpaces the industry’s growth). Virgin and Southwest may have strong marketing strategies and good differentation, but how are they weathering the global downturn in air travel?

    • Paul H

      For the record, I do not include Virgin with Southwest. My point with Southwest as the airline analogy to Apple is that (as stated very well below) “get everything right, by doing everything wrong” (when compared to their peers that is). I am far from a student of the airline industry, but am aware of a few things that seem “wrong”, but combined “get it right”. Examples include: Hedging fuel prices tens of years out, creating a work environment and incentives that avoided unions and creating an operating model that the envy of many industries, using their own reservation system, not assigning seats, maintaining a point-to-point route system vs. hub-and-spoke, etc. No one else did these things and they have combined to create a profitable (yes, still profitable) product that has an extremely loyal customer base (and I am not one of them!).

      As far as how they have weathered the downturn, well time will ultimately tell and will shake out over years not months or quarters. However they are still profitable though margins have been challenged. I think their track record demonstrates a willingness to think and act differently and deliver results. I speculate that the market believes this as well given they are the most valuable domestic airline ($4.6B) and this is despite “doing everything wrong”.

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  • Andy Freeman

    I often write “good, unique, valuable makes money” in response to someone lamenting that “journalism” doesn’t pay what said someone would like. I continue with “if all three are too hard, go with unique and valuable”.

    The Economist, which is succeeding, appears to be producing “good, unique, valuable”. Are there any failures that do?

    Suppose, for the sake of argument, that the vast majority of the successful journalism enterprises are practicing “good, unique, valuable” and very few of the failures are. (There will be a couple of exceptions – someone will make some money from the brutal biz that is commodity news.) What are the odds that your company will be one of the exceptions?

  • http://www.myfrugalways.com plin

    I like Economist because of the additional analysis it provides. Instead of simply stating the facts that are broadcast everywhere online, it actually provides analysis that are insightful. Although not everyone will agree with the analysis, I like the way it provokes me to think about different economy around the world and how it affects where I live.

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  • http://www.sixtysecondview.com david brain

    I think Wired said of Apple that they “get everything right, by doing everything wrong”. Maybe the same can be said of The Economist.

    • Pontus Nystrom

      About Wired/Apple/Economist. Everything is not just marketing and communication, you could come a very long way by just building a great product

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  • http://www.bug.co.uk Tim

    “name me the Apple or The Economist of airlines”

    If JetBlue, Southwest, easyJet, AirAsia, German Wings, VirginBlue and Tiger Airways are the Google of airlines, then Emirates is the Apple or Economist of airlines.

  • http://alephblog.com David Merkel

    The Economist succeeds because of superior writing, not being US-centric, and because they take sides, like blogs do.

    That last point is important. I don’t always agree with their opinions, but having opinions, even as a group, makes the writing more punchy, like many blogs.

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