Posts about magazines

All hail Justin Smith

When people ask me for someone smart who’s doing innovative and successful things in magazines, I scan the known world and always end up at the same place: Justin Smith, who just announced that he is leaving Atlantic Media to become CEO of Bloomberg’s media group.

I’ve known Justin since he launched The Week in the U.S. and I’ve admired his work nonstop. He is rather unsung so it’s worth recounting some of his successes thus far:

* At The Week, he launched a *weekly* magazine with a *total* staff of 24 — which is fewer than the old butler staff at Time. The concept for The Week came from the U.K. It was the original news curator, taking advantage of the oversupply of news we still have. That wasn’t his. But his method for launching the magazine was new: He created an ad scarcity with limited pages to sell. He refused to waste a fortune on fees and returned copies on newsstands, selling it only in some bookstores. He launched essentially a subscription-only magazine and he let that grow organically, by demand, rather than bribing people to subscribe with costly sneakerphones. He thus didn’t spend a fortune on marketing.

* At Atlantic, Justin took a dying brand and rather than milking it and devaluing it with cheap stunts as others are, he increased its value by turning it into an online brand that happened to have a magazine (how cool). He understood that what appeared under the brand online would have little to do with the magazine and so he invested in new content. That included investing in writers as brands, for he recognized the attention and audience they could bring — thus Andrew Sullivan’s sojourn there on his Paul Theroux-like train tour of the internet.

* He had the guts to create new brands, starting with Quartz, relying on his experience starting a blog company outside of his job. He had the vision to invest in smart editorial talent and the patience to let them build.

* Like a few other publishers — Condé Nast included — he saw that he had to take on the role of an advertising agency, no longer just selling space on a page, print or digital, but offering creative and marketing services to advertisers. Yes, there was that stumble with Scientology, an important object lesson and warning for everyone dancing with the devil in mixing selling and informing under one brand. But all in all, his real lesson to the industry is to change the relationship of media to marketer. You can see him talking about this in a discussion he, John Paton, and I had at CUNY sometime ago — the video is below.

* LATER: Oh, yeah, I forgot: He also made a strategy at both companies at using events wisely as a way to brand the publications as a convener of important conversations and as a way to bring in sponsorship revenue — a model other media properties are just beginning to mimic.

* AND ONE MORE THING: He made Atlantic Media profitable.

Bloomberg can use him. It is a powerhouse, the one journalistic organization that is hiring — often our CUNY students, I’m happy to report — like no one else. It has a pay wall that really works with its truly valuable terminals (that don’t offer commodity information; they sell speed). It rescued BusinessWeek to own a consumer brand. It started an opinion site. It dabbles in TV.

What Justin can bring, I think, is much more consumer attention to the company. There are lots of very smart opinion makers writing for Bloomberg but I don’t see them in the conversation. There’s a considerable investment in video but I don’t see it embedded or talked about enough. There is much good journalism but to reach consumers it could stand to have a voice. And with a stronger brand and much technological muscle, I’m confident that Justin can bring a torrent of new advertising attention and revenue to the company.

It is a brilliant hire. I’m glad to see him be able to show off his stuff on a more visible stage.

Digital First and the Future of News from CUNY Grad School of Journalism on Vimeo.

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Digital First

At CUNY’s Tow-Knight Center for Entrepreneurial Journalism, we invited John Paton, CEO of Digital First Media, Journal Register, and Media News, and Justin Smith, CEO of Atlantic Media, to answer questions about how they are executing their digital first strategies. I interviewed them, digging down into revenue, costs, transition for staff, audience, and advertisers, and more. Here’s the full video:

Digital First and the Future of News from CUNY Grad School of Journalism on Vimeo.

Paton made it clear that digital first is a transitional strategy, not an end game. He said that at companies like Paid Content, he cannot ever imagine them having a digital first discussion because they obviously are already digital. But he has to transform his companies into digital companies. He talked about cost-cutting and efficiency; about how he is multiplying digital revenue; how he motivates sales people to sell digital; about digital journalism; and about the size of a digital company versus a print monopoly.

Smith — who also launched The Week magazine in the U.S. with a unique and successful strategy — came at many of these questions from the perspective a magazine that sells high value. So he is not only multiplying audience through digital. He is making Atlantic, more and more, into a digital marketing agency for his clients. On the one hand, he says, costs decline from paper to screen, but costs also increase as advertisers need and will pay for greater services. (I think we’ll find that even down to the local level, media companies will have to act like agencies, helping advertisers execute their own digital strategies …. more on that another day.)

In a time when much of the rest of the newspaper and magazine industries are moaning and mourning about their fate, these two executives are building a new future. They are optimists, as are we at Tow-Knight. They have reason to be as they begin to find successes on this difficult path.

Whither magazines?

Three people I respect a great deal now lead the big magazine companies: David Carey (ex Condé) at Hearst, Bob Sauerberg at Condé, and now Jack Griffin at Time Inc. — and I’ll add Justin Smith at Atlantic.

It’s a big challenge to head a magazine company these days (witness the sales of Newsweek and TV Guide for a buck each). Circulation is plummeting; costs are soaring; advertising competition is killing.

But I still say that magazines have unique value in media as the centers of communities of information and interest. They just have to act like it. My advice to my friends at the top:

1. Ignore print. Enable community. Yes, print is where the revenue is today. But it’s only going to shrink. Preserving print — and the past — is no strategy for the future. The physical costs of production and distribution are killing. The marketing cost of subscriber acquisition and churn is hellish. The editorial costs of maintaining gloss are wasteful if not sinful. So concentrate instead on your relationships with your like-minded souls among the people formerly known as your audience. In a social (post-brand, post-search) market, these magazines still have tremendous if very perishable value if you know how to unlock it because their people care about the same stuff. Enable communities to build and meet and create value around their interests, especially those that are specialized — SI and EW will be worth more than Time, Jack. EW may look like a bad business today (it pains me to say that, as its Dad) and it may be way too late to the web party, but I still think there’s one last chance to enable fans to congregate and create. Enable them to do what they want to do and follow along. Before you follow the money, follow the passion.

2. Avoid Steve Jobs’ siren call. The iPad is not, not your salvation. Oh, it’s nice and elegant but your editors are leading you over the lemmings’ cliff because they think the public wants the world packaged just as they used to package it. The link robbed them of that control forever. And that’s great news to you because you can now listen to your customers, your readers, instead of your editors. You can escape the cost and tyranny of editorial ego and determine what the community wants most. Fine, have apps. But the winner in your war, friends, will be the one who breaks out of the old models and scales to enable a huge community instead of a small audience.

3. Build new brands. Don’t just preserve the old brands. Enable a thousand entrepreneurs to build a thousand new brands. Curate them. Train them. Equip them (Flips for all!). Promote them. Sell them. That’s the key to scale.

4. Build new networks. Oh, I know, magazine people make fun of Glam because it’s not as controlled as magazine brands but they’re blind to do so. Glam grew to four times iVillage’s size by enabling a network of many independently owned sites and brands. That’s the way you can grow and scale even as your old, print brands shrink. So imagine a huge, scalable network of like-minded sites and brands you don’t have to build and pay for that you can sell.

5. Commerce. I don’t think you’ll succeed at charging readers for content. As Google taught media and government, we now operate in an economy of abundance, not scarcity. So trying to convince readers to pay premium prices for content when content is anybody’s game is a fool’s paradise. But I do think you can sell merchandise to the people formerly known as readers as long as you take on the skills of merchandiser. And that ain’t editors.

6. Cut costs. Yes, I know, Felix Dennis made his career on that call and look where it got him. But there’s no doubt that growth will not come from fancy offices and car services and wardrobe allowances. So cut the hell out of your costs. Move to Jersey.

7. Be any-media. Glossy paper is expensive. Pixels are cheap.

8. Get local. This is the hard one but it’s a goldmine if you can figure out where the entrance is. Look at how ESPN is going local. Every one of your magazine brands (well, except Time) can find local audiences, local advertisers, local efficiency if you can scale advertising sales with new partners.

I used to love magazines. I bought piles of them every week. I don’t buy them anymore. I don’t need them anymore. I don’t miss them. Sorry but it’s true. Be honest and imagine life without any of your magazine brands. It’s not hard. It’s easy. So imagine instead what would matter: relationships. That’s the key to your future.

What makes me hope that these four people might be able to pull this off is that they aren’t just advertising snake-oil salesmen. They understand value. Now they have to find it and enable it and I think the key to that is people, not content or paper or apps.

Advertising is next

Condé Nast is a house built on smoke and mirrors — that is, to say, on brand advertising. So it is astonishing to hear its CEO, Chuck Townsend, essentially toss the company’s business model out the window of the Death Star in what The Times frames as “a fundamental overhaul of the advertising-based business model.” This, folks, is surely the real product of the McKinsey studies undertaken at Condé, not a few magazines folded but a new strategy. In a phrase:

Advertising is fucked.

I’ve said that Rupert Murdoch’s paywall is also essentially his surrender of any hope that advertising can be grown or even maintained. He gave up and shrank like George Costanza’s privates. It’s one thing for the dirty digger to give up on car ads. It is quite another for Condé to go off its diet of Madison Avenue and Seventh Avenue in favor of a parking meter.

Photo: Flickr - wallyg

“We have been so overtly dependent on advertising as the turbine that runs this place, and that is a very, very risky model as we emerge from the recession,” Condé CEO Chuck Townsend told The Times. “In a company like ours where 70 percent of our margins are generated on the advertising side, we must develop a much, much more effective financial relationship with the consumer.” That is, get money from the consumer instead of the advertiser.

Good luck.

The company plans — like Murdoch — to try to suddenly get new money from consumers who for years — long, long before the internet — have been accustomed to almost-free content: $1-per-issue luxe magazines that cost probably four times that to produce and distribute (not to mention the tens of dollars it takes in marketing to acquire that subscription with advertising and schwag — a purse for Glamour readers or the fabled sneakerphone up the street at Sports Illustrated).

Condé promoted Bob Sauerberg, former head of consumer marketing (read: circulation) to its presidency. Bob is one of the good guys of Condé Nast (I don’t mean to damn him with faint praise there … sorry, couldn’t resist); he’s smart, mature, experienced. (I worked with him a good deal when I was at Advance’s parent company and he was at Fairchild; I should add that none of what I’m saying here comes from the slightest contemporary knowledge of the company; haven’t been in the cafeteria for many months.) Bob knows management and consumer marketing. The age of the ad sales guy is over because the age of the ad is over.

The problem is going to be that there is only more competition in content and so trying to suddenly charge more flies in the face of basic economics. The absurdity of the strategy struck me yesterday as Amazon tried to sell me a subscription to Time for 28.8 cents an issue while Time is trying to sell its iPad issues for $4.99 and I see no reason to buy either. In what world do these economics make sense? In their dreams.

“I want to collect income from the consumer,” Townsend told The Times earlier. “An annual magazine subscription may be something like anywhere bet[ween] $12 and $24. So I’m currently locked into a model that says I get a buck or two a month. How about I get a buck for a click?”

Dream on.

They’re not wrong that they need to get money from consumers but they’re not going to get it for content. Sorry guys. But as Google schooled the newspaper industry (I’ll substitute appropriate words):

The large profit margins [magazines] enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No [dreaming] will be able to restore [magazine] revenues to what they were before the emergence of online [content]. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.

Instead, I suggest they have to get new revenue through commerce — through selling the things they once advertised now that advertisers are deserting them to sell direct. Problem is, that’s hard, as Condé knows best from its experience with Style.com, which started as an attempt to create a high-end store (I worked there then). They created it in partnership with a retailer and the retailer bagged the effort when times got tough in the first bubble; it then became another ad-supported site. But the strategy wasn’t wrong. Problem is, there is no retail expertise in the company.

More recently, Condé should have bought Net-a-Porter but instead luxury conglomerate Richemont snarfed it up. (Disclosure: I spoke at Richemont’s corporate retreat recently.) Condé should buy Gilt to establish new skills, a new relationship with customers, and new revenue. Its content then becomes just added value: the Cinnabon’s in the mall.

A media company going into retail and selling in areas held by former advertisers has precedent: Media News’ Salt Lake City paper became a real estate broker and undersold the entire business in town. The Telegraph, as I like to point out, sells everything from hangers to wine to betting to its readers.

But if Condé and other media companies are going into retail, they need entirely new skills of merchandising and sales, an entirely new financial structure to cope with inventory costs and tight margins, the ability to cope with entirely new competitors and suppliers (that is, former advertisers — but, worse, Amazon), and an entirely new efficiency (forget the cafeteria; they’d be lucky to have a Wal-Mart lunch room with vending machines as a profit center).

They also have to defeat a calcified, entitled culture. For that, I’d suggest they buy Gawker Media to get the incredibly popular competitor Jezebel and to infuse the company with a new culture. Make Nick Denton editorial director and COO and then watch the fun.

I doubt they heard any of this from KcKinsey because in the few encounters I’ve had with them they remix known models rather than invent new ones, which is what is called for here. I’ll bet they proposed cutting some costs (done) and remixing revenue (started) when what’s really needed is a complete restrategizing.

Or maybe I”m wrong. Maybe 4 Times Square will become the world’s lushest mall, with one helluva food court.

Nevermind my advice. The moral of this story remains that advertising is next to fall into the black hole (as a Time Inc. president once dubbed this damned internet thing). Welcome to Bob Garfield’s Chaos Scenario.

Gourmet, 86ed

Shocking news this morning that Gourmet, the Talmud of food, is closing – less shocking that Condé Nast is also folding Cookie, Modern Bride, and Elegant Bride, all apparently a case of the other Monolo dropping after McKinsey dug into Condé’s closets.

(Disclosures: I worked in Condé for bits of a dozen years as a corporate online guy. I was privileged to be there when Epicurious was started around Gourmet and the surviving Bon Appetit. When the company bought Modern Bride, I twice worked on its digital presence and strategy. Oh, well.)

When Condé folded Portfolio, I said it didn’t yet presage the death of magazines, only of magazine launches. Well, that “yet” has arrived and now magazines are going to start dropping like newspapers – faster, even, for there’s more direct competition among the slicks.

We will see at least one business magazine go after BusinessWeek is sold. One or even all three of the general-interest news magazines is toast. There’ll be death among women’s magazines. Men’s magazines are already sinking. Showbiz magazines will have more and trouble competing with online (I fear for my baby, Entertainment Weekly). Watch for blood in the trade publishing business as blogs beat B-to-B magazines in service and efficiency.

Magazines as a medium won’t die and when ads come back – or at least stop falling – the survivors will get a gulp of oxygen (AdAge reports that magazine revenue fell 6.9% last year). But it still won’t be pretty. The valuable FitchRatings media report, which I received just today, decrees:

Fitch remains skeptical about the ability of magazines to profitably make the digital transition. Fitch believes the larger players will seek to rationalize available print advertising inventory through consolidation and closing down titles. The remaining players will have scale through portfolios of top brands in demographics that are attractive to advertisers, but sustainable profitability remains uncertain as advertiser sentiment is likely to continue to shift away from print mediums.

Fitch is prescient about Condé: It is closing multiple magazines in a category and keeping the strongest. Bon Appetit is the winner, I’d imagine, because its demographic is younger and its cost lower. Brides is the better brand in that category. When Condé bought Modern Bride, it thought it owned the category but was shocked to see that in the meantime, the No. 1 brand among brides – a market that is replaced every 18 months – has become The Knot. That’s how fast a venerable brand can sink from preeminence.

I used to buy magazines by the ton (especially when I had an expense account to support the habit). I loved rifling through them. I loved working on them. But now I have all but stopped reading them in print. I still read magazine stories now and then but, like everything else in my media day, I come to them through links, from peers and aggregators. Just as other media have been disaggregated – the atomic unit is no longer the album but the song, the equivalent in news was the publication or the section or the article and now is the post – so is the essential element of the magazine no longer the publication but now the article, at least for now. So what separates a magazine article now from a newspaper article or a blog post except, perhaps, length (and online, length is often seen as a liability)?

Packaging used to be a key value of magazines: the great editor selecting the interesting topics and good writers and cooking a meal out of it. But in the era of media unbundling, the magazine becomes an instant anachronism. Reading the New Yorker or Economist or Vanity Fair becomes an act of living nostalgia, at least for those who can remember them. For the next generation reading magazines and newspapers and buying albums is – haven’t we learned this yet? – an alien experience, a media oddity.

So go to the newsstand today and look around. You’ll never see so many magazines again. One by one, like the trees they used to kill, they will fall. Some will remain standing, stronger because they’re not competing for sunlight and nutrition. But magazines as a medium and an industry will only shrink.

As a former magazine man, am I sad about that? What’s the point of emotions? It’s economics. As I’ve been saying about my cancer:It is what it is. There are new and wonderful ways to tell stories and to curate good and interesting work and so the value of the magazine can continue even if the form cannot.

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.

Are magazines doomed, too?

Condé Nast folds Portfolio even as it starts Wired in print in the U.K. So which are we to take as the harbinger for the future of magazines?

I hate to be calling doom for yet another medium, but I fear that Portfolio is the better indicator. We’ll see magazines fold and it’s going to be a lot riskier to start new ones to replace them — riskier because, just as on TV and in movies and music, it’s harder to create a blockbuster and consumer magazines depend on the blockbuster economy. Magazines don’t make money until they hit magic numbers of circulation (which comes only after renewals reduce marketing costs) and advertising (which is sold at heavy premiums and that market is bound to suffer both in a recession and against unlimited competition from online). In the U.S. market, subscriptions are so heavily discounted ($1 per issue for a product that can cost $5 or more to print and distribute) and marketing costs are so high (subscriber acquisition can hit $20 or $30) that the risk is only greater.

Entertainment Weekly, my baby, went through an astounding $200 million before becoming profitable. No one is going to invest that kind of money again. If anybody would, it was Condé. Oh, well, so much for that.

A few years ago, I was asked to speak on a panel at a magazine industry meeting. A few days before the event, the organizer called me and said, “Uh, Jeff, are you going to say that magazines are doomed? And if you are, could you not come?” So in a rare moment of preparing for a panel, I actually thought about what I thought and I concluded that magazines weren’t doomed. They have the unique value of slickness and focus that their publishers always brag about. And, I reasoned, magazines already were communities and so they should be perfectly positioned for the community-based internet. Magazines are collections of people who are interested in the same stuff. The challenge for an editor is to figure out ways to enable them to share with each other, to become a platform for that community.

Afraid I was wrong. Or at least, it’s hard to name a magazine that has done a good job becoming that community platform. The problem, as I said of newspapers in relation to GeoCities and MySpace the other day, is that magazines can’t stop thinking of themselves as content. They’re not communities.

If I proposed EW today, I’ve said here before, I wouldn’t make it a magazine, not for a second. It would be a community of criticism about all forms and tastes in entertainment, growing far, far bigger than its razor-thin page-count these days. But those communities already exist online; they’ve organized themselves. They don’t need EW. I hear that EW is suffering as a result. And it’s probably too late to rescue itself. It would pain me if EW followed Portfolio. But it wouldn’t shock me.

Can other magazines save themselves? I still think it’s possible. But then, I said that magazines weren’t doomed.

Mind you, I’m not saying that magazines are going to start dropping like flies and newspapers. When the economy comes back, many will still be able to sell their targeted, engaged audiences to advertisers for a premium … at least for awhile. Some may even manage to pull off a metamorphosis into community platforms and a few high-value titles — see: The Economist — can even grow. But when the weak ones die, there’ll be none to replace them.

And there are so many ready to die. Who needs newsmagazines? Business magazines are suffering the tragic irony of being at the same time more necessary and less supportable because of the financial crisis. Men’s magazines have been folding. Entertainment magazines are dicey. Trade magazines are dropping. And the list goes on and on.

So what about Wired? I don’t know, knowing what you know now about the state of the economy and magazines, would you have decided a year ago or so to start a new one?

The death of Portfolio doesn’t yet presage the doom of magazines. It marks the doom of magazine launches.

: Speaking of Wired.co.uk: Can anyone explain how this story is wired?

Don’t meet. Work.

So now the American society of Newspapers Editors has canceled its annual meeting, joining the Magazine Publishers of America, joining the World Association of Newspapers and the World Editors Forum before them. There aren’t enough dollars to send them to Vegas or its equivalent. And the way things are going, there won’t be enough of them to get a quorum anyway.