The Changing Magazine Industry

Continuing on with the topic of struggling media companies, here is an article from the WSJ discussing the changes the magazine industry is making in order to remain competitive, as competition from both cable news and the internet has hurt revenues and profitability. The companies are restructuring their operations, streamlining and shedding employees in an effort to maintain profitability/survive. The graphic below depicts the year to year change in the number of ad pages in various magazines.

Notice how the economist is the only magazine that has shown a YoY increase in ad pages, I suspect this is because the physical publication provides a lot of news that can’t be easily acquired on the web. With all due respect to the publisher of Newsweek the issue isn’t one of branding or image, instead it’s the simple fact that it’s rather easy to obtain all the content from a current events magazine on the web for free. While Newsweek and Time both run unique analysis and commentary, it’s still rather easy to find it on the Internet or find similar content from somewhere else. Why would someone pay Newsweek for its latest cover story, when chances are one of the big Internet portals will syndicate that content and provide it to you for free?

The issue is one of “uniqueness”. Cover to cover the economist is full of stuff you can’t find anywhere else, which gives it a distinct advantage over other print publications.

This is not to say that the economist doesn’t have an online presence, but it’s doing, in my opinion, a better job of providing the public with “some” of the content from its print publication whilst also providing breaking news coverage as well. It’s a nice balance between providing breaking coverage a magazine can’t provide, and a “taste” of the print edition without giving away the entire thing online.

Based on my own experience the economist is one of the few print publications I still read (even though I have subscriptions to multiple print publications), for no other reason that it’s just easier for me to get the same content online. Most of the magazines I subscribe to just pile up and take up space unless I take them along with me to read on planes, at the gym, etc. When I consider the other magazines I always read offline they’re magazines like “Stereophile”, “Seattle Magazine” or Amex’s “Departures”, as there just isn’t an online alternative that provides the same level of information.

Another aspect is that the aforementioned magazines often serve as reference materials, as (again) it’s easier to look up a review on a particular power amplifier, a local restaurant or a vacation destination in the physical issues, as opposed to the online alternatives.

The key to success (if not survival) for old-line media companies is to deliver something offline that can’t be acquired online, while simultaneously trying to search for ways to monetize online delivery at similar levels as offline. Perhaps monetization is the greatest obstacle, as the inability to monetize the online world at the same level as the offline one is what is crippling newspapers and the music industry as well.

Graphic courtesy of the WSJ

Disclosure: the author doesn’t own positions in any of the companies mentioned in this article.

Comments

[User 152859]

When consumer of media decide that they have some expertise in a market because they consume, it somehow comes across as fact via the internet. Thankfully, magazines like Time and Newsweek have a process called fact-checking which keeps them and their stories on-target and relevant. What Mr Lee doesn't know about the magazine industry is clear from his "analysis", which he should hold to cocktail party observations and not share with an investing audience.

[Markham]

Criticism is more valuable when you point out the actual flaws in the thing you're criticizing, as opposed to merely saying: "The individual doesn't know".

What I do know is that Time and Newsweek are having trouble selling magazines to my generation and their response is to berate us for thinking their magazine as old and stodgy, as opposed to looking at the way we actually consume news media.

I.e. My generation is telling Newsweek how to reach us, but Newsweek is ignoring the message.