Coverage of long-time print magazines shifting towards an all-digital format has left many audiences feeling as though the ending of an era is appearing closer in view. Countless stories of a publications journey reaching the proverbial fork in the road being forced to choose a substandard existence over death have been told. Needless to say, this approach should not be done with a cautionary tale of tragedy and dejection, or as either necessary for survival, but acknowledged as an alternate avenue for publications to venture upon to stay on the continual path to success (instead of it being an ‘if/or’ situation, but more as an ‘also/additional’ decision to be made). Even though a last-ditch-effort approach has resulted in some cases, the overall condition of the industry remains on shaky but good ground.
Magazines came to life with the Edifying Monthly Discussions launched in Germany in 1663 and leading the trail as the first modern general-interest magazine, was England’s The Gentleman’s Magazine, published in 1731. Today, there are over 200,000 magazines in print worldwide with an average 20 billion paid copies in circulation monthly (both figures conservatively estimated).
The decision for a magazine publication to go from print to an exclusively online format became commonplace with PC Magazine in February 2009 and momentum gained with Computer Shopper following suit just two months later. Since then, all printed editions of the computer genre ended mid-2013 with PC World. To coincide with the decline of computer-related periodicals, news magazines have been among the hardest hit, according to Pew Research Center. In 2007, Life magazine, after three separate revitalizing attempts throughout its 71-year lifetime, became the first news weekly to announce a digital-only transition. U.S. News & World Report ceased printing in 2010 – releasing only the occasional special-interest college and hospital ranking issues – and in October 2012 the nearly 80-year long run Newsweek made its online-only debut. Time [magazine] is now the last of the mass-market general interest news weeklies to survive in print form.
It should be said, going online is not a guarantee for success, and, according to the publisher’s cost structure, readership and advertisers, being exclusively digitized may not be the best choice. In fact creating digital publications, as stated by Samir Husni, known in the industry as “Mr. Magazine,” if done well, will be much more expensive to create than similar ink and paper magazines. Be that as it were, for reasons such as “subject matter, frequency, editorial turnaround time, and advertising base,” structurally (or organizationally), magazine publications still possess the basic functions to run successfully, as pointed out by Harry McCracken editor at large for Time and former editor in chief at PC World. Notwithstanding, on a procedural basis, how the publisher’s will now choose to move going forward is the matter at hand.
The U.S. Magazine & Periodical Publication Industry – businesses that only operate online are not considered part of the industry – is expected to produce $38.4 billion in revenue for 2013 (latest numbers as of July 2013) with key segments being in entertainment (30.6%), academic and professional (28.8%), home and living (18%), general interest (16.5%), and other (16.1%), according to market research firm, IBISWorld.
The 2009 recessionary restraints depleted discretionary income at large for the average consumer. As a result of less spending publishers reduced advertising dollars leading to less total revenue as sales from newsstands declined; whereas subscription circulations were not as heavily affected. Many firms would opt to make operating cuts in the form of layoffs, dropping unprofitable publications and closing offices – some businesses were even forced to fold. The industry, presently, has yet to fully recoup pre-Recession profits.
“Profit, or industry earnings before interest and taxes, is estimated to make up 3.8% of revenue in 2013, coming back from a low of 0.0% in 2010…Profit is anticipated to continue rebounding during the next five years, to 4.0% of industry revenue in 2018,” IBISWorld reported.
Under a traditional business model a publication will have mostly fixed-costs. The costs associated with running a print magazine are production, printing (in-house or outsourced) and distribution with proceeds from sales of subscriptions, newsstand (single-copy) and advertising space being the major sources of revenue. As declared in the report, “Revenue from advertising accounts for nearly half of total industry revenue. Many companies in the industry choose to subsidize the cost of magazines to consumers with revenue from advertisers.”
From 2009-2011, as all industries across the board were affected by the economic downturn, a PBS article from 2010 suggests operating inefficiencies as the catalyst for why a greater impact was felt in the magazine industry; as signs of decline began to occur prior to this time period. “The ugly truth that no one seems to want to face is that 1) many media companies need better and more efficient management techniques and 2) many of these same organizations are starved for capital investment and innovation.”
It further highlighted that under the old method a “lack of investment in technology — sales management technology, digital and newsroom technology, accounting technology — publications don’t have the information in their hands to make decisions about resource management and where or what to invest in to improve results.”
Reduced readership and advertising expenditures could (in disguise or not) ease the burden for publishers when making restructuring decisions. When U.S. News and World Report’s circulation cut nearly in half from 2 million in 2005 to 1.1 million in 2010, the choice to go online was “the culmination of a long process inside U.S. News to gradually de-emphasize the printed magazine and shift focus to its highly influential and profitable rankings guides…,” explains The New York Times. Fortunately, the move paid off. As of 2013 the U.S. News website has 15.1 million monthly unique visitors with half of its revenue coming from digital advertising and “[t]he rest comes from income that companies pay U.S. News for the names of qualified leads; data from U.S. News’ vast archives that it packages and sells to institutions; licensing fees; and a new and growing conference business.” On the other hand, once Newsweek’s circulation “dropped by about half to 1.5 million and advertising pages plunged more than 80%,” as noted by WSJ, its fate was sealed. Formally sold for $1 to Sidney Harman by The Washington Post in 2010; Mr. Harman would later merge the business with IAC’s Daily Beast. After his death the family no longer financially supported the venture and once IAC – an online company- received a majority stake, printing of Newsweek was shut down.
As consumer tastes are changing and their spending steadily climbing publishers can capitalize by way of integration and by new ways of finding niche markets. Multi-platform publishing is increasingly becoming a useful tool by creating offline, online and live content. As far as a targeted marketing strategy goes, according to the same IBISWorld report, supermarkets remain the top outlet for magazine newsstand sales. One consideration could be where newsstand magazines are placed; perhaps a look into unconventional locations such as clothing or home furnishing stores as possibilities – this of course, for the intention of going where the publishers’ specific audience shops.
“The top four firms in this industry account for about 20.6% of industry revenue in 2013. Only 2.1% of the industry’s firms employ over 500 people, while about 84.4% of companies have a staff of fewer than 20 employees. About 55.9% of firms employ between zero and four people.” IBISWorld.
Advance Publications Inc.
Advance Publications is a private media company that owns several magazine publishing houses: Condé Nast Publications (titles including Vogue, Wired, GQ, The New Yorker, and Vanity Fair), Parade Publications, Fairchild Publications, American City Business Journals, and the Golf Digest Companies; including newspapers, television stations, 27 websites and 50 mobile apps. Its 22 U.S. magazine publications in circulation, accounts for 43.1% of the company’s revenue in 2013. Advance Publications holds 9.2% of the industry’s market share.
Time Warner, Inc.
Time Warner, a media conglomerate with businesses in television networks, TV and film entertainment and publishing, ranks as one of the world’s leading mass media companies. As of June 2014 its subsidiary Time Inc., as it is preparing for a spin off, will be valued as the largest U.S. publicly-traded magazine publisher in terms of market cap. Time Inc. publishes 21 magazines in the U.S., including Time, People, InStyle, and Sports Illustrated. Q1 2014 Time Warner posted $7.5 billion in revenue; excluding Time Inc. first-quarter revenue grew 10%. For 2013, revenue increased 4% from 2012 to $29.8 billion while Time Inc. generated $3.35 billion down 2% from $3.43 billion in 2012. Estimated current market share is 5.4%
The Hearst Corporation
Private firm, The Hearst Corporation, publishes 19 US consumer magazine titles; including Cosmopolitan, Esquire, Seventeen, and O, The Oprah Magazine; 15 newspapers; television stations and networks; and 2 radio stations; in the UK, National Magazine Company Limited, a wholly owned subsidiary, publishes 20 monthly magazines. Hearst achieved record revenue and profit in 2013, as stated on Hearst.com. Also, “Hearst has diversified well digitally, with over 800,000 digital subscribers in 2013, according to the Wall Street Journal.” Estimated current market share is 3.9%.
Meredith Corporation is a media and marketing company that operates on two business segments: national media (magazine, books and television) and local media (TV broadcasting), according to The New York Times. The publishing house is best known for its Better Homes and Gardens, Family Circle, Fitness, and Ladies’ Home Journal magazines. Total revenues rose 7% to $1.5 billion, and advertising revenues increased 7% to $824 million. Estimated market share is 2.1%
A special niche or an identifiable difference tends to separate successful magazines from others but, more importantly, it’s not just a matter of standing out but having adaptability. Can a publisher be unique as well as a participant of change as opposed to a victim of it? Case in point: Jet and Ladies’ Home Journal, two long-lasting, and prominent, consumer magazines that have recently been affected by altering paths. Jet, a staple in the Black community, will end its 69-year in print history in June forming an online-only presence and Ladies’ Home Journal announced that its legacy as the first general interest magazine to reach 1 million in circulation in 1903 will no longer issue paid-for subscriptions, turning instead the 131-year monthly magazine to a quarterly, newsstand-only publication and as a website.
The life cycle of the industry is on the decline but don’t bury it just yet. Expect more consolidating through mergers and acquisitions as consolidation is anticipated to occur to 2018. Although on a global basis, as stated by PWC, consumer magazines are “proving resilient.” However, in terms of improving new growth, the industry continues to perform at a snails pace. A total of 10.8 million digital replica editions or 3.5% of circulation were produced last year from the more than 300 titles reported, the Alliance for Audited Media announced; which is a step up from 7.9 million digital replica editions or 2.4% of the total industry circulation reported from 289 magazines in 2012 – making up an industry-wide increase of 36.7%. Nevertheless, publishers’ digital shares of revenue have more than doubled, up from 15% the year before to 32% in 2013 and as Charlie Gallagher of 3D Issue, maker of digital publishing platforms, so aptly explains:
“Increasing smartphone and tablet adoption has made the progression to digital content consumption a natural one for the consumer. Many publishers have realized this fact and are adjusting their approach to facilitate publications that combine both print and digital editions which has been helping their cause but worryingly there are still a number of publishers who have so far resisted going with the wind of change… It is clear that this [digital] segment of publishing is growing at such a rate that it will become the dominant force before too long (in some sectors it already has), in order for magazines to survive and prosper they have to be a part of the digital sphere, they have to be where the consumer is and the consumer is online.”