Publishing/Writing: Insights, News, Intrigue

10/18/2012

Most Magazines to Begin Going Digital-Only by the End of the Decade


Newsweek – Going Digital-Only AND Global

At least that is what publishing industry ‘watchers’ predict.

One early indicator of this transformation: Newsweek magazine is going digital-only at the end of this year and be renamed Newsweek Global. (I still don’t think print mags will disappear completely – they’ve had too much of a renewed growth and popularity – due, incidentally, to digital growth).

But, it’s the ‘going global’ thing with Newsweek — and how they’ve set it up — that I think is interesting.

TJ Raphael reports this in FOLIO magazine:

Newsweek To Cease Print Publication in 2013

Rebranded in a digital-only format called Newsweek Global.

Earlier this week at the American Magazine Conference, industry watchers speculated that most magazines will begin going digital-only by the end of the decade—that prediction seems to be coming to fruition sooner than expected, starting with today’s announcement that Newsweekmagazine will cease its print publication by the end of 2012.

After 80 years in print, the magazine will transition to an all-digital format, renaming itself Newsweek Global, and will become a single, worldwide edition targeted for a mobile audience. Newsweek has an Asian edition; a Business Plus edition; an edition for Latin America; Europe, the Middle East and Africa in addition to its U.S. publication, all of which will be consolidated into Newsweek Global.

A statement from the Newsweek/Daily Beast Company, signed by editor-in-chief Tina Brown and CEO Baba Shetty, says that Newsweek Global will be supported by paid subscription and will be available through e-readers for both tablet and the Web, with select content available on The Daily Beast.

“Regrettably we anticipate staff reductions and the streamlining of our editorial and business operations both here in the United States and internationally,” says an internal memo posted on the company’s Tumblr page. “More details on the new organizational structure will be shared individually in the coming weeks and months.”

According to the most recent Fas-Fax from the Audit Bureau of Circulations for the period ending June 30, 2012, Newsweek saw a 9.7 percent year-over-year drop in the number of single copies sold at retail, with total paid, verified and analyzed non-paid circulation dropping by 0.2 percent. In the last three years, its total paid and verified circulation has gone from 2,646,613 to 1,527,157, with single copies going from 64,866 to 42,065 during the same period. Ad pages, however, have been up by 2.5 percent year-to-date, according to Min Box Score numbers.

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06/12/2012

How Targeted Acquisitions are Changing the Magazine Publishing Model


Targeted Acquisitions Changing Publishing Model

Giant publishers such as Hearst and Meredith are foregoing expansion by building in-house tangential departments (such as digital, mobile and marketing services) from the ground up and are, instead, target purchasing already established peripheral companies with the needed expertise.

They are doing so to play catch up with a marketplace that is moving faster than organic growth can keep pace with.

Who is buying who and what, when, and for what purpose and at what cost, and what’s exactly behind the deals is detailed by Bill Mickey, Editor of FOLIO magazine:

The Acquired

How big publishers like Meredith and Hearst are expanding operations, hedging against print advertising and transforming the traditional publishing model through targeted acquisitions.

Acquisitions allow companies to make rapid changes to their corporate structure and are often a way to play catch-up with a marketplace that’s moving faster than organic growth can keep up. The call for diversification has been going on quite a while now and it’s no big secret that print advertising, by itself, is incapable of the scale publishers need to survive. Accordingly, publishers have been acquiring companies with surgical precision that allow them to quickly enter a market that’s tangential to magazine publishing, but far enough outside their wheelhouse to be considered nontraditional—digital, mobile, marketing services, for example. And as these acquisitions are being made, the model of magazine publishing itself is being changed. And we wanted to look at how these deals not only change the buyer, but the seller too, and what this means for an industry that once only had one thing to do: Print magazines.

Two companies have historically been singled out for making key acquisitions that have, along with continuing to build out and expand their core media expertise, quickly given them significant market share in marketing spending outside of print—Meredith and Hearst. Here, we dive into their key acquisitions to see how the companies have changed as a result, the value that’s being created, and how the companies they acquired have also changed.

The Shift From Offline to Online

Nothing has inspired the necessity to chase nontraditional deals than the rapid shift of marketing dollars from print to digital channels. And now, even digital has fractured into social, mobile and search marketing spending, to name a few. Meredith was one publisher that recognized this relatively early and in the last 5 years has spent roughly $110 million on six companies to form its Meredith Xcelerated Marketing Group (MXM).

The group is kind of like an in-house advertising and marketing agency that allows Meredith to offer marketing services way beyond what its core media brands can offer by themselves. Yet having those media brands in close proximity to these new services allows for tremendous leverage and scale for the acquired companies as well.

Meredith had been offering “custom publishing” services to the tune of $75 million in annual revenue for 35 years before MXM, but the market was quickly changing in ways that print-centered custom solutions could no longer support. It was time to start buying, and fast.

“It became clear to us that the marketing dollars would start moving from offline to online,” says John Zieser, chief development officer and general counsel for Meredith Corporation. “We knew we needed these competencies and it was better to acquire them for a few key reasons: We needed them, the market was moving quickly, we had to get to market. In our minds it was better to buy businesses that had a track record of serving clients.”

Bootstrapping Is Too Slow

With the market changing so quickly and with huge accounts in the balance, Zieser and the rest of the executive team weighed the risks of a bootstrapping, entrepreneurial approach versus buying established expertise with an existing track record. “It’s really about how do you focus on delivering these competencies to our clients in a top-quality way?” he says. “If you find the right target, that’s a much more intelligent approach in our world, which is moving quickly. To me, as a corporate executive, it’s a lot less risky approach than trying to start something from scratch and putting it front of a Nestlé or Kraft and hoping it all works.”


Impacting the Traditional Model

While MXM operates as its own group, now making about $300 million in annual revenues (a far cry from Meredith’s custom publishing days), it has also had an impact on Meredith’s National Media group as well. The various companies that make up MXM now have a deep well of mass media-branded content to draw from and support their marketing services, and Meredith’s brands benefit from having a cutting-edge agency within arm’s reach. “Having cutting-edge marketing services is very useful—we often have National Media people sit in with pitches. We’ve also developed a profile of a company that is much more attractive to our clients than if we were to just stay in our traditional publishing role, there’s a halo effect as a result of these development activities,” says Zieser.

A unit within the National Media group, called Meredith 360, made up of executives attached to the big, national clients, also meets regularly with MXM and keeps them apprised on the strategic needs of the larger accounts. “It’s a useful pipeline to understand what our clients are looking for outside of traditional advertising,” adds Zieser.

Now, integrated marketing programs can run $1 million to $2 million per discipline (mobile, digital, social, etc.), but can run upwards of $10 million for a 12-month program across them all, some much higher.

Treading Lightly

In forming MXM, Meredith had a tight line to walk as each company was gradually integrated into the group and the company as a whole. In all cases, Meredith acquired entrepreneurial-run operations that were on the verge of stepping up to the next level and needed a bigger partner to make that happen. The owners didn’t want to totally liquidate and exit, and most of the deals were built on three-year earn-out models to keep the primary shareholders motivated and incentivized.

Nevertheless, the acquired brands had standalone value, and integrating them into the mothership too quickly could dilute that value. “We were very careful. These businesses are people businesses that have intellectual property—it’s human capital and expertise in that particular discipline. We were very careful about not integrating those businesses too quickly and not jeopardizing what made them special. But we were integrated from a revenue perspective very quickly,” says Zieser.

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11/07/2011

‘The Week Magazine’ Proves Print Power Still Exists


Print Magazine Success!

When most print magazines have been devoting more and more effort to digital operations to save their very skins … The Week magazine has been growing print subscriptions and advertising sales like it was the glory days of the 1960’s. 

How are they doing this, you ask? 

I asked too … and found this incisive article by Matt Kinsman, Executive Editor of FOLIO magazine

Print Power

How The Week continues to grow print revenue (and profits) in a dotcom world.

Mobile content and community brands dominated the media category of the 2011 Inc. 5000, which recognizes the 5,000 fastest-growing privately-held companies in the U.S. (The number one company in the media category: GoLive! Mobile, which “creates and packages content, including videos, games, and social media, for consumers to access on their mobile phones”, as well as offers consulting services to companies that want to create their own mobile content.)

But “traditional” publishers made the list as well, including two Felix Dennis-owned publications: Mental Floss, ranked #50 in the media category with three-year revenue growth of 52 percent to $3.1 million in 2010, and The Week at #51 in media with three-year growth of 49 percent to $38.4 million in 2010. Unlike many of the other publishers on the list, The Week continues to flourish as a print enterprise.

Here, president Steve Kotok talks to FOLIO: about how The Week continues to boost print revenue and profit, why readers are the brand’s best way of gaining new subscribers and why The Week is waiting until 2012 to finally jump into the app race.

FOLIO: The Week recently made the Inc. 5000 as one of fastest growing media brands. Where is the growth coming from?

Steve Kotok: I would say the growth is coming equally from subscription and advertising. The subscription growth is coming from our ability to raise price, that’s the biggest thing. According to ABC, our price is up 40 percent, and as measured by us as net-net it’s doubled.

On the ad side, it’s going from selling print ad pages to engaging with these larger brands. The number of ad packages we’ve sold at $500,00 or more since 2008 went from one to three to 10, this year it should be 15. The vast majority are combining print, digital, and events. We wouldn’t say, ‘Oh, it’s coming from print ads or digital ads.’ It’s coming from our ability to offer larger packages to the advertising brands and serve them if they want to make a splash in D.C., to serve them digitally, to serve them in multiple ways.

There is stuff we put in buckets for accounting, but when really looking at our biggest sales, we may say $600,000 of this goes to print, $400,000 goes to digital, and $50,000 goes to an event fee. We wouldn’t be able to sell any of it without the other.

FOLIO: Are packages coming from existing advertisers or new advertisers?

Kotok: It’s a combination. Every year you start new, some are existing advertisers, a lot of them are new…it’s definitely breaking a lot of new business but that’s not really a distinguishing factor. Every year we make our best shot at them.

FOLIO: Please talk about current revenue ratios (print versus digital versus other channels). What is it today and how has that changed in recent years? What does it need to be going forward?

Kotok:
Subscriptions and print advertising are more or less equal with Web ads being 15 to 18 percent of the revenue generated by print ads. However, print and Web ads combined exceed subscription revenue.

FOLIO: Do you see that changing going forward?

Kotok: I don’t now if we will see a huge change. A few years ago we may have thought that ads were going to grow faster than subscriptions but our ability to grow subscription revenue and keep it growing has surprised us. I don’t think we’ll start doing more digital advertising than print advertising.

We’re going on the Kindle, Nook and iPad in January and that’s all circulation revenue. I don’t see the mix radically changing, although we still see our print subscriptions and our print ads growing. Web ads are growing faster but at 15 percent of print revenue, it’s not a massive shift—we may go 80/20, 75/25, print to digital in the future. We have a good business. We’re aware of the trends. Even before digital, there were trends to follow. We’re not embarrassed of print.

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12/04/2010

Mag Publishers Branching Out


In order to save money, and also seek new revenue in non-traditional functions, magazine publishers are taking on related tasks usually contracted out to vendors. Actually they are strengthening their own vertical (business model) in-house capability.

These tasks include such things as launching all kinds of media products, from Web sites to custom publishing, virtual events, databases, books, supplements and spinoffs…Afterall, if you’re going to branch out you might as well stick to your core business and who knows what a publisher needs more than a publisher?

This magazine publishing branch-out (or in-house vertical strengthening, as I like to call it) kind of reminds me of what writers (novel writers as well as others) have had to do to break loose from traditional publishing “slush piles” and non-action by learning and taking on more of the tasks performed by publishing houses in the past…This all was made more possible and easier through the new digital technology. Let’s all drink a scotch on the rocks to that!

Tony Silber and Matt Kinsman, reporting for FOLIO magazine, analyze it this way:

When Publishers Become Vendors

Dave Schankweiler, CEO and publisher of Journal Publications Inc., a Harrisburg, Pennsylvania regional publisher, remembers the day he became not just a publisher, but a vendor to publishers too.

Back in 2004, the company, which publishes the Central Penn Business Journal, Central Penn Parent, and NJ Biz, launched a new survey, called Best Companies in Pennsylvania. It used an outside survey firm to do the first report. The night the winners were presented was a huge success. “That night,” Schankweiler remembers, “it was loud, and there was a countdown and a lot of excitement. And that’s exactly when we decided to change the company, because we were coming down from the high of the event. We said, ‘Why don’t we take this out into the market and do it as a service to other publishing companies?’ ”

Magazine publishers are by nature entrepreneurial types. They like to tinker with their businesses. They’re incessantly launching all kinds of media products, from Web sites to custom publishing, events, databases, books, supplements, spinoffs. But there aren’t a lot like Dave Schankweiler. Most media companies tend to stick to their knitting and limit their creative impulses to media products.

Some companies, though, are transforming themselves into a different kind of hybrid, media companies that have branched out into businesses traditionally occupied by publishing-industry vendors. Gulfstream Media, the Fort Lauderdale, Florida-based regional publisher is one. Gulfstream is the parent company of Magazine Manager, a popular ad-sales management software. UBM’s TechWeb is another. TechWeb created UBM Studios, which develops in-house virtual events for tech publisher UBM as well as for external clients.

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11/05/2009

Playboy Publisher Scrambles To Maintain Profits


From Folio magazine by Jason Fell 11/5/2009

Cost Cutting, New Business Model Top Priority for Playboy CEO.

Company reports $23.5 million net loss through first nine months.

In order for the print edition of Playboy magazine to break even or be profitable, “bolder steps are required,” recently-named CEO Scott Flanders said during the company’s third quarter earnings call Thursday morning. The company’s print/digital group reported a $900,000 loss through the first nine months compared to a $3 million loss during the same period in 2008.

Overall, Playboy Enterprises reported a $23.5 million net loss through the third quarter, down from a $13.6 million net loss last year.

During the call, Flanders declined to offer specifics about the “bolder” steps, but said three things are sure: he’s creating a new “corporate culture” that enables his staff to think and perform across divisions; he’s working on a joint venture in the development of a new business model for the company; and is strongly considering further cost cutting initiatives.

Flanders said he expects to announce those developments before the end of the year.

Last month, the company said it would reduce its rate base to 1.5 million from 2.6 million, and will combine its January and February issues into one, meaning it will publish two issues total during the first quarter next year. This summer, Playboy published a singular July/August issue that saved the company roughly $1 million in printing, paper and other costs. Those savings were offset slightly by expected declines in ad and circulation revenues as well as higher editorial costs, Flanders said during the earnings call.

Licensing, meanwhile, remains Playboy’s most profitable business, he said. The division reported a net profit of $15.9 million through the first nine months, down from $19.4 million during the same period last year.

Flanders said he expects to report a 38 percent decline in ad pages during the fourth quarter this year.

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