Monday, August 31, 2009

Doubling Down on Print: Magazine Launches Uptick in A Crunched Economy

At first it might appear as if some people in the magazine industry are in dire need of searching for their sanity when you first read FOLIO:'s article on a spate of new magazine launches in recent weeks. Certainly print media has its fair share of die-hards, and, well, when it's what you do well and you want to keep doing it, it's not likely that you're going to stop any time soon. But as much as there's that never-say-die strain to print media these days, there's also a lot of sense to many of the efforts that are being undertaken these days to launch new print titles.

For one thing, you'll notice that the list of magazines being launched includes a strong mix of private-labeled publications for stores, enthusiast organizations and other types of very focused market niches with loyal followings and a strong desire for relevant content. These are the kinds of niches in which print media has done very well historically and also the types of publications where captive audiences are going to appeal to many advertisers and marketers. It may be less expensive to advertise online, but when you own the audience for a particular niche anyway, why not capture the value for advertisers as effectively as possible? When you're involved deeply with a very focused topic or geography, print offers a way to get very personal with an audience that still appeals to many audiences and advertisers.

But as much as new titles such as these are valiant efforts to help marketers still looking for value in their advertising budgets, there is a larger and more nagging problem that is hanging over both consumer and B2B magazines that's just not going away; namely, why are magazine publishers still so intent on maintaining gross revenues to support ultimately unsustainable cost structures? Yes, there are good reasons to demand higher revenues for quality online content, be it through higher ad rates or various subscription and pay-as-you-go plans for readers, and these are likely to start taking off as advertisers chase their audiences into online venues more aggressively. Premium outlets will continue to thrive online indefinitely if they manage the mix of content and community features effectively. But the broader truth is that the era of big media founded on high revenues from a handful of titles is largely drawing to a close. This doesn't mean that media is dying; to the contrary, media is thriving more than ever before, even as it thrived before the past several decades of media consolidation. But what it does mean is that success will be measured by different standards moving forward.

I was struck particularly by an entry posted recently in Howard Owens' blog that underscored the importance of accepting different cost structures for media moving forward. Howard notes:
It wasn't until late 2007 that a switch tripped in my head and I realized I needed to flip the expense/revenue picture upside down. Instead of thinking about how to generate more cash, I needed to figure out how to create a news operation that could exist profitably based on a reasonable expectation for local online revenue.

In a market where the newspaper newsroom might cost $10 million, I knew how to make $1 million online, or even $2 million, but I didn't know -- and still don't -- how to make $10 million.

So if I can make a million online, why do I need operate a $10 million newsroom, especially given the greater efficiencies of online publishing?
In other words, while it's great to get that ten million if you know how to do it, why are publishers still so intent on launching a handful of publications that might make big revenues the old way then they can launch far easily many smaller publications online that can succeed in smaller increments very effectively? While it's not a perfect analogy for every publishing operation, I am thinking particularly of portals such as TechTarget, which is able to define and publish very discreet slices of content for very specific computer technology topics that it pays for by selling qualified leads to tech marketers. The very targeted special topic sections that The Huffington Post and other publishers are able to create rapidly and efficiently are also good examples of how online technologies can allow publishers to adapt rapidly to hot interests far more effectively than the usual "book"-oriented mentality would allow.

At the same time, many of the people who advertisers are seeking are spending more and more time with the people with whom they share common interests in social media outlets such as Facebook and brand-specific online communities managed via white-label services such as Lithium Technologies. Good editorial content will always be a draw for advertisers, but increasingly it's an extension of a core online market conversation that's managed via platforms other than news and magazine portals. The recent addition of a Facebook Connect-enabled discussion community on The Huffington Post underscores the importance of editorial content having tight connections to the personal networks that people trust to underscore their willingness to trust sources of editorial content. The fundamentals of marketing are changing before our eyes, yet media companies still whistle in the dark in search of dated metrics while opportunities to invest in the success of future metrics remain underfunded.

In this sense it's fortunate that Reed Elsevier has dared to float a GBP 824 million stock placement to gain more capital in spite of its short term effect on its share prices. If publishers should double-down on anything, it should be on raising capital to reinvest in the innovations and new business models that will sustain them well into the future. The Web has, by fiat, declared publishing to be a innovation-driven growth industry for more than a decade, even while major publishers have tried to maintain the illusion that it's still an IP-driven cash cow industry. Lower share prices from dilution may seem like a painful decision in the short run, but if publishers don't have the working capital to keep up with mean, lean operations that have invested in innovative approaches to publishing already, then they won't have much in general very shortly. For those who tried to leverage their way into a mythical king-of-the-hill media mogul position in the marketplace, well, sorry, timing is everything, they say. In the meantime, congratulations for those folks who have managed to float new print titles for very focused markets. It works for today, at least.
Post a Comment