Last week, five of the largest publishers of magazines and newspapers announced their support for a new electronic venture - a “Hulu for Magazines” they called it.
I put my bet in the death pool for this at eighteen months. Do I have any takers for sooner?
I understand why they’re doing it, but I think that they’re doomed to fail. These are monster businesses that have made millions of dollars in the past and they see their businesses crumbling. They’re trying to do something to keep those high profits coming in.
Their solution: keep doing the same thing, but do it electronically. See this amplifier? This one goes to eleven.
And they think that if they hurry they can get out ahead of Amazon or Apple before they disrupt the market and reduce the cover price of their publications to ninety-nine cents and their profits to pennies. They saw it happen to the recording industry. Hell, Time Warner was one (but no longer).
But it’s too late. Readership is plummeting. Advertisers are fleeing. And readers are showing that they no longer want a monthly or even weekly package of information. They want a continuous stream of information. And publishers can be profitable in the new model, just not wildly profitable.
This announced model shows that they understand nothing. They don’t understand the technical infrastructure required to publish online (hey, I’m doing it now!). They don’t understand that the reader has many other options, most of them free. And they don’t understand that the market will continue to evolve. And that evolution is happening damn fast.
There are ways they could have reinvented themselves, but they’ve chosen not to. And that’s a shame. For example, I was a big fan of Gourmet Magazine, which Condé Nast recently shut down. Just shut it down. It’s been publishing since 1941. And since they insisted that it was a print magazine, they couldn’t figure out how to capitalize on almost seventy years of content and a devoted group of readers. And an even bigger group of potential readers in the increasing “foodie” market. They couldn’t figure out that a staff of just a few people, maybe as few as four full time employees and a strong group of freelancers, could have turned that treasure trove into a vital web business. But a small business. Not one that generates millions, but maybe just hundreds of thousands. A nice, small business.
Did they actually ask any customers if they’d pay full subscription costs for the online editions of the magazines they currently subscribe to? How much would they pay? Or what other ways could they use that amazing content to generate a little revenue, enough for a nice small business.
But they don’t want a nice, small business. So they killed it. And they’re killing their other publications with this move.
{ 2 comments… read them below or add one }
Randy,
Unfortunately, I can’t agree with the contention that,
“And publishers can be profitable in the new model, just not wildly profitable.”
Right now the business models don’t work out–the amount you have to pay writers to have a “continuous stream of information” of the type that isn’t news can be ruinous. Models are not worked out to have 24/7 flow, and the logistics are nightmarish. (Speaking from the side of the fence that I’m on, I’m intimately familiar with these problems.)
The conversion is not the simple. Which is not to say that it isn’t possible, but it isn’t possible directly, and the route from here to there is fraught with peril. And no one is willing to make the first mistake. But it is in making the mistakes that you learn how to do it right.
So I do agree with your ultimate point which is–no one yet is doing it right–though Salon and Slate try.
shalom,
Steven
It is a thorny problem and I’d welcome a wider discussion.
What I’m calling for is wider experimentation, not this attempt to wall off the publications and try to treat their online versions like packaged digital versions of the physical magazine. If it were one of twenty experiments, I’d applaud it, but as their complete thrust, I think they’re unlikely to succeed.
I recently met with a trade publisher – they have a very nice business, four employees and a group of contract writers. Their revenue is around $2 million per year. And they publish a newsletter 5 days a week and a full updated site, with video and special features. It’s a nice living, but not a big business. I think the model of the future is more like theirs than what they’re showing for Sports Illustrated and Bon Appetite.
Thanks for comments – I’d welcome a “guest” post from your perspective!
Randy