Newsweek had unique troubles as industry recovers
Paul Canetti, the founder and CEO of MAZ, a company that helps magazines publish digital editions, says he tells prospective clients to “dip their toes” into digital publishing and “wade in as the market demands it.” He notes only about a quarter of Americans own tablet computers, which have become a popular way to read online magazines.
“Maybe what they’re really facing is an audience-connection problem and not really a print-versus-digital problem at all,” he said.
Going all-digital could solve many problems associated with the print magazine business. For instance, magazine publishers charge advertisers according to a so-called “rate card” that is based on a promised number of paying subscribers, called a “rate base.” If subscriptions fall, publishers then must spend a lot of money mailing potential customers and offering heavy discounts just to keep advertising revenue from falling.
In contrast, online advertising usually requires advertisers to pay only for ads that are seen or clicked on by readers, a number that is easily measurable in real time and that doesn’t require the discounting of subscription prices.
Moving online could solve that problem, which hit Newsweek in particular, said Tom Rosenstiel, director of the Project for Excellence in Journalism at the Pew Research Center in Washington.
“Newsweek’s problems came from spending an enormous amount of money to maintain a guaranteed rate base,” he said. “They ended up spending millions each year to try to reach a number of readers they needed to reach.”
Newsweek is betting that there will be enough growth in the number of tablet users to make up for the fact that when its print runs end with the Dec. 31 issue, a lot of subscribers will be left without a way to get the magazine.
The magazine expects that the number of tablet users in the U.S. will exceed 70 million this year, up from 13 million just two years ago, Newsweek spokesman Andrew Kirk said.
“We have reached a tipping point in the industry at which we can most efficiently and effectively reach … readers in an all-digital format,” he said.
However, it’s a choice that doesn’t reflect the general health of the industry, said Mary Berner, president of The Association of Magazine Media.
She said she doesn’t want a decision by one publication to be an indication that the entire magazine industry “is going down the toilet.”
“That’s simply not true,” she said. “The experience of reading the print version of magazines is not going away.”
• AP business writers Michelle Chapman and Barbara Ortutay in New York contributed to this report.