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Subscriptions Now Available on the iPad

Posted on Thursday, May 26, 2011 at 12:44 AM

In the news: The New Yorker and Wired iPad Subscriptions.

Condé Nast's The New Yorker recently became the first magazine to offer a subscription in the iPad app store. Other magazines such as GQ have followed suit.

Elsewhere, Wired has also begun offering subscriptions on the tablet device. In the past users could purchase individual issues only. Now, the tablet magazine edition will be available to digital subscribers for a yearly rate and to print subscribers as a free perk. The magazine describes its model thusly: "Subscribe once, read anywhere, anytime." The research and development doesn't end with the iPad; the magazine also plans to explore desktop, Android, and smartphone publishing.

Annual Wired iPad subscriptions are $19.99 (one issue per month), monthly subscriptions are $1.99, and individual issues are $3.99. Read more.

Also Notable

Digital Content Creeps Up on Print

The U.K.'s Future Publishing Limited has posted its first-ever digital profits in the first half of 2011. The numbers are impressive: According to PaidContent.org, digital revenue is up 30 percent, and both the Lick of the Day app (an extension of Future's Guitar World magazine) and MacLife magazine had over half a million downloads this spring. Future's digital editions are experiencing meteoric growth (up ten times over last year), while print edition sales have been weak.

For the time being, most digital Future magazines are replicas of the print editions, but tech magazine T3 is published on the iPad. Read more.

Should You "Mobilize" Your Website?

According to Outspoken Media, content providers need to be reaching out to their mobile users. More and more users are seeking out information on their smartphones, and publications must capitalize on this trend in order to reap the full benefits of the digital wave. Outspoken Media goes a step further and warns, "To be a site that doesn't render in mobile is similar to not having a site at all." The site offers five tips for making online content mobile-friendly. Read more.

Social Networking Demographics

Curious about who is using the popular social networking websites? AdAge.com has compiled statistics regarding Facebook, MySpace, and LinkedIn. The statistics might reveal where your magazine might be best served in the social networking universe. Read more.

The Bundling Approach

Could bundling of print and digital content be a lucrative solution for magazine publishers? According to The Wall Street Journal, more and more publications are experimenting with a new model: charging for digital content and throwing in the print product as a free or deeply discounted digital subscription perk. In the past, the trend has been the inverse: to monetize the print edition and give away online content for free. Will more and more magazines jump on the print-as-perk bandwagon? Read more.

Next Issue Media Newsstand

Last week, Next Issue Media launched its Android alternative to the iPad digital newsstand. The digital magazine store is a collaborative effort by several magazine giants (including Condé Nast and Hearst) to provide alternatives to iPad editions. Next Issue Media hopes to make over three dozen titles available by the end of the year. Read more.

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Do Paywalls Really Work?

Posted on Thursday, April 21, 2011 at 7:16 AM

In the news: New York Times Web traffic has taken a hit since the publication instituted a paywall on its website.

When the New York Times announced that it was putting up a paywall on its website, the roar was deafening. Readers who had enjoyed free content for years were up in arms, and publishing insiders squabbled over whether the move was genius or folly.

The paywall is not as prohibitive as some. Readers can still view up to twenty articles free of charge each month. After the twentieth article view, they are asked to subscribe. According to the Times, only 15 percent or so of online visitors read more than twenty articles per month. PaidContent.org explores some of the page view and site visit statistics. Read more.

Also Notable

The Daily Roundup

So how is iPad's The Daily digital newspaper doing? It's hard to say, but Nieman Journalism Lab paints a bleak picture. It's too soon to write The Daily's obituary; the Nieman study examines Twitter sharing of the publication's content, not concrete subscription numbers. Nieman describes the interest level in dismal terms. Still, a recent tweak to the app to resolve some lingering technical issues may boost numbers. Read more.

Magazines on the iPad

Things remain tense between Apple and magazine publishers, but more and more magazines are showing up in the iPad store. The iPad subscription model can mean limited or no access to customer data, a compromise that makes it difficult for publishers to market their magazines effectively. For the time being, however, the iPad is virtually the only game in town. If other operating systems can adopt and subsequently improve upon Apple's subscription model, magazine publishers will have a host of options for their digital editions. The next high-profile iPad adopter? The New York Times. The newspaper plans to be available on the iPad by June. Read more.

Independent Mobile Publishing

Mobile advertising revenues may be on the rise, so it stands to reason that mobile publishing will grow considerably in the coming years. In a recent Folio: article, Marshall Matheson shares his strategies for "mobilizing" Web content with smartphone/tablet site redirects, apps, and QR codes. Devising a sound mobile strategy benefits publishers on two levels: 1) Magazine brands can tap into the exploding mobile user marketplace, and 2) They can attract new advertisers whose focus is mobile advertising. Read more.

Newsweek Owner Dies

Sidney Harman, who purchased the ailing Newsweek magazine last year, died last week at 92. His family intends to continue with the magazine. Read more.

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The Daily Quest for Online Profits

Posted on Monday, March 21, 2011 at 5:30 PM

Part II. Success of The Daily launch is in question. The publisher is mum. Who knows if the start-up is a hit or a flop?

By William Dunkerley

The Daily, the new iPad-based multimedia publication of News Corp., is off to a quixotic start. In Part I, we covered the February 2 launch and focused on a number of possible pitfalls ahead. Now, as the publication is about to enter its third month of operation, there is very little to indicate that things are going well.

First, a free two-week trial period was extended to almost 7 weeks. PC Magazine indicated that the extension was issued as a result of "some stability issues and bugs." The original trial was credited to the sponsorship of Verizon. There's been no word on who's footing the bill for the extension.

Despite the extensively extended free trial, News Corp. has been evasive about the extent of readership. Publisher Greg Clayman told The Independent, "We're not disclosing the exact numbers (of downloads) but it's in the hundreds of thousands." He also declined telling exactly how many paid subscribers there are, except to say there are "more than one and less than 1 billion." Cute.

However, The Guardian reported "Although the Daily has been free so far, it is understood that a few thousand people have already signed up to the year-long subscription. News Corp has not released any numbers, but it is estimated that the figure is in the region of 5,000."

Meanwhile, AFP, the French news agency, reported that The Daily "has tallied hundreds of thousands of downloads since its launch a month ago its publisher has said." Beyond the ambiguous claim of "hundreds of thousands of downloads," there doesn't seem to be consistent and reliable information about readership.

It's hard to imagine that The Daily would be so tight-lipped about its audience size if the news were good. It's also hard to understand how it can be conducting a credible advertising sales effort while keeping the audience size a virtual secret.

In other advertising-related news is the puzzling absence of any information on the publication's website on how to advertise. There is no link to an advertising contact. There is no link to a media kit. Not even a rate card. It seems like quite a strange advertising sales strategy.

"Strange" may indeed be the byword for the orchestration of this launch. In addition to all the aforementioned concerns, there is the matter of what devices The Daily will work on. PC Magazine claims they were told that an application will be released for Android-based tablets within months. However, The Daily's own website claims that the publication is intended exclusively for the iPad. More apparent confusion.

Is It Even Legal?

The Daily uses the highly-controversial new Apple subscription system. It's touted as being as convenient as buying a song on iTunes. The Federal Trade Commission and the Department of Justice, however, are looking into the subscription scheme, according to Information Week. There has been a lot of speculation that it is basically unfair, if not even illegal. The Wall Street Journal ran the headline "Apple's Subscription Rules Raise Possible Antitrust Issues." What's more, Apple's demand for a 30 percent cut of revenue from subscribers who are new to the publication has raised a lot of eyebrows. Legal analysts seem to believe that the final result will depend on whether Apple is deemed to have a dominant position in the marketplace.

As a publishing issue, the 30 percent doesn't really seem problematic. Publishers are used to new subscriber costs often running several times that. What's more, Apple claims that if the publisher recruits a new subscriber, Apple will process the order at no charge. (At least that's what Apple seems to be saying.) But if Apple and the publisher are both out there selling subscriptions, that makes them competitors in that activity. And if competitors are conspiring on the subscription price, is that price fixing? Perhaps the legal analysts should be looking into that angle.

But It May Be a Moot Point

All this worry over whether The Daily's subscription arrangement with Apple is legal may be for naught. It won't really matter if the publication does not survive. Despite all the hype that the iPad is the up and coming substrate for magazines, some preliminary figures speak otherwise. They seem to be saying that the hype is -- well, just hype.

Media Post reports that, in 2010, "sales of digital magazines on the tablet computer have fallen significantly." Data cited indicates that Wired magazine's digital copies went from over 100,000 for the first iPad issue to 23,000 copies just 5 months later. Vanity Fair took a dive from selling 10,500 digital magazines down to 8,700.

While the numbers were tanking for these and other publications, the total sales of iPads jumped 565 percent through the end of the year.

I don't know what people are doing with all those iPads, but it doesn't seem to be reading magazines. Indeed, there is quite a dearth of objective data available about what iPads are really being used for. There's a lot of hype about what they might be used for. But not much hard data on actual usage.

Nonetheless, The Daily remains a pioneering effort in multimedia publishing, one worthy of our continued interest. News Corporation's Rupert Murdoch says he believes The Daily "will be the model for how stories are told and consumed in this digital age." Indeed, it may become that. But, for now, it seems to be hitting snag after snag. Unless things change, it may be the model for how not to orchestrate an innovative launch!

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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Apple Magazine Publishing Templates?

Posted on Monday, March 21, 2011 at 5:30 PM

In the news: Is Apple releasing a magazine publishing template for its iPad tablet?

According to some industry insiders, Apple may soon release Xcode, a magazine publishing template for the iPad. This template would help publishers to make the print-to-iPad transition a lot smoother and resolve some of the formatting issues that accompany transferring text and spreads from print to a tablet screen. It would standardize the iPad magazine publishing experience.

While the template release is little more than rumor at this point, it is an exciting prospect for magazine publishers who have struggled to turn their print editions into attractive iPad editions. The template would also, according to the Gadget Daily website, "facilitate in-app purchases for subscriptions and back issues." Read more.

Also notable:

The New York Times' Payment Model

The New York Times has finally unveiled its online payment system. On March 17, publisher Arthur Ochs Sulzberger Jr. published a letter announcing the change to the online pay structure. Non-subscribers can now read 20 articles on the website per month before being asked to subscribe. Smartphone and tablet app users can continue to read Top News stories for free. Read more.

Internet News Consumption Still on the Rise

Thanks to smartphones and tablets, Internet news consumption continues to explode. According to The Project for Excellence in Journalism, Internet news consumption increased 17 percent in 2010. The number of people using the Internet as the primary news source has also grown. Read more.

Meredith Corp. Magazines on the iPad

Three Meredith Corp. magazines (Parents, Fitness, and Better Homes and Gardens) are now available on the iPad. Prices range from $2.99 to $3.99 per issue. The publisher also plans to make these editions available to Android users. Ultimately, Meredith Corp. hopes to engage its female readers in the digital sphere and facilitate content delivery for busy, on-the-go subscribers. Read more.

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The iPad Daily

Posted on Thursday, February 24, 2011 at 10:56 AM

How the iPad's daily newspaper is bringing the traditional newspaper into the Digital Age.

By Meredith L. Dias

Earlier this month, Rupert Murdoch's News Corp. launched The Daily, a daily newspaper for the Apple iPad. With this digital daily, News Corp. hopes to marry the traditional concept of the daily newspaper and tablet technology. Forrester Research has forecast that tablets will overtake desktop computing by 2013. News Corp. seems poised to take advantage of that trend.

The Daily is Murdoch's appeal to a new generation of readers. Will it become the gold standard for digital newspaper publishing? Will new readers latch on to Murdoch's vision? And just what subscription model is News Corp. going to use, anyway?

An App-based Subscription

Thanks to Verizon sponsorship, The Daily will be available to iPad users for a free two-week trial. Satisfied readers can subscribe for 99 cents per week or $39.95 per year through the iTunes App Store. There is a new issue each day, with periodic updates throughout the day for breaking news content.

There are, of course, limitations. Currently, the publication is iPad-only; not even iPhone users can access it. What this means for the ultimate success of The Daily, which just debuted on February 2, remains to be seen. While the iPad is certainly popular, it stands to reason that News Corp. would get more mileage (not to mention profit) out of the daily, which will cost an estimated $56 million to run in its first year, if it were at least available to the millions of iPhone users in the United States.

Publication Features

So what does a subscription to The Daily get you? "A newspaper that's both old-fashioned and cutting edge," says Peter Kafka of MediaMemo.com. Journalistic content is beefed up with photographs, 360-degree panoramic images, streaming HD video, and links. Users can share some content with their social networks, but other content remains behind a paywall.

Interactivity plays a role in The Daily's identity, too. Users can share certain articles with their social networks, and there are both text and audio comment options for readers to sound off about stories. They can also customize their reading experience with features like local weather data.

Some early adopters of the app describe their Daily experience as "more like reading a news magazine than a traditional newspaper." Others have dismissed the newspaper as tabloidesque. Still others have lauded Murdoch's incorporation of snazzy multimedia extras into news copy.

Advertisers

News Corp. hopes that, eventually, subscriptions and advertising will each account for half the publication's revenues. For the time being, the newspaper will rely primarily upon its subscribers to pay the bills. However, in a recent article on RedHerring.com, newspaper analyst Ken Doctor predicts that less than one percent of iPad users will buy subscriptions to The Daily, which would necessitate a less balanced, advertising-heavy revenue model.

For the time being, the newspaper remains in a foundational phase, developing relationships and name recognition with advertisers and readers alike. CNBC reports that HBO, Land Rover, Macy's, Paramount Pictures, Pepsi, Verizon, and Virgin Atlantic are among the first advertisers.

Can The Daily Go the Distance?

The Daily has one advantage over its competitors: It is brand new and, therefore, free to explore its own potential without the burden of heavy reader expectations. Unlike the New York Times or Time, this is a new brand. It has no print or digital predecessor and, therefore, can evolve with a freedom impossible for an established publishing brand. However, with its powerful Murdoch backing, The Daily has enough resources and name recognition to become a powerful contender if it employs sound strategic planning.

There are, as mentioned earlier, limitations. With several high-profile tablet models, not to mention the perpetually expanding crop of smartphone users, it would be wise for News Corp. to reconsider its iPad-only strategy. The iPad makes for a compelling test market, but with other tablets now on the market and several more due to hit stores this year, it seems unwise to remain iPad-exclusive for long. We can't know how popular The Daily will become, but if it does meet or exceed expectations, expanding beyond the iPad could mean the difference between 50,000 and 5,000,000 subscribers.

Meredith Dias is senior editor of STRAT.

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The Daily Quest for Online Profits

Posted on Thursday, February 24, 2011 at 10:55 AM

Part I. Magazine publishers have long lamented the absence of a successful model for online profits. Will the launch of The Daily show us the way?

By William Dunkerley

News Corporation's digital start-up, The Daily, is sure to be a model for the rest of us. What's unclear is whether it will be a model for what to do -- or what not to do!

The Daily promises readers an embarrassing richness of multimedia features: audio, video, enhanced photography. I've long advocated that publishers open up to the array of channels now available for bringing content to readers. The Daily certainly seems to share that advocacy. This start-up well could be a transformative publication in the evolution of our industry.

A lot will be riding on the implementation, however. Will the publication use the multimedia tools in a way that will enhance reader satisfaction? Will the enhancements help the reader to better understand the content? Will they intensify the reader's satisfaction with the publication? Or will the multimedia features be used simply gratuitously as bells and whistles? It's hard to tell at this early date in the life of the publication.

In fact, there is a lot about the publication that is hard to discern presently. News Corp. has put out a lot of very limited information on its newborn. And, some of the early media discussion of the product contains various takes on it that don't entirely agree. We've tried to sort through those for you in our reporting, but must admit that we're dealing with a market entry that does not seem to be entirely understood by anybody.

Device Specificity

The Daily is device-specific. It's an iPad publication. It may be available on other devices in the future. But, replicating The Daily's features on other devices will likely require an additional app or program for each device. This aspect of device specificity is one of two problems that should be high on any publisher's list of things to consider before jumping in.

There are other publications that are already available as iPad apps. They range from Marvel Comics to The Wall Street Journal. These apps, however, are likewise device specific. The prospects of making your magazine available for additional devices can be daunting. According to Richard Pradley, managing director of Semantico, an online services provider, "As yet no publishing infrastructure exists that can take a given work and repurpose it automatically for all available delivery platforms and operating systems." It takes a lot of expensive human intervention, he explains.

Bob Cohn of Bonnier, a large multinational publishing group, recently told Folio magazine, "We want to be on as many devices as we can logically handle." That may be fine for gigantic operations like Bonnier. For smaller magazine publishers, the budget needed for all that development may be elusive.

The second consideration related to device specificity falls in the category of industry modus operandi. A publisher that goes device-specific is stepping into the world of computer software and hardware. There, planned obsolescence is a way of life.

As publishers, we make our money by having ever-changing content in our publications. That's what keeps customers coming back. Paper has been the stable substrate for publication content for centuries. The iPad and other PDRs (portable digital readers) represent in effect new substrates born of the computer industry. Continued sales in the computer field is different in nature from that in publishing. It comes from new models, new versions. A lot of that is driven by the development of new technologies. Some of it seems to be marketing-driven, i.e., planned obsolescence.

With that in mind, what are the chances the iPad will still be around in 10 years? In 5 years? What's more, a newer technology may come to entirely replace the entire tablet computer category. Of course, publications will need to adapt to all these new developments. My point here is just that it is in our interests that our multimedia publications be developed in a way that does not leave us at the mercy of software developers and computer manufacturers whose own interests may be at variance with ours.

Who's in Control?

That leads to the question of who is the customer and who is the vendor in this equation.

If you look for parallels back in the print-only days, publishers had basically the printer and the Postal Service to work with. The constraints they imposed on how publishers did business and what they published were relatively minimal. Where limitations did exist, alternatives were available, albeit usually at higher prices. Many will argue that the Postal Service did little to ingratiate itself with publishers. The printers certainly did a lot. They each tried to out-do each other in serving publisher needs. I guess that's the difference between dealing with a monopoly vs. competitive entities.

But even the Postal Service didn't say that if you set a price for subscriptions delivered by them, you couldn't price the subs differently for alternative delivery. But that in effect is what many allege Apple's policy on subscription apps amounts to. It's hard to know all the ramifications with certainty. As Bob Cohn remarked about Apple, "...they haven't been too transparent."

Even with fledgling competition from Google, and from others on the horizon, Apple seems to have assumed the posture of a monopoly. The fact that The Daily seems to have kowtowed to that sets a bad precedent for our whole industry. Apple is certainly not coming across as a vendor wishing to court the favor of its publisher customers and prospects.

A lot of noise has been made about Apple's demand for 30 percent of the revenue from each subscriber that it brings to the publisher. But that doesn't sound like a bad deal to me. Many publishers are glad to spend 100 percent of the first year revenue acquired from a new subscriber just to get him or her. Profits come from renewals. Traditionally the cost for getting the renewals is very low. It's not clear how Apple would handle renewals, other than taking another 30 percent each time. That would mean after a few years the publisher starts to come up on the losing side when using Apple as a new subscriber source.

That's not the worse part, though. In publishing, selling subscriptions is not at all like selling music singles (which is where much of Apple's App Store experience lies). If they sell a single, it little matters whether the buyer is in New York or LA. But, if the App Store is selling subscriptions for a New York–centered magazine with New York–based local advertisers, it certainly does matter. The advertisers won't want to pay to have their ads downloaded all over LA for viewing by people who are not likely to become customers. This concept doesn't just apply to geographic considerations. It's relevant to things like age, gender, profession, interests, etc. Certainly the magazine's title, cover, and description may ward off some of the mis-fit subscription sales. But if something in your New York magazine somehow goes viral, you suddenly could be big in LA!

Plunging iPad Magazine Sales, and More

There are a lot of other issues raised by the advent of The Daily. One is the apparent nosedive in subscription sales for iPad magazines right at the time The Daily is being promoted. What's that all about? And recently, there are a lot of questions about whether Apple's iPad subscription program is even legal! We'll cover those issues and more in Part II of our business analysis of what The Daily means to magazine publishers.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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Is Wikileaks Relevant to Us?

Posted on Tuesday, January 25, 2011 at 11:25 AM

The process of publishing may never have come under such intense scrutiny before.

By William Dunkerley

For most publishers, the dilemmas faced by Wikileaks publisher Julian Assange probably seem quite remote. Certainly Assange himself is a controversial figure. Opinions of him range from criminal to hero. But a number of publishing-related concepts have come up in coverage of the scandal that deserve analysis and clarification.

If some kind of counterpart situation had arisen in your field of publication, how do you think your editor would have handled it? Editors Only conducted an anecdotal survey posing the situation, "Let's say someone approached you with content that's sure to interest your readers. But it was leaked and a foreign government considers it to be confidential." The survey then asked the question, "What would be your editorial decision?"

Of the survey respondents, about half said they would publish the information. Around one-quarter said they wouldn't, and the remainder were uncertain.

Some respondents believe it would be their duty to publish, while others consider publication irresponsible. One publishing expert took a pragmatic view: "I'd bring in a lawyer or two to tell me what kind of consequences publication would have. If it is not going to be a criminal offense in my country, and if I have proof that papers are not faked, forged, or the like, I'd publish them. Definitely. Keeping a foreign country's state secrets is none of my business."

According to Columbia Journalism Review, twenty faculty members of the Columbia University graduate school of journalism wrote to President Obama and Attorney General Holder about Wikileaks. They warned that prosecuting Wikileaks would establish a dangerous precedent. Their view is that Wikileaks is engaging in a journalistic activity that is entitled to First Amendment protection.

At the same time, the Pentagon was asking news organizations not to publish the questionable information carried by Wikileaks. According to the Associated Press, Pentagon spokesman Dave Lappen warned against disseminating Wikileaks' "stolen" information, even if already published elsewhere.

CNN further editorialized on the matter. National political correspondent Jessica Yellin said, "We would draw a distinction between publishing information that comes to you by, [sic] and publishing information that is stolen by somebody." CNN national security contributor Frances Townsend disparagingly commented, "Is [Assange] profiting from the commission of a crime? And the answer to that is yes."

In December, I attended a World Affairs Council public discussion of the Wikileaks scandal held in Hartford, Connecticut. As you can imagine, there were comments both pro and con. But, what I found most interesting is that in the audience of around 30 people, there were two FBI agents who so identified themselves. They actively participated in the discussion. Among their comments were the suggestions that (a) one can't trust the Wikileaks information since the chain of custody is unclear, (b) China is somehow involved, and (c) decoupling the databases of the various US intelligence agencies could help avert future leaks. After the meeting, I asked a World Affairs Council official what the story was behind the attendance of the FBI agents, and was told that "they came because they were interested in the program."

Here are a few takeaway points from the Wikileaks scandal:

1. It is abundantly clear that when considering the publication of something as controversial as the leaked cables, it is worth doing a risk/benefit analysis. Would you really want to subject yourself to possible criminal prosecution (even if you believe it would be unfounded), and to a powerful government dispatching security agents into the field to speak out against you?

2. The claim by CNN's Jessica Yellin and the Pentagon's Dave Lapan that the Wikileaks information was stolen appears to be specious. For something to be stolen, there must be someone who has property rights to that which is stolen. Copyright law is the mechanism that establishes property rights for content such as the allegedly-stolen cables. However, according to my layman's understanding of US copyright law, the federal government is explicitly excluded from eligibility for copyright protection for its own work. That would mean that anything authored by an employee of the federal government is essentially "unowned," and thus unable to be stolen. The actions of the US Army intelligence analyst who was Wikileaks' source are another story, however. He has been charged with unauthorized disclosure of US classified information, which is not directly a publishing matter.

3. Similarly, CNN's Frances Townsend's comment about "profiting from the commission of a crime" seems off-base. Perhaps Townsend is thinking of the "Son of Sam" laws. They are intended to prevent a convicted criminal from profiting from his or her own crime. Why, if Townsend's apparent contention were true, the authors of books about the JFK assassination would be guilty, since they presumably profited from Oswald's commission of a crime!

4. A participant at the WAC discussion reasoned that if someone received a stolen television and then sold it, that person would be guilty of trafficking in stolen merchandise. He asked why wouldn't the same concept apply to Wikileaks. However, as pointed out above, the cables in question do not appear to be stolen property.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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Watch Out for Big-Sounding Percentages

Posted on Tuesday, November 16, 2010 at 2:08 PM

Digital Hype Watch: Misleading numbers often have percent signs.

"Some have referred to the current marketplace as the 'golden age' of online advertising..." So proclaimed a recent Foliomag.com article. It went on, "That's the story at Hearst's Popular Mechanics." The story cited the publication's online advertising as being up 46 percent over last year! It was pointed out that online outpaced print, which was only up 25 percent.

Flying in the face of that buildup is that "print represents 89 percent of the magazine's total revenue." The reader is left to do the math that online constitutes only 11 percent of all revenue. But then again, it may be less. If print is 89 percent of "the magazine's total revenue," what about circulation and list revenue? If there's some of that, it means that online revenue would be less than 11 percent.

Confusingly, the story also states that "most advertisers take an integrated approach of using both print and online advertising." Even accepting the 11 percent online revenue postulation, it means there's a 9 to 1 ratio of ad spending, print to online. Some golden age! What's more, when we calculated out the stated online growth increment, the numbers suggest that it will take at least 15 years before online will even equal print, much less surpass it.

Now, we don't know how factual any of those numbers and resultant calculations might be. But, regardless, they seem to have very little meaning for publishers who are now planning their own online strategies. There is no doubt that online advertising is growing and that publishers need to position themselves accordingly. But the "print is dead" and "tomorrow everything will be digital" predictions found in many quarters deserve some scrutiny. Otherwise, publishers could be led astray as they make important decisions regarding their ascent into multichannel publishing.

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Breaking News: Newsweek Sold Again

Posted on Monday, November 15, 2010 at 8:20 PM

Ownership of Newsweek changes hands for the second time in three months.

By William Dunkerley

Newsweek, just sold last August, has another new owner. Now it's owned by The Newsweek Daily Beast Company, a joint venture created by Newsweek and The Daily Beast (an online news website). Sidney Harman who bought Newsweek in August is a 50 percent owner of the new company. IAC/InterActiveCorp, owner of such websites as Match.com, Excite.com, Reference.com, and founder of TheDailyBeast.com, owns the other 50 percent. Interestingly, IAC's chairman and CEO, Barry Diller, is a board member of the Washington Post Company, the outfit that sold Newsweek to Harman a few months back.

STRAT analyzed the factors of Newsweek's business strategies in our July issue. We found them flawed, but there didn't seem to be a compelling business reason for the sale. Then in our August issue, we reported on the sale to Harman, a publishing novice. We wondered what could have motivated the purchase of the money-hemorrhaging news magazine.

Now, we're left wondering what's behind joining forces with a news website. Newsweek already has a news website (Alexa rank: 1911). But reported plans are to junk Newsweek.com in favor of keeping TheDailyBeast.com (Alexa rank: 2121).

Did Harman buy Newsweek and cleverly flip the property for a nice profit? There have been no media reports of any money changing hands going into the joint venture.

Was Harman merely an intermediary for the acquisition of Newsweek by Diller who himself was afraid to ask for it? Who knows.

Are the principals assembling a print and online news organization to support a 2012-oriented political agenda? Who knows on that count, too.

Some speculate that the wisdom of the joint venture lies in efficiencies of a combined operation. Reports indicate that Newsweek is leading up to a $20 million loss for this year, $10 million for The Daily Beast. It's hard to picture wiping that away with "efficiencies." Our analysis indicates that Newsweek's losses are a result of flawed business strategies. The Daily Beast, on the other hand, is still in a start-up mode (launched in 2008). Thus, its losses are not necessarily a result of any dysfunction at all. It simply may not have had enough time to achieve profitability.

The ostensible objective of the new venture was expressed by its CEO, Stephen Colvin: "Consumers and advertisers value media distributed across multiple platforms. The merger of The Daily Beast and Newsweek audiences creates a powerful global media property for the digital age."

That seems like a sensible statement. But…

Launching a major news-oriented website like The Daily Beast was a considerable undertaking. At just 2 years into it, the job is far from done and it is too early to know if sustainable success will be achieved.

The turnaround of a major print publication like Newsweek, with a legacy of failure, too, is a monumental task with an uncertain future.

And, the merger of two organizations is yet another challenging undertaking unto itself. Merging usually creates unnecessary duplication that has to be dealt with -- a need to accommodate 2 different business cultures through carefully orchestrated process, not by decree; a refocusing of business objectives and a concomitant adjustment of work routines; and dealing with staff resistance to change.

Organizational mergers are indeed challenging enough all by themselves. But when you're dealing with a major website still in the throes of startup and a failed print publication that has yet to display a viable turnaround strategy, and try to merge the two, you have just multiplied the risks involved by an enormous factor.

There are a number of experienced and talented people involved in the Newsweek Daily Beast venture. Maybe they have a good plan and will succeed. Maybe the undertaking is just an expression of bristling egocentricity. Or, maybe there's a hidden political agenda. Time will tell. But, if they are able to produce the "powerful global media property for the digital age" of Colvin's vision, it will indeed be a noteworthy accomplishment, one that will stand as an exemplary model for the industry.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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Posted on Thursday, October 14, 2010 at 12:21 PM

Recently tweeted from @STRATnewsletter:

WSJ: Magazine Ad Pages Rose in Third Quarter. http://bit.ly/cVDKpR

Folio: MPA changes name, tagline to reflect multi-platform publishing. http://bit.ly/aSNmP4

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Recently Tweeted

Posted on Wednesday, August 18, 2010 at 12:57 PM

Recently tweeted from @STRATnewsletter:

--What are the benefits of being a multichannel magazine? See how to reap them at your magazine. http://bit.ly/cc5klD

--Audit Bureau of Circulations: U.S. magazine circulation continued to fall in the first half of 2010. http://bit.ly/amLtVB

--Breaking News: Newsweek Sold. Questions about who's really behind the purchase and what's needed for a turnaround. http://bit.ly/9Sbn82

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Breaking News: Newsweek Sold

Posted on Monday, August 02, 2010 at 5:26 PM

Newsweek magazine has been sold to Sidney Harman, 91-year-old husband of California Congresswoman Jane Harman, reportedly for a one dollar bill. The new owner, a retired stereo equipment manufacturer, is apparently a publishing novice.

No one seems to be asking, however, who or what is really behind the purchase of what has become a money-losing machine. And, some early news reports on the sale contain inaccuracies. For example, the New York Times reported that Newsweek underwent a redesign last year "in hopes of attracting more readers." In fact, Newsweek itself cut its audience from 2.6 million to 1.5 million as part of its failed repositioning strategy. Readers didn't leave Newsweek -- Newsweek left the readers.

The magazine has gone from profits of about $30 million in 2007 to losses of the same magnitude in 2009. It seems that Newsweek has been operating like a ship with a mis-calibrated compass.

The New York Times reported today that, "In its new owner, Newsweek appears to have an engaged and active steward." An experienced captain, however, is what Newsweek will need to achieve real business success, someone who can keep the venerable magazine from running aground for a second time!

Then, there's the tax write-off sub-plot. When Washington Post Company first put Newsweek up for sale, talk was that WaPo would retire the magazine's debts for a clean sale. Now it's reported that Harman's deal is to pick up the debt and liabilities and pay just $1 for the magazine. It remains to be seen what the strategy is behind that move.

STRAT for July 2010 carried a detailed analysis of Newsweek's failure.

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Coffee and Subscriptions: A Package Deal

Posted on Monday, July 12, 2010 at 2:58 PM

An experimental strategy for publishers.

By Kevin Roberts

In order to thrive in today's participation economy, traditional media outlets like magazines and newspapers will need transformational ideas. Especially when it comes to creating revenue in an age of free content.

Of all companies, Starbucks might have happened upon just such an idea. Next month, the coffee giant will begin offering free wi-fi in all of its American locations. No big deal in this -- but soon, Starbucks customers will also have unrestricted access to a variety of pay sites, including the Wall Street Journal.

This is an innovative way to avoid having to institute the dreaded "pay wall," without giving content away gratis. Publishers get paid for their content, they get audience for their advertisers, Starbucks gets to offer an exclusive service that will surely help sell more coffee, and customers save potentially hundreds of dollars in subscription fees.

As we've seen, the emergence of the Participation Economy has been both good and bad for the media industry.

Today, anyone with an Internet connection can access a wide array of content -- from the Washington Post to their friend's latest blog post, from the Drudge Report to the Colbert Report -- and decide for themselves what's worth their time. In fact, only 7 percent of Americans get their news from a single platform.

At the same time, technologies like blogs, Facebook, and Twitter allow every connected person to create, distribute, and comment on media without getting out of their pajamas.

The media, in all its various forms, has never been more engagingly diverse. But traditional media outlets, as we know, are in the lurch. The truth is, one way or another, high-quality content will need to be paid for.

Figuring out how to do that, without disrupting the dynamic media environment that free content has created, will require wild experimentation. If content producers are going to discover the breakthrough ideas that will keep mainstream media thriving for years to come, they need to adopt a philosophy of fail fast, learn fast, and fix fast.

Kevin Roberts is the CEO worldwide of The Lovemarks Company, Saatchi & Saatchi, www.saatchikevin.com.

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Why Newsweek Magazine Failed

Posted on Monday, July 12, 2010 at 2:58 PM

Are there lessons in what they did wrong that can benefit the rest of us?

By William Dunkerley

"We do not see a path to continuing profitability under our management." Those were the words used by Washington Post Co. chairman Donald Graham. He was announcing intentions to put the venerable newsweekly up for sale. Graham admitted, "We have reported losses in the tens of millions for the last two years."

That sounds like a stark admission of failure to me. Graham's announcement came after a well-publicized, extensive effort to turn things around.

But, a commercial magazine is supposed to be a money making machine. Investors put money in, the publication turns a profit, and investors receive a return on their investment. Apparently not so with Newsweek.

What Went Wrong?

A lot of armchair analysts are chalking up Newsweek's troubles to consumer flight to the Internet. This argument has common sense plausibility. After all, consumer reading habits are clearly
changing -- and at an accelerating pace. But common sense also told us that the earth is flat. And so, when we got into examining Newsweek's predicament more methodically, the consumer flight explanation didn't hold up.

For one thing, Newsweek voluntarily cut its own circulation. Consumers didn't fly away. They were, in effect, deliberately liquidated! The readers didn't leave Newsweek -- Newsweek left the readers.

"Newsweek Plans Makeover to Fit a Smaller Audience," reported the New York Times in early 2009. That "smaller audience" was the effect of a rate base cut. Newsweek earlier had been promising advertisers a rate base of 2.6 million. The makeover plan included dropping that to 1.5 million by January 2010.

Isn't Bigger Better?

Why cut circulation? How is that going to make more money? Was that a bad move? Actually, I believe that in principle it was a smart plan. If they had approached me at my consulting firm, I would have advised them to do exactly that. Bigger is not always better. The reality is that when a magazine over-markets circulation, it's easy to aggregate an audience segment that will have only a weak interest in the publication. They'll be poor renewers, thus making them expensive acquisitions. And, worse, they may be poor prospects for the advertisers.

Apparently, Newsweek realized that gung-ho circulation marketing had gotten them to that spot. Now, they wanted to make things right. Somewhere in that multitude of readers, there was a core group that would be the best fit for the magazine. Newsweek said it was looking to keep readers who are most interested in news, have higher levels of education, and greater affluence.

That's fine, as far as it goes. Unmentioned in that, however, is whether those particular core readers are going to be active purchasers of the particular products and services the advertisers are selling.

The First Fatal Flaw

Smart, wealthy, and educated readers are nice. They may be interesting people to rub elbows with at a social gathering. They can be influential friends. But if they're not good prospective customers for the advertisers, they're of limited strategic value as readers. The prime lever Newsweek should have had its hand on here is the link-up between the buyers and the sellers, the readers and the advertisers. Was there good synergy? Was the magazine bringing together appropriately matched buyers and sellers? There's a formula for getting this right. But it's not clear that Newsweek was using it.

The New Newsweek

Then there's the matter of redesign and repositioning. In early May 2009, Newsweek announced the impending changes. The article, entitled "Reinventing Newsweek," was written by deputy editor Kathleen Deveny. It explained at length that they would in effect be taking the news out of Newsweek. The reasoning was that consumers can find breaking news on the front page of the New York Times. At the same time, the article quoted Newsweek editor John Meacham saying, "We will always be about the news, and we will always break stories that are important to the country and to the world." That all sounds like a confused message to me.

Wouldn't it have been clearer to readers, and perhaps to Newsweek's staff itself, if they simply said they would be cutting back on breaking news and just covering those stories whose impact was the most profound?

By my count, Newsweek used about 350 words to spit out that message.

So if news is coming out of the publication, what was to go in?

Deveny's article announced "a new editorial strategy." She promised that readers will be seeing more "well argued essays." They'll also be hearing more from regular columnists on "some of the most pressing issues of our time." The intent of the new editorial strategy is apparently "to be provocative, but not partisan." Outside observers characterized the move as a shift to opinion journalism.

The final component of the new Newsweek is the graphic redesign. Its goal was to make the magazine "less daunting, more entertaining, and easier to navigate."

The Second Fatal Flaw

Newsweek set out to reinvent itself. Editorially and graphically. They did it. But their invention isn't what the situation called for. What was wrong with it? One thing is how they came to specify what needed to be done. They revealed two considerations:

a. "Some of these changes spring from what we learned from all of you during extensive market research." Does that mean that they asked their readers? They should have asked the prospective customers of the advertisers that they wanted to court. Those are the people they needed to attract as readers. Editorial content is the bait for attracting readers.

b. "Some of [the changes] reflect our own editorial goals and financial needs." I'm not sure exactly what that means. But it sounds like they're saying that some of the changes were made to satisfy themselves. That's certainly a bad strategy if you're looking for success in the marketplace. I wonder how satisfied those managers are feeling right now. I also wonder how satisfied the corporate shareholders are feeling over the self-centered shenanigans of Newsweek's managers.

I didn't specifically evaluate the graphic redesign. Certainly, it's always good to keep one's design attractive and functional. However, I'm not sure that design was an issue in the magazine's poor performance. Newsweek's managers may simply have wanted a fresh new look to signal to readers that things have changed. That's not a bad strategy. But a major redesign is a major undertaking unto itself. It is one that deserves significant management attention and involvement. As such, it also could be viewed as a diversion of management attention from the other critical and more central elements of remediating Newsweek's problems.


Unique website visitors since May 2009 to Newsweek.com (blue) and Time.com (green).

How did the market respond to the new Newsweek? The above chart plots Newsweek's website activity, compared to that of Time magazine. It shows a bump up around the time of the changes. Afterwards, things settled into a steep downward trajectory.

Make the Readers Pay

"Over time, we will increase subscription prices," wrote Deveny. It's hard for me to tell whether or not that's a smart strategy here. Lately there's been a general trend among publishers to grow the percentage of revenue coming from audience/circulation. In fact, that's been a trend in all recent recessions.

When advertising support drops off, publishers try to squeeze more revenue out of readers. Now that greater numbers of readers are online, publishers are experimenting with systems for extracting "micropayments." Our sister publication Editors Only has been running a series of articles on that topic. It seems there's still no consensus on the best way to do this.

The Third Fatal Flaw

While increased revenues from readers can be helpful, there is another side to that. Often I've seen that publishers try to extract more audience revenues, when what they really should be doing is solving the problems responsible for weakened ad sales. Is that a mistake that Newsweek made?

There's usually more to a shortfall in ad sales than just a flagging economy. Typically there are two major in-house causes of declining ad sales in a recession. The first is inadequate sales skills and strategies. They may be alright when the picking is easy and ad spending is at a normal level. But they prove to be totally inadequate when it becomes harder to convince advertisers to spend money with you.

The second cause is the fundamental business strategy of the magazine itself. Is it really efficient at gathering good, active prospects for the advertisers? When the economy is good, a magazine can be sloppy at doing this. But in a recession, when there is greater pressure for advertising expenditures to produce results for the advertisers, those publications that are weak in this regard lose advertisers quickly.

A Richness of Financial Resources

Despite the errors in Newsweek's approach to business, there existed a potentially mitigating factor -- one with the potential for breathing life amidst the assortment of fatal flaws.

That factor is the magazine's owner. Newsweek was indeed fortunate to be owned by the Washington Post Company. It possesses a richness of resources -- at least in terms of the financial resources available. According to the company's recent 10-K report, it had operating revenues of $4,569,731,000.00 for the fiscal year ending January 3, 2010.

We examined a Newsweek financial summary that was represented as coming from the "sale book" that was offered to prospective buyers. It shows that for 2007, Newsweek made about $30 million. But in 2008 and 2009, there were operating losses of $13.5 million and $28.1 million, respectively.

That all caused us to question the business imperative for putting Newsweek up for sale. Last year's $28.1 million loss is certainly nothing to sneeze at. But for a company whose annual revenues total more than $4 billion (that's $4 thousand million!), it is hardly a catastrophe. One wonders whether it is worth the embarrassment of corporate admission that they lack the ability to turn things around. Especially when one could reasonably expect a change for the better as the economy improves, even if Newsweek's business acumen didn't improve.

Adding to that puzzling conundrum is this statement by management at Washington Post Company's May 14, 2009, annual shareholders meeting: "It is not easy to reshape the economics of a magazine, but it's easier to do that than to reshape the economics of a newspaper."

Why does that add to the puzzle? It is because their newspaper operations are incurring losses that are more than 5 times higher than Newsweek's losses! (The company stays afloat with profits from its Kaplan educational services division.)

So, if it is easier to turn around a loss-making magazine than a loss-making newspaper, why wasn't the newspaper the first to go?

There seems to be more afoot here than plain and straightforward business considerations.

Is It Politics?

We were going over this analysis of Newsweek's failure in a staff meeting here at STRAT. At one point we came to the realization that, despite a number of strategic mis-steps, there was no compelling business reason for the Washington Post Company to sell Newsweek. They have the resources to carry it until the economy improves.

Could there be some political consideration compelling the divestment? Editorially, Newsweek had not been antagonistic toward the Obama administration. Nor had it been a good buddy to Bush. There didn't seem to be any obvious reason why Newsweek would be crosswise with the current political establishment. What about Clinton, we wondered? So we googled Bill Clinton and Newsweek. Not too far down the list of results we encountered the name of Michael Isikoff, Newsweek's investigative reporter who dug up the Monica Lewinsky story. Bingo. Was that it?

So for discussion, we floated the theory: When the Obama-Clinton coalition came to power, did someone tell the Newsweek folks to close up shop as revenge for the dirt Isikoff dug up on Bill? It was a highly speculative theory. But we thought to try it out on Michael Isikoff. I wrote him about the theory on June 4, a Friday afternoon. He responded on Saturday morning. He didn't flatly dismiss the theory, but said he thought it was "a stretch." Later on Saturday I explained to Isikoff our analysis that there did not seem to be a compelling business reason for Newsweek to be put up for sale. On Monday morning, Isikoff submitted his resignation to Newsweek. It's certainly interesting to muse over what influenced him.

But, just for the record, we certainly uncovered no evidence that any political considerations coerced Newsweek's sale.

A Trophy for a Billionaire?

Even if there was no apparent business need to sell Newsweek, it is intriguing to see how much interest there's been in buying it. At one point, there were reports of over 70 interested parties. That's quite astonishing when you consider that for prospective owners without Washington Post Company's multibillion dollar cash flow, the idea of losing almost $30 million year could be quite off-putting.

We asked the firm charged with managing the sale whether they were going to do a valuation to peg the nominal value of the property. They weren't. The plan seemed to be to allow the market to set the price.

But who would want this money-losing machine? For a while, Haim Saban's name was prominently mentioned. Forbes pegs his net worth at $2.8 billion. However, he's a mere piker compared to another whose interest was mostly on the q.t. That would be Leonard Blavatnik, a Russian-American businessman whose net worth Forbes puts at $7 billion. Was Newsweek to become literally a trophy for a billionaire? In the end, however, neither party apparently submitted bids.

More recent media speculation narrowed the field to just 3: businessman Sidney Harman (husband of Congresswoman Jane Harman), Avenue Capital, a global investment firm focusing on distressed securities and private equity, and businessman Fred Drasner, formerly of U.S. News and World Report.

But the Washington Post Company remains mum on who the finalists really are. That just adds to the theater of it all!

What Are the Lessons?

The high drama of secret moves to sell a real money loser, including shades of possible political intrigue, may provide us with entertainment. But are there any real lessons publishers can learn from the Newsweek episode?

I think there are.

Study the process recounted above by which Newsweek blundered its attempt to survive. Observe these three mis-steps: (1) They seem to have used a flawed process for identifying what remedial steps should be taken. (2) They may have put personal predilections ahead of business necessities. (3) They apparently diverted management attention to non-essential activities during a crisis period.

But the bottom-line issue here involves the fundamental and essential strategy for any publisher who needs significant advertising revenue to prosper: The publication has to be an efficient tool for collecting good, active prospects for a synergistically-related group of advertisers. There are proven techniques for doing this. The trick is to learn them and use them strategically.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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News Flash: Newsweek Publisher Throws In Towel

Posted on Wednesday, May 05, 2010 at 3:30 PM

The Washington Post Company has given up on Newsweek. It put the publication up for sale. Chairman Donald E. Graham, in announcing the move on May 5, admitted, "we do not see a path to continuing profitability under our management."

The Washington Post's failure with Newsweek underlines a point about business strategy. If a publication is operating with flawed business strategies, when the economy hits a downturn, the publication can experience potentially insurmountable problems. Even the mighty Newsweek was not above that basic principle.

Graham said that they are looking for a rapid sale to a qualified buyer. STRAT has learned of interest from a group of Russian investors with experience in publishing. (Newsweek actually has a Russian edition, which is operated by licensee Axel Springer and reportedly in deep financial trouble, as well.)

Graham's statements make no mention of whether an independent valuation of Newsweek has been conducted. The business itself may indeed even have a value of less than zero, given "reported losses in the tens of millions for the last two years." That said, there may be residual value in the Newsweek brand if it can be divorced from association with the Washington Post operation.

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