Women’s Wear Daily
04.16.2014
digital
digital

Digital Newsweek: Unique or Harbinger?

The 79-year-old news publication will abandon print on Dec. 31, the latest magazine to bet on a less-lucrative and so-far-unproven future strictly online.

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A Newsweek cover from 1945.

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But it was not enough to pull the magazine through a period that has been inhospitable to weeklies, and, in particular, newsweeklies — Newsweek’s newsstand sales fell nearly 10 percent through the first half of the year, according to the Audit Bureau of Circulations, while Time declined 31 percent. Both saw small declines in overall circulation — through June, Newsweek’s total circulation stood at 1.5 million.

Revenue from print advertising has also been weak but better than at its rival — total ad pages were up 2 percent through Oct. 15, according to Media Industry Newsletter; Time is down 19 percent.

“Our business has been increasingly affected by the challenging print advertising environment,” said Brown in the memo. She and Shetty were unavailable to WWD by deadline.

Newsweek’s losses — estimated at about $40 million — were eventually too significant for IAC to bear. BusinessWeek, on the other hand, loses an estimated $18 million a year, but Bloomberg continues to invest. “We bring value to the company in different ways,” Tyrangiel said, while declining to comment on financial losses.

But Diller is known to acquire properties, fix them up, and unload them when an investment doesn’t pan out. Simply put, his strategy is: “Sell it, write it off, go on to the next thing,” he told Marketplace earlier this month.

The magazine’s fate was sealed when the Harman family stopped investing in July, and, that same week, Diller floated the theory of an all-digital Newsweek during an earnings call, though he later back-tracked. High-profile defections followed, including creative director Dirk Barnett. In September, Shetty, an ad executive with a background in digital sales, was appointed ceo.

The bet now is that by unloading the dead-tree component of the operation, Newsweek will be able to reduce losses by relying on digital subscriptions, conferences and next-generation advertising.

“We have reached a tipping point at which we can most efficiently and effectively reach our readers in an all-digital format,” Brown wrote. Shetty was bullish with The Wall Street Journal, saying he expects to gain “hundreds of thousands” of digital subscribers in 2013. The magazine has 44,000 tablet subscribers, a spokesman said. Print subscribers will be given the option to convert to Newsweek Global, or be issued a refund. The Daily Beast will remain free, though it’s not clear how content will be divvied up.

Newsweek argues that the brand still has enough vitality to lure paid digital subscribers. But that’s a loaded variable.

“You look at the industry and there’s not a lot of examples of people who’ve done that and turned it into a huge business,” Sauerberg said. By giving up print, “you give up a big revenue stream.”

There’s only a handful of publications — like the Times and the New Yorker, for instance — that have proven their readers are willing to pay for digital content.

Mary Berner, the ceo of the Association of Magazine Media, said it’s too early to tell whether an all-digital future will pan out. To any struggling publishers, she advised, “Hang in there,” and then she repeated the same message she had delivered at the group’s annual conference: be in as many platforms as possible, including print.

Tyrangiel said Newsweek’s bet is brave, and not an altogether impossible strategy. But it doesn’t alter the Web’s competitive environment. And, Newsweek will have to do without its most reliable asset —those millions of print subscribers.

“The challenge is getting in front of folks. Once you open an iPad, there’s a lot of stuff in there,” he said. “Online, you’re speaking to one audience. That audience still has to initiate a transaction. The advantage of print is that once you’ve made a commitment, you open the door, and there’s your magazine.”

 

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