Thad McIlroy - The Future of Publishing

Esquire Magazine Takes a Stab at the Future of Publishing

A glowing article in last Monday's New York Times alerted readers that Esquire magazine, celebrating its 75th anniversary this year, has figured out a trick to gain admittance to the future of publishing party.

The cover of its September issue, or rather the cover of the newsstand version of the September issue, will be "printed" with E-ink technology. It's not 100% clear exactly what kind of razzle-dazzle Esquire will be providing newsstand browsers as a result. It could be fun...we'll soon enough see. Esquire went to some considerable pains to make this technology leap. The article provides the details, including "first Esquire had to make a six-figure investment to hire an engineer in China to develop a battery small enough to be inserted in the magazine cover. The batteries and the display case are manufactured and put together in China. They are shipped to Texas and on to Mexico, where the device is inserted by hand into each magazine. The issues will then be shipped via trucks, which will be refrigerated to preserve the batteries, to the magazine's distributor in Glazer, Ky." The article notes that unfortunately the battery will lose power in 90 days, although any unsold copies will no doubt be in the recycling machines by then. It may however be a disappointment to the folks who are hoping for an eBay bonanza as a collector's item.

The blogosphere has been underwhelmed by the announcement. Brian Lam at Gizmodo comments "This is really slick in some ways—as far as attention goes—but the bigger thing it shows is the terrible lack of understanding that most magazine editors have in dealing with the digital future of their publications." Later in his piece he even uses the "f" word!

In the comments section of Paul Constant's brief entry on SLOG, we're treated to Fnarf's snarky comment: "When you open it, will it play a tinkly electronic version of a popular Christmas carol, like those godawful greeting cards that came out 20+ years ago?" Jubilation T. Cornball chimes in with a quote from the article in the NYT and then adds a comment: "'I fully expect that in 25 to 30 years, this cover will be in a museum,'" is noted in the original article.

Mr. Cornball adds: "I fully expect ALL magazines will be in a museum by then."

Oh well. Nothing ventured, nothing gained.

Not a Good Week for Publishers

It's not as if the last few months have been exactly perky and upbeat around publishing offices across the U.S. But the last week seems to have been completely inundated with a dismal torrent of bad news. Both Hearst (3^rd largest magazine publishing in the U.S.) and Hachette (dropped out of the #10 spot in 2006, but presumably still in the top 15) lost their chief executives  -  whatever language the companies used in making the announcements, these guys got the boot.

Meanwhile the big newspaper companies were reporting horrible financial results: Gannett Co., which publishes more than eighty U.S. newspapers, acknowledged that publishing ad revenue fell 14.3% in May. Its smaller rival McClatchy Co. reported a 15% drop in newspaper ad revenue for the first five months of the year and announced a 10% cut of its work force. New York Times Co. said last Wednesday that ad revenue dropped 12%. And on June 17, Bloomberg reported that "Los Angeles Times and Chicago Tribune controlling investor Sam Zell may be unable to stop the loss of advertising revenue leading him and other U.S. newspaper publishers closer to default on billions of dollars in debt."

My take on all of this is the opposite of Robert Schiller's well-known phrase (and book title) "Irrational Exuberance." I call it Irrational Pessimism.

As I pointed out in my blog entry "Is the Internet Really Destroying Newspapers?", quoting from a PEW report, "Even with so many new sources, more people now consume what old media newsrooms produce, particularly from print, than before. Online, for instance, the top 10 news Web sites, drawing mostly from old brands, are more of an oligarchy, commanding a larger share of audience than in the legacy media."

Yesterday I received the executive summary of PWC's "Global Entertainment and Media Outlook: 2008-2012" (at 112 pages, it's a little more than the average executive might expect in a summary!). The full report would take me offline for weeks, but the executive summary represents a marvelous chunk of research. Notable is PWC's prognosis for the newspaper industry: continuing declines through 2009, followed by a return to modest growth.

As this chart from PEW illustrates, Hearst is not suffering in terms of revenue growth. The two firings, as suggested in several media reports, may have much more to do with internal company politics than with failed strategies. (A fascinating article in Fortune, "Intrigue at Hearst's Castle," examines the intricacies of Hearst's corporate structure.)

These days it's very easy to get on the newspapers-are-dying bandwagon. I think that the conclusion to this story is still to be written.

-30-

Steve Ballmer Forecasts the Death of Print Media

I am still reeling from Steve Ballmer's atrociously ill-considered remarks to The Washington Post  (Ballmer, as most recall, is CEO of Microsoft, when Bill G. is not at home) that "there will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form."

My retort: "in 10 years there will be no software that Microsoft will be able to profit from either in operating systems or as shrink-wrapped software."

Print is not a Burden: Useless Drivel is the Burden

An article appeared on May 5th in the New York Times called "Publisher Tested the Waters Online, Then Dove In." In glowing terms, it recounts the apparently amazing transformation of media giant IDG from primarily a print-based magazine publisher to an online publisher.

The article moved quickly onto the Times' most-read and most-blogged list (today it's still #5 on the most-blogged list), and I figured that I'd just let that one go, particularly as my blog has been focusing quite a bit on magazines for the last week.

But I couldn't resist getting a comment on the record, and so posted a remark on Jeff Jarvis' excellent Buzz Machine blog. I wrote:

"I read this article with some incredulity. It reads more like a corporate brochure than a carefully-researched piece of journalism. First of all, IDG is privately held, so there's no way to check into what's been happening to the overall sales and profitability of the company in its transition to digital.

"Mr. McGovern states 'The excellent thing, and good news, for publishers is that there is life after print — in fact, a better life after print,' and the major evidence offered is that 'today, I.D.G. says, the InfoWorld Web site is generating ad revenue of $1.6 million a month with operating profit margins of 37 percent. A year earlier, when it had both print and online versions, InfoWorld had a slight operating loss on monthly revenue of $1.5 million.'

"OK on that…but what about before the dotcom bust? I'd be surprised if the profitability of the publication was not significantly higher.

"I applaud IDG on its bold moves, but wonder if Mr. McGovern doesn't sometimes wish for the good old days before the Web."

I'd have let it go at that if I'd not today stumbled upon an entry on Rex Hammock's also excellent rexblog.com. The blog entry, titled, "Print is not a burden. Useless drivel is the burden. So ignore this post," is for me the final word on the affair, although it's really more about content than the IDG story, per se.

Just one quote: "Unfortunately, saying "print is a burden" implies that there are other options out there that are not burdens. Frankly, the web is a burden. Traveling to events IDG puts on is a burden. Trying to synch my phone and computer is a burden.…If you publish a beautiful magazine with articles that really matter to me — that instruct, inform or celebrate something I feel strongly about, it is no burden on me. If you help me get to the information and insight I need to live a fuller life or conduct business in a more flexible and productive way, your blogging and tweeting and bookmarking does not burden me. Useless, redundant, meaningless, re-shuffled drivel is the burden. It can be delivered via print or on a weblog or a mobile device. Crap is a burden no matter what the medium used to deliver it."

A powerful reminder that the medium is not necessarily the message.

Are Magazines now a Luxury Item?

This blog entry complements my last entry on magazines (May 2nd). The information came to me by a circuitous route.

Bob Sacks, aka "BoSacks" "a veteran of the printing/publishing industry since 1970" (primarily the magazine industry), issues an iconoclastic email newsletter, and does so thrice daily (!), most of which focuses on the magazine industry, some of which reaches out to the broader publishing business. (You can subscribe and read back issues here.)

In his first issue today he quotes an entry by Michael Truro from his "[in plain sight]" blog. That entry, also posted today, says in part:

"While I hate to sound like chicken little – and though the print is dead meme is way overplayed – I had to post this quote from Steve Frye [a publishing and printing industry consultant]. In a sidebar in the current issue of Publishing Executive titled "The State of the Printing Industry," Frye drops this bomb:

"'I think we need to change our philosophy of what a magazine is. We are no longer a cheap means of dispensing information, and that's what we were until the Internet came along. Now we are an inefficient and expensive means of distributing information.…We need to reinvent ourselves as a luxury item that people want and are willing to pay for. And until we change our own image of who we are, we're going to find out that our vendors are going to change it for us. Because, right now, postage is a premium. Paper is a premium. Soon printing will be a premium. How long can we buy at a premium and sell at a discount? We can't.'"

Frye's is the strongest statement I've yet encountered on the future of magazines. I'm not sure I agree – it doesn't really matter if I do. I think it's a well-thought-out comment, worthy of consideration and debate.

MagaBrands and Online Content

I somehow missed this interesting development last October, but it's well worth getting it on the record here.

The annual American Magazine Conference was held October 28-30, 2007. As stated on the Magazine Publishers Association (MPA) site promoting the conference:

"Our theme this year is 'The MagaBrand Revolution: How Media Brands are Finding Success on the Printed Page—And Beyond.' What is a MagaBrand? It's a magazine that's found a way to extend the power of its brand beyond the printed periodical—into realms like 'old' media (books, newsstand specials, television, radio); 'new' media (podcasts, webcasts, cellcasts, e-newsletters); even non-media (nightclubs, restaurants, tour operations, fashion lines, retail products, conventions, big-cause crusades, hotels and casinos).

"The MagaBrand Revolution will detail how magazines can—and must—expand their brands into all corners of the target audience's consciousness, and how your magazine will live or die on the inventiveness and daring you bring to your brand. From bricks and mortar to burgeoning new technologies, you'll learn what works (and what doesn't) in the new media environment."

Jason Fell, in a February 2008 Folio blog called "Print No Longer 'Heart and Soul' of Magazine Brands," adds a commentary to the topic. "Here's an idea that has been kicked around ad nauseum (see: 'MagaBrands,' Dave Zinczenko et al.) but perhaps never expressed so bluntly. According to Computerworld and Infoworld editorial director Don Tenant, the print magazine no longer should be the "heart and soul" of a brand. Instead, as his team did at IDG, publishers should think of their brand as an online media company with ancillary print and event products," Fell wrote.
"'Advertising is shifting from print to online in droves. So, what do you do?' Tenant said this morning during a session at the FOLIO: Publishing Summit. 'Content should be going online first. Our strategy is to think of print as being a compilation of the content online.'

"Like a growing number of companies, Tenant's group merged its print and online editorial teams four months ago. On the surface, at least, this seems to be an easy, efficient content management strategy.
"'I can't tell you how much this was a morale boost for everyone,' he said. ' We should have had a plan in place all along to unite the two teams.'" End of blog entry.

While Mr. Fell may think the idea has been kicked around ad nauseum, I'd argue that while getting kicked around, the concept has failed to be put into practice by most print publishers (book publishers being the #1 offender, followed by newspaper and then magazine publishers).

The time to stop kicking and start acting is overdue.

Not a Cat

Given its stuffy name, The Economist, and its stuffy image as a turgid journal featuring dry analysis of economics and politics, I find this publication a remarkable source of data for many of the entries on this site. Being The Economist it is generally authoritative without being windy. Economist writers (never identified with a byline to an article) are the cream of the crop, and it soon becomes obvious that they combine the right balance of education, knowledge and judgment with well-researched facts and figures to produce timely articles often as short as a page, and sometimes as long as several. (I should mention that they can also surprise the reader with a very dry wit.)

Part of what makes The Economist seem standoffish is the price: the cheapest online-only one-year subscription is $80; print and online jumps the price past $100/year.

Apparently an excellent magazine, one that knows its audience and delivers consistently, can still be a roaring success. The latest figures I can find are for the six months ended September 30, 2007. Circulation increased 11% to over 1.2 million copies (and remember, this is a weekly!). Electronic advertising revenue increased 15%, as monthly users increased 39% (reaching 2.6 million), contributing to a 25% increase in operating profits.

How do you like them apples, Time, Newsweek and U.S. News and World Report (each hit recently by troubling circulation and/or financial news)?

Today I stumbled on an online-only article (available to non-subscribers) called "Finding the right picture: Engineers are making progress with the old problem of getting computers to recognize what they are looking at." In the lede the problem is explained: "To a microprocessor, a photograph of James Bond might as well depict a cat in a tree." The article goes on to explain recent research underway designed to overcome this challenge.

Why I love The Economist is made clear in part from the accompanying illustration and caption:

Image and caption copyright 2008, The Economist.

The Slow and Ugly Demise of Ziff Davis

The New York Times stated it tastefully: "Ziff Davis Media Seeks Bankruptcy; Ad Revenue Down"; The Wall Street Journal's Deal Journal a little more directly: "Billionaire Brand Joins the 2008 Bankruptcy Bonanza."

As the Deal Journal points out, Ziff-Davis is a company with a proud history that only in the last decade-and-a-half fell prey to the birds of prey that have unceremoniously gobbled up so many different media companies hoping for…convergence? Power? A quick flip? Who really knows?

Ziff-Davis Publishing Company was founded in 1927 by William Ziff and Bernard George Davis. With two subsequent generations of the Ziff family at the helm (Davis was bought out in 1958), in 1994 the company was finally sold in a series of transactions for a total of more than $2 billion.

Alan Meckler, who runs JupiterMedia, was not shy in his commentary on the sad story. "The history on this mess is profound. Lots of mistakes were made. None of the mistakes were made by the Ziff family that sold the business in 1994 for a ton of money to the private equity firm of Forstmann-Little. A year or so later Forstmann sold the company for about a $1 billion profit to Softbank. Softbank then went about methodically destroying a great company." His analysis continues in some detail.

The finale is contained in The New York Times account: "Ziff Davis…said in a court filing that it had total debt of $500 million to $1 billion and total assets of $100 million to $500 million."