Magazine Profitability Strategies: Prevention Magazine Goes for a Radical Solution

April 10, 2016 Phillip Nones Advertising, Business, Economics, Manufacturing, Media, Media Consumption, Publishing Magazine Publishing, Maria Rodale, Media, Prevention Magazine, Print Media, Publishing, Rodale

When a business model becomes problematic, sometimes the only solution is to step outside the circle with some seriously radical thinking.

That seems to be what magazine publisher Rodale has done with its flagship media property, Prevention magazine.

As reported by Jeffrey Trachtenberg this past week in The Wall Street Journal, beginning with the July issue, Prevention will no longer accept print advertising.

It’s a major step for a publication as venerable as Prevention, in print since 1950 and an important player in the magazine segment focusing on nutrition, fitness and weight loss.

According to the Trachtenberg piece, Prevention magazine has actually seen an increase in ad pages – up over 8% to 700+ ad pages in 2015 over the year before. But here’s the rub: ad revenues were actually down because of circulation losses.

The magazine hasn’t turned a profit in a number of years, either, although other related Rodale titles have (Runner’s World and Men’s Health).

The radical surgery planned for the publication means that the number of pages of a typical magazine issue will decline dramatically. So the cost of printing and shipping will go down. In order to make up for the loss in ad revenue, the magazine’s subscription price is set to more than double to nearly $50 per year.

Price-conscious as consumers are, that action is expected to drive circulation figures down even further – from around 1.5 million to roughly 500,000 if the company’s projections are correct.

Is this an ingenious idea that will preserve and strengthen a highly regarded publication? Or a desperate action that will end up simply driving this magazine into oblivion in a novel way?

Maria Rodale, CEO of the family-owned publication company, thinks the former. As she stated to reporter Trachtenberg:

“We’re walking away from revenue but we’re also walking away from a lot of expense. Let’s serve our readers and charge them for it.”

Rodale anticipates that Prevention magazine’s operating expenses will be reduced by more than 50%.

What are the implications of that? Maria Rodale again:

“If you have to run the numbers out with an advertising model, it’s hard to see it ever getting to profitability. With a non-advertising model, it quickly becomes profitable.”

… But I’m not so sure. This radical departure from the traditional ad-supported publication model may pay short-term dividends. But will it turn out to be merely a momentary respite before the next downward slide – this time into irrelevance?

With so much information being so easily accessible online (and free of charge) – particularly in the areas of preventive health – I can easily envision fewer and fewer people wishing to shell out $50+ per year for the benefit of receiving a monthly publication that may or not contain highly relevant and valuable information each and every issue.

What do you think? Is this a silver-bullet solution? Or a zinc zeppelin?

So Many Magazines … So Little Time?

January 25, 2015January 26, 2015 Phillip Nones Business, Content Creation and Content Management, Media, Media Consumption Magazine Publishing, Magazine Subscriptions, Magazines, Magzter, Magzter Gold, Media, Next Issue, print magazine, Print Magazines, Publications, Readly, Subscription Services

Who wants easy, unlimited access to thousands of publications?

You might not, but millions of other people do, apparently.

And the crowd is getting ready to increase more, most likely.

As if there wasn’t enough material to read already, some online publication bundlers are making sure that people have unlimited access to the world’s most important periodicals for one low price.

This week, The Wall Street Journal blog reported that Magzter, a company that provides a single access point for more than 5,000 magazines published around the world, has now introduced a service plan it calls Magzter Gold.

It’s an “all-you-can-read” option that gives subscribers online access to approximately 2,000 publications – many of them top-circulation magazines like ESPN, Maxim, New York Magazine and Forbes – for a flat rate of just $9.99 a month or $99.99 per year.

And access to this huge repository of publications is quick and easy via desktops, laptops and tablets, plus iOS and Android phone apps.

There’s also a plan called Magzter Gold Lite, allowing access to the subscriber’s choice of any five magazine titles (which can be changed from month to month).

The cost of that subscription? $5 per month.

These two new programs are aimed at increasing Magzter’s subscriber base, which already numbers more than 4 million active monthly users.

Magzter isn’t the only company offering online access to a family of publications. Other providers like Readly and Next Issue also offer programs encompassing the stable of magazine titles belonging to various different publishing arms (Condé Nast, Hearst, Meredith, Time).

But none of them have anything like the sheer number of titles Magzter is offering.

Readers of my generation (over the age of 50) grew up with print magazines and are preternaturally drawn to the tactile sensation of reading a physical magazine. But I suspect that publication bundlers like Magzter represent the tip of the spear rather than simply a passing fancy.

The question is whether the changing mode of delivery ends up destroying the actual product that Magzter and others are able to peddle. After all, were it not for the print magazines to begin with, what would these aggregators have to sell?

If what it boils down to is offering fee-based premium content that is no longer tied to a print magazine because the publication is no longer available in hard-copy form, will the quality of that content continue to be as high?

In many — perhaps most — cases, I think it’s doubtful.

If the print magazines that underlie the digital product offerings disappear, it wouldn’t surprise me if millions of readers fall away from subscription services in favor of trolling the Internet for similar content that’s easily available for the bargain price of … goose egg.

For those who are using access services like Magzter or Readly today, would you recommend them to others? Is it the wave of the future? Please share your perspectives with other readers here.

Where Print Advertising Still Reigns

October 22, 2014October 22, 2014 Phillip Nones Advertising, Business, Marketing Communications, Media, Media Consumption Advertising, Consumer Advertising, Digital Media, FOLIO, Magazine Advertising, magazine publishers, Magazine Publishing, media publishers, Print Advertising

Print advertising may be atrophying, but it’s still important enough to be the overwhelming revenue stream for city and regional magazine publishers.

According to the latest annual survey of media in this category, conducted by FOLIO last month, most publishing titles continue to rely on print for the vast bulk of the revenues they generate.

But before we look at FOLIO’s figures today, let’s see what’s happened over the past decade or so.

Print advertising revenues in this segment of the publishing industry represented over 95% of overall revenue as late as 2005. It’s dropped since then – but it hasn’t declined all that much, all things considered.

Here’s what FOLIO’s research findings are showing today:

Print advertising: Represents ~75% of all revenues
Paid subscriptions: ~6%
Custom publishing: ~6%
Digital media: ~5%
Events: ~3%
Mobile products: ~1%
Mercantile data (e.g., list rental): Less than 1%

Compared to Folio’s 2013 survey, print advertising has declined slightly (from ~77% of overall revenues in 2013), but paid subscription revenues are down sharply (from about 10%).

Within this publication category, there are some differences between large and small publishers. Larger brands (those generating more than $5 million in revenues) rely less on print advertising; it’s only about 65% of their earnings.

With smaller publication titles, it’s been significantly more challenging to diversify away from print. They’re still relying on print ad sales to generate more than 80% of their revenue. And that percentage hasn’t changed in five years.

Right now, digital media accounts for only about 9% of total revenues generated by the larger media properties in this segment. But managers at these publications anticipate that revenue from digital platforms will continue to grow at a faster clip.

In fact, they foresee a jump of nearly 30% in digital media revenues this year alone.

The FOLIO report notes that the increase in digital revenues is coming from better monetization strategies for existing products, rather than the introduction of new ones.

Considering why publishers in the city and regional magazine category continue to rely on print versus other revenues, I think it goes back to the idea that consumers don’t consider these properties strong sources for “instant” or “breaking” news.

Behaviorally, there’s more of a propensity to browse through story topics in a more “linear” fashion. The emphasis on human interest and region-centric news also aligns more with a more traditional approach to journalism, where most every news story tends to have some sort of a “human” dimension.

Quite a few stories are long-form journalism, or ones that feature high-quality photography. Far fewer of them are time-sensitive. They lend themselves to a more leisurely perusal.

Even so, it would seem that broader trends regarding the way consumers are interacting with media — and the platforms they’re using to consumer them — destined to overtake the city/regional magazine category.

Eventually.

More details on the FOLIO research results can be found here.

Condé-Nast Gets Real – and Reality Bites

October 7, 2009November 10, 2009 Phillip Nones Uncategorized Advance Publications, Advertising, Business, Condé-Nast, Consumer Publications, Entertainment, Gourmet Magazine, Magazine Advertising, Magazine Publishing, Magazines, McKinsey, McKinsey & Co., Media, Michael Sheehan, News, Nones, Nones Notes, NonesNotes, Phillip Nones, Print Advertising, Publications, Publishing, Thoughts

This week, magazine publisher Condé-Nast announced the closure of four magazines, including two bridal publications plus the prestigious and well-known Gourmet Magazine title.

It’s an indignity for a publishing firm that has fallen pretty far pretty fast. For years, the company seemed by-and-large unaffected by the winds of change in the publishing industry. Even as other firms were belt-tightening and divesting themselves of low-performing magazine titles, the storied “in-your-face” Condé-Nast business style – replete with jet-setting executives and seemingly endless clothing and expense accounts – appeared to remain intact.

It didn’t hurt that parent company, Advance Publications, also owns cable TV properties that could help prop up the print publication segment of the business – at least for a time.

But with plunging ad page revenues from its luxury goods advertisers on the order of 30%+ throughout 2009, it was only a matter of time before the day of reckoning would arrive. And the sense of impending doom was only heightened when McKinsey & Co. consultants started roaming the halls, poking around the company’s headquarters like a nosy relative, asking all sorts of questions and taking notes.

And now, a few short months later, we have this announcement.

Accompanying the news of magazine closures and personnel layoffs, Condé-Nast reported that it is shifting its priorities to digital properties even while focusing on a fewer number of “core” magazine titles.

Will it be enough? One unnamed company executive was quoted in The Wall Street Journal as saying, “We’re going to make a go of everything else.” But I think that’s doubtful. McKinsey has recommended that nearly all of the remaining publications cut their budgets by upwards of 25%. Whether or not that happens – or whether it will be enough to save the remaining titles – is something we’ll be able to judge pretty quickly.

UPDATE (11/7/09) — The New York Post is reporting that Condé-Nast has now hired Michael Sheehan, the famous crisis manager and media coach, to help the company with PR. Sheehan has coached presidential candidates from Clinton to Obama, as well as handling AIG Insurance’s PR during its financial meltdown in late 2008. Reportedly, Gina Sanders, publisher of Lucky magazine, prodded top brass to bring Sheehan in, citing deep morale problems at the company. Considering the dramatic events at the publishing house over the past year, this news is not at all surprising.