You’d think if any group was immune to layoffs, it would be digital. In FOLIO:’s Magazine Industry Job Report, which came out in March, 53 percent of respondents to a survey on hiring said that their company is most focused on filling online positions (compared to just 24 percent for print). Meanwhile, 75 percent of b-to-b CEOs [B-to-B Magazine CEO Survey, May 2008] and 66.5 percent of consumer CEOs [Consumer Magazine CEO Survey, October 2008] say e-media will offer the fastest growth over next year (followed by new print advertisers, which surprisingly edged out events as the second-fastest growing revenue stream).
But while almost every publishing discipline is feeling the squeeze of mass layoffs, digital groups are surprisingly hard-hit, especially at the larger consumer publishers. One major consumer publisher is in the process of farming out all of its IT functions, including Web development, to India. Meanwhile, Mansueto Ventures, publisher of Fast Company and Inc., merged its online group into its print department, reflecting the struggle even that company is going through in its approach to new media, despite its reputation (and success) as a leading edge publisher.
Financial Realities of Print vs. Online
The problem for consumer publishers is the financials. While publishers have long spoke of online revenue being smaller but more profitable, it’s hard for publishers with six-figure (or seven-figure) print deals to get excited about five-figure online deals. In a recent article on Slate.com’s Big Money, Lesley Blume wrote that one media expert estimates that online CPM is worth between one-seventh and one-tenth of print CPM. “That means that swapping out online-for-print publication right now literally amounts to trading in dollars for pennies—which is hardly an alluring prospect for publishing companies used to commanding lavish ad revenues.”
Hearst has aggressively pursued a digital strategy and purchased dedicated online companies such as UGO.com, ECRush.com and Kaboodle. While CEO Cathy Black told FOLIO: last year that she spent 20 percent of her time on digital, print still paid the bills. “The numbers that are trotted out are that 4 percent or 5 percent of [mass consumer magazine revenue is digital] but we’re not there yet,” Black told FOLIO: at the time. “Digital still for us is the tail wagging the dog.”
While Hearst knows it must pursue a digital strategy, too many publishers that were lulled into thinking the Web is a quick fix may gut their online departments before they’ve had a chance to get started. We’ve heard over and over about salespeople not wanting to sell digital because the commissions are too low—hopefully that’s not a mindset CEOs are developing, too.