Why Are Successful Magazines Folding?
When otherwise growing titles are forced to fold, something is very wrong.
The magazine â€ścouldnâ€™t reach our benchmarks.â€ť
â€śWe cannot justify continued investment.â€ť
â€śWe have concluded that this economic market will not support our business expectations.â€ť
Those are the respective reasons given when Rodale shuttered Best Life, Hallmark Cards killed Hallmark and CondĂ© Nast folded Domino.
The commonality among these magazinesâ€”besides that they are no longer being publishedâ€”is that they were some of the few titles to deliver seemingly solid performances in 2008. Best Lifeâ€™s ad pages increased 6.6 percent last year, according to the Publishers Information Bureau, and total circulation was up 6.1 percent, according FAS-FAX figures. Hallmarkâ€™s ad pages were up 11 percent and total circ skyrocketed 27.2 percent. While ad pages fell 4.1 percent last year at Domino, total circ soared 54.6 percent.
Itâ€™s no secret that 2008 was a brutal year in magazines. On the consumer side, ad pages dropped 11.7 percent in 2008 when compared to 2007, according to PIB. Of the more than 230 magazines tracked only 42â€”or about 18 percentâ€”saw ad pages increase for the year.
So, why are publishers walking away from publications that appear to be growing? â€śThe problem is the publishing model,â€ť says University of Mississippi professor Samir Husni. â€śItâ€™s one thatâ€™s served us well since World War II, when we switched from a circulation-driven publishing model to an advertising-driven model. Thatâ€™s when magazines began counting numbers, not finding customers that actually count.â€ť
Some publishers, however, see oversaturation as a key reason magazines are going out of business. â€śMost publishers have the same problems as car dealers or home buildersâ€”that is, they have too much inventory and not enough buyers,â€ť says Hanley Wood CEO Frank Anton. â€śThere are too many magazines, too many Web sites and too many conferencesâ€”and not enough advertising or marketing spending to support them. So just as stores close and auto dealerships disappear, media properties get shut down. Itâ€™s not really about costs or expectations, itâ€™s about revenue, or lack thereof.â€ť
Even after cutbacks and layoffs, thereâ€™s no guarantee a magazine will survive. â€śWe did see some great growth in terms of circ and ad pages but the business still fell short of our plan,â€ť explains Hallmark spokesperson Julie Oâ€™Dell. â€śWe looked at a number of business models and options but were not able to put together the type of structure we needed. It was not an easy decision, but we have to focus our efforts on our other products.â€ť
Another publisher, Sebastpol, California-based Oâ€™Reilly Media, said in February it would no longer publish the print edition of Craft, a 50,000-circulation quarterly which â€śsaw some uptick in numbersâ€ť in the fourth quarter.
â€śI donâ€™t think itâ€™s fair to say the print model is brokenâ€”at least not for Maker Media,â€ť says associate publisher Dan Woods. â€śIf youâ€™ve been all but giving away the book and taking up a big chunk of your EBITDA and spending it on direct mail to build circ for advertisers, I can see that itâ€™s hard to find a way out. On the other hand, those magazines that are built around blended business models that balance circulation and ad revenue seem to have a far better chance of coming through the storm prepared for growth.â€ť
Time for Change
In order for magazines to survive, Husni says, publishers need to stop â€śdevaluing their contentâ€ť by selling annual subscriptions for the price of (or less than) a single issue. One recent example of this is CondĂ© Nast, which lowered Glamourâ€™s subscription price to $1.50 in recognition of the magazineâ€™s 70th anniversary.
â€śThe obsession with advertising was supposed to continue to buoy losses elsewhere and weâ€™d continue to plod forward,â€ť says TV Guide president Scott Crystal. â€śWell, itâ€™s not. We need to charge consumers more for a better product and to take costs out of inflated rate bases. Weâ€™re all making tough decisions that should have been made a long time ago.â€ť