Add the USPS to the list of unfinished business left by the now-adjourned 112th Congress. As it muddled its way through negotiating terms for avoiding the fiscal cliff, the legislation the Postal Service was looking for fell by the wayside, prompting Postmaster General Patrick Donahoe to voice his disappointment in an official statement. Even with hearings, lobbying from ABM and MPA and a raft of restructuring initiatives done over the last two years, the USPS is still in major crisis mode. And any major operational or pricing changes going forward could have a significant impact on publishers.Â
Ranks have been reduced by 60,000 carriersÂ and 70 facilities have been consolidated, but the USPS is still losing massive amounts of money, to the tune of $25 million per day. And it's already defaulted on its $11.1 billion Treasury payments and has no money left to borrow. "As we look to the coming year, we are on an unsustainable financial path," warns Donahoe. "We will be discussing with our Board of Governors a range of accelerated cost-cutting and revenue generating measures designed to provide us some financial breathing room."For the full statement, click here.
In what's become an annual tradition from Hearst Magazines president David Carey, a post-holiday letter to employees highlights some of the company's successes in the last year and points to new initiatives for 2013.While there were definitely highlights for the company, Carey noted the days of consistent performance across brands are over. This is a nod to a recognition that while the external media landscape continues to fracture, so goes the internal performance of brandsâ€”strategies that used to work consistently across the platform are now maddeningly hard to predict from one brand to another. "While in the past our businesses tended to move in unisonâ€”collectively, up or offâ€”I believe that the variability and volatility of performance is here to stay, which puts a greater emphasis on the impressive can-do spirit and creativity of our teams," says Carey in the letter.Nevertheless, Carey is continuing his push for entrepreneurial thinking within the company, noting international, digital and commerce-oriented growth initiatives. By the end of the year, for example, Cosmopolitan's partnership with jcpenney was producing $1 million in weekly sales. Also notable is Carey's claim that Hearst Magazines now has the highest number of paid monthly digital subscriptions across tablet devices in the industryâ€”at nearly 800,000. The subscriptions are generating profits and 80 percent of the subscribers are new to the file. Here's the letter in full: Dear Colleagues,Â Happy 2013! Welcome back after what I hope was a wonderful holiday break for each of you. If you were minding business at the office last week, I trust you also found it a peaceful place to be.Â As we begin a new year, I want to take stock of our companyâ€™s accomplishments in the last year and look forward to whatâ€™s on tap for the coming one.Â We have been thrilled by consumer response to the new print products we introduced, led most notably in the U.S. by HGTV Magazine and, globally, by 10 new Hearst international editions, including Esquire in Singapore and Colombia and Harperâ€™s BAZAAR in Poland. Weâ€™re also enthused by the pace at which our content is ricocheting around an increasingly mobile world. At the end of 2011, we had 39 million monthly page views on mobile devices; by the end of 2012 that number had grown to 186 million.Â But no question, 2012 will not be remembered as mellow in either media or meteorology.Â Many of our businesses soared and produced record results. Others faced challenges, and the teams behind these brands have put in place fresh thinking for 2013. While in the past our businesses tended to move in unisonâ€”collectively, up or offâ€”I believe that the variability and volatility of performance is here to stay, which puts a greater emphasis on the impressive can-do spirit and creativity of our teams.Â Whether you were doing business in sunshine or in storm, so many of you pushed aheadâ€”continuing the enormously imaginative work of expanding our companyâ€™s reach and influence. I want to thank all the teams that make Hearst Magazines great.Â The barometer of our 2012 performance marked important developments. Our core print brands were honored with a raft of prestigious awards: three National Magazine Awards, total domination of Advertising Ageâ€™s A-List, including Magazine of the Year Marie Claire and Publisher of the Year Nancy Berger Cardone, numerous Folio: Eddie and Ozzie Awards, and an Adweek Hot List nod for HGTV Magazine.Â More of our greatest brand hits last year:Â â€˘ ELLE had very strong growth in its first full year of Hearst ownership, gaining market share and becoming our second-largest business in the U.S.Â â€˘ HGTV Magazine, created in partnership with Scripps Networks, ended its first year with nearly 700,000 paid subscribers, producing average monthly newsstand sales of more than 250,000 and strong reception from advertisers. This year, the title will move to 10 issues annually.Â â€˘ Harperâ€™s BAZAAR had a perfectly executed redesign that has been a hit with readers and advertisers, and Good Housekeeping introduced a new look and feel in its January issue, a front-to-back revamp driven by extensive consumer research and testing. Now under way: a dramatic restyling of Road & Track and a new direction for Redbook.Â â€˘ Marie Claireâ€™s powerhouse publishing team delivered the most revenue ever in the magazineâ€™s 18-year U.S. history.Â â€˘ Already the No. 1 epicurean magazine on the newsstand, Food Network Magazine had a sales jump of 18 percent last year and earned the top spot for ad pages in its category. Projected FNM circulation for 2013: 1.55 million.Â In keeping with our UNBOUND positioning, we made impressive gains in digital media. By the end of the year, we counted nearly 800,000 monthly digital subscriptions in the U.S. across iPads, NOOKs, Kindle Fires and Android devicesâ€”the highest in the industry. Those subscriptions are now generating profits after 24 months of investment. And how exciting to see how this business is developing organically: More than 80 percent of our digital subscribers are new to our files, and their engagement levels meet or exceed the high levels we see from our print products.Â We achieved important digital milestones all across the company:Â â€˘ The number of unique monthly visitors to our websites grew by more than 30 percent. Our brands have driven an explosion in social engagement with their audiences; Hearst has 7.7 million Facebook fans, 4.7 million Twitter followers and 5.5 million Pinterest followers, including the No. 1 brand on Pinterest, Harperâ€™s BAZAAR.Â â€˘ Cosmopolitan doubled the size of its digital edit team in December, with the goal of reaching 20 million monthly unique visitors. The magazine also used a multi-pronged social media strategy engineered by iCrossing to welcome new editor in chief Joanna Coles: 18 million tweets announcing Joannaâ€™s move were sent in just a few hours. (The brand is also active on the TV front: Watch for Cosmo as a star of a new Mark Burnett series debuting in February.)Â â€˘ Jumpstart, a key asset from our LagadĂ¨re acquisition, had the most profitable year in its history. Jumpstart grew to become the No. 3 website for auto shoppers, with more than 9.5 million monthly unique visitors.Â â€˘ Innovation flows in all directions in our halls: Hearstâ€™s popular foodie destination Delish.com introduced a print special that was sold with the November editions of six titles at Wal-Mart, producing a 22 percent lift in single-copy sales.Â We welcomed new faces last year and, in some cases, rearranged places. Chief Technology Officer Phil Wiser, who joined Hearst Corporation last January, quickly became a key resource for our technology teams. In addition to Joanna at Cosmo, we named three new editors in chief: Susan Spencer at Womanâ€™s Day, Larry Webster at Road & Track and Anne Fulenwider at Marie Claire. We were also pleased to welcome Carine Roitfeld as global fashion director of BAZAAR, who, in an industry first, will create fashion editorial that will run in all 26 international editions of the magazine at the same time. This high-profile creative initiative with Carine is among my favorite rule-breakers of 2012 and paves the way for more global content sharing.Â Benchmarking industry leadership took a number of creative forms at Hearst in 2012:Â â€˘Â We created the Hearst Design Group by consolidating the editorial staffs of ELLE DECOR, House Beautiful and Veranda under Newell Turnerâ€™s leadership, bringing a streamlined, nimble, European publishing model to the U.S.Â â€˘ Again, in the spirit of not holding onto established orthodoxies, we changed the business models of some titles, including Womanâ€™s Day and Veranda, shifts that have dramatically improved bottom-line performance.Â â€˘ You will see more brand extensions this year based on last yearâ€™s success; Cosmopolitan for Latinas, Delish and ELLE Accessories will all increase their frequency in 2013.Â â€˘ From its genesis as a column in Good Housekeeping, 7 Years Younger is now a book and a website with extensive social media presenceâ€”and the launch has been a collaborative effort across our company.Â Always looking for new ways to connect with our readers, Hearst developed fresh, effective commerce initiatives last year, including ShopBAZAAR.com and the House Beautiful Marketplace, a partnership with HSN.Â After a year of close collaboration, the Cosmopolitan Collection debuted in September in 700 jcpenney stores nationwide. At yearâ€™s end, consumer sales were running more than $1 million per week. (Operating as entrepreneurs entails taking chances: Our 2011 partnerships CLAD and Gifting Grace were discontinued. There will be some swings and some missesâ€”we learn and move forward.)Â As you know, Hearst is the largest publisher of monthly magazines around the world, with 284 of our 304 editions outside the U.S. Iâ€™m pleased to report that in 2012 our international business grew by more than 50 percent. European shortfalls resulting from the ongoing turbulence in the economy were offset by the strength of earnings from our businesses in Russia and Asiaâ€”China, in particular, where ELLE has seen so much success that it moved to a semi-monthly publishing schedule.Â Our other lines of business also made bold inroads in new areas. Hearst Integrated Media had its biggest year ever in 2012, selling more than 30 custom programs.Â We welcomed new leaders, in the U.S., the U.K. and Latin America, to boost iCrossingâ€™s digital marketing leadership. In 2012, iCrossing won two out of every three pitches and signed 30 new accountsâ€”with its average deal size now 250 percent larger than two years ago. iCrossingâ€™s fourth quarter revenues were the highest in its history.Â CDS Global celebrated its 40th anniversary in 2012 and successfully focused on transforming its technology to offer new digital and e-commerce services and diversify its business across industries. CDS Global is a key part of the magazine industryâ€™s tablet media infrastructure and at the same time is building business beyond mediaâ€”it ended 2012 with nearly 20 percent of its revenue from non-magazine clients.Â One thing thatâ€™s distinctive about Hearst is how important partnerships are to driving our growth, a key strategy established long ago by our CEO, Frank A. Bennack, Jr. Weâ€™re fortunate to operate joint ventures with many of the worldâ€™s leading corporations. (These ventures not only generate earnings, but also bring great talentâ€”our just-named Hearst president, Steve Swartz, originally came to the company via a joint venture with Dow Jones). Because of our reputation of being such a good partner, we regularly receive inbound concepts from media companies looking to jointly create new products with Hearst. (So donâ€™t be surprised if we test yet another new magazine by yearâ€™s end!)Â Finally, a sad note and a heartfelt tribute: Helen Gurley Brown, the Hearst magazine editor who first made Cosmopolitan famous and single women proud to be smart and sexy, died on August 13 at the age of 90. She led Cosmo for more than three decades, leaving an indelible, personal imprint on several generations of womenâ€”and their men. Helenâ€™s re-creation of Cosmopolitan produced profits that were quickly reinvested into a diversified set of businesses that helped build the modern Hearst Corporation.Â Which brings me to 2013: Every member of the team has the chance to make a Helen Gurley Brownâ€“level contribution, one that can have a long-lasting, positive impact on our company and colleagues.Â Many are hard at work on achieving exactly that.Â Esquire Editor in Chief David Granger and Publishing Director Jack Essig will soon announce a bold new partnershipâ€”an initiative that will dramatically expand the Esquire franchise. The brand also has big plans in the works to celebrate its 80th anniversary this year.Â Our consumer marketing colleagues are collectively rethinking how we bring our titles to market by striking new partnerships with retailersâ€”as they cast aside the â€śsame old wayâ€ť of doing businessâ€”and building world-class digital marketing capabilities.Â The companyâ€™s digital leadership team is working on plans to â€śfuture-proofâ€ť our digital business models for a world where more than 50 percent of our traffic will be on small screens, and our readers will demand fresh, high-quality content from our brands around the clock.Â The team at Hearst Magazines International is readying another dozen launches in 2013, from France to Australia.Â And thereâ€™s so much more.Â Iâ€™m also pleased to announce that in 2013 we will put greater emphasis on the training and development of our team. In the last few weeks weâ€™ve had the good fortune to welcome to Hearst Tower inspirational executives like Facebook COO Sheryl Sandberg and HSN CEO Mindy Grossman to talk about how they are managing change at their companies. In 2013, we will significantly step up these programs and our exposure to some of the business worldâ€™s smartest minds. We will also invest more in digital training of all kinds.Â Regardless of the headlines, change in GDP or cyclical trends, our teams are pushing ahead to create a successful 2013. This is the spirit that has put Hearst at the forefront of the industry.Â Like you, I get a lot of e-mail newsletters. A few months ago, one contained an especially insightful passage that succinctly sums up the opportunities for our company and industry:Â If one thing is clear, itâ€™s that over the next 20 years the shortest distance from A to B is going to be anything but a straight line. To survive, much less to thrive, will require being both clever and smart. Clever means a willingness to try new thingsâ€”be scrappy and make bold bets, even if they may not pay off. Smart means keeping your eyes on the year-2032 prizeâ€”be ready to cut off the experiments that arenâ€™t working and cultivate your willingness to let go of the legacy as the time comes.Â I am so proud of all the talented and smart men and women at Hearst who work to empower, educate and encourage our readers, advertisers and partners. In picas and pixels, you are simply the best, through all kinds of weather. And I know you are not aloneâ€”supported by family and friends who encourage you to do your best work and reach for the stars.Â Thank you, again. I wish you a new year filled with personal and professional success and happiness.Â Sincerely,Â David CareyPresidentHearst Magazines@CareyAtHearst
After an acquisition, some staff turnover is expected. But when that acquisition also means moving the brand halfway across the country, you'd better be ready to do some significant rebuilding of personnel. This rings especially true when a magazine relocates from, say, New York to Wisconsinâ€”as happened with Discover magazine after Waukesha-based Kalmbach bought it. Privately-owned Kalmbach, an enthusiast, craft and hobbyist publisher with titles such as Astronomy, Model Railroader and Cabin Life, among others, picked up Discover two years ago from private equity backers WallerSutton and Sandler Capital Management. At the time, Discover had revenues of about $14 million. Less than a year later, Kalmbach outsourced the sales operation to James G. Elliott, Co., a partnership that's still in place. Which left the edit team (production and back office operations were already set up in Waukesha) still in New York. In August this year the company finally announced that it was closing the editorial offices and moving operations to Wisconsin. At the time, about 20 edit and design staff were faced with the decision on whether to move. All opted outâ€”except former editor-in-chief Corey S. Powell, who was with the brand for 15 years and will continue as editor-at-large and columnist, and executive editor Pamela Weintraub, who remains in a consultative role. Today, Discover announced a completely rebuilt edit and design team. The magazine has hired 13 new staff members.The magazine's new editor-in-chief is Stephen George, who was last with Reader's Digest at the Greendale, Wisconsin branch as its executive editor in the book and special publication group. Former managing editor of Kalmbach's Trains magazine will take the same title at Discover. From there, two senior editors, a photo editor, four associate editors, a senior graphic designer, staff writer, editorial assistant and copy editor have also come on board. Still open is a design director spot, says vice president-editorial and publisher Kevin Keefe.
An essay by Craig Mod has been making the rounds lately among media watchers. It's a terrific read. Mod, a current independent writer and former Flipbook employee, touts what he's calling the Subcompact Manifesto, which places a premium on a minimalist approach to digital publishing. His manifesto emerges out of one of the main criticisms 'traditional' publishers have received for their tablet magazines and apps: They're unwieldy, hard to use, have too many bells and whistles and take up too much room. But most importantly, they're tied to print production schedules, design and pricing. In other words, tablet editions are not exploiting the medium in the open, nimble, socially-forward way they could and/or should be.As Mod says: So why do so many of our digital magazines publish on the same schedule, with the same number of articles as their print counterparts? Using the same covers? Of course, they do because itâ€™s easier to maintain identical schedules across mediums. To not design twice. To not test twice (or, at all).Unfortunatelyâ€”from a medium-specific user experience point of viewâ€”itâ€™s almost impossible to produce a digitally indigenous magazine beholden to those legacy constraints. Why? Not least because we use tablets and smartphones very differently than we use printed publications.The key here, for Mod, is the "indigenous magazine"â€”a product born exclusively for the mobile-digital platform, free of any print production and pricing frameworks. He goes on to highlight The Magazine, created by Marco Arment, as a perfect example of the digitally indigenous magazine. It's short (four or five articles), it's design is breezy and open, it's file size is small, it's cheap and easy to snack on.This all may be true, and there's probably an audience for The Magazine and future brands just like it. But what's wrong with publishing a tablet magazine that's full of print magazine design and rich media content, that's $4.99 for a single copy and might take all night to download to Apple's Newsstand? Nothing, really, because there's room in the market for the digitally indigenous magazine and the digital magazine that's married, for good or bad, to its print namesake. I understand that with digital comes an expectation of disruption and re-invention. And not just an expectation, but actual disruption. But it's also a world where all sorts of business models live and play.I don't think Mod is necessarily saying all publishers need to drop their old-school, print-legacy-based digital magazines and start producing $2, 4-article, scrolling mini-apps. He does say though, that publishers are balking at producing products like these because they're not based on a familiar model and they're not likely to produce immediate and significant returns. Funnily enough, neither have the full-blown tablet magazines, for now. What will be interesting to see is how much the subcompact model informs or influences the sedan version of digital magazinesâ€”or simply rides next to it.
ABM, which is wrapping up its Executive Forum being held in Chicago this week, voted nine new companies into membership at its board of directors meeting Monday.Media members include Editorial Projects in Education, InsuranceNewsNet.com and new international member Beuth Verlag GmbH.The association also added six associate members, including Adobe Systems Inc., bXb Online, LiveIntent, MagToGo, Tout and WeiserMazars LLP. "These new membersâ€”ranging from traditional and international media companies to progressive businesses focused on app development, social media, virtual event technologies and digital monetization solutionsâ€”support ABM's initiative to represent the wide range of platforms and models leveraged by business information and media companies," said ABM president and CEO Clark Pettit in a statement. Meanwhile, news out of the Executive Forum includes a bit of research ABM did in partnership with Outsell that examined mobile content and business models. B-to-b executives responding to the joint survey, it seems, are not in it for the moneyâ€”yet. Instead, brand enhancement, content delivery, serving advertisers' needs and creating a superior digital experience were the top mobile objectives, with 64 percent, 60 percent, 60 percent and 52 percent of responses, respectively. At the bottom of the objectives list were "new revenue from mobile users (29 percent) and "enable mobile e-commerce" (24 percent).Additionally, only 20 percent of respondents indicated they have a formal mobile strategy in place. The majority of respondents (56 percent) say their mobile strategy is somewhere between formal and ad hoc. A quarter, or 24 percent, say mobile is on an ad hoc, project or case-by-case basis. Given that objectives aren't quite standardized and that 40 percent of respondents expect to break even with their mobile investments and 48 percent expect a negative ROI, mobile initiatives are clearly still in the experimental phase.For more results from the study and the slide deck on the ABM/Outsell presentation from the Executive Forum, click here [pdf].
Source Interlink Media's enthusiast sports group, GrindMedia, bought Dirt Sports and Off-Road Industry magazines from Ryan Communications Group this week. The deal sets up a new Dirt Sports group within Grind for Source, which also includes existing titles Dirt Rider, ATV Rider, Endurocross and Motocross.com. Ryan Communications founder Jim Ryan will head up the new group.The deal is the second one for GrindMedia, which bought Baseball America last December. The GrindMedia group is Source's gen-y, young male consumer group, which, says the company, reaches a monthly audience of 20,000,000 along with other brands such as Skateboarder, Bike, Powder and Slam. The latter recently extended its model into Football with the release of TD and TDdaily.com.
A new report conducted by app store analytics firm Distimo finds that the United States is the most "socially savvy" country by virtue of its download volume of social apps. According to Distimo, out of the most popular apps downloaded, 20 percent of the volume is apps from Twitter, Facebook, Instagram and the like. In countries in Europe and South East Asia, social app download volume doesn't exceed 10 percent. These findings are part of a larger look at how social media app downloads compare to other apps. As an example, the report finds that while download volume among the 100 most popular apps in Apple's App Store increased 43 percent over the last two years, the top 100 social applications increased 193 percent between July 2010 and July 2012. Further, Facebook lost its prominence by July 2012 as the top downloaded social app, falling to the third spot behind Instagram and Twitter (as measured across Canada, China, France, Germany, Italy, Japan, Mexico, Korea, United Kingdom, and the U.S.).For the full report, click here.
Some of us "older" publishing pros often quip it's the "digitally-savvy youngsters" that are driving the new publishing eraâ€”not just as consumers, but as talented members of the magazine publishing community. In that spirit, it's time once again to turn the FOLIO: spotlight on the younger set and profile the next group of rising stars and innovators across traditional publishing roles, never-before-seen positions in new lines of business, and market-shaping start-ups: FOLIO:'s 15 Under 30.
Last year's list featured a cross-section of talent responsible for social media, interactive marketing, community management and new digital companies. These are all excellent, and we're equally impressed with individuals who are leading the way in defining new competitive opportunities for existing, more traditional products. The nomination process is officially openâ€”tell us who you think deserves to be on the list by filling out our simple online form. Our list-makers will appear in the October issue.The only catch? All nominees must be younger than 30.The deadline for nominations is Monday, September 10. Good luck and thanks for participating!
Once derided as Johnny-come-latelys to the digital media game, traditional publishers are now becoming enthusiastic start-up accelerators, buying or incubating early-stage companies that aim to disrupt the media market. Bonnier has just joined the club with its own Innovation Lab, a 14-week program seeking applicants who are interested in "developing revolutionary products and services that will change the way major media companies engage with their audiences." The idea being that Bonnier, like other publishers, has already waded its way into the modern media world and knows a thing or two about digital business and audience development, marketing and content strategy. Not quite an ownership-based incubator, such as Hearst's Interactive Media unit, the Innovation Lab is more like an educational program that helps entrepreneurs get their ideas off the ground and into the market. The brainchild of David Rich, Bonnier Corp.'s director of digital innovation, the program features a dozen mentors. Some are from Bonnier's ranks, including CEO Terry Snow, digital audience and analytics director Jennifer Anderson and VP of corporate communications Dean Turcol. And some are from VC firms and other start-ups. Four start-ups will be selected for the first program and each receives a pretty generous set of perks, including a minimum of $25,000 in seed capital, $5,000 in PR support, $10,000 in PayPal transaction fees and about $79,000 in hosting credits from a variety of services including Amazon, Rackspace and Microsoft Azure. For its part, Bonnier will get an equity stake in the startups if they make it from drawing board to real companyâ€”and presumably first dibs if it's a concept uniquely appealing to Bonnier. But how much that ends up being depends on the progress of each start-up and what is ultimately negotiated as they progress through the Lab.
An announcement went out today, but if you haven't seen it, we've decided to put Foliomag.com on a metered paid-access model. Here's why:Our mission has always been to provide you with the most up-to-date and in-depth resources to help media companies succeed. Our news and analysis lead the industry. Our blogs, columns and more offer the context and perspective you need to optimize your business.At the core of our decision was this: We felt that it's very important to place a clear value on our content, and to recognize the value that our best customers see in what we do. Also, as a brand that covers the digital-media transformation, we seek to not just reflect what the industry is doing, but to lead it as well.This paid-access initiative will also allow us to invest in Foliomag.comâ€”to significantly improve it over time. We'll be adding regular multimedia features, more voices, more connectivity and more content.Our paid-access model begins immediately. Here's the way it will work: Each month, you'll get to read eight stories on a complimentary basis. You'll be reminded as you get closer to the eighth report. After that, you'll be given the option of buying an annual subscription to Foliomag.com for $69.95. Alternatively, you can gain full access to the site on a monthly basis for $14.95.As a leader of the digital-content marketplace, we to need to adapt to the changing times. Our new format allows you, our most loyal customers, to choose the level of information you need.
Feel free to comment below; you can also email me at bmickey at red7media.com.Â
While there are pockets of good news on the ad revenue side of the publishing business these days, overall publishers are still duking it out on the front lines. This is illustrated for better or worse in Time Inc.'s 10-Q report released last week. The publishing giant's revenues dropped nine percent in the second quarter to $858 million and six percent for the half to $1.6 billion. Every segment within the publishing division recorded a loss in revenues. And the losses prompted the company to warn that because "soft market" conditions are expected to continue through the third quarter, the fair value and book value of the company's brands are getting uncomfortably close.Â This ratio is pointed out by anonymous blogger Dead Tree edition, who also notes operating income for the half is down 60 percent compared to same period 2011. As of the end of last year, Time Warner says the fair value of Time Inc. is 19 percent higher than its book value, and that it didn't actually have to do an impairment analysis during the second quarter, but if that 19 percent gets erased due to continued declines this year, the company may have to take a non-cash charge out of earnings that are already significantly pinched. "During 2012, the Publishing segment has experienced soft market conditions that have negatively impacted its operating results," says the report. "If those market conditions worsen, it is possible that the book values of the Time Inc. reporting unit and certain of its tradenames will exceed their respective fair values, which may result in the Company recognizing a noncash impairment that could be material."This may never happen, the 19 percent separation in value is a decent cushion but with the market condition the way it is, the company felt compelled to issue a warning nevertheless. If book values (the value of the company straight off the balance sheet) do end up exceeding fair value (the value of the company determined by a hypothetical sale, or market value), then there will be a non-cash charge to the bottom line.In the meantime, the report also highlights just how expensive digital investments have become for companies that are making heavy commitments to web, mobile and tablet development. As print production scales back, savings are immediately eaten up by digital. TW says that in the second quarter costs dropped about 4 percent, or $13 million due to less production associated with lower print volumes, but were entirely offset by investments in websites and tablet magazines. As for the publishing group's segments, subscription revenues were down 11 percent for the second quarter to $292 million and 7 percent for the half to $623 million. Advertising was down 7 percent for the quarter and 6 percent for the half to $472 million and $855 million respectively. Content sales were down 20 percent in the quarter to $20 million, but that gap narrowed by the end of the half to a loss of 5 percent, ending at $39 million. In the second quarter, Time Inc. took back the management of SI.com and Golf.com from Turner, who had been paying Time Inc. licensing fees to manage the sites. With the two site back in the fold, advertising losses were partially offset by about $7 million, but that was nulled by the loss of $9 million Time Inc. would have had from licensing fees.
Joe Pompeo at Capital New York reports that Huffington Post has made its Huffington app, launched in June, free. The app's single copy price was 99 cents, $1.99 per month or $19.99 per year and, at the time, reflected the you-don't-get something-for-nothing mentality now so prevalent in digital content publishingâ€”especially when producing a magazine app like this one is still far from efficient or low-cost.But, in hindsight, Huffington had clearly wrestled with whether to charge for the app or not. When Folio: first reported on the app's coming launch, executive editor Tim O'Brien said the business model had yet to be determinedâ€”and this was only weeks out from its debut.SEE ALSO: Inside Huffington Post's Weekly Magazine AppPompeo says the change in strategy was revealed during a company meeting yesterday, and the app is already listed as free in the App Store. All of this was underscored earlier this week when News Corp.'s The Daily axed 29 percent of its workforce, or 50 employees, and streamlined its content production.
The changes at Huffington and The Daily highlight the difficulty publishers are having with nailing down a consistent business model for magazine apps. The technology is new and the products and the experience they offer are still new for consumers and that mix can bloom into a confusing array of strategies as publishers balance customer preferences with business realities. This can be especially frustrating as publishers also try to figure out how apps relate with and exist next to their traditional products. A Huffington spokesperson tells Pompeo that the decision to go free was triggered by the fact that The Huffington Post itself is free and the app's paid model clashed with that. Perception goes a long way.
In an earlier blog post, Penton Media senior vice president of strategy and business development Warren Bimblick sniffed out a pricing scheme that might have been a bit too perfunctory.Â Â