Monday, June 09, 2008

U.S. News Loses Weekly War as Sector's Ad Pages Plummet

U.S. News Loses Weekly War as Sector's Ad Pages Plummet
Biweekly Will Focus on Franchise Rankings, Cede Space to Time, Newsweek
By Nat Ives

NEW YORK ( -- U.S. News & World Report, the longtime No. 3 weekly news magazine, is dropping to a biweekly frequency starting next year, effectively ceding its troubled category to larger rivals Time and Newsweek.

Source: Media Industry NewsletterAll three traditional newsweeklies have already taken steps such as cutting paid-circulation guarantees as competition has increased and the news cycle has gone into hyperdrive. U.S. News has already trimmed its frequency to 36 issues this year from 46 last year. But the move to publish issues only every other week -- with additional specials on occasion -- provides the strongest signal yet that the ground has permanently shifted under the old newsweeklies. "'News' and 'week' becomes an oxymoron," was how Brian Kelly, editor of U.S. News, described the effect of always-on media last week. "It's a very smart, strategic move," said Brenda White, senior VP-director of publishing activation at Starcom Worldwide.

"When you think about it, what their brand stands for is the rankings: the 100 best hospitals. There is a franchise there, and they capitalized on it." "They're really embracing change," Ms. White added, "vs. fighting or just thinking about it."

It's probably helped focus everyone's mind that ad page sales are suffering this year under the added weight of a recession. Ad pages so far have fallen 23.7% at Newsweek, 27.2% at Time and 32.7% at U.S. News, according to Media Industry Newsletter. Around in five years?At a panel last week, media critic and provocateur Michael Wolff suggested the newsweeklies' challenges would only get worse. "If Newsweek is around in five years, I'll buy you dinner," he said.

(Newsweek Editor Jon Meacham sees a different future: "I like steak," he told Ad Age later, "and look forward to dinner.") But there's no getting around the fact that demand for the print versions is dwindling. Time reported average paid circulation of nearly 3.4 million for the second half of last year, down 17.6% as it drastically cut its guaranteed circulation; newsstand sales declined 19.4%. Newsweek's average was flat at 3.1 million, including a 16.3% decline on newsstands; its rate-base reduction did not take effect until January. U.S. News also reported flat circulation, at just over 2 million, as newsstand slipped 7.9%; it, too, cut its rate base in 2008. The newsweeklies are investing heavily in their websites, where they expect to find future audience growth. The new idea at U.S. News is to let the web do what it does best -- provide instant news updates and vast stores of reference material -- so the print edition can publish less often.
"Because we're able to provide our audience with much more current information on the web, it frees us up to do some better storytelling in print," Mr. Kelly said. Websites for all three are, in fact, turning in growth, but Time and Newsweek are faring much better, in part because of their collaborations with other players including CNN and MSNBC. Time's site averaged 4.5 million monthly unique visitors last year, up 34% from the year before, according to Nielsen Online.

Newsweek's 6.5 million average unique visitors represented a 38% gain. U.S. News averaged 1.3 million unique visitors for a gain of 6.5%. Redesign in storeU.S. News executives are turning away from the old category battles. "We're definitely less concerned about the broader issues for the newsweekly category," said President William D. Holiber. "We're more concerned about focusing in on how we can connect our users and readers with our advertisers. The direction that we're taking puts us in a position to do that."

U.S. News is also revealing a redesign next month which will play to print's strengths, such as the capacity to engage readers with that better storytelling Mr. Kelly mentioned earlier. It is refocusing its editorial efforts on providing "what it means to me" content in health, education, personal finance, public affairs and opinion. Its online offerings will include expanded e-mail newsletters, themselves a relatively recent arrival, and a new opinion area later this month. The brand is also creating a U.S. News Media Group to house and market its print edition, the companion site, its popular rankings of colleges and other institutions, the Rankings and Reviews site introduced last year, and newsstand specials such as "Secrets of the Civil War."

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Sunday, June 08, 2008

Bits, Bands and Books

Bits, Bands and Books
Do you remember what it was like back in the old days when we had a New Economy? In the 1990s, jobs were abundant, oil was cheap and information technology was about to change everything.
Then the technology bubble popped. Many highly touted New Economy companies, it turned out, were better at promoting their images than at making money - although some of them did pioneer new forms of accounting fraud. After that came the oil shock and the food shock, grim reminders that we're still living in a material world.
So much, then, for the digital revolution? Not so fast. The predictions of '90s technology gurus are coming true more slowly than enthusiasts expected - but the future they envisioned is still on the march.
In 1994, one of those gurus, Esther Dyson, made a striking prediction: that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product - software, books, music, movies - the cost of creation would have to be recouped indirectly: businesses would have to "distribute intellectual property free in order to sell services and relationships."
For example, she described how some software companies gave their product away but earned fees for installation and servicing. But her most compelling illustration of how you can make money by giving stuff away was that of the Grateful Dead, who encouraged people to tape live performances because "enough of the people who copy and listen to Grateful Dead tapes end up paying for hats, T-shirts and performance tickets. In the new era, the ancillary market is the market."
Indeed, it turns out that the Dead were business pioneers. Rolling Stone recently published an article titled "Rock's New Economy: Making Money When CDs Don't Sell." Downloads are steadily undermining record sales - but today's rock bands, the magazine reports, are finding other sources of income. Even if record sales are modest, bands can convert airplay and YouTube views into financial success indirectly, making money through "publishing, touring, merchandising and licensing."
What other creative activities will become mainly ways to promote side businesses? How about writing books?
According to a report in The Times, the buzz at this year's BookExpo America was all about electronic books. Now, e-books have been the coming, but somehow not yet arrived, thing for a very long time. (There's an old Brazilian joke: "Brazil is the country of the future - and always will be." E-books have been like that.) But we may finally have reached the point at which e-books are about to become a widely used alternative to paper and ink.
That's certainly my impression after a couple of months' experience with the device feeding the buzz, the Amazon Kindle. Basically, the Kindle's lightness and reflective display mean that it offers a reading experience almost comparable to that of reading a traditional book. This leaves the user free to appreciate the convenience factor: the Kindle can store the text of many books, and when you order a new book, it's literally in your hands within a couple of minutes.
It's a good enough package that my guess is that digital readers will soon become common, perhaps even the usual way we read books.
How will this affect the publishing business? Right now, publishers make as much from a Kindle download as they do from the sale of a physical book. But the experience of the music industry suggests that this won't last: once digital downloads of books become standard, it will be hard for publishers to keep charging traditional prices.
Indeed, if e-books become the norm, the publishing industry as we know it may wither away. Books may end up serving mainly as promotional material for authors' other activities, such as live readings with paid admission. Well, if it was good enough for Charles Dickens, I guess it's good enough for me.
Now, the strategy of giving intellectual property away so that people will buy your paraphernalia won't work equally well for everything. To take the obvious, painful example: news organizations, very much including this one, have spent years trying to turn large online readership into an adequately paying proposition, with limited success.
But they'll have to find a way. Bit by bit, everything that can be digitized will be digitized, making intellectual property ever easier to copy and ever harder to sell for more than a nominal price. And we'll have to find business and economic models that take this reality into account.
It won't all happen immediately. But in the long run, we are all the Grateful Dead.

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