Another Business Magazine Bites the Dust

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Last night I picked up the latest issue of Fortune Small Business magazine and started flipping through. I almost never read the letter from the editor, but the headline ”Hail and Farewell” caught my eye. I thought maybe the editor was leaving and moving on. Turns out that this would be the last issue of the magazine. Time Inc is shutting it down. Damn. This is the second great business magazine that’s gone down in the last few years – Time Inc also closed Business 2.0 down in October of 2007.

I get why. There isn’t enough advertising out there to support the costs associated with running a magazine. Writers, editors, printing costs, and shipping costs are just too high when you make next to nothing on your subscriptions and your advertisers are buying less ads. I get that the internet takes away a lot of readers, and that most readers would rather not pay for the content.

But I still can’t help but feel like there’s a gap being created every time this happens. I can get all of my day-to-day business news on TechCrunch and ReadWriteWeb and others. I don’t need a newspaper for that. And when I want to delve deep into something there are plenty of books available. While the book industry is in transition, it’s not dying.  No one is talking about books becoming extinct (or at least they shouldn’t be).  They’re too valuable.  We’re just not sure of the medium that they’ll be consumed in the future.  The Kindle seems to have at least partially solved the problem.

Magazines are great at feature stories.  The kind that take a month or two to research and half an hour to read.  Take for example, the recent Wired writer Evan Ratliff who wrote about people who vanish and try to create new identities for themeslves, and then decided to do it himself, placing a $5k reward for anyone who found him within one month.  People from all around the world pooled their resources and finally caught him. The articles were fascinating.  Great reads that I’ll never forget.  TechCrunch doesn’t do stuff like that…and neither do books.  Magazines have a very unique and specific niche.

However, the magazine model seems so flawed that I can’t help but see this as a trend that will continue.  They charge essentially nothing for subscriptions (many times $10/year or less) and instead rely on hefty ad rates to subsidize the ever-increasing costs.  The model used to be brilliant.  You charge to create perceived value – both in the mind of the customer and the advertiser (it stands to reason that people are more likely to read something that they pay for).  It’s not working anymore.  Magazines are dropping left and right.

So how do you save that niche?  I don’t think that ad-supported blogs alone are the answer.  Do you charge for an online-only version?  Do you charge more for a print version?  Do you just run your business leaner – less writers, less issues (say bi-monthly), and less filler pages with misc news that people already know?  Do you run as some sort of hybrid, blogging regularly but charging for a quarterly magazine with more in-depth articles?  Something else?

I don’t know what the answer is, but I’d like to see some people start trying some of this stuff instead of folding or becoming a blog in a niche where there are already plenty of blogs.  Especially magazines with a focus on business and entrepreneurship.  Come on guys, think outside the box a little.

18 comments on Another Business Magazine Bites the Dust

  1. Nethy says:

    Fascinating area for anyone interested in strategy. There are no convincing right answers. Plenty of convincing are clearly wrong.

    You can really tell if certain writers/pundits are good strategic thinkers in this environment, which aren’t. I’ve heard otherwise smart”analysts” stand up & blame the plight on margins optimisations in the 80s, for example. Bad answer.

    One of the things to look out for is expecting something to fill all the voids left by destroyed models. When press printing killed monk calligraphy a lot was lost. Books became ugly & stayed ugly for centuries. It was not till relatively recently that a printed book might look as nice as a copied one (typography, colour pages, photos, illustrations). It’s not just the calligraphy, it was also the drawings. Even the imperfections of copying and subsequent evolution of text & images was a loss.

    Magazines have suffered before, BTW. Last time they took a hit, it killed the short story genre. Short stories were once an important part of the literary world. They were once a source of income & stability for novelists, the cash cow. They were a way of getting known and people liked reading them. Many classics (eg Sherlock Holmes) came from this ecosystem. Authors still write them, but no one reads them & no one pays for them.

    You are absolutely right that you can’t just take the magazine & make it a blog. They need creativity to survive.

    • Adam McFarland says:

      Great comment.

      “One of the things to look out for is expecting something to fill all the voids left by destroyed models.”

      I wish you were wrong about this, but you’re not. That’s what I fear will happen. For me personally, it would be a loss. I’d gladly pay extra to support these publications (I’d easily pay $100/year instead of $10 in most cases), but I’m only one person. The reality is that these types of magazines probably won’t be around much longer.

      The short story thing is also a great point. I’m a big F.Scott Fitzgerald fan and a lot of his best stuff came from the short story world because he needed the steady cash flow to live. It’s a shame that medium isn’t supported anymore – personally I think it would be great for both readers and writers. Oh well.

      • nethy (netsp) says:

        Adam,

        I suspect that even if 75% of former readers paid $100, it wouldn’t help. The $10 was only ever there to convince advertisers you were reading it. It was never a real part of income. I’ve heard anecdotes that in some niches, publishers were making thousands of dollars per subscriber. Small businesses sound like a good niche.

        Magazine advertising was a killer business model while it lasted, the Adwords of the day. They made like bandits. But it (like Google) always had 2 points of complete failure: Readers & advertisers. Both have taken hits.

        I agree with you about the loss but it is the other side of the coin that I enjoy a lot. Your blog is one of the things killing that magazine. I have gotten a lot from this blog that a magazine could never have done.

        Paying $100 isn’t the price for saving magazines. Blogs, forums, Wikipedia, Google whatever you use. These are the price.

    • nethy (netsp) says:

      Not sure what happened to my name in that comment.

  2. at the end of the day it all comes down to making money. no money, no mag.

    at some point there will be a nice hybrid model – something like you mentioned, some online w/ quarterly print etc… or micropayment model too could work. I’d be willing to pay a couple of cents out of paypal to get access to what I think might be a good article. At the end of the day, publishers may make out better that way b/c of the “long tail” effect.

    We’ll know soon enough b/c there’s too much good content that is going to be held back. It will need to surface somewhere and someone is going to need to get paid for the content. You’re right thought, it’s not good when small business publications go by the wayside.

    Great article.

    • Adam McFarland says:

      Thanks Jake.

      “We’ll know soon enough b/c there’s too much good content that is going to be held back. It will need to surface somewhere ”

      That’s the part I’m looking forward to 🙂

  3. Great post and great comments (hmmm… Is that part of the new model?). We’ve been working hard to define a sustainable, Web-only business that supports top-notch business journalism at BNET.com for the past three years. We’re not there yet, frankly, and like everyone else we’re looking at paywalls and registration-based business models. And ad innovation.

    This last is where I believe great opportunities exist. Online biz media needs to deliver much better advertising results. The money will always come from advertising primarily, but off-the-shelf ads are not good enough. You can’t build a better house for journalism with innovation in advertising, and the business media space is a great place for this work (better than, say, fashion or gadgets or CPG).

  4. Adam McFarland says:

    Hi Stephen –

    Thanks for the comment. BNET.com looks very cool…I had not heard of it previously. I’ll have to spend some more time looking around later.

    You bring up good points about advertising. I think the technology is close to being able to serve very highly targeted ads, but the hard part is getting the information from the user to serve the ad without inciting privacy scares.

    Maybe something where you can subsidize the cost of your subscription by providing information to the ad network? I’d do it, but I know a lot of people who are afraid of that stuff…even though it’s happening more and more whether they know about it or not.

    • nethy (netsp) says:

      I agree Adam,

      Privacy is a concern when it’s unclear. I think it might be possible to increase targeting without being sleazy or abusive. It’s a matter of making things clear. I see a lot of potential for things like retargetted ads or clever profiling, for example.

      But.. None of this will replace former models. We can’t just expect new revolutionary advertising models as a way of keeping everything else in the magazine (tv, radio, news..) the same. it doesn’t work like that. These will be innovations in advertising. These will probably spill over in to publishing somehow, but they are not for publishing. They are for advertising.

  5. Carla says:

    I’ve been in the magazine business for 30 years, on the management side of editorial and business. I, too, lament the loss of the long form and the backbone of magazine economics being broken, not to mention no clear solution as of yet on how to make up the deficits with online development. My only quibble is picking a weak magazine like Fortune Small Business as your example. Its content tends to be regurgitated work that has been done in Inc. magazine years ago. Of all the business magazines it has always had the least original content and inconsistent quality. Now we wait… as other business magazines, Forbes, Fortune and Fast Company come to mind immediately…as they totter financially and the question is — how long will they last in their present form? But your basic lament is felt by all of us in publishing…and we are all very worried about cutbacks that will ultimately cause a decline in quality and a trend towards just quick hit/newswire publishing. For innovation and entrepreneurship, the first magazine to cover that sector, Inc. magazine, is owned by man that is willing to lose millions, as he also owns Fast Company as well. But how long can rich men like Mansueto (Inc & Fast Company), Bradley (The Atlantic), Wasserstein RIP (The Deal, New York Magazine), Newhouse (Wired, New Yorker, Vanity Fair, etc.), Forbes —continue to pour millions into these magazines with mounting losses?? Hopefully a while longer until someone comes up with an economic model that can sustain them.

    • Adam McFarland says:

      Carla –

      Thanks for replying. It’s great to hear from someone with so much experience.

      I enjoyed FSB, but it is definitely not in the league of Wired, Inc. or Fast Company. Those are hands down my favorite magazines. If one of them shut down I’d really be upset 🙂

      I did not know that all of those magazines were backed by individuals, or that they were losing that much money. That doesn’t make me any more optimistic!

  6. Clarification: I intended to write, “You can’t build a better house for journalism *without* innovation in advertising.” Unfortunately, my clumsy fingers typed the opposite.

    Adam replied that getting better demographic data for targeting was challenging because of privacy concerns. I still think there’s plenty of room for success.

    To speak from my own experience, BNET.com has more than 1 million registered users, all with detailed demo data including company size, address, and a double-confirmed email. This registered user base took years of effort to build, but it wasn’t that hard, really.

    We simply build certain types of resources and content for which people were willing to undergo a one-time registration. The content was free, and lots of people are willing to register for free content of value. I suppose that’s not too different than magazines subsidizing a ridiculously low subscription price in order to get people onto their lists.

    Also, FWIW, I don’t think targeting is the panacea for what ails online advertising. What online ads lack are impact, and the past several decades have shown that you can get impact in a ton of ways with zero targeting.

    • Adam McFarland says:

      Stephen – glad to hear that BNET.com has had that much success getting registered users and all of that demo details.

      I do agree – what hasn’t been done is taking the demographic information + the technology and creating innovative relevant ads that really get through to people. An interesting opportunity for sure.

  7. bobby says:

    seems you’d be more of an Inc. guy anyway, with a little more slant towards techies!

    • Adam McFarland says:

      Definitely Bobby. I really love Inc. I think they do a perfect job of blending monthly columns that I’m excited to read with great feature stories. If I could only read one magazine it would definitely be Inc.

  8. […] Fortune Small Business bit the dust I wrote about the old school magazine business model: They charge essentially nothing for […]

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