The World: US consumer magazines face brave new world

With even giants such as Conde Nast forced to close titles, the glossies market needs to change radically, Ann Cooper writes.

In the glossy, inflated universe of the US consumer magazine industry, the bad news just keeps on coming: ad pages down by double-digit figures, magazine closures, rate-bases slashed, lay-offs, reduced issue frequency and budget cuts. And, media experts say, with the traditionally thin first quarter of 2010 looming, it's going to get worse before it gets any better.

In just the past month, the mighty Conde Nast folded its 68-year-old epicurean icon Gourmet, along with its siblings Elegant Bride and Modern Bride, and the relatively new parenting magazine Cookie, sending shockwaves throughout the industry.

Earlier this year, it closed Portfolio, the business title it launched, with much fanfare, just two years previously. The company has cut 400 jobs to date this year, on magazines ranging from Glamour to Wired, with more predicted.

According to figures from Media Industry Newsletter, which charts monthly and weekly ad pages, in November, Gourmet was down 42 per cent, while among other Conde Nast titles, Vogue was down 32.34 per cent, Allure 31.67 per cent, Architectural Digest 49.14 per cent, Vanity Fair 33.78 per cent and Conde Nast Traveler 43.48 per cent.

While most magazine ad pages are falling - figures from the Publishers Information Bureau show ad pages were down 26.6 per cent during the third quarter of 2009 - Conde Nast serves as the high-profile symbol of the malaise affecting most US magazines, thanks to a crippling recession and seismic advertising shifts caused by the web.

These factors, combined with an outdated economic model, may toll the death knell for some formerly profitable magazines. Critics agree on the cure: charge more for subscriptions and diversify.

"Magazines are not dying," Samir Husni, the director of the Mag-azine Innovation Center at the University of Mississippi, says: "It's the people behind them who are committing suicide. They devalued the reading experience so much, and the free business model is not sustainable. Chief executives are in a coma. How many electric shocks do they need to wake up to what's happening? They must make the business model more equitable between the price on the newsstands and subscriptions."

George Janson, the managing partner, director of print at Group M, agrees: "They need to charge a meaningful amount of money for product and content, instead of giving it away. If you amortise the cost of a magazine over a year, it costs less than a can of soda on a per-issue basis. That's disgusting when you think about the amount of money that goes into producing a magazine. Magazines need to look beyond print to drive revenue. They should start to charge for content. But it has to be so engaging, relevant and unique, because you've trained everyone to expect their content online to be free."

So far, magazines have reacted in traditional ways. In the past week, for example, Forbes announced lay-offs across the board, Fortune is cutting frequency and Playboy slashed its base rate. Conde Nast, meanwhile, seems to be suffering more than most because of an over-reliance on luxury advertising. That, along with the financial and car sectors, has fallen dramatically.

Despite having a digital division since 1995, the company has been slow to develop internet properties. "There's a lot written about Conde Nast being behind the times digitally, and it's true," Steve Cohn, the MIN editor-in-chief, says.

"But it's more to do with the fact that for years, the newspaper side subsidised magazines," he adds. "When that dried up, Conde Nast magazines dried up. Plus, Si Newhouse treated his editors like kings and queens. They had all kinds of perks. They didn't have budgets, they had clothing allowances, car services and, it was claimed, Newhouse paid off mortgages for some. But everything came down to earth with the banking collapse, which affected the whole economy."

The company has made moves towards licensing and diversity. Bon Appetit, for example, operates cooking schools in certain stores around the country, Golf Digest has a credit card, Lucky magazine offers a shopping app for iPhones. It also recently announced that all of its magazines would be available as iPhone apps costing $2.99 each, and it is restructuring its digital sales unit.

But is it too little, too late? Conde Nast's competitor Meredith Corp has been heavily into integrated marketing for years and seems to be bucking the trend. It is projecting that four of its biggest titles - Better Homes And Gardens, Family Circle, Fitness and Ladies' Home Journal - will each end 2009 with more ad revenue than in 2008. It claims to have achieved that by diversifying, realigning its business and hiring people from outside the magazine industry. It has a custom publishing division and bought a digital agency, a social media shop, a database agency and a stake in a mobile agency. "Meredith has really diversified and done a lot of things that Conde Nast has not done," Janson declares.

But there are a few advertising growth categories. According to the PIB, food and food products were up 3.9 per cent in ad pages, the first time this year any ad category has been up compared with 2008. Other magazines doing well include Saveur, an award-wining food magazine owned by Bonnier Corporation, which has increased both subscriptions and ad pages, and Every Day With Rachael Ray, a print and online magazine owned by Readers' Digest Association, is also up in pages and subscriptions.

Husni believes there's still a future for magazines and that the media should focus on the up-and-coming titles, perhaps with different business models. "There's a lot of new blood out there. While some older magazines are going out of business, new ones, such as the Food Network Magazine from Hearst, are doing fine," he says.

FNM, which is an extension of a cable network and launched in February, survives, he says, because it "only goes after those who really want the magazine with not just necessary but relevant content".

Meanwhile, many magazines are just trying to get through the next few months. "October is a scary month," Cohn points out. "Last year, a lot of magazines went under in October and November. Christmas will be critical. If people shop like crazy and revenues go up, that might help advertisers decide to market new products, which would be good for magazines."

With magazines, he says, everything is cyclical: "Eventually, the economy will get better, it has in the past. You have to be optimistic to be in magazines. No-one's say-ing 'Armageddon' to me."

THE 2009 CASUALTIES

- Alpha Media Group

Blender: US music magazine originally launched in 1994 by Dennis Publishing becomes a victim of the recession and goes to an online-only format.

- Conde Nast

Portfolio: Launched in April 2007, with a reported budget of $100 million. By October 2008, the magazine had reduced frequency to ten issues and cut staff. It closed in April.

Domino: Launched in 2005 as "the guide to living with style". Aimed at women with a median age of 37.2 and household income of $103,500, but ad revenues couldn't keep up with expenses.

Gourmet: The web, the economy, overlapping readers and advertisers with the fellow Conde Nast title Bon Appetit were all blamed for the demise of Gourmet last month.

Elegant Bride, Modern Bride: Both titles to be folded into Brides, which will increase its frequency.

Cookie: Launched in 2005, it was nominated a "Launch of the Year" by Advertising Age in 2007. A lifestyle magazine for mothers, it was brought down by the bad economy.

Topics