The New Yorker’s parent company has been slow in creating content-driven sites for its publications, which include such brands as Vanity Fair, GQ and Architectural Digest. Prelaunch, newyorker.com was a generic page where people could subscribe or check on account status. Now the site features the magazine’s shorter articles, a few longer features and a bit of Web-only copy. But it took some cajoling by New Yorker editor David Remnick to persuade CN top dog S. I. Newhouse to approve the upgrade. “If we hadn’t pushed it, I think, it wouldn’t have happened,” Remnick says.
The timing may be just right; magazines that have taken a wait-and-see attitude could have the last laugh. Banner ads and e-commerce have largely failed to support bloated online ventures, and publishers that dumped millions into the electronic void are facing a new reality: a Web site is less a revenue stream than a cost of doing business–a way to sell subscriptions while building credibility and brand awareness.
This attitude adjustment comes at a time when magazine ad sales are slowing. Last year broke records for print advertising: revenue climbed 14 percent and the number of ad pages increased 10 percent over 1999, according to Magazine Publishers of America. But across the magazine industry, ad pages declined about 1 percent this January, compared with the previous year. The rest of the quarter could be just as bleak.
In this atmosphere, it’s not surprising that publishers thinking of cutting costs are eyeing their money-losing Web operations. Consider inc.com, which positioned itself as a small-business commerce portal and burned through $13 million last year on revenues of slightly more than $1 million. The site and its parent magazine, Inc., were bought last summer by Gruner + Jahr USA, which also recently purchased Fast Company magazine. A few weeks ago, G + J slashed the site’s staff from 53 to 16. “A magazine 100 percent needs a Web site, but what magazines do not need is an enormously staffed site where the magazine itself is not a big part of it,” says David Carey, G + J USA’s president and CEO.
Inc.com, in other words, is downgrading from a “destination” site to a “companion” site–the two options laid out by McKinsey & Co. consultant Joanna Barsh at October’s American Magazine Conference. Destination sites require a staff of about 35 and can expect to spend $17.5 million over three years, excluding marketing costs. In a break-even scenario, these sites must cover 58 percent of expenses through online ad sales. A typical companion site costs $1.1 million over three years and aims to recover 83 percent of that by selling subscriptions. Carey says inc.com will go more minimalist like fastcompany.com, which he says turned a slight profit in 2000.
Other magazines simply sat out the Web frenzy. Talk, Tina Brown’s splashy 19-month-old, finally launched a content-oriented site last month. Its goal: to raise the title’s profile and sell subscriptions. But it harbors no illusions about profits from advertising. “I’d like to be taller and have more hair,” says Talk Media president Ron Galotti, “and I’d like to have my site pay for itself.” The strategy for newyorker.com? Be miserly and hope for the best. “Do you know how many people we’ve hired to do this?” Remnick asks. “None!”
So why bother? “There is a cost to not having a Web site,” Remnick says. “[It] has repercussions editorially and commercially.” Besides service and subscription sales, magazines’ print editions need the Web to maintain credibility with advertisers. Without that cachet, publishers say, they’re leaving money on the table. “The real leverage point is with a magazine’s advertisers,” says Bob LaPointe, outgoing president of inc.com. “When you combine print and Internet, you’re not just selling ink on pages, and that creates a more enduring client.”
The trick is to do that without investing a fortune. Until ad revenues bounce back, publishers may just have to make themselves taller and grow more hair.
