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Digital Trends

Digital Trends

Introduction

By the Project for Excellence in Journalism

With the profitability of their print publications in steady decline, magazine publishers turned with greater urgency in 2008 to Web operations.
In many cases they went beyond improving their online portals and experimented with new models for the digital distribution of content. Some even moved away from print journalism, cutting back on the number of print issues and borrowing features from other media.

As far back as 2006, Time had already announced, at least in concept, that it would use the Web for news and make the print magazine each week more a place for analysis and commentary. That migration gained velocity across the industry in 2008, though it was not fully clear, as yet, what that would mean, how it would work, or whether readers would follow—let alone whether there was a financial model that would support it.

Among the features of the Web-based magazine world during the year were the introduction at the news magazines of video webcasts (Newsweek), mobile wireless editions for iPhone/PDAs (Time), topic-specific channels at The Atlantic, and plenty of Twittering (Time and elsewhere). U.S. News & World Report, as noted earlier, not only signaled it was effectively moving the magazine online entirely (printing only guides), but also it was shifting its focus online also toward searchable, consumer-oriented channels.

Increasingly, more magazines view their websites as stand-alone products that break news, aggregate content from outside sources, contribute immediate analysis of current events or provide searchable consumer information. Nearly all of the weekly, monthly and less frequent news publications studied in this report have geared themselves toward covering news on a daily basis for the Web.

For all this, the Internet remains a challenging medium for magazines. Unlike television or newspapers, which both seem suited for the Web with their focus on breaking news, the magazine franchise usually involves critical analysis—not something that lends itself to immediacy.

Will they be able to adapt?

By year’s end, the indications were not encouraging. None of the magazine sites attracted the readership that the largest newspapers and television networks commanded, although by some counts Time and Newsweek had moved into the top 25 among general interest news websites.1 And revenues from these emerging sources still represented a small fraction of total income, and failed to make up for losses in ad revenues from print editions.

The publishers also continued to explore different content models in 2008. Nearly all offer breaking news coverage at no cost, but some have found ways to make money from archives, searchable data and digital editions.

Digital Magazine Services

Magazines online also looked during the year to develop new ways to develop revenue from the Web by using their brands and often their archives.

One of the most notable examples came from Time Warner, whose storied history in magazines lent itself to looking for ways to exploit that legacy. The company owns the rights to Life magazine, which was published from 1936 to 1972 and again from 1978 to 2000. Over those years, it acquired an extensive archive of some of the world’s best photojournalism.

In September of 2008, it announced that it was making thousands of famous Life images available for free viewing through Google. Those who wanted to own high-quality prints of the images could purchase them for fees ranging from $79.99 to $109.99.

The move was undertaken in part to draw attention to its plans to launch in 2009 LIFE.com, a website with archival and contemporary images.

“Image search is the fastest-growing type of online search, and LIFE.com will satisfy the public’s desire for quality and relevant imagery through a visually pleasing and easy-to-browse website,” said Life president Andrew Blau.2

Newsweek looked to its recent history as a chronicler of political campaigns. In October, Newsweek began selling repackaged collections of its recent coverage of the presidential candidates as e-books for Amazon’s Kindle electronic book readers. Newsweek editor Jon Meacham said, “The Kindle platform has created the opportunity to give readers something with the breadth of a political biography, but with digital immediacy.”3

In addition to Newsweek, periodical editions of Time, The Atlantic and Reader’s Digest are also available on the Kindle platform, for $1.25 to $1.49 a month.

Another intriguing development in 2008 combines both magazines and the Web in a fee-based system. More publishers began to offer digital replicas of their print magazines. The advantages for the publishers are clear: they save on paper, printing and distribution costs, and can embed Web-based features such as audio, video, links and other tools. The e-editions carry the advertising found in the print editions, too.

Readers of digital magazines have the advantage getting the publications delivered electronically and immediately, of archiving and accessing back issues. Not least of all, digital magazines are more environmentally friendly than paper ones.

In September, Time Inc., Time’s parent company, launched MagHound (maghound.com). MagHound delivers digital editions of more than 300 magazines, with an emphasis on Time Inc.’s titles. Users can buy magazines on an à la carte basis or a monthly package of three or five publications. Maghound also sells subscriptions of print editions.

The model resembles another effort, called Zinio.com, which was launched in 2001 by Zinio, an online publishing and distribution services company. Zinio distributes digital or digital-only versions of 850 magazines, including U.S. News & World Report, BusinessWeek, Playboy and Car and Driver.

Zinio.com users access the digital editions from personal computers, handheld devices like the iPhone before magazines hit newsstands. Zinio.com gets a cut of sales as the online distributor. The site sells subscriptions, single issues and back issues.

Some individual magazines chose not to use a third-party digital magazine distributor like Zinio, and launched in-house digital editions. In November, for instance, Condé Nast’s New Yorker launched a Web-based, searchable digital edition for subscribers to the print edition, which is delivered before most copies of the print editions hit newsstands or arrive in mailboxes.4

Readers can buy a digital-only subscription for the same cost as a promotional subscription of the print edition ($39.95 for one year).

Some New Yorker print content is held back from the Web site, at least temporarily, in a bid to encourage readers to get the publication on newsstands or via subscriptions.

Magazine Web Economics

With a downturn in revenues from advertising and circulation, the projected growth in revenues from magazines’ digital platforms offered some of the relatively small amount of good news to magazine publishers received in 2008.

It is difficult to ascertain how much money the magazines are making from their digital operations. Few publishing companies report revenue figures, fewer still by revenue source or single publication. But estimates suggest that digital revenues are a small, but fast-growing, part of their business.

Projections from the media research firm Veronis Suhler Stevenson and analysis of advertising revenues by Advertising Age, a magazine that covers marketing and the media, indicate digital revenue grew at double-digit rates in 2008.

Veronis Suhler Stevenson projected that magazine revenues from digital platforms would grow by 29% in 2008, although those estimates were made before the economy fell into crisis.

According to Veronis Suhler Stevenson, digital represented just 2% ($542 million) of all magazine revenue in 2007, compared with 41% for circulation ($10 billion) and 58% ($14 billion) from advertising.

The share from digital revenues was projected to increase to about 3% in 2008, but the growth rate is expected to taper off over the next four years. By 2012, digital is expected to have grown but only to 7% of all magazine revenues.5 In short, the Web will not be the future of the magazine industry, at least according to current view.

A possible exception involves magazines with readers who are especially Web-savvy.  Among the 10 magazines ranked by the percentage of the magazine’s overall net revenue coming from digital revenues by Ad Age, three were about computing. In 2007, PC World was the leader, with 38% of its revenues coming from digital platforms.6

Another computer magazine, Ziff Davis Media’s PC Magazine, closed its print edition altogether in 2008.

Ziff Davis Media CEO Jason Young told Folio that the company’s digital business would account for about 70% in 2008. Seven positions at the magazines were cut as a result of the closing. “We’re in a good position to make this move, when a lot of other publishers downsizing don’t have this kind of scale,” Young said.

Consumer Reports, according to data compiled by Advertising Age, brings in more than one third of its revenues (36%) from its digital properties and is ranked second among magazines by percentage of overall net revenue coming from digital operations in 2007. It charges readers for archived product reviews and other consumer advice.

The revamped usnews.com of U.S. News & World Report also sells archived content, such as its Best Colleges database. The searchable premium electronic version costs $14.95. In August 2008, U.S. News President Bill Holiber reported that online revenue for the Best Colleges site was up fivefold.7

Business publications, in turn, also continued to capture a big share of dollars online. Entrepreneur, which was ranked first in 2006, came in third in 2007 (at 34.5%), while three Time Inc. publications — Fortune, Money and Fortune Small Business — were included in the top 10, each with 24.5% of revenues from digital platforms. Five of the 10 magazines ranked by Ad Age were business publications (including two business-to-business publications).

No news magazines were included in the Ad Age rankings of the top 10 in percentages of overall digital revenue for 2007, the last year for which Ad Age has complete figures for most publishers.

The previous year, the list included 25 publications and only one news magazine made the cut: Newsweek.com, which tied for last.

Overall online advertising—which makes up the largest share of total digital revenue—still represents a very small portion of all total magazine ad revenue.
At Time Inc., which leads among big magazine publishers in the share of revenues from digital businesses, that segment accounted for just 10% of its 2008 ad revenue.8 The publisher, one of few that report digital revenues separately from other types of earnings, increased the share of revenues from digital sources from 7% in 2007.9

And that is on the high end for publishers, according to estimates from Advertising Age. The trade publication estimated that Condé Nast collected just 3% of revenues from digital sources in 2008, one of the lowest proportions among the other magazine publishers tracked by Ad Age.10

In 2009, the publisher promised more attention to fostering its digital operations. It closed CondéNet, which had managed magazine websites as well as those for standalone sites like Epicurious.com, Concierge.com and Hotelchatter.com, and consolidated those operations under Condé Nast Digital. The new structure gives advertisers the ability to buy ads across Condé Nast’s stable of digital businesses, rather than buying ads for individual websites.

Condé Nast president Charles H. Townsend told Ad Age, “To get back to double-digit growth, we have to put our digital assets to work hard. I am hoping that the print business will recover to double-digit growth, but I am convinced that the digital business will grow exponentially.”

Despite the talk of investing in the future, CondéNet was targeted in October 2008, for layoffs as part of a 5% staff reduction throughout Condé Nast. The exact number of layoffs was not released.11

The big question for the largest magazine publisher in the U.S. (by revenue) in 2009 will be whether it can significantly increase revenues from the Web as its once-reliable print titles continue to struggle.12

Online Audience

Despite the questions about revenue, news magazines, like other legacy media, have shown an ability to attract readers online.

Newsweek.com increased audience substantially compared with the five other news magazine websites tracked by Nielsen Media Research.13 Among these websites, Newsweek.com attracts the biggest audience, 9.8 million unique visitors, based on November 2008 data from Nielsen. Audience  increased 83%, although this rate is far below the growth from 2006 to 2007, when the magazine’s site was spun off of MSNBC’s and traffic soared by 183%.

At U.S. News & World Report, which overhauled its website (usnews.com) in the summer of 2008, with more tools, articles and better accessibility of the ranking data for sites including its Best Colleges franchise,14 growth was also brisk. Audience for usnews.com increased 118% over 2007, to 2.6 million visitors, again based on November 2008 data.

Change in Audience for News Magazine Websites
2006 to 2007; 2007 to 2008

Percentage Change,
2006 to 2007

Percentage Change, 2007 to 2008

economist.com

20%

-20%

newsweek.com

183

83

newyorker.com

11

52

theatlantic.com

145

100

time.com

42

35

usnews.com

-6

118

Source: Nielsen Media Research, used under license

Another news magazine website that has invested a lot in a 2008 redesign was The Atlantic (theatlantic.com). In 2008, its unique monthly audience doubled over 2007 figures, to 1.3 million. The website added to big increases in audience in 2007. In 2006, theatlantic.com’s monthly audience totaled 274,000, the lowest among the news magazine websites. The website’s audience in 2008 was bigger than that of The Economist’s and The New Yorker’s.

The New Yorker bested the audience growth in 2007, when it increased unique visitors by 11%, to 545,000. It added 283,000 unique monthly visitors, to 828,000 in November 2008, a 52% increase.

The numbers suggest that success in print does not necessarily bring readers to online products, or vice versa. Traffic to economist.com was actually down from 2007 by 20% to 553,000 unique visitors. The Economist’s North American print edition had significant increases in audience and advertising growth in a year that was particularly unkind to other news-oriented periodicals.

Unique Visitors for Select Magazine Websites
November 2006; November 2007; November 2008
Design Your Own Chart

Source: Nielsen Media Research, used under license

Website Profiles

TheAtlantic.com

The Atlantic moved much more aggressively in 2008 toward a digital future. In December 2007, it announced it was eliminating 2 of its 12 print issues during the year. Meanwhile, online, theatlantic.com removed its paid content firewall, added bloggers and incorporated various social networking features.

In a further signal of the move toward digital, in March, the magazine lured Jay Lauf from Condé Nast’s Wired to become the Atlantic’s publisher. And in November, it hired former Wired executive editor Bob Cohn to be editorial director for theatlantic.com, a new position, reporting to the magazine’s editor, James Bennet.

In a redesign, Web-only content was moved to front and center, such as breaking news and blog posts from contributors Andrew Sullivan, Megan McArdle and Marc Ambinder. Content from the current print issue remained on the Web site’s three-column design, but was less prominent than the daily content.

Theatlantic.com also began publishing its own occasional Web-only magazine, The Current, a digital publication of essays on news and current events.18 In January 2009, The Atlantic Business and Politics channels were launched. The business channels featured columns, interview and news analyses by Atlantic contributors including Megan McArdle, Tyler Cowen, Conor Clarke, Arnold Kling, Jim Manzi, Grant McCracken and Bart Wilson.19 The politics channel is edited by Marc Ambinder.

The channels are promised as the first of multiple topic-specific microsites.19
At launch, the channels were each sponsored by a single company: Bank of American for business and Shell Gasoline for politics.

More than any other news magazine Web site, The Atlantic embraced social networking as a way to build an online audience and even report the news in 2008.
The Atlantic focused on cultivating a Facebook community after establishing a presence on the social net in October.

On Election Day, November 4, 2008, the Atlantic site employed Twitter, the social networking and micro-blogging service that allows its users to send and read text-based posts of up to 140 characters. Theatlantic.com contributors posted items throughout the day.

Time.com

Time Inc., which pledged in 2006 to transform itself into a “multiplatform” news organization, took further steps in that direction in 2008.

The second redesign of Time.com in two years was begun in September 2008.
While still in partnership with CNN.com, Time.com was changed to more closely reflect the redesign of the print publication. A blogs section was eliminated in favor of spreading the blogs throughout the site. A “Must Reads” section, devoted to stories, commentaries and blogs on developing stories, was added.

Like Newsweek.com, Time’s website posts third-party breaking news content—mostly from the Associated Press—alongside the “must-reads” website exclusives. Time.com also posts various short pieces on the homepage, quotes of the day, short biographies of people in the news, and brief histories of newsworthy institutions, people and events. These features are timely but have a longer shelf life than breaking news stories. For example, bios of Obama cabinet designees up for confirmation in the Senate may be updated and repeated as they make news.

Time.com also launched a mobile website powered by Crisp Wireless. It is optimized for iPhones and Wi-Fi-enabled iPod-touch devices with scalable sliding pages, and the “tap and slide” user input native to both devices.

In March 2009, Time Inc. was weighing whether to make Time.com and People.com subscription-based, as a way bring in more revenue.20

Under chief executive Jeffrey Bewkes, who headed AOL before its merger with Time Warner, the company seems intent on blazing a new trail in the digital world.

Newsweek.com

Freed from a long-term partnership with MSNBC.com, newsweek.com looked to establish a new identity as a stand-alone website in 2008. Newsweek.com had been hosted on MSNBC.com from 2000 through 2007 as part of a agreement between the Washington Post Company, which owns Newsweek.com, and NBC, then the part-owner of MSNBC.com. The arrangement was renegotiated, and the new multiyear deal represents a much looser association between Newsweek.com and MSNBC.com.15 “We really wanted the experience to reflect more of what’s going on on the Web now, as opposed to seven years ago when we launched [on] the MSNBC site,” said Newsweek.com editor Deidre Depke.16

Among the changes in the new site was original video reports and greater cooperation with other Washington Post operations, such as Slate and the namesake newspaper.

The Post and the magazine first collaborated on video coverage from primary elections states on Super Tuesday, February 5. and Ohio and Texas on March 3. Newsweek.com and washingtonpost.com jointly hosted discussion forums, taking questions submitted by users of both Web sites, and published blogs from Washington Post reporters on the campaign trail.17 The two websites collaborated once again for similar coverage of the 2008 Republican and Democratic national conventions.

The next month, the two partnered with EWTN, a U.S.-based broadcasting network that carries Catholic-themed programming for special coverage of Pope Benedict XVI’s April visit to Washington. EWTN’s On Faith host Sally Quinn and Newsweek Editor Jon Meacham conducted the webcasts.

Newsweek.com also added to its roster of bloggers in 2008, enlisting Post columnist David Ignatius and Newsweek International Editor Fareed Zakaria to contribute.

In addition, Newsweek.com expanded two popular features to offer more online than in print: Periscope, which features advice and commentaries from outside experts and personalities and the Conventional Wisdom, where Newsweek editors weighed in on the issues of the day, from the profound to the trivial.

The Newsweek-Post Web partnership extended beyond video webcasts in 2008. Together they launched Theroot.com, a daily online magazine targeted at African Americans. (See African American Media.)

Breaking news is delivered to the Newsweek site from the Associated Press, while the site’s stable of bloggers often weigh in on the events of the day. Web-exclusive articles are mostly prominently displayed on the homepage. Print magazine-specific content and articles are located on a separate navigation tab. Other tabs link to the international edition of the magazine and to MSNBC.com.

U.S.News.com

U.S. News & World Report reinvented itself in 2008 by emphasizing digital publishing and giving up the news weekly format altogether.

In print, starting in 2009, U.S. News was limited to monthly editions based around one of four content areas: health, money and business, education and science. Many will be focused on the publication’s “best of” franchise of consumer-oriented information such as its annual rankings of American colleges.

Online, the range of topics is somewhat more expansive. Usnews.com features exclusive content on national and international affairs, opinion pieces, photos and videos. Rankings of America’s best cars and trucks, hospitals, public leaders and other lists appear on the websites, many with more expansive microsites (clusters of pages that function as a supplement to a primary website).

U.S. News Editor Brian Kelly told PEJ that only the Web could allow the publication to disseminate the amount of information it gathers on its primary topics. “We probably have half a million pages online,” Kelly said. “What you see online are portals to what are libraries of information on these topics. It’s something we could never do in print.”

Kelly said that with the development of individual channels of the U.S. News site, it is more a competitor with WebMD (for health information) or CNNMoney (for personal finance and business) than other magazine sites like Time or Newsweek.

The U.S. News website is a natural competitor to Consumer Reports, a magazine that is well established on the Internet.  U.S. News seems to be patterning itself on Consumer Reports, which has built up its digital business in recent years by opening its archives of product reviews to readers willing to pay.

While the focus of the U.S. News Web strategy was on consumer information in 2008, traditional news coverage is still a part of the website. In January 2009, U.S. News launched U.S. News & World Report Weekly, a digital weekly news magazine.21

Economist.com

Ever the iconoclast, economist.com avoided the rush to flashy Web technology. It made few substantive changes to its Web site in 2008. But it did streamline the process used to obtain copyright permission for reprinting articles and licensing content.22

Like its competitors, economist.com offers a dose of daily news, blogs, audio, video and interactive/informational graphics. What sets its website apart from its other news-oriented competitors is the focus on markets and economic data.
Economist.com frequently publishes charts on consumer spending, various market indices, currency value and conversion charts and various rankings on technology, politics, risk, education, business and economics.

The magazine lost its bid to gain the rights to the domain name TheEconomist.com in 2008.23

That site was created in 1996 as a tribute to the former U.S. Federal Reserve Chairman Alan Greenspan, but has not been updated since 2002. Nevertheless, the World Intellectual Property Organization denied the magazine’s claim to the name.

Footnotes

1. Based on a PEJ analysis of Nielsen data, April to October 2008.

2. “Time Inc. and Getty Images Jointly Launch LIFE.com,” Time Warner press release. September 23, 2008

3. Staci D. Kramer, “New Yorker Launches Digital Edition; Free to Subscribers,” paidContent.org, November 4, 2008. Online at: http://www.paidcontent.org/entry/419-new-yorker-lauches-digital-edition-fr-ee-to-print-subscribers/.

4. Veronis Schuler Stevenson, Communications Industry Forecast 2008-2012, pp. 385-6.

5. Ad Age Data Center, “Magazine 300: 10 Digital Leaders.”

6. Matt Kinsman, “Online Revenue Up 500 Percent for U.S. News’ Best Colleges Franchise,” Folio Magazine, August 28, 2008. Online at: http://www.foliomag.com/2008/u-s-news-relaunches-best-colleges-portal-online-revenue-jumps-500-percent.

7. Nat Ives, “Time Inc. Tops List of Digital Earners,” Advertising Age, January 19, 2009

8. Maureen Morrison, “Digital Climbs as Ad Pages Slip,” Advertising Age, October 6, 2008

9. Nat Ives, “Is Condé Nast Finally Fostering Digital?” Advertising Age, January 26, 2009. Online at: http://adage.com/mediaworks/article?article_id=134077.

10. Peter Kafka, “Condé Nast Web Arm CondéNet’s Turn for ‘Across the Board’ Cuts,” Media Memo Blog, AllThingsD, November 11, 2008. Online at: http://mediamemo.allthingsd.com/20081111/conde-nast-web-arm-condenets-turn-for-across-the-board-cuts/.

11. These include websites for The Economist (economist.com), The Atlantic (theatlantic.com), Time (time.com), The New Yorker (newyorker.com) and U.S. News & World Report (usnews.com). The number of unique visitors to the website for The Week (theweek.com) for November are too few to reliably analyze.

12. Keith Kelly. “Newsweek Gets a New Look in Print, on Web,” New York Post, October 13, 2007.

13. Matt Kinsman, “Online Revenue Up 500 Percent for U.S. News’ Best Colleges Franchise,” Folio Magazine, August 28, 2008. Online at: http://www.foliomag.com/2008/u-s-news-relaunches-best-colleges-portal-online-revenue-jumps-500-percent.

14. From 2000 to 2007, msnbc.com hosted the Newsweek site and sold and placed ads on its page. In October 2007 the two companies ended the distribution arrangement, and Newsweek migrated its website from the msnbc.com homepage to its own Web address, Newsweek.com. As a result, Newsweek took control over content and advertising sales for the site. But the two sites still share content and an msnbc.com tab is featured on the Newsweek.com homepage.

15. Diedre Depke, Interview with BeetTV.com, undated. Online at: http://www.youtube.com/watch?v=oNuwuhPAN1Q

16. “washingtonpost.com and Newsweek Host Unprecedented Live Super Tuesday Election Coverage” Business Wire, February 1, 2008

17. Tonya Irwin, “The AtlanticLaunches Digital Publication, The Current,” MediaPost Publications’ Online Media Daily, March 4, 2008

18. “The Atlantic Launches Business Channel,” MediaBistro, January 22, 2009. Online at: http://www.mediabistro.com/fishbowlny/media_companies/theatlanticcom_launches_business_channel_106630.asp.

19. Expanding on Digital Successes, TheAtlantic.com Introduces Business Channel—First in Series of Targeted Verticals,” Rosen Group Press Release, January 22, 2009

20. Jason Fell, “Time Inc. Mulls Making Time, People Sites Subscription-Based,” FolioMag.com, March 10, 2009.

21. Jeff Bercovici, “U.S. News Launching Digital Newsweekly,” Portfolio.com Media Blog, January 23, 2009

22. “The Economist Selects CCC’s Rightslink for Easy Online Ordering of Reprints & Permissions,” Business Wire, October 16, 2008

23. Jason Fell, “The Economist Loses Battle Over Domain Name,” Folio Magazine, February 25, 2008. Online at: http://www.foliomag.com/2008/economist-loses-battle-over-domain-name.