Time Magazine Validates the Year of the App Subscription

We predicted that 2011 would be the year of the app-based subscription -- and in just a few weeks, we're seeing evidence that validates our prediction published in "Birnbach Communications' Top Predictions for 2011, Part I."

The New York Times reported "Time Inc. has begun selling subscription bundles that include apps that run on the Android tablet software from Google." Time still wants to sell subscriptions through iTunes, too, but negotiations have been slow.

Meanwhile, the Times reported online today a breakthrough we've said is necessary for magazine publishers and subscription platforms: "Apple Offers Subscriptions for All iPad Publications."

Here are key points about the new service, according to the Times:

• Revenue from subscriptions sold through the App Store will be shared. Apple will keep 30 percent, and publishers will keep 70 percent. That is the same revenue-sharing split that applies when apps of single-copy publications are sold through the App Store.
• Apple said it would not restrict publishers to selling their apps solely through Apple. And when publishers do sell apps outside Apple’s store, they will keep 100 percent of the revenue.

Also check out Forbes' coverage, "Apple Introduces Subscriptions — But There’s a Catch."

More Bad News for Print: WSJ, Time, & Forbes

Although the Wall St. Journal's front page had a positive story about the economy, "Economy Snaps Long Slump," it's clear we're not out of the woods yet.

Need more convincing? This morning's breaking news, Consumer Spending Tumbled, now appears on wsj.com above the story it now contradicts ("long slump").

That perhaps explains recent media moves:

• "Time Inc. Is Expected to Eliminate More Jobs": The $100 million in cuts is expected to come largely from layoffs, which comes after 600 layoffs last year.
• Forbes announced on Monday that it was dismissing 40 to 60 people from its editorial staff. According to an early Times story, "Depending on how you count, there are about 200 editorial employees at the magazine. And depending on who you talk to, at least 40 people could be cut, while one source who was not authorized to speak about the layoffs said the number could go as high as 60."
• Wall St. Journal to close its Boston bureau, according to the Boston Globe. The bureau, which covers health care, education, and financial services, will close Dec. 31. The paper will shift most of the coverage to its New York office...According to Robert Christie, a Journal spokesman, said the paper does not plan to close any of its other 36 news bureaus. “We are not giving up on the beats; we are just relocating them,’’ he said. “A lot of the companies that we used to cover are no longer in Boston and a lot of the jobs that were in Boston could be located anywhere in the US.’’

What's interesting is that even as the Journal reported good news about the economy, it is continuing to look at ways to cut costs. Furthermore, the Journal also is beefing up its tech coverage, called Biz Tech Tuesdays. Guess it won't feature much New England tech.

I think if the Journal can close its Boston bureau, it and other papers will close other bureaus, too, especially those that can be covered by regional hubs. For example, expect that there could be consolidation of all the San Francisco and Silicon Valley bureaus out there.

Magazine Death Pool

Business Week's media critic, Jon Fine, wrote about MagazineDeathPool.com, a blog that seeks to predict which magazines will fail and when. The blogger, apparently a magazine publishing insider, does a good job of explaining what turns out to be an epidemic of closings of major magazines. The latest victim: Business 2.0, which it first predicted in Feb. 2006: www.magazinedeathpool.com/magazine_death_pool/business/index.html.

It's not surprising that the Internet is putting pressure on print magazines. (I've already discussed that in earlier posts.) Apparently Time Inc. feels the smart business decision is to close a well-received magazine like Business 2.0, despite a strong circulation. MagazineDeathPool notes that Business 2.0 is "the forgotten business magazine of the Time Inc. empire" which also publishes Fortune, Fortune Small Business (FSB) and Money, and that is "in the same category as another barely-breathing dot-com relic, Fast Company."

What's surprising, though, is this: Time Inc. feels that they can't sell the advertising to support Business 2.0. Remember: circulation for most general magazines is only one sign of a magazine's health -- but it is not the most important. Advertising underwrites subscription fees for most magazines; publishers often reduce subscription fees to boost circulation and in turn to raise fess they can charge advertisers.

Having a strong circulation, which an involved readership, is not enough reason to keep a magazine around.

There's an increase in magazine's death rate because -- and this isn't getting a lot of coverage yet -- advertising is going through a slump. In the tech press, some ad reps blame industry consolidation: too many mergers reduce the number of companies that need to advertise.

From a PR perspective, this is bad news because:
1. Fewer magazines means fewer opportunities for coverage.
2. Fifty percent of any issue of a healthy magazine is advertising copy. Any cut in ad pages = cut in editorial copy -- again reduced opportunities for coverage.
3. Fewer opportunities leads to increased competition for remaining editorial.

Of course, this is not the first wave of magazine closings -- there were a lot following the dot-com crash, and in the early 1990s and in 1987, too. While PR will survive as it embraces new channels (and re-evaluates its priorities of traditional print to online), the challenge for the magazine industry is more significant. To capture readership, particularly those younger than Baby Boomers, magazines will need to find new ways of being relevant...and that may mean moving to a completely non-paper basis.