What the Selling of Forbes Tells Us about the State of Business Media (Part I)

According to the New York Times media columnist David Carr, Forbes will be sold to an international company sometime in the next few months. You can read his article, "Foreign Buyers Eying Forbes Magazine, a Chronicler of the World’s Wealthiest." 

But here are some lessons learned, gleaned from the article and our experience:

• Standalone magazine companies are at a disadvantage to conglomerates that can spread costs and profits across a family of magazines, according to Carr. For the most part Carr is right -- but Forbes actually publishes several other titles -- ForbesLife, Forbes Europe, Forbes Asia as well as 29 international editions. (It's probably not a good time to purchase advertising in Forbes Russia, Forbes Ukraine.) Forbes also runs a very popular website (more on that below) and RealClearPolitics.com family of website. Our point is: it's not just publishing a range of publications -- it's publishing magazines that reach a range of readers. After all, if you put all your eggs in one high-value Birken bag, when advertisers pull back on your demographic, you could get hit 29 times.
• Sometimes selling isn't a matter of making money but in preventing additional losses. The estimated price that Forbes may sell is $250 million (though some say that estimate is low). But Elevation Partners paid $264 million for a minority stake -- so their portion is certainly underwater. Carr says the Forbes family is unlikely to make money from the sale. The question becomes: why sell? Seems clear that the reason is that it continues to be tough for media companies to build value.
• The value shoring up Forbes is not its popular website -- but its conference division. The publication is probably generating tons of revenue from its growing number of conferences, including luxury cruises offering insights and access to top stock pickers. Conferences have re-emerged for Forbes and other publishers as a profit generation tool. Conferences may have been a difference in the valuation of BusinessWeek for $5 million (and the assumption of debt) when it was acquired by Bloomberg. The same for Newsweek, which had no conferences and was sold for $1 and the assumption of debt. The bottom line lesson: perhaps leverage a successful conference series and turn that into a multimedia property (which is what TED is doing). 
• Forbes could generate more money by establishing a paywall around its content. Carr makes the point that Carr makes the point that others -- including the Times and Wall St. Journal -- have successfully boosted revenue by establishing paywalls around their content. Yet Forbes.com aggressively promotes the website in a bid to generate views that can translate into higher revenue. It has been very successful in developing a community of columnists (many of them people trying to position themselves as thought leaders). The bottom line here: there's still no single, accepted way to generate sustainable revenue online -- neither free access (and higher revenue from advertisers) or paywalls (and subscription fees from access) are really replacing print advertising revenue that will never return to pre-mobile/digital levels.
• Circulation is holding steady but it may not generate steady revenue. Last year, Forbes was offering print subscriptions for $10 -- that's a steep discount from prior years. Keeping circulation high is important to advertisers (and the amounts you can charge them) but discounting clearly hurts profits.
• Forbes is very creative in finding revenue. It's been a leader in pushing advertorials. It can sometimes feel like a 1/5th of the magazine is devoted to advertorials. But more significantly, Forbes is a pioneer in native advertising (though I don't think that's the term they use) through its BrandVoice section on the website and in the magazine. Here's how Forbes describes it: "Forbes BrandVoice™ is an integrated and by-invitation content-sharing platform ...(that) is an innovative approach to integrating marketers’ content with Forbes’ editorial and users’ content — allowing marketers to demonstrate their thought leadership on the Forbes platform using the same tools as content creators." What does it take to receive an invitation to be a Forbes BrandVoice partner? We've heard estimates of $800,000 in annual advertising just to get to the point of discussing BrandVoice. (In other words, BrandVoice spending is on top of a company's annual advertising buy.)
• Not all ways of charging access are reader friendly. While Forbes doesn't charge to access its website, it does charge to access its content via your iPad. If you're already a subscriber to the print edition, Forbes charges $9.95 for an annual iPad subscription.  When you consider Forbes' $10 print subscriptions price, charging $9.95 to access the iPad version is like a 100% tax increase.

Carr makes the point that it's ironic that a magazine with a strong heritage of America-first is now being sold to an international company. I agree -- but I also think that the sale (likely to an Asian company) makes sense because Forbes is more likely to be seen as a trophy property for companies based in Asia than anywhere else in the world.

What Carr doesn't discuss or speculate is how an international owner will change Forbes. For that, stay tuned! You can check out a subsequent look at the selling of Forbes here. 

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."

New York Times Finalizes Pay Wall

You can read about the Times' plan for the launch of its pay wall next month in the "Wall St. Journal, New York Times Readies Pay Wall: Paper Will Charge for Bundled Digital Service, Allow Some Free Access."

The Times plans are said to include:

• A certain amount of free online access
• An Internet-only package that may cost $10 per month.
• A digital package, including iPad app access, for $20 per month.
• Print and online access: bundled together for the same print subscription fee.

Key questions include:

• How much access will non-subscribers get to Times coverage?
• How much access will non-subscribers get to Times coverage -- via the Times' syndicated news service -- available on other sites that lack a pay wall yet?
• How many non-subscribers will decide to pay for online access?
  

As they used to say on old radio programs, Stay tuned tomorrow...

Boston Globe to Get Paywall

Add the Boston Globe to the list of print newspapers building a paywall, according to the Boston Business Journal article.

Not a surprising move given that the Globe's parent company, The New York Times, just announced another quarterly loss -- and that it will establish a paywall for nytimes.com in 2011.

The real question is what model of a paywall will the Globe have. And the second question is what affect will having articles behind a paywall have on the readers accessing Globe content. And if the numbers of readers declines, what happens to ad revenue?

This is a question not only for the Globe but for other similar newspapers in other markets.

Newsweek Evaluates Time Magazine's Paywall: Some Good Points

In summary, the Newsweek article looks objective enough: "Evaluating Time Magazine's New Online Pay Wall."

But when you click on the link, the headline changes to: "In Which Time Inc. Rides on the Wall of Death One More Time."

I've seen more objective headlines on the Drudge Report -- and is an example of how headline writers can ruin an article.

The article is actually reasonable and focuses on three good points:

• First, make the sell clear, and the transaction frictionless.
• Second, define a better value proposition.
• Third, remember that people will pay for value.

Check out the article here. Just ignore the headline.

More Newspapers Establish Paywalls & the Implications to PR

The news-is-free business model is crumbling.

Starting today, the Worcester Telegram & Gazette will charge non-subscribers for staff-generated articles. Non-subscribers can access 10 staff-produced articles per month before being charged, either $1 per day for one day's access or $14,95 per month. Subscribers don't have to pay for online access.

Wire-service content is available for free.

As the Globe's Johnny Diaz reports: "The T&G joins a small but growing list of newspapers, such as The Wall Street Journal and Newsday, that already charge for some access to their websites. In Massachusetts, The Standard-Times of New Bedford, part of News Corp., which owns the Journal, started charging in January for its website, southcoasttoday.com. Online subscribers, for example, are charged $3.37 a week, which provides access to all articles, blogs, and video."

The Globe has not announced any plans to establish a paywall. However, as a sister paper to the T&G, which is in turn owned by the New York Times which has announced plans to start charging for online access, it's only a matter of time before the Globe establishes its paywall. The same is true for the Herald, since the Journal has charged for online access for years.

Not all paywalls are successful. Newsday spent millions of dollars to establish their paid online access policy, but generated only 35 subscribers in its first three months.

Nonetheless, we dubbed 2010 to the year of online subscriptions because we figured this was the year that online media companies would come to that realization -- including the fact that online advertising alone won't generate enough money to subsidize free access. They've got to find a way to make online content pay for itself.

Over the next three to five years, we expect most newspapers and magazines will have to have a paywall. There will be a domino effect, as more sites find a way to charge for online access, an growing number of sites will adapt paywalls.

The implications for PR functions may be a bit of back to the future. In the past, if an article appeared in a newspaper in one market, you assumed it only reached readers in that market; and for a while, the Internet broke down geographical barriers, and you could access an article in the UK's Guardian as easily as accessing a newspaper around the country. But, as paywalls become the standard, not the exception, articles that appear in the Guardian may not show up on search engines -- so we're back to articles in one market not being seen in other markets.

In an increasingly fragmented society, paywalls will be another obstacle to reaching a mass audience.

I will be further discussing the paywall implications in another article this week.

Should Search Engine Results Drive Media Coverage

While the shift to online-only news has been a big shift, there are implications for PR functions beyond the diminishing number of print outlets.

The degree to which people access news by search engine is significant. And the rise of pay walls, limiting content to actual paying subscribers, will be see news by search engine (nbse) help boost the users of smaller news sites that have lower brand recognition but offer the value of not (yet) charging readers.

According to a New York Times article, "At Yahoo, Using Searches to Steer News Coverage," Yahoo's blog, The Upshot, which launches today, will "create content based on common words, phrases and tpics that are popular among users across its vast online network." In other words, content based on what people are searching about. By way of example, the Times cited a lot of questions asked about why Olympic divers shower after their dives (to keep their muscles warm and limber), and that Yahoo developed a story that no one else was covering based on readers' queries. And that that story got lots of hits.

Upshot is designed to fill in the gaps in the coverage of other media outlets. The Upshot is not trying to focus on breadth of coverage but on developing a niche.

Traditional journalists are concerned that Yahoo's approach will mean that what gets covered may be popular but will prevent news outlets from covering important news.

That's a claim that broadcast news has been dealing with for years -- with it "If it bleeds, it leads" approach, in which a local car accident shutting down a major artery gets more prominent coverage than economic news or some international development.

Yahoo says its search engine algorithm will be used to supplement coverage, not drive it. On the other hand, at some point, the question will be, according to Ken Doctor, author of Newsonomics: Twelve New Trends That Will Shape the News You Get, "Why produce all this stuff that doesn't make money. Just produce the stuff that sells."

So PR functions should look at what sort of content the Upshot is reporting on, and develop story angles that play off those concerns. News by Search Engine is definitely going to impact editorial decisions.

News Corp. Validates "The Year of Online Subscriptions" Predictions

In acquiring an electronic reading platform called Skiff and in making an investment in Journalism Online, a company co-founded by Steven Brill, that develops pay models for newspapers and magazines, News Corp. has validated our prediction that 2010 is the year of online subscriptions.

Rupert Murdoch is literally putting his money where his mouth is. It's going to push others to take Journalism Online more seriously. And expect that by 2012, we will be paying access to a lot more online news content.

Check out the prediction, Prediction #3: 2010 will be the year of online subscriptions.

Murdoch to Build Paywall Around the London Times -- Will Others Follow?

A fierce proponent that newspapers need to charge for content, even if available online, Rupert Murdoch is putting your money where his mouth is. News Corp. papers, the Times of London and the Sunday Times will establish a paywall and start charging online readers as of June 2010.

The planned fees are not significant --£1 for one day's access or £2 for one week's access for those who don't subscribe to the print edition. (Print subscribers will get free online access.)

What is significant, is that, as AdAge noted in an article, "New Test for Paid Content as Competing News Sites Remain Free,"competitors to the Times of London "such as The Guardian, The Daily Mail and The Daily Mirror remain free for all comers." (It's interesting to note that AdAge offers a hybrid approach, with some free articles and some available behind a paywall.)

So will readers pay for online access to the Times of London, when they are not used to paying for content? Will they merely shift to competing online sites? Or will those sites start charging online readers for access?

There are some who think Murdoch is making a bad decision. Well, not just a bad decision. TechCrunch sees it as evidence of The Madness of King Rupert.

My guess: That more paywalls are inevitable because newspapers need the revenue stream, and can't afford to give away content. We're a long way from the dot-com era, when sticky eyeballs were everything. They're still important, but now publishers need those eyeballs to contribute more than just boosting ad rates.

At the very least, this latest move continues to validate our prediction in calling 2010 the year of the online subscription.