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June already! Where does the time go? Nothing like an uncertain future to telescope the hours. Remember, buyers: Bids are due Wednesday!
While we wait, we’re thinking about David Carr’s piece in the Sunday Times about the sale. For the most part, we’re OK with it—though we do have a few issues. For instance, this:
It’s a cold fact of economic life that the value of a business is an expectation of future growth. If Associated Content will deliver 15 percent annual growth in earnings and Newsweek offers only compounding losses, the smart money will forgo the admired publishing enterprise led by a Pulitzer Prize winner, and instead opt for a business of link-bait stories churned out by people you’ve never heard of.
We’re skeptical that Associated Content is going to keep delivering 15 percent annual growth in earnings (their commodity content isn’t going to get any more valuable to advertisers, so they have to keep increasing pageviews at a rapid pace; plus, the younger generation of consumers increasingly gets their information not through search, but through referrals from a trusted source, like a friend (or this Tumblr!) (we hope, anyway)). Also, we strongly dispute the notion that Newsweek offers only compounding losses going forward.
Still, Carr’s right about the expectations. Newsweek is a large company, for a magazine, and it is constructed to exist on large money. You’ve all seen the numbers; this is a mature organization, with lots of obligations, and it’s not simply a matter of saying “OK, now we’re not going spend all this money, and we’re going to continue to collect lots of money, and everything will be OK.” Finding that right level is difficult—it’s the driving rationale behind the decision to cut rate base and charge more for the print magazine—and takes time.
In the current digital news ecosystem, having “week” in your title is anachronistic in the extreme, what an investor would call negative equity.
This is a small irritant, but what the hell: So what? In the “digital news ecosystem,” “Newsweek” is a better name than “Time” or “People”; ever try Googling “Time”?
In a publishing landscape filled with the lame and infirm, weeklies are the most profoundly challenged. A weekly schedule, with its tight turnarounds and frenzied production, is costly as a matter of course. Monthlies can still do step-backs for readers who don’t expect to see what happened five minutes ago, and daily newspapers have co-opted the newsweekly formula to build in real-time analysis. And according to the Publishers Information Bureau, advertising revenue at Newsweek was down a whopping 30.4 percent in 2009.
This is true, but we think it missed the point by conflating a journalistic problem (in this new, faster-paced news environment, how do you deliver the best experience for your readers?) with a business one (how does your business recover from losing a near-monopoly on a certain segment of national advertising?). Or, to put it more bluntly: We are not in the situation we are in because of Jon Meacham.
This is important, because that’s the CW from the pundits, and it’s simply wrong. Jay Rosen, Michael Kinsley, and Michael Wolff, to name a few, are full of advice about what Newsweek should have been doing, and even if we had adopted every single proposal, it still wouldn’t change the simple fact that, 30 years ago if you were a national advertiser who wanted to reach a certain type of reader in print, Time and Newsweek were about the only games in town. The newsweeklies used to sit in a really valuable, powerful niche, and while we still think there’s a lot of value we deliver to advertisers, we’re no longer alone in being able to do that. The competition is much tougher, and the profits are harder to come by, for everyone, and that is why we’re where we are today, not because we didn’t do what some guy who’s never even run a business (well, Wolff, OK, but we all know how that turned out) said.
Everyone seems to have a solution for what Newsweek Should Have Done. But if you unpack the gloating over our current difficulties (and, to Rick Stengel and those unnamed Time magazine execs who are using this as opportunity to spin their fiction that Time has somehow “won” the newsmagazine war, we would just like to remind them that there but for the grace of Larry Hackett go you all), the solutions are all pretty much the same: Fire this journalist. Hire that one. Make Newsweek into The Week. Make Newsweek into TMZ. None of them will change the underlying business reality.
One of the biggest logical barriers to buying the magazine has to do with its current ownership: If the Graham family, who are careful, good publishing operators, could not make a go of it, how might someone else?
We can think of a lot of ways! For instance, there’s the Time Inc. model, in which costs are spread around a lot of publications. There is, as Carr points out, the rich guy option. We’re thinking of starting a Kickstarter account. Also, as our numbers do show, our losses have narrowed considerably over last year, and we expect that situation to continue to improve.
But there’s one thing that we should set straight about Donald Graham: This bit, from an interview he did with Paid Content last month
The editorial staff of Newsweek, which is as good as it’s ever been, spends half of its time on a print product and half its time on digital. The print product has almost $160 million in revenue; the digital product had $8 million last year.
Is incorrect. The editorial staff of Newsweek certainly did not spend half of its time last year working for digital version; a quick look at the editorial headcounts for print vs. Web edit (92-18) and bylines on the Website will correct that; Newsweek.com is most certainly not the product of the equivalent of 55 full-time editorial employees (though we’d love to have that!). This is not to say that this won’t be the practice going forward (as Meacham noted on the Daily Show, digital will be a greater emphasis) only to note that there’s a lot of room for improvement here, which is one of the things that gives us hope for doing better on the digital side.
Newsweek has already been reinvented, downsized and digitized in almost every way imaginable. If there is a move left on the board to avoid a checkmate, it’s hiding in plain sight.
And yet, here we are. Still. Combined print and Web, we speak to more than seven million people around the world every month; clearly, we still have something worth listening to, and we expect to keep saying it for years to come.