Magazines Are Dead. Long Live Magazines!

Imagine that you were drowning and I tossed you a giant life raft. Would you climb in? Or would you sputter about, gasping, debating whether to live or die? Seems like a ridiculously easy choice -- unless you happen to be in the magazine industry.

Magazine publishers have been hit hard by the emergence of the Internet, rising printing and mailing costs, and plummeting advertising revenue (down 25% just last year). Inevitably, so many have folded over the past decade that there's at least one website – MagazineDeathPool.com -- devoted to chronicling their departure. RIP Gourmet, Cookie, Modern Bride, and Portfolio. Those are just a handful of the 772 titles that have closed over the past two years, according to FolioMag.com.

But just as the "Are Magazines Dead?" headlines began to spread, something of a miracle occurred when Apple (Nasdaq: AAPL  ) unveiled the iPad.

Not another iPad story!
Yes, well, sort of. See, the iPad's magic blend of size, vivid color, and portability are tailor-made for displaying magazines. Seriously, they're stunning. Go download Zinio's free app, and check out the sample issues (Rolling Stone and National Geographic are currently among the featured titles). Or try Martha Stewart Living's app (also free) and download the free "Boundless Beauty" issue. How cool is that cover video of a peony blooming?

It's enough to make you want to read all your favorite magazines on the iPad. And in fact, that's what I set out to do a few weeks ago. Only there were a few small roadblocks.

The price is wild
First, most of the magazines I subscribe to aren't even available digitally. Time Warner's (NYSE: TWX  ) flagship Time and People have digital issues, but other popular titles such as InStyle, Real Simple, and Southern Living do not. Second, for those magazines that you can get electronically, the pricing models are, to put it generously, confusing.

Let's consider Martha Stewart's (NYSE: MSO  ) Martha Stewart Living. Through the beautifully executed iPad app, you can purchase single issues for $3.99 each. But while browsing through the sample issue, I was given an offer to subscribe for $19.95 for 12 issues -- for the print version only. Via Zinio (an online newsstand featuring 3,500 magazines), I could buy a one-year electronic subscription for $28 or a single issue for $4.99, without all the nifty features of the iPad issue.

And what about Time? It's $4.99 for each weekly issue through the iPad app with no subscription option offered (versus about $0.71 per issue with a six-month print subscription). Even publishers who sell their digital issues for the same or less than the print versions present some hurdles. Harvard Business Review refused to transfer the balance of my print subscription to digital, and for others, I had to first cancel the print account and sign up separately for electronic access. Oddly, People (published by the very same division as Time) had one of the more sensible (and simple) models: Print subscribers get the iPad edition for free.

Granted, some magazines have added cool interactive features to their digital counterparts that might make iPad owners happy to pay up. Rolling Stone nailed it with its "500 Greatest Songs of All Time" special issue, which included four hours of streaming audio of the featured songs. Martha Stewart is experimenting with a variety of videos, audio interviews, 360-degree panoramic photographs, pop-up recipes, and even interactive ads. With 15 million iPads already sold and a slew of similar tablets on the way, including a major contender in Research In Motion's (Nasdaq: RIMM  ) Blackberry Playbook, it's a balance that publishers need to get right if they want to thrive.

Wait, did you say interactive ads?
Why yes, I did. That's perhaps the most important reason for the magazine industry to hurl itself aboard this life raft. Just as the decline in ad revenue kicked off the death spiral, there's also tremendous potential to reverse the trend. Interactive ads, live links, video, and the ease of in-app purchases (take a guess at how many credit cards Apple's iTunes store has on file -- 125 million as of April 2010) all should be very attractive for advertisers, not to mention the captive audience of affluent, tech-savvy iPad owners ready to spend. And did I mention that early indications show that iPad magazine readers spend more time with each issue than print subscribers? That's a crucial metric in the advertising biz.

While it may take awhile for demand and technology to drive enough subscriptions and ad sales to match revenues from the print operations, the opportunities are endless. Richard Branson's Virgin Media (Nasdaq: VMED  ) just announced plans for an iPad-only magazine, and the venerable U.S. News & World Report just staved off death by going to a digital-only format.

The best part? Publishers have nothing to lose. As GQ VP and publisher Pete Hunsinger commented, "This costs us nothing extra: no printing or postage. Everything is profit ..."

And that's something this industry needs as much of as it can get.

Former magazine writer and editor Robyn Gearey owns an iPad but does not own any shares of the companies mentioned here. Apple is a Motley Fool Stock Advisor selection. The Fool has written puts on Apple. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (14)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 28, 2011, at 11:02 AM, dppilcher wrote:

    I think it's interesting that because flash, apps, zinio and HTML5 have created ways for magazines to look like a magazine online that companies think their revenue and business model will remain the same. Magazine companies have had websites for years to gain additional exposure to their company but didn't abandon their business model. All industries are suffering and advertising revenue is down in most markets. But to think that suddenly readers, who have been aware of the internet for years now are suddeningly going to flock to it for their magazine content is false. And advertisers won't be happy with the decline of downloads and visits - can you imagine trying to sell ads for WIRED right now if it were only digital? Even with WIRED's success of 120,000 downloads in May of 2010 today they are averaging between 20,000 and 30,000 downloads. How could you give an advertiser that information and expect to keep him paying the same price for his ads? If some magazine publishers are suffering and see digital as a cheap alternative to keep their business model intact then they should do that - but I think those who remain will be stronger for it and print won't be a media that is absorbed by the internet like every other form of media (TV, radio, movies, games, etc). Print will become a more unique kind of media and deliver different results than internet clicks.

  • Report this Comment On January 31, 2011, at 12:35 PM, lctycoon wrote:

    Digital Editions are far more cost effective than print versions for the magazine companies.

    With that said, I'd cancel every magazine that I subscribe to in a second if I could only get it on an iPad. Forcing people to buy an overpriced toy to get Time? No thanks.

    I can see a lot of potential in maintaining both digital and print versions though and letting customers choose which one to subscribe to.

  • Report this Comment On January 31, 2011, at 3:18 PM, samedge wrote:

    @TheTechLover: Are you serious? I don't even own AAPL and I'm pretty sure that is the weakest argument I've ever heard for the iPad's demise. Referencing "the word on the street" as your source is basically like saying you heard it from a friend of a friend who read it on a gossip blog maintained by a friend of a costume intern of Britney Spears.

    In short: it's insane. Apple sold 7.3m iPads last quarter and nobody else is anywhere NEAR that level of penetration yet.

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