With Time Inc. announcing layoffs ranging from 300 to 700 positions; Gannett promising to lay off 10% of its local-newspaper staffers; Condé Nast cutting Men's Vogue down to a biannual and paring Portfolio and its website; and even Radar shutting its doors again, turning its Halloween party into a good-bye party, it was a week that needed that title's gallows humor just to get publishing types through it.
Clearly, the changes to publishing's business model aren't going away, so publishers are going to have to adapt to a new reality. As Time Inc. Chairman-CEO Ann Moore said in a speech last week, "If you're sitting on your five-year plan, you're delusional." But just what should publishers be planning for?
The best-case scenario now facing print publishers is that the events of last week will eventually be revealed to be mainly the product of a familiar economic cycle, a temporary downturn that exacerbated the trends already challenging print media. After the economy recovers, probably by the end of 2009, advertisers will regain their interest in print as well as their ability to buy space there.
In this rosy but still grim scenario, the blows landing left and right these days will drive weaker players out of business in the meantime. Magazines' most vulnerable categories, such as shelter books and entertainment weeklies, will see second-tier titles fold. Even the survivors will unleash frightening bloodletting along the way (think Condé Nast and its 5% budget cut across its magazines announced last week, as well as its suspension of its lavish "Fashion Rocks" and "Movies Rock" marketing programs for 2009).
Good environment for survivors
When the economy returns to good health, the print publications that remain will enjoy expanded market share, as fashion and luxury advertisers especially revel in showing off their beautifully photographed products in lushly designed titles. (Magazines have seen a decline in ad revenue of only 1.8% so far this year, thanks largely to upscale marketers.) Newsstands won't be so crowded. Dominant magazines won't be undercut by so many challengers offering lower rates.
In the worst-case scenario, however, advertisers won't come back. The downturn will drive them into the arms of efficient electronic media that can better demonstrate a higher return on investment. Auto looks likely to behave that way. Marketers will get the hang of building friendly social networks and advocates around their brands, undermining their interest in the trusted brands of newspapers and magazines.
The hemorrhaging of jobs will scare the print industry's top talent into other businesses entirely. The focal points of culture and commerce will swing further from faded institutions such as newspapers and magazines. The print products that continue will rely on smaller audiences than ever.
The one thing certain today is that 2009 will look and feel a lot like last week.
"In some ways the Monitor is lucky that it can take a bold step right now," said Bob Hanna, advertising director at the paper. It's true: The Monitor can ditch daily print because it doesn't get much revenue there.
Not for everyone
Your local daily can't afford to do the same; nearly all of its revenue comes from the print edition. So even though newspapers' print ad revenue declined 7.4% in the first half of this year, most newspapers are in no position to cut themselves free from print and its rising costs. The web doesn't seem poised to save them either. Tribune Co., Lee Enterprises and E.W. Scripps all reported actual declines in web advertising during the second quarter. Mark Potts, the consultant and media blogger, estimated that newspapers' online revenue won't surpass their print ad revenue until 2018.
"We're getting these kind of 'Come to Jesus' moments for newspapers," Mr. Potts said. "I suspect we will see much more in the next few months. Anecdotally, internally what I'm hearing is, 'Oh my god, we thought it was bad before.'"
Portfolio, for its part, is pulling back from producing web-only content and doubling down on its print edition. With a staff of about 50 before last week's layoffs, its website bore costs too heavy to support. So it hit "reset," turning into little more than a print companion that will also aggregate other outlets' content. That makes the Portfolio website a lot less interesting, particularly to publishers trying to find their way to real businesses online.
That group, if it wasn't clear by last week, should now include just about everyone.
Brought to you by: The Trade Desk