Wanted: wealthy readers

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Attention, investors who hope to make a bundle on tech stocks: Harry Newton wants to give you a free magazine to help you reach that goal. But only if you claim to already have a portfolio worth at least $1 million.

Technology Investor, a new title set to be launched Feb. 7, has an unusual business model. Subscribers who share demographic information about net worth and investment portfolio size are eligible to receive Technology Investor free. The catch is that only the 267,000 wealthiest subscribers will get free subscriptions; everyone else will have to pay $39.95 for the first year of monthly issues.

Mr. Newton, the title's president and publisher, hopes Technology Investor will become the first controlled circulation consumer title for personal investors.


"`There's a new paradigm today," Mr. Newton asserted. "A lot of information is available on the Web for free-stuff that you used to have to pay a fortune for-so we're competing with that. We are reaching out to people who accept the fact that they can get the magazine for free in return for a little demographic information. That model was set by the Internet, and I'm just applying it to this magazine."

Over 5 million potential subscribers were sent a direct-mail solicitation that asked for key demographic information such as age, whether one is a private or professional investor, how much of one's portfolio consists of technology stocks and one's professional title. Technology Investor received over 200,000 responses so far, and has entered nearly 58,000 of those into a database.

Of that 58,000, the average net worth claimed is $1.6 million, while the average portfolio size is $1.2 million. Twenty-five percent of those either own or are the majority stockholder of companies.

Subscribers also can sign up to qualify online at the promotional Web site (technologyinvestor.com).


In 1997, Mr. Newton and his partner, Gerry Friesen, sold their group of technology trade titles, whose flagship was LAN Magazine, to Miller Freeman for $130 million. That left Mr. Newton with a tidy fortune to invest. But he found the advice he got from professionals and investment experts was inadequate for evaluating technology opportunities. The idea for Technology Investor was born from his own attempts to gather information on this fastest-growing set of stocks.

Technology Investor will not recommend which stocks to buy. Its editorial will dissect emerging technology markets, lay out the leading players in that field and allow readers to make their own judgments about which stocks to buy, Mr. Newton said.


While controlled circulation titles are not unusual in the business-to-business publishing world, they are rare in consumer publishing. Most advertisers evaluate consumer magazines based on paid circulation figures.

"That's probably the age-old question, paid circulation vs. a qualified one," said Laura Bracken, senior VP-media director for Saatchi & Saatchi, San Francisco. "If you can get my products in front of a target audience, if you can show me you are reaching the people I want to reach, I don't think a qualified audience is necessarily viewed as a negative."

But, Ms. Bracken added, she would carefully evaluate how readers are qualified and if they really have requested the magazine.

"That's key, that they have said they want to receive the magazine," she said.


Other magazine circulation pros are wary of a controlled-circulation model.

"As an advertiser, you have to be aware that what people are responding to when they say they want the magazine is the sales piece, not the actual magazine," said Holly Klingel, VP-circulation at Imagine Media, publisher of Business 2.0. "When we get people to sign up for a paid magazine, they've already seen an issue of the title. So we need to deliver a product people want to pay for. That's harder than it is to build a controlled circulation title."

June Sargent, VP-circulation for Red Herring, agrees.

"With a controlled-circulation title, the demographic information is what the audience is telling you. How do you know whether it is the truth or not? They may be answering anything to get the free magazine. There's some value in a person picking up a checkbook and saying I'll pay for this magazine," she said.

But Mr. Newton believes his way is the better way to launch a magazine.

"When we looked at launching, we noticed that it was costing more and more money to get paid subscriptions as a start-up," Mr. Newton said. "In most magazines, the advertising pays for most of the costs, but especially on a new title. When you are ramping up, you're spending an awful lot of money to build circulation. You end up throwing promotion money into the wind as fast as possible when you're launching. . . . So we're looking at a different numbers game."


Mr. Newton plans to spend $7 million on the launch. Each issue will cost approximately $250,000 to print and mail to subscribers, so Mr. Newton plans to fund his venture with ad pages.

Technology Investor plans to target four major advertising categories: investor services; business services; shareholder awareness ads; and consumer retail.

A one-time, color page costs $19,055. Advertisers that already have agreed to be in the first issue are all investor service companies: Omega Research, Select Information Exchange and Direct Stockmarket.

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