Newsweek CEO: Dumping Print 'Liberates Us'
There's been a deathwatch for the print edition of Newsweek ever since IAC CEO Barry Diller hinted in July that print would go away or be scaled back in 2013. That happened today when Editor Tina Brown and CEO Baba Shetty announced that Dec. 31 would be Newsweek's last print issue. Mr. Shetty, who officially joined The Newsweek Daily Beast Company just days ago, is now charged with turning the storied print brand into a profitable digital-only business.
As a former ad exec, Mr. Shetty knows as well as anyone how difficult the environment is for digital advertising. He also knows how hard it is to charge anyone for anything on the web, especially high-end journalism that competes with plenty of "good enough" content that 's ubiquitous and free.
We talked to Mr. Shetty about how he thinks an all-digital Newsweek will work.
Ad Age : You're just a few days into your job. Did you have any input into the call to kill print?
Baba Shetty: I was involved in discussions. Obviously it's different from being here. I've worked with Tina [Brown] and the team here for the past year in various ways, so I came in with an understanding of what the direction was. I don't come from a print publishing background. But I have a very clear sense of the direction that Barry [Diller] wanted when he came in and move the company to become a pure-play digital company -- like the rest of the IAC.
Ad Age : What's the opportunity, then?
Mr. Shetty: Newsweek the brand has a lot of stature in the world, especially in markets beyond the U.S. Now it is attached to a form factor and category in the newsweekly that is on the decline and losing relevance. This is about taking the essence of Newsweek and saying, 'what could happen if it was truly liberated from legacy publishing constraints?' The move lets us explore that .
Ad Age : Part of this is subscriptions, correct?
Mr. Shetty: A kind of hybrid paid and free content model seems to be what's necessary today. You need social inroads to discover and share your content.
Ad Age : What will the digital-only Newsweek cost?
Mr. Shetty: The cost will depend on various factors. For people we transition from print, it will be $24.99 [same as an annual subscription to print]. We will experiment with a porous paywall and metered access. We're keeping our options open. One of the big things about this direction is it gives us a lot of strategic options that we wouldn't have if we were hanging on to print. Nobody has the right answer, but this is a model that lets us iterate.
Ad Age : Reports say the company will save $45 million a year cutting print. Is that true?
Mr. Shetty: $40 million plus is the cost involved in the physical manufacturing and distribution of the physical product. It's an enormously expensive undertaking that this decision gets us out from under.
Ad Age : You will also be cutting staff; can you say how many?
Mr. Shetty: No. We want to share that internally before we discuss it.
Ad Age : How big is current staff?
Mr. Shetty: The combined newsroom with the Daily Beast is 270 employees both in edit and on the business side.
Ad Age : Is there a danger that by eliminating print you also lose some of the prestige from the brand that helps launch other extensions?
Mr. Shetty: I think it goes the other way these days. Everybody understands that digital is the future and the present.
Ad Age : How will the Newsweek brand, which is a subscription product, differ from the Daily Beast, which is free?
Mr. Shetty: The Daily Beast is part of the stream -- part of the constant flow of information. It's of the moment. It's hot, fast, sexy, cool. Newsweek is by its nature about perspective and framing around the themes that matter in the world today. It's about longer form, sitting back, taking it in and gaining perspective. Tina likes to talk about them as the same person in different modes of life.
Ad Age : Yet consumers show they much prefer free content that is good enough over content they have to pay for, even if superior.
Mr. Shetty: I think there is a role for both. We are beginning to see a behavior that says 'I'm willing to pay not for everything but will pick two or three things that are my paid media products.' The bet we are making that Newsweek as a digital-only product will lay claim to one of those slots for certain people.
Ad Age : Beyond subscriptions, online advertising is a tough market. How will you compete?
Mr. Shetty: There is vast oversupply of commodity impressions on the web. The economics are pretty straight forward on that : infinite supply and limited demand means massive pricing pressure. The thing we would like to do as a company is vanishingly scarce. We have a claim to hugely influential audience that is incredibly engaged. We've seen a 40% increase in advertising on the Daily Beast in the past year and we are just scratching the surface of what we can do.