Business Magazines Face Harsh Reality

Books Balance How to Monetize Web, Publish Print With Smaller Staff

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NEW YORK ( -- After losing a third of their ad pages so far this year, two of the big three business magazines that have survived and thrived for decades spent the month either cutting staff or issues. The third, BusinessWeek, got sold to a new owner with plans of its own. The biggest imperative for all three, however, may be grabbing more cash from readers.

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As Forbes laid off nearly 100 employees out of 600 last week, just one scene of upheaval in the category, executives emphasized the brand's continuing pivot toward digital. "The way the user is coming to and using our content is much different now than a year ago or even six months ago," said Forbes Media President-Group Publisher Kevin Gentzel. "We're developing strategies that will allow us to impact our users even when they're not on"

Good idea. But Forbes is also still publishing a biweekly magazine guaranteed to reach 900,000 paying readers, an enormously costly enterprise. The website can't pay for that.

"Digital's very important, but I don't think it replaces the print product in that you're never going to make enough money on digital to support the kind of editorial investment you need to have a good print product," said one veteran of the business magazines. "You're going to have to make some money on the print product as well."

Will readers step up?
Subscribers' contribution to the bottom line, moreover, has slipped. Forbes netted an average of $1.24 per copy from subscribers last year, up from $1.18 in 2007 but down from $1.58 in 2003, according to its reports with the Audit Bureau of Circulations. The difference is just 34 cents, but multiply that by 886,483 subscriptions and 27 issues a year and you're talking about millions of dollars gone.

And Forbes is not considering cutting its publishing schedule, trimming circulation or asking subscribers to pay more than a token subscription price, according to Mr. Gentzel. So ad sales won't get much relief from the pressure to produce profits. But ad pages over the first three quarters fell 35% from the period a year earlier at both BusinessWeek and Fortune, while ad pages fell 31% at Forbes, according to the Publishers Information Bureau. *

"We need to see how they reinvent themselves and come up with new business models moving forward," said Scott Kruse, managing director and director of print at Group M, the major media-agency group. "Their core categories traditionally had been automotive, technology and financial, and obviously all those categories have been hit extremely hard."

Look just a few years back. IBM was the only top 10 advertiser for all three titles in 2004 that reappeared in their top 10 again last year. And IBM spent $22.2 million across the three last year, down 44% from $39.7 million in 2004, according to TNS Media Intelligence. Toyota, a top 10 advertiser for all three in 2004, didn't crack the top 10 for any of them last year.

"So the question," Mr. Kruse said, "is what other categories they are going to be able to bring in to support their business models moving forward."

The job cuts, another buyer said, won't help in that effort. "By cutting their staff in any significant way, they're really hurting the product in the long run," said Audrey Siegel, exec VP-director of client services at TargetCast, the independent media agency. "There are fewer and fewer people qualified to make the sales calls. We're looking for more and more in-depth conversations about the business and how we can partner. We're not looking for anyone to sell us pages."

Fortune's quiet price hike
Readers are the other factor asserting new importance. Fortune is testing the proposition that its readers don't care much about the current frequency, cutting its schedule to 18 higher-polish issues every year from 24 now. That also means a de facto subscription-price increase, because subscription prices are staying the same while the number of issues falls 28%.

That should help undo the decline that Fortune, like Forbes, has seen in readers' contribution. Fortune netted 83¢ per copy from subscribers last year, down from 90¢ in 2007 and $1.43 in 2003. "Over the years they went to a model that doesn't ask the reader to pay their fair share," said Ms. Siegel. "They were really reliant on advertisers. And when the bottom fell out -- when certain categories such as technology, finance and luxury goods really pulled back -- the magazines were left holding the bag."

Media buyers generally like the idea of charging readers more. "It's just creating a better balance from your revenue sources and overall should make for a healthier business model," Mr. Kruse said.

Fortune's print edition is refocusing, too, on stories that dive deep or provide practical career information -- probably a good tactic when electronic media dominates breaking news. "Do we have to cover every story in business?" asked Mark Ford, president of Time Inc.'s News Group, referring to the print edition. "Maybe not."

But Fortune is also in line for layoffs as part of deep, deep budget cuts anticipated at Time Inc. this week. And it isn't obvious that the promised matte cover, heavier paper stock and other improved production values will mean much to readers -- or even much more to this category's biggest advertisers. This is not -- Condé Nast Portfolio's attempted entrée notwithstanding -- fashion publishing. "It could be a smart move," said Jack Hanrahan, publisher of the Circ Matters newsletter and former print-media buyer. "It's all about content, though. It's all about what they put in the magazine."

Fortune wouldn't dispute that. Neither will BusinessWeek, whose massive losses have forced its sale to Bloomberg, which will run more editorial pages on heavier paper, angling to increase its subscription prices substantially.

BusinessWeek's average net subscription price per copy has held up much better than its competitors,' but is also lower all the same: The title netted 75¢ per copy from subscribers in 2008, down from 77¢ in 2003.

"Right now the subscription price is $35 annually," Daniel L. Doctoroff, president of Bloomberg, said when his company won the auction for BusinessWeek. "The Economist is $106. We've got to improve the product and make BusinessWeek a must-have."

Buying BusinessWeek, of course, is part of Bloomberg's plan to extend its own brand's reach among consumers, as opposed to the high-finance specialists that subscribe to Bloomberg terminals. That's also why Bloomberg TV is considering a show providing a satiric take on business news, a series akin to "The Daily Show." The question for business media this time next year: Is anyone laughing now?

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CORRECTION: This story has been corrected; an earlier version transposed the ad-page performances of Forbes and Fortune.
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