Brand alliances are mainstay that benefit readers the most

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Rosie's Mccall's. Walter's Time Inc. Jim's Time. Yes, there's hope for the old magazine business yet. In these new "products" the periodicals are revealing an admirable willingness to experiment with fresh business models, while remaining true to the journalistic values that satisfy readers and elevate society.

These are lofty conclusions about deals the tabloids prized for gossip potential, so let's parse them, starting with the arrangement by which McCall's, the venerable women's magazine, will be rebranded and partially programmed by talk show host Rosie O'Donnell. It has been widely interpreted as Gruner & Jahr's me-too response to Hearst's wildly successful O, The Oprah Magazine. But buried inside the announcement was a tantalizing fact: that Rosie and Gruner & Jahr would share content costs. That smells like an alliance to me.

Alliances are mainstay concepts of the new economy. To understand how radical a notion this is, recall that not too many years ago vertical integration-owning as much of your supply chain as possible, from raw materials extraction right up to the customer interface-was deemed the sine qua non of success. The accomplishments of such companies as Cisco and Dell, which manage large numbers of suppliers toward the creation of products tailored to customer needs, has helped support a broadening belief that vertical integration hinders speed to market, limits customer understanding, curbs responsiveness and ultimately reduces profitability. Alliances, not ownership, can, it's believed, solve these problems.

The infotainment industry is no stranger to alliances: Hollywood studios are nothing if not alliance managers, creating ad hoc combinations among creative, production, finance, distribution and marketing specialists each time they put out a movie. But the periodicals industry has lagged behind. Now, in the Rosie's McCall's partnership, Ms. O'Donnell is lending demonstrated programming expertise and a significant marketing channel; Gruner & Jahr is providing editorial, manufacturing and distribution infrastructure; and the two are sharing the brand. A deal like that between the gabber and the maggers could be a harbinger of a new receptiveness to creative collaborations.

Time Warner is going in the other direction; its forthcoming merger with America Online takes vertical integration to towering heights. The new behemoth can do no better than to have Walter Isaacson as editorial director of its Time Inc. magazine division, recombining the DNA from an assortment of companies into one powerful life form.

Even in vertical enterprises, collaboration is a prerequisite for customer knowledge, new business development and speed to market. Yet it's even harder to accomplish in a big company than in an outsourced structure. Walter, whom I've had the honor to know for years, is not only one of his generation's great news magazine editors-he is a masterful media geneticist. His ability to see the future and draw upon inside and outside resources to shape it is almost unparalleled in the industry.

Time had lumbered for years until Walter had the chutzpah to open it to the cheekiness of a Joel Stein, the whimsy of a Calvin Trillin and so much more that's antithetical to earlier conceptions of a news weekly. When online was little but a cumbersome distribution medium, he pushed Time Inc. into risky arrangements with the likes of AOL. It's now fashionable to view Pathfinder-Walter's pioneering online concept-as an expensive fiasco. But when you see it as R&D, it looks like what it was: an inexpensive investment for a multinational company that eventually pointed it toward the AOL merger and helped unlock billions in shareholder value.

Which would have been meaningless had not Time Inc. remained so strong. That's why all journalists should take pride in Jim Kelly's ascendancy to Time managing editor. I met Jim 24 years ago, when, in a writing class, we had to profile each other. While I can recall a number of facts I learned then about him-raised in Queens, policeman's son, star student at Regis, disciple of John McPhee's-my great memory of that moment is being peppered with questions, cajoled for facts, and queried within an inch of my life. Jim has kept that inquisitiveness to this day, a journalist's journalist, and his readers have benefited-and will continue to benefit-enormously from it.

Rosie's McCall's. Walter's Time Inc. Jim's Time. Let us give thanks.

Copyright November 2000, Crain Communications Inc.

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