Monday, May 28, 2007

Magazines feeling postal pinch

Magazines feeling postal pinch
High-circulation periodicals enjoy discounted rates, while smaller publications get hit with steep rate hikes.
By Teresa Stack and Jack Fowler, TERESA STACK is president of the Nation. JACK FOWLER is publisher of the National Review.,1,5257005.story?coll=la-news-comment&ctrack=1&cset=true

THE COST OF getting magazines into your mailbox will shoot up July 15. How much? It depends.

Magazine publishers are facing a radical postage rate restructuring that favors those with large circulations and transfers costs to small- and mid-circulation publications.

Past increases to periodical postage were applied fairly equally across all publications. But this time, things are drastically different — and potentially damaging to the diversity of voices that our founders strove to foster when they created the national postal system.

Our respective magazines — the Nation and the National Review — sit on opposite ends of the political spectrum and disagree on nearly every issue. But we concur on this: These proposed postal rate hikes are deeply unfair.

It is not simply that we want to avoid a massive increase in our mailing costs, though that is a factor. More important to us is that we believe in a vibrant marketplace of ideas (where we each think our ideas will prevail). We are not afraid of intellectual competition; we welcome it.

For this latest round of rate hikes, the U.S. Postal Service proposed a 12% increase that would have affected magazines more or less equitably. Then, in an unprecedented move, that plan was rejected by the Postal Regulatory Commission, the body responsible for setting rates. Instead, it approved a complicated pricing system based on a proposal by Time Warner Inc., the largest magazine publisher in the country. Rather than base rates on total weight and total number of pieces mailed, the new, complex formula is full of incentives that take into account packaging, shape, distance traveled and more.

It adds up to this: discounts for some periodicals; as far as we can see, mostly the huge-circulation titles associated with firms like Time Warner. At smaller magazines like ours, rates will go up 15% to 25%. Research by McGraw-Hill Cos. concludes that the rate increases for some small-circulation publications could hit 30%.

Time Warner and the Postal Regulatory Commission say this scheme rewards efficiency. But the rates appear to have been adopted with little research into their effect on publishers and with no meaningful public input.

How will small magazines that operate on the economic margins — yet have an outsized effect on public discourse — accommodate $500,000 (in the case of the Nation and the National Review) in additional postage expense? Will we be forced to cut back on reporting, raise our prices, reduce our staffs or our number of pages to stay afloat? For some titles, the change may prove fatal. It certainly will make it more difficult to start a new magazine, and publishing will be less competitive as a result.

Time Warner and the postal commission seem to have little understanding of the crucial role the Postal Service has played in establishing an open marketplace of ideas. It has always been a central policy of the Postal Service to use its pricing mechanism to encourage smaller publications and competition.

Since the time of James Madison and the founders in the 1790s, it has been understood that low rates for small publications make it possible to have the rich, open and diverse media that a self-governing people require. This is what is at stake today. And because so much of the material online originates in print magazines, these postal rates could have the unintended effect of shrinking the digital marketplace of ideas as well.

We urge the relevant congressional committees to hold a hearing to investigate this coming crisis before it is too late. The last 215 years of postal policy were instrumental in the creation of the extraordinary free press we have in the U.S. today. We should not begin to overturn this magnificent tradition.


Internet Ad Revenue Charges Ahead

Internet Ad Revenue Charges Ahead
IAB Suggests 35% Growth in Its Year-End Report
By Emily Tan

Published: May 24, 2007

NEW YORK ( -- Internet ad revenue grew 35% in 2006, with search, display, classifieds and lead-generation categories continuing to rise at a healthy clip while e-mail, sponsorship and slotting fees remained flat or lost share of the total online ad market.
The IAB said online growth is coming from advertisers using the web to drive product awareness, purchase intent and brand loyalty.

The figures come from the Interactive Advertising Bureau's quarterly Internet Advertising Revenue Report released today, which included both fourth-quarter and full-year 2006 figures.

Hit record high
U.S. online ad revenue reached a record high of $4.8 billion last quarter, an increase of 33% over the 2005 fourth quarter. The 2006 full-year total was $16.9 billion. Display advertising and keyword search were up $3.7 billion and $6.8 billion, respectively, last year.

Randall Rothenberg, president-CEO of the IAB, said in the announcement that the growth is coming from advertisers using the web to drive product awareness, purchase intent and brand loyalty. "We have every confidence that this growth trend will continue as marketers allocate more of their total marketing dollars to interactive and the industry delivers effective and innovative platforms for connecting with consumers," he said.

As in past years, ad revenue was concentrated among top publishers. The top 10 raked in $11.6 billion, or 69% of total online ad revenue, down slightly from the 72% share those publishers had in 2005. The top 50 publishers accounted for 93% of the online ad market.

Rich-media share drops
While much of the buzz circulates around broadband video, rich media as a share of total online ad revenue actually dropped, increasing total dollars by a lower-than-industry rate, from $1 billion in 2005 to $1.2 billion in 2006. But Sheryl Draizen, senior VP-general manger, IAB, said that the growth is coming.

"I think that everyone is talking about broadband digital video, but it hasn't happened yet," Ms. Draizen said. "There's still a lot of potential."

E-mail's share remained flat, although total dollars spent on the tactic was up 34% to $338 million. Ms. Draizen suggested e-mail may be reaching a plateau and that spam-blocking by consumers also is a key factor in its slow growth. The IAB has developed guides to provide marketers with information that will make e-mail campaigns more effective.

"Authentication and deliverability issues for e-mails need to be delved into," Ms. Draizen said. "It's really about what are the best practices for e-mail that they have the highest percentages to get to the audiences they need to reach."

Sunday, May 27, 2007

Grade-School Girls, Grown-Up Gossip

Grade-School Girls, Grown-Up Gossip

WHEN Britney Spears shaved off her signature blond locks, Alexis Gursky, 9, found herself wondering not why Ms. Spears picked up a razor in the first place, but why she did not do more with the hair she shaved off.

“I just thought it was a little weird to just do it and not to give it to people who have cancer,” said Alexis, a third grader in Manhattan.

And while scores of people were petitioning Gov. Arnold Schwarzenegger of California to keep Paris Hilton from having to report to jail on June 5, Jessie Urvater, 8, could not muster any sympathy.

“I don’t like Paris,” said Jessie, of Manhattan, who was quick to point out that hotel heiresses are not above the law. “I think she should go to jail.”

Well before they experience puberty, children today are deeply immersed in the dirty laundry of celebrities — their eating disorders, bouts with drinking and drugs, and run-ins with the law (and one another). The gritty details are all around them: on the Web, on cable, at the top of the network news and splashed across the covers of magazines.

The prevailing wisdom is that exposure to vast amounts of gossip, particularly about Hollywood’s so-called bad girls — Ms. Hilton, Ms. Spears and Lindsay Lohan, to name the most frequently chastised — is leading America’s impressionable 8-to-12-year-old girls into the gutter. But the reality is more complex.

In interviews, tweens tend to be highly judgmental of the much-publicized antics, turning them into age-appropriate morality tales that would make their parents proud and bring comfort to those who fear the next generation will be made up of pantyless party girls known more for their D.W.I.s than their G.P.A.s.

Ms. Hilton, said Jamie Barton, 10, of Mobile, Ala.: “spends all this time acting like everyone else doesn’t mean anything. It’s just me, me, me.”

Said Diamond Martin, 12, of Parlin, N.J.: “I don’t see her as a role model. I’m not sure what she’s really ever done, actually.”

That tweens are not traipsing after the drunken pied pipers who erupt in the gossip headlines is not surprising to child behavior experts.

“I would be shocked if they did,” said Dr. Ritch C. Savin-Williams, a professor and chairman of the human development department at Cornell University. After all, he said, 8- to 12-year-olds are by and large “really heavily under the influence of their parents.”

That does not mean, though, that gossip culture is harmless. “There may be a delayed effect,” said Dr. Richard Gallagher, the director of the Parenting Institute at the Child Study Center of New York University. “When kids know that some behavior is possible and that it doesn’t lead to total ruination of your life, they may, as they get older, be willing to entertain that.”

But until then, many children view the unseemly behavior through a lens of common sense that some celebrities themselves appear to lack.

“They should really do good things that they want other people to do,” said Rachel Steir, 11, of Manhattan, “not smoking, taking drugs, thinking that they need to lose so much weight.”

That children today are exposed to much more scandal than those of previous generations is not in dispute. Like many girls, Courtney Barton, 12, of Mobile, Ala., said she does not seek out celebrity gossip, but encounters it everywhere: “I hear these things about all of them on the radio, Internet and TV.”

According to the Pew Research Center for the People and the Press, the death of Anna Nicole Smith, on Feb. 8, constituted 9 percent of news coverage the week she died (she died midweek). That same week, 8 percent was devoted to the 2008 campaign and 3 percent to the Super Bowl. Pew also found that in the two days following Ms. Smith’s death, “nearly a quarter of the news from all sectors (24 percent) was devoted to this story, and fully half of cable news.”

Of course, Ms. Smith’s accidental drug overdose is old news by now. Children have moved on to Us magazine, where they can read about Ms. Lohan reportedly snorting cocaine, or to, where they are informed that the estranged husband of Anne Heche, the actress, “craves porn, poker and money.”

Gone are the days when children who wanted to learn the meaning of a naughty word or slang term had to find a dictionary or a more worldly pal. Today, Wikipedia can explain in a matter of seconds that badonkadonk is a term for a woman’s buttocks.

Michelle Dale, a second-grade teacher in Brooklyn who works with the youngest of the tweens, said she is “always blown away” by all the things her students know about. “The movies that these little second graders have come in and watched,” she said, “I’m like, ‘Oh, my goodness.’ ”

In interviews, children expressed their detailed knowledge of Angelina Jolie’s penchant for adoption (though they never mentioned her previous marriage to Billy Bob Thornton or the vial of his blood she wore around her neck). They knew about Ms. Hilton’s sex tape, Ms. Lohan’s dramatic weight loss and Ms. Spears’s underwear-free club outing. Saturated with such gossip, they had formed some very strong opinions about what is good, bad and just plain weird.

Caroline Lee, 11, of Greenwich, Conn., pointed out Ms. Spears’s public parenting blunders, including driving with a baby in her lap: “I feel kind of like she’s a little young and she’s not the right kind of mom,” Caroline said.

But Ms. Jolie, Caroline said, is “a good mother. She takes care of her kids.”

“She’s not as strange and bad as Britney and Paris and Lindsay,” she said, adding that “she adopted so many kids and she also helped places that needed help.”

Of Ms. Lohan, Sophia Ambrosino, 12 , of Manhattan, lamented the passing of the young actress’s red-haired, reproach-free “Parent Trap” days. Now, she said: “There are things that she does just to be on the cover of something. I liked her when she was little.”

Arielle Urvater, 11, also said while once she was a fan of Ms. Lohan and Ms. Spears, she is no longer. “We’re well educated,” she said. “We know that drugs aren’t good and that smoking isn’t good.”

Tweens often think in moralistic terms, especially if they have a solid family support system or role models, Dr. Savin-Williams said.

But around 12 or 13, it is not unusual for a child’s individual values to give way to peer pressure, some child experts said, and children may be influenced by what they perceive to be cool, not what they instinctively know to be right.

“The younger kids are a little freaked out by Paris,” said Susan Schulz, editor in chief of CosmoGirl. “For the most part they’re still very good kids at that age.”

But, said Ms. Schulz, when they are teenagers, “every kid is trying to have a Paris Hilton kind of night at their prom.”

And that is exactly what some adults fear.

“I don’t think there’s any question that kids are getting more and more information at a younger and younger age,” said Dr. David Walsh, a psychologist and the founder of the National Institute on Media and the Family. “And there are very few filters available.” The result, he said, is the “adultification of youth.”

“Kids have information but not necessarily the emotional maturity to absorb the information,” he said. “We’ve got kids who are at the simple arithmetic phase in terms of their emotional maturity dealing with quadratic material.”

Dr. Gallagher of N.Y.U. suggested parents discuss celebrity misbehavior with their children. “You have to talk about it before someone else does,” he said. “That helps the kids digest it more effectively.”

Most of those conversations will likely be with and about girls.

“The bad boys have been replaced by the bad girls,” said Ted Harbert, the president and chief executive of the Comcast Entertainment Group, which includes E! Entertainment Television, Style Network and G4. “You just don’t hear as much of these guys who get in trouble as much as we used to in the ‘St. Elmo’s Fire’ generation.”

“The girls don’t want to just leave it to the boys to get in trouble,” he said. “They want their fair share of time in the principal’s office.”

But what about all those thoughtful things tweens say about celebrities’ bad behavior and their embrace of good clean role models?

Dr. Walsh said: “A kid can write a well-thought-out essay about why a behavior is not good, but that doesn’t mean it’s going to carry over to their behavior. Thinking ability is right on track but emotionally ability lags.”

Yet the girls interviewed cited wholesome-seeming celebrities as their favorites: Miley Cyrus, Ashley Tisdale, Hilary Duff, Dakota Fanning, Anne Hathaway and Ms. Spears’s younger, scrubbed sister, Jamie Lynn. Is it possible that today’s tweens have seen enough to inoculate them against the pressures of their teenage years?

“As I grow older I see more and more how bad they are,” Arielle Urvater said. And yet kids her age cannot help but be interested, she said.

“They’re famous, pretty and all the boys like them.”

Bill Keller:NYT "Our Stories Are Too Often Too Long

Bill Keller: "Our Stories Are Too Often Too Long"

Today the New York Times held its "Throw Stuff at Bill" (that would be Keller!) meetings—one this morning and two this afternoon. We got a report about the early afternoon session, and learned that the future of the Times is all about Sewell Chan, among other things.

The bulk of Keller's presentation (which was followed by a Q&A) had to do with the Times' transition to "journalism on the web" and the evolving "web-print relationship." Newsroom editors, he said, "need to be better informed about features that appear in their sections. They don't necessarily have to know how to put up a slide show or put up a graphic, but they need to know who does what." Excellent plan!

He also spoke about the "gradual reallocation of resources from print towards digital" and copy editors being moved to the day side, so that there could be a "greater flow of fresh quality edit material." We imagine a chill swept quickly over the room! Then he brought up two of the Times' stars: Sewell Chan, who has become a "full-time, online Metro journalist"; and the comely Ariel Kaminer, who—assuming we heard this correctly—is becoming a "cultural impresario." Snarf.

"We can't let our reverence for quality become a straitjacket in new media," he warned. "The web environment is different... We can offer guidance but we cannot insist on the same control we exercise over print."

That, it would seem, might be a difficult lesson to absorb. But Keller hurried to make his charges feel better! "Online and in print, we are the New York Times," he intoned, not entirely convincingly.

He spoke of the new building: "Pioneers have already settled in our gleaming frontier." He brought up some of the complaints that the "pioneers" have had, including fire alarms having a mind of their own and motion-sensor lights not working. "There have also been reports of a rat sighting," he said, though he hurried to say that it was unsubstantiated. "The mice aren't scheduled to move in until June 15." Laughter! Relief!

"I implore you to be versatile," he implored. "It's an immense improvement over our venerable, but cramped and deteriorating, building on 43rd Street. The company is heading for a long future."

Part of the future includes a reduction in the size of the paper at the end of the summer. "Folks, it ain't that different," he said. There's that warm Bill Keller we all know! "It's an inch and a half narrower. There's no dramatic makeover of our design." In contrast to the Wall Street Journal's redesign, he said that the Times would "absorb the change without a great deal of fanfare." He said the changes include a display page for the foreign desk, and limiting the jumping of A1 stories to other sections.

While the paper will be adding pages, the "actual reduction of the newshole is about 5 percent," he said, which will give editors "some incentive about being a little more ruthless about throwing stories back for cuts. Our stories are too often too long... The 1200 word stories could be 800 or 900. There are editors at a Page 1 meeting boasting that a story is only 1400 words." (Good thing Sewell is only writing for the web, then.)

Then it was time for questions. Someone asked how the Times plans to make money off the web. "I heartily believe we will," Keller said. "How, is a lot more complicated." He talked about Wall Street, and doing PowerPoint presentations. "There's a phrase they use in drug and alcohol rehab—'fake it til you make it.' That's basically what we're doing."

Another person asked about Rupert Murdoch's bid for the Wall Street Journal and how that might affect the Times. Keller seems to think that if Murdoch wins the bid for Dow Jones, he will invest in Bloomberg-type news. "I don't think we want to go into the newswire and business newswire service," he said. "It's not our strength. We can respond in a smart way by providing more of what we provide now, which is stuff that if you're interested in business, you have to read. Smart analysis, columns, news of that kind." He speculated that Murdoch might be interested in starting a magazine to go with the Journal. "He doesn't seem to like the Saturday Journal," Keller remarked. "We're pretty good at magazines. I'm quite confident that if he comes up with something we will be able to respond. There are a lot of people at the Wall Street Journal wondering if we're the last lifeboat in the ocean."

Someone asked whether the hiring of online staff would affect hiring or staffing the paper. "Mostly, no," Keller said. "The web creates openings for very specialized jobs. Sometimes you have to go out and hire them from other places. But in the reallocation of resources from print to digital, we're not talking about closing down print slots and opening up web slots."

And then someone asked about City Room, which is Sewell Chan's new project, and is basically a mini-New York Times, but online and only about New York. "The idea is that the New York Times is not giving up New York City... We're taking one of our most inventive and productive journalists and setting him loose. He will do all different kinds of news without any narrow portfolio." God help us

Patterns, measurements define 2006-07

Patterns, measurements define 2006-07 seasonby Paul J. Gough

May 25, 2007

Overview: Patterns, measurements define season
Ratings rerun: Fox, CBS on top
Thursday, Monday are battlegrounds
Chart: Final series ranks
Network news makes headlines

NEW YORK -- It has been a wild and in some cases wacky season for network TV, culminating in a hunt for millions of missing viewers that is so complicated that it's worthy of its own episode of "CSI."

On the surface, it is status quo -- CBS extended its winning streak in total viewers to five years, while "American Idol"-powered Fox bagged a third consecutive season victory among adults 18-49.

But underneath, a sea change has been brewing.

"I think we'll look back and see 2007 as the watershed when all the things we talked about -- viewing behavior and audience measurement of that behavior -- all came together to start the new era," NBC research chief Alan Wurtzel said. "We've talked a lot about change and everything, but this is the first year we've seen it in a profound way."

At the beginning of the season, Nielsen Media Research introduced "most current" ratings, cuming the audiences that watch a show live as well as those that record it on a DVR and watch it up to seven days later.

But even with those additional viewers counted this season, primetime television viewing dropped significantly compared with last season.

The steepest decline was in live viewership, which fell 10% year-over-year among the four major broadcast networks. Adding in DVR viewership, which can boost shows' ratings by as much as 25% or more, the Big Four were still down 5%.

Things turned for the worse in the spring when many of TV's best and brightest fell to season or even series lows. That list includes "Desperate Housewives," "Lost," "Grey's Anatomy," "CSI: Miami" and "ER," among others. Even "Idol" wasn't immune though it hasn't seen a year-over-year decline.

The reasons seem myriad. Explanations include poor comparisons with the Winter Olympics, which boosted viewership levels last year, the lack of stunt counter-programming, a three weeks' earlier start to daylight-saving time, an abnormally high amount of repeats in February and March and a shift in viewing behavior brought on by the DVR, streaming video and the growing number of ways network TV is consumed these days.

"It's never one thing," said Fox scheduling czar Preston Beckman, who acknowledged that the early start to daylight-saving time and the increase in DVR penetration has changed the game.

He thinks that the networks also have learned the hard way that viewers are annoyed by their favorite shows going on hiatus or repeating. It's something Fox took into consideration three years ago when it scheduled "24" straight through. Nielsen said that only 66% of program minutes in March were original compared with 80% a year ago.

Daylight-saving time generally shaves 3% or 4% off viewing, something the networks saw three weeks earlier this year. It particularly hit the 8-9 p.m. hour and such shows as NBC's "My Name Is Earl" and "The Office." But even when things started evening out, the ratings remained down.

"Probably the two had a compound effect and moved people away from their normal March viewing patterns into a lower general pattern of television viewing," CBS research chief David Poltrack said. "We haven't really recovered from that."

Mindshare research director Debbie Solomon thinks that the long hiatus periods and schedule shifts are coming back to haunt the networks and turn off viewers.

"They're not leaving the set, they're leaving the shows," Solomon said. "It's important to make that distinction. The networks have been playing so many games with scheduling and a lot of programs have gone on long hiatus periods and a lot of changed nights. ... I think viewers have given up trying to find their shows."

And unlike the past two years, when several shows debuted in the winter and spring -- "Office," "The Unit," "The New Adventures of Old Christine," "Deal or No Deal" and, of course, "Grey's Anatomy" -- this year fewer programs were introduced and only three, ABC's "October Road," Fox's "Are You Smarter Than a 5th Grader?" and CBS' "Rules of Engagement" stuck.

"And certainly you wouldn't put them in the same class as 'Grey's Anatomy' and 'Deal or No Deal' in terms of strength," Poltrack said. "This was a spring where the networks were not reinvigorated with new programming as in years past. Hence, more repeats. This led to some lowering of overall viewing levels."

Fox's Beckman doesn't think that the decline is as severe as it seems when just looking at live-plus-same day. It's a function of the fact that the average Nielsen home is three or four times more likely to be recording programming and playing it back later than it was a year ago.

"When you incorporate the live-plus-seven (ratings), you see that viewing isn't down as much as it appears to be," Beckman said. By that yardstick, such series as "24," "Lost" and "Idol" are flat or slightly up compared with a year ago.

NBC's Wurtzel doesn't think that there's a mass departure of network TV viewers. It's just that there are more choices and people are consuming media differently.

"It may well be that for a lot of people they don't feel the need to be there day-and-date for conventional television anymore," he said. "I do not believe that people aren't interested in television. That doesn't make any sense."

But Beckman believes that with the networks putting so many shows on so many platforms, it is leading to a growing perception that viewers don't have to watch it on network TV. The trick, he said, is whether the loss in potential advertising revenue is offset by the gains in the other ways the shows are being sold.

NBC is asking Nielsen to look into its measurement to make sure that there's nothing hinky there, like a few years ago when young male viewership dropped precipitously. Nielsen said it's looking into NBC's concerns and plans to report to its clients before the Memorial Day holiday.

"What we've found is that people aren't watching less TV this season, they're watching slightly less live television," a Nielsen spokesman said.

Wurtzel is more concerned about the changes in the HUT (households using television) and PUT (persons using television) levels, upon which the viewership and ratings are based.

"I would be surprised if there was a proverbial smoking gun. I think it's going to be a lot of different things," he said. "But I think we really have to understand what the Nielsen situation is, either to say we've got to deal with it or to say it's been taken off the list."

Network season rankings
Network Total viewers (in millions) % change from 2005-06
CBS 12.5 -1%
FOX 10.4 +3%
ABC 9.9 -8%
NBC 8.9 -9%
CW 3.2 n/a
All data reflects "most current ratings"--live-plus-seven through availability and live-plus-same day for the final week of the season.

Adults 18-49
Network Total viewers (in millions) % change from 2005-06
FOX 4.0/11 -2%
CBS 3.7/10 -3%
ABC 3.5/10 -13%
NBC 3.1/8 -6%
Adults 18-34
CW 1.5/4 n/a
Source: Neilsen Media Research, Sept. 18-May 23. Mulls Launch of "Business YouTube" Mulls Launch of "Business YouTube"
Mike Shields

MAY 24, 2007 -

John Byrne, BusinessWeek's executive editor and the acting editor-in-chief for, said that company is looking to create a "business YouTube" essentially an online video hub for wannabe moguls to post short pitch videos for a new ventures or companies.

The site is also exploring the launch of an online-video-based contest that would invite anyone with a idea for a new business to submit a plan on the site with the chance to land $500,000 in venture capital funding.

Byrne, speaking during a panel session at the Interactive Media Conference in Miami, Fla. on May 24, said that like on YouTube, users would rate each proposal and ultimately vote on the winner, who would receive half a million dollars from a VC firm to invest in the proposed business.

To help create the YouTube-like platform, Byrne said the company was looking to purchase a new technology platform.

According to Byrne, the drive behind the proposed launch, given its potential appeal among non-BusinessWeek-readers, is to help widen the site's audience while also boosting repeat visits among existing users.

Given the challenging economics of print, and the need to cash in on larger online audiences, is "Looking to do things that are highly engaging but are completely non-journalistic in many ways," he added.

Friday, May 25, 2007

Advertising's Brave New World

Advertising's Brave New World
Different Lineup of Players
Emerges With Online's Rise

For decades, advertising has been a relatively simple process dominated by a clubby world. Long-established advertising and media-buying agencies, most owned by half a dozen global giants, make TV or print ads and negotiate for airtime or space with TV networks or publications, most owned by a handful of other big media companies.

But as a series of recent high-profile deals makes clear, the emerging importance of digital advertising is making for a shifting and more complicated advertising terrain.

"The biggest innovation in the advertising industry during the last 70 years before digital was color TV," says Ajaz Ahmed, chairman and co-founder of independent digital marketing agency AKQA. "The agency of the future will be half a software company and half an entertainment company because that's the new landscape."

A host of newer firms from outside the traditional ad mainstream dominate the technology-rich process of making and delivering ads to the Web. And while TV networks, magazines and newspapers have a presence online, much of the Internet media is controlled by companies such as Google Inc. and Yahoo Inc.

Marketers -- seduced by the perception that Internet ads offer a more cost-effective way to reach specific consumers and measure results -- have shifted more of their ad budgets online. Internet advertising has grown into a $16.9 billion industry -- 5.9% of the $285 billion total U.S. advertising market in 2006, up from 4.7% in 2005, according to the Interactive Advertising Bureau.

To try to get a slice of that online spending, both traditional ad companies and Silicon Valley titans have battled for a stronger position in the digital-ad food chain. Google bought Internet-ad broker DoubleClick for $3.1 billion last month; Microsoft Corp. struck a deal to acquire Seattle-based online ad concern aQuantive for $6 billion last week; and ad giant WPP Group PLC last week acquired search-marketer and ad-network 24/7 Real Media Inc. for $649 million.

Much of online's allure can be traced to its precision. In television, for instance, media buyers from Madison Avenue try to place an ad on a TV show that attracts the highest concentration of target customers. Someone wanting to promote their wares to young women, for instance, might advertise on ABC's "Grey's Anatomy." But audience measures for television are, at best, rough approximations, based on surveys of a small number of viewers, and advertisers have always found it difficult to judge whether their costly TV ads succeed in driving sales.

Online, advertisers can be much more scientific in where they place their ads. Using behavioral targeting companies, such as independently owned Tacoda Inc. or Revenue Science Inc., marketers can track the online habits of potential customers. For instance, if a consumer clicks on two car sites then visits the Web site for Us Weekly magazine, car ads might show up on the magazine site, in addition to the car sites. That way the ads will appear in front of the person most likely to respond -- even when that person is on a site unrelated to cars.

"We might know what term they just searched on, which is essentially them raising their hand and saying give me information about this subject," says Jeff Lanctot, senior vice president of global media at digital marketing agency Avenue A/Razorfish, a unit of aQuantive.

What's more, the most popular category of online advertising -- paid search -- requires advertisers to pay only when a consumer has clicked on their spot. With paid search, which accounts for 40% of online ad spending, advertisers pay Internet search engines such as Google or Yahoo to post a link to their Web site next to a specific word or phrase that visitors plug into the search engine.

Up until now, paid search has benefited just a handful of players, particularly Google and Yahoo because those ads have mostly attracted smaller businesses that don't use ad agencies. With bigger companies becoming more involved in paid search, agencies and search-marketing firms are playing a greater role. Also firms have sprung up to help marketers design their Web sites to make it easier for search engines to understand what information appears there. The goal of this "search-engine optimization" is for a company's Web site to show up at the top of a search engine's free results listings when a person is looking for information related to that particular company or industry.

A more diverse cast of characters dominate the other forms of online advertising, including display ads -- such as banner ads -- online video and the various types of animated ads that dance across the screen. These ads are usually designed by digital ad agencies and then transported to various Web sites through a circuitous route often involving a number of technology-focused companies. It is this area that has seen most of the acquisition activity in recent weeks, as bigger ad players try to streamline the online advertising process.

For example, Avenue A/Razorfish bought ad space on a total of 863 individual sites last year for its clients, which include Kraft Foods Inc., Walt Disney Co. and Nike Inc. To line up all that space, Avenue A/Razorfish used firms that deal with hundreds or thousands of Web sites. These firms, called ad networks, buy space from sites and resell it to advertisers at a premium. Among the major ad networks are, acquired in 2004 by Time Warner Inc.'s AOL, and 24/7 Real Media.

In the middle of this process are another set of players, called "ad-serving firms," technology companies that get the ads from the advertiser to the Web sites that the ad network firms have lined up. The top two ad-serving companies are DoubleClick and Atlas, another unit of aQuantive. Ad-serving companies save the digital information that creates an online ad on a computer server and then deliver that data to the sites where marketers bought advertising space. This lets ad agencies change the contents of an online ad or where it runs on a site by switching that digital information on the computer server instead of communicating with each of the hundreds of sites where an ad might appear.

"Ad serving is kind of like oxygen. You need it for every major [online advertising campaign] that you run," says Sarah Fay, president of Aegis Group PLC's digital-marketing subsidiary, Isobar U.S.

Some ad-serving companies also have ad-network arms. DoubleClick, for example, provides both these services for advertisers and Web sites.

All of the major digital ad players also generate measures to track the effectiveness of campaigns. While in the traditional media, marketers assess response to their ads by surveying audiences before and after the ads have run, digital advertisers can gauge response within minutes by using a number of metrics -- including how many people clicked on an ad, the time a consumer spends with the ad, what a Web surfer does after viewing the ad.

If advertisers find that a certain creative component of the campaign isn't working or if a specific Web site isn't delivering, they can make a switch at the click of a button to try to improve the results. These data ultimately determine where advertisers spend money on the Web and is expected to become an increasingly important aspect of the industry as other aspects of the business -- such as delivering an ad -- become more streamlined.

"The Internet was built on little companies," says David Kenny, chairman and CEO of Digitas and digital strategy chief for Publicis Groupe SA. "Now that we've got big advertisers putting money on the Internet, they need big scalable operations."

Thursday, May 24, 2007

Best Magazines of 2006

Best Magazines of 2006

Deeming 2006 disappointing for the magazine industry may be an exaggeration. Nevertheless, publishers have undoubtedly seen better years. Advertising revenue declined for a number of popular print titles, with publications such as Field & Stream, Outdoor Life, Vanity Fair, The New Yorker, Skiing, and Jane shedding significant numbers of ad pages over the course of the year, according to Advertising Age (“Magazines Finish Flat, but Hope for Better Q1” by Nat Ives, 12/4/06). A noticeable drop in automotive and pharmaceutical advertising was partly responsible for these declines, although with Internet marketing techniques clearly improving throughout 2006, print publications were competing for a smaller piece of the pie than in previous years. Still, according to the Magazine Publishers of America web site, there was a two percent increase in the number of magazine launches during 2006.

Uncertain potential

While the Hispanic publishing category has long been viewed by industry insiders as a potential gold mine, the overall rate of consumer spending on Hispanic magazines fell by four percent in 2006. The closures of once-promising titles Shape en Español and Christina La Revista were indicative of the difficulties that publishers face in attempting to reach this constantly changing demographic. There's no magic formula that will suddenly turn things around; however, the idea put forward in MEDIAWEEK that “the key to success in the Hispanic magazine market is reaching the 30-something female decision-maker” (“Hispanic Mags' Growth Slow, Despite Cultural Boom” by Lauren Charlip, 2/19/07) has gained traction, and 2007 will almost certainly bring new efforts to appeal to this subset of readers.

Teen magazines also experienced turbulence in 2006, with Elle Girl and Teen People shutting down, and overall circulation numbers showing little upward momentum. As the Internet draws more teen readers away from print, publishing companies are attempting to create brand associations among magazines, sophisticated web sites, and other media platforms. At this stage, it's difficult to say whether such tie-ins will attract new readers, but at least publishers are beginning to see the Internet as something other than a monolithic impediment to their goals. During the 2006 American Magazine Conference, reports Advertising Age, the tone concerning new media, digital and otherwise, seemed to be one of increased openness (“Mags No Longer Equate Digital with Doom” by Nat Ives, 10/30/06). With Google and Yahoo! actively seeking to create partnerships with print media organizations, this new cooperative, positive attitude may yield some interesting results in the near future.

Wealth in the pages

Luxury and men's magazines performed exceptionally well in 2006. Luxury magazines catering to the ultra-affluent, such as Robb Report and Town & Country, were seemingly immune to the malaise affecting other segments of the industry. Time, Inc.'s 2006 launch of Golf Magazine Living, which offers advice on owning a home in a high-end golf community, indicates the promise of niche and luxury publications. The substantial increase in the number of millionaires over the past decade appears to be the driving force behind this taste for extravagant products and services. According to MEDIAWEEK, men's magazines succeeded in large part by catering to the “demand by men for fashion and style guidance” (“Men's Mags Bulk Up on Service” by Lucia Moses, 2/12/07) and by streamlining content presentation.

Mixed economic indicators make the latter half of 2007 somewhat difficult to predict from a publishing perspective, as the subprime mortgage lending crisis along with unstable world markets could trigger a recession by early fall. Luxury and niche publications should continue to be successful this year, but a potential economic downturn offers no guarantees.

Culture & Travel. bi-m. Free. Ed: Peter Terzian.

Although it suffered from editorial staff turnover and other setbacks in its first few months of existence, Culture & Travel has a formula that could succeed over the long run, especially in an era when luxury-related publications are performing exceptionally well. Its emphasis on art, architecture, food, and wine appeals to cultured travelers. Patrons interested in topics such as contemporary English art, the spectacular late-winter sunrises in Longyearbyen, Norway, or Kyoto-based Japanese cuisine will undoubtedly thumb through Culture & Travel regularly. Currently, the magazine's web site offers complimentary subscriptions.

JAZZed: The Jazz Educator's Magazine. bi-m. $30. Ed: Christian Wissmuller.

At a time when funding for secondary school arts and music programs is being slashed nationwide, it is somewhat surprising to see this first-rate jazz education magazine appear. Perhaps its launch is an indicator that the worst of the cuts is behind us and that parents, teachers, and administrators are again recognizing that music education is essential for human development. Superbly instructive articles on solo growth in improvisation, classical guitar techniques, and music-related computer programs make this essential for any library serving music educators.

Maximum Fitness. bi-m. $14.97. Ed: Matt Nicholls.

Maximum Fitness was one of the more solid start-ups in 2006, mainly because it became exactly what it promised: an actual fitness magazine. Where other men's health and fitness publications present celebrity-obsessed, sex-driven content, Maximum Fitness keeps things simple by providing readers with helpful, well-researched information on weight training, weight management, nutrition, and related topics. (LJ 5/1/06)

The Nest. q. $14.99. Ed: Carley Roney.

Catering to newly married young women, The Nest scores with its home décor tips, fashion recommendations, and delectable recipes. There's also plenty of advice on managing household budgets, preparing for children, and buying a house. Developed by the well-known wedding web site The Knot, the magazine treats its readers to a chic yet affordable upper-middle-class sensibility; it belongs in most public libraries.

A Public Space. q. $36. Ed: Brigid Hughes.

Former Paris Review executive editor Brigid Hughes founded A Public Space in 2006 with the idea that good literature had lost its place in contemporary culture and that a new publication was needed to help the restoration process. While literature's marginalization isn't news, A Public Space is worth noting for its attention to quality and its open-minded approach. An excellent buy for libraries with strong poetry and short fiction collections. (LJ 7/06)

Shattered. bi-m. $29.95. Ed: Julie Ros.

Shattered is the “first global business magazine for and about women,” and based upon its debut issue, it's an absolutely necessary publication. Featuring articles on diverse subjects such as the hedge fund industry's institutionalization, the microfinance revolution, and the development of intellectual property strategies for China, Shattered certainly lives up to its word to provide “substantive, hard-hitting” content. It also offers a bit of lighter lifestyle-related material to supply some relief from the heavier reality of business life. For most libraries.

ShopSmart. q. $5.99/issue (newsstand only). Ed: Lisa Lee Freeman.

Published by Consumers Union as a companion to Consumer Reports, ad-free ShopSmart was created to appeal to younger women who want to be educated shoppers but who do not necessarily enjoy reading through the complicated graphs and ratings systems in Consumer Reports. Rather than emphasizing the hi-tech and big-ticket items covered in its sister publication, ShopSmart attends to items such as food, clothing, household cleaners, and kitchen utensils. Libraries subscribing to Consumer Reports are advised to add this one to their collections.

Success. bi-m. $9.95. Ed: Gay Bryant.

Reborn in 2006 as a snazzier, breezier magazine than its predecessor, Success is geared toward “inspiring business people to achieve in business and in life”; it markets itself as a motivational tool for corporate management and, to a lesser degree, independent entrepreneurs. Like most self-help publications, the power of positive thinking is at the center of what Success hopes to forward. Where it truly succeeds is in leadership profiles of individuals such as CNBC's Maria Bartiromo, hedge-fund manager Tom Brown, and restaurateur Steven Schussler. For business libraries and larger public libraries. (LJ 11/1/06)

Verdant. bi-m. $18. Ed. Sharon King Hoge.

Al Gore's film, An Inconvenient Truth, brought the global warming issue to the forefront of American popular culture, and now, with several large corporations beginning to espouse tenets of the Green movement, a move toward ecofriendly, sustainable economic models seems inevitable. Verdant, aimed at individuals and individual households, presents the looming environmental crisis as something that's personal—something that can be affected by small, domestic-derived changes in thinking and behavior. (LJ 1/07)

Wondertime. q. $10. Ed: Lisa Stiepock.

Wondertime, a magazine devoted to the worldviews and activities of young children, enjoyed a successful initial year, owing in large part to its ability to capture the attention of parents with its easy-to-read presentation and pragmatic approach to child rearing. The task of raising young children isn't always cut-and-dried, but Wondertime's sensible advice columns and helpful features certainly make parents' lives easier. Recommended for public libraries. (LJ 7/06)

Young Adults Bigger Mag Readers Than Their Parents

Young Adults Bigger Mag Readers Than Their Parents
Study: On Average, See 18 Titles a Month, Vs. 16 For Older Group
By Nat Ives

Published: May 22, 2007

NEW YORK ( -- Is your 20-year-old niece just not reading that subscription to The Atlantic that you bought her for her birthday? Not to worry; she's probably reading more magazines than most 50-year-olds -- just different magazines than the older crowd likes.

That's the upshot of research results by consulting firm McPheters & Co., which said this week young adults read more magazines than older people. "Because many established titles have seen the median age of their readers increase, there has been a misperception that magazine readers are getting older," said Rebecca McPheters, president. "While younger adults tend to read different titles than those in older age groups, the fact that they read more magazines overall is very exciting."

Good news for print
Exciting, that is, for purveyors of ink on glossy paper, many of whom fear the internet will do for them what it did for Elle Girl and Teen People last year -- run them out of print.

Among a group of 8,400 respondents, those aged 19 to 24 reported reading an average of 18.3 titles in the previous six months, while the 25-to-34 set counted reading 18.9. By comparison, those aged 45-54 said they read 16.7 titles in the prior six months and people older than 65 said they read 14. The young, moreover, read more issues of the titles in question.

The findings were based on results from the beta test of, a planned audience-measurement service for print publications, conducted last summer. A full rollout of itself has been stalled by a lack of funding, McPheters & Co. said.

Magazines Aimed at Muslim Americans Multiply

Magazines Aimed at Muslim Americans Multiply
May 22, 2007 at 11:00 pm · Filed under VOA, VOA Religion, VOA United States

In recent years, several new magazines intended for Muslim Americans have come on the market. While they are not prominent on the shelves of newsstands and bookstores in the United States, the magazines are making an impact, according to creators, editors, and readers of the publications. From New York, Mona Ghuneim has the story.

Hanifah Abdul-Baqi, a 19-year-old Muslim girl from North Carolina, loves fashion. Like most teenage girls, she enjoys flipping through magazines and seeing the latest styles and trends. But Hanifah wears the hijab, or headscarf, and she says that while she can look through magazines like Teen People or Cosmo Girl, she cannot always relate.

Then she discovered Muslim Girl, a magazine featuring young Muslim American women who stand out in academics, the arts and sports. And, she says, the magazine gave her ideas for modest fashions she could wear.

Hanifah says the English-language magazine, launched in January of this year, also helped her peers and friends understand her better.

"They were surprised to see that there's a magazine with a girl in hijab on the cover," said Hanifah Abdul-Baqi. "They said, 'You guys have something that is your own now' and they felt comfortable with the issue even more."

Being comfortable with Islam is certainly one of the goals of Muslim Girl, says editor-in-chief Ausma Khan. She describes the monthly publication as a magazine for young Muslim women whose faith means a lot to them, but who are just like other teenage girls in America. Khan created the magazine as a way to serve what she says is a huge community that needs more positive representation in the mainstream media.

"We want to reach as many people as possible by telling the stories about American girls who are Muslim and getting other communities to see them as part of American life, as teens that they have something in common with and to clear away misunderstandings, and hope for a better dialogue," said Ausma Khan.

Khan says Muslim Girl, with a current circulation of 50,000, targets a potential 400,000 Muslim teenage girls in Canada and the United States.

Understanding demographics is key to the magazine business, says Firas Ahmad, senior editor of Islamica magazine.

Islamica began as an academic journal in the 1990s in London but then closed down. In 2003 it re-emerged in the United States as a glossy quarterly. The magazine features articles on current affairs, arts, science, business and even poetry and fiction.

The articles in Islamica are similar to those a reader would find in other magazines, says Ahmad, but from a Muslim perspective.

"We're interested in discussing the issues that come out of what it means to be a Muslim or to have the experience of being Muslim and how that relates to people who are living around you, in your communities and things like that," said Firas Ahmad.

Ahmad says 60 to 70 percent of the magazine's subscribers are in the United States and Canada. Islamica's worldwide circulation is 15,000 and its subscriber base in the United States is 6,000. Ahmad says, the magazine isn't out to win a popularity contest. Rather, he says, the goal is to be influential in certain circles.

"What we're trying to do is get the magazine out there to 'thought leaders' in America, both within and outside the Muslim community. If someone like, say for example, [journalist] Thomas Friedman is a subscriber and he reads an article in there that gives him a different perspective on reform in the Muslim world and then he cites something in his Op-Ed piece that then goes out to 3.5 million people to the New York Times, that's the kind of impact we're looking to achieve," said Ahmad.

Ahmad believes Islamica and other magazines like Muslim Girl, Islamic Horizons and Azizah all stem from the same desire: to define for themselves what it means to be Muslim.

Tayyibah Taylor is the publisher and editor-in-chief of Azizah. She says the quarterly publication premiered in 2000 as a vehicle for Muslim women in America to hold their own conversation about themselves. Taylor says she was tired of seeing the same image of Muslim women in the western media - what she describes as oppressed, depressed, usually Arab and dressed in only one way. So she decided to offer an alternative.

What ensued, Taylor says, was a women's magazine that deals with issues like autism, breast cancer, leadership, fashion, marriage, and a whole gamut of subjects reflecting the diversity of Muslim American women.

Taylor says Azizah started as a homegrown project, using personal savings and avoiding loans. Today the magazine is sustained by subscription sales and advertising, and she says, the Muslim market is growing.

"Advertisers in America are going to now realize that the Muslim consumer is one to be courted and they will start courting them with custom-made things for their demographic," said Tayyibah Taylor.

The rise in the number of Islamic publications in North America does reflect the growing Muslim market, says one reader of these magazines. But, he says, many of these publications are avoiding the hard issues.

Mohamed Zakariya converted to Islam in 1961. Since then, he says, he has read as many English-language Islamic publications as he could find. While he feels the more recent magazines have promise, he thinks they still talk about Islam from the outside and skirt around certain subjects.

"They need to be discussing the serious consequences, for instance, to put it in a way that people will all understand, the consequences of following radical ideologies and where it's going to take them," said Mohamed Zakariya.

But Zakariya says he's glad to see more of these magazines coming to the table, or in the case of many of the publications, to the Internet, public libraries and universities. And the publishers hope that one day their magazines will be available to the mass market in newsstands, bookstores and even airport shops.

Saturday, May 19, 2007

Taking out the Trash: Death of Print edition

Taking out the Trash: Death of Print edition

Media Coverage takes a look at a quintet of stories that show tough times ahead for the game magazine market.

There's a rule of thumb in journalism that it takes three occurrences of something to make a trend. So you could say that these five articles on problems with print gaming journalism might almost constitute almost a double-trend of popular opinion against the medium.

The conventional wisdom that game magazines are being replaced by their online competition is nothing new, of course. But the confluence of chatter around the topic in the last week is notable. Be warned, game magazines – the vultures are circling, and they're hungry.


Perhaps the biggest buzz around the print-is-dead issue this week came from an IGN report that the venerable Nintendo Power magazine may be shutting down or restructuring in the wake of massive layoffs planned for September. The report remains an unconfirmed rumor for now, but IGN's Matt Casamassina has shown a talent for breaking Nintendo-related scoops in the past -- see his prediction of Super Paper Mario heading from the GameCube to the Wii, for instance.

The rumor has led many to speculate that the magazine might decide to go completely digital, perhaps being reborn as a downloadable channel on the Wii. It's an intriguing theory, especially in the wake of Sony's decision to shutter the demo-disc-based Official PlayStation Magazine in favor of direct demo downloads to the PS3 and PSP. The possibilities are exciting -- imagine reading a review for a Wii game on your TV and then being able to click a link to download and play a demo immediately.

Frankly, I'd be surprised if either rumor turns out to be true, though. Nintendo's record with online content for the Wii has been spotty at best, and they've shown little to no interest in downloadable game demos thus far. As for the print edition, if Nintendo Power can't survive with its strong brand loyalty, relatively healthy subscriber base, and a marketing subsidy from one of the big three console manufacturers, then what chance does any other game magazine have?

Undercirculation overseas

In overseas death-of-print news, reports on a group of game journalists that seemed all too willing to pile on the dead tree medium during a panel at the recent Nordic Game conference. Apparently, the game press market in Norway and Denmark is relatively magazine-free already, and what magazines do exist have a pretty bad reputation. "They're really driven by advertisements, so it seems to me there's a really unhealthy relationship between the PRs and the people who write the magazines," said panel moderator and Denmark journalist Thomas Vigild. "We don't have magazines like in the U.K. where you can say, 'No way, I won't print your PR bulls**t.' That's much harder to do in Denmark because they still need the income from the advertisers."

But the once-proud English print market is also in decline, according to panel member Patrick Garratt of EuroGamer. ""For the unofficial magazine arms race in the U.K., where we had 20 - 30 magazines in massive bags with two discs on the cover and stuff like that - no one cares anymore. It's over." In other words, in England you can lead a consumer to a newsstand full of gaming mags, but you can't make him read.

IDG's advertiser/editor troubles

Speaking of magazines putting up with PR bulls**t, PC World editor-in-chief Harry McCracken decided he'd had enough of it when he resigned his post last week. You might know PC World as the highest-circulation part of IDG, publisher of age-old gaming mag GamePro. McCracken's departure was spurred on by an executive's refusal to run an article critical of Apple, one of the magazine's biggest advertisers.

The article was later run and McCraken reinstated, but the PR damage had already sunk in to an extent. A NeoGAF thread title sums up the opinion succinctly: "Money-hats confirmed at GamePro Publisher."

Accusations of advertiser interference are rampant in the game press, and while both the print and online fields are affected, magazines seem to get the brunt of the "sell out" labeling. Perhaps this is because online outlets are by their nature a bit more transparent and inviting of reader discussion. Perhaps it's because some magazines tend to devote most of their limited space and cover opportunities to heavily advertised games. Whatever the case, these accusations are notoriously hard to prove unless someone makes a principled stand like McCracken did. By the way, if anyone wants to go on the record with insider info, let me know.

Ziff Davis on the down swing

Folio, the magazine about magazines, joins in the fray with a meaty feature on the ailing health of tech mega-publisher Ziff Davis. The piece is full of dreary numbers and quotes, but the most damning bit comes right at the beginning when an Edelman PR rep reveals that his freebie subscription of PC Mag goes right in the trash can. If you can't even give the thing away to PR people, you know you're in trouble.

The article goes on to tell of Ziff's slow but steady transition from print to web, which seems only natural for a tech-savvy audience. Ziff Game Group VP John Davison admits that the publisher's gaming properties were "late to the online world," but 1UP's quick rise to prominence in the online gaming world shows just how much they've made up for lost time.

Disposable Media on disposable magazines

Online magazine Disposable Media rounds out our look at print naysayers this week with an excellent examination of the relative pros and cons of online versus print in the U.K. market. While print magazines take the brunt of the abuse, the feature makes sure to look at the problems with the online game press as well, most notably issues with their reputation. "To be honest, it annoys me that the reputation of games journalism is dragged down by everyone who can afford a domain name," says British freelancer Kieron Gillen. "But when professional ones screw it up on such a regular basis, it seems a little churlish to moan."

Still, the general consensus seems to be that print magazines are having a tough time adjusting to their new position in the order of things. As EuroGamer's Rob Fahey puts it, the people behind print magazines have to "accept that they'll never be the dominant force in games coverage ever again, and I think that might be too painful for a lot of magazine writers to accept just yet."

— —

Friday, May 18, 2007

Can Top Washington Writers Save Time?

Can Top Washington Writers Save Time?
By Harry Jaffe

Time managing editor Richard Stengel has big plans for the three marquee Washington journalists he’s hired.

“All are best in their class,” Stengel says. “They fit perfectly into my strategy.”

Stengel, who took over the reigns of Time earlier this year, hired David Von Drehle and Michael Grunwald from the Washington Post. He took Mark Halperin from ABC News.

The three hires came on the heels of layoffs across Time Inc.’s magazines, from Sports Illustrated to People. The company shuttered Life magazine. Stengel cut 50 from Time magazine’s staff in March. The newsweekly closed bureaus in Chicago, Atlanta, and Los Angeles.

Now Stengel is doing some selective hiring.

“What do we do as journalists?” Stengel asks. “We write, we report, we think. In terms of people who do these things, David and Michael are as good as anybody anywhere.”

Mark Halperin, ABC’s political director for years, will help in “framing the conversation,” he says. “His metabolism is perfect for the Internet.”

Having sliced his staff, Stengel has made room for writers he can build into brand names.

“They are already great brands within our community,” he says. “We want to make them more potent in the broader community.”

Time will tell whether Stengel’s strategy will succeed. Many mainstream media publications are struggling, and newsweeklies like Time, Newsweek, and U.S. News top the list of endangered species in the new digital world.

“We feel bullish all the way around,” Stengel says. “I’m fixing the roof when the sun is shining.”

From the outside, Time’s roof looks a little leaky. Industry sources say its ad pages are down by double digits. Part of its business strategy has been to cut circulation from 4 million to 3.25 million. It has also reduced advertising rates.

The magazine has made a big gamble by changing its publication cycle, moving up its deadlines to Thursday for an earlier close, hoping to get the magazine to readers on Friday. But many readers still receive the magazine Monday or Tuesday.

Von Drehle, Grunwald, and Halperin will fit into a Time that’s been reconceived and redesigned. Gone is the omniscient voice instilled 84 years ago by founder Henry Luce. The new Time has bylines on the cover and commentary by Joe Klein, Peter Beinart, and Michael Kinsley, among others.

Newsweek, Time’s main competition, took the personality brand-building route years ago. Evan Thomas, Jonathan Alter, Howard Fineman, and Robert Samuelson have had their names on Newsweek’s cover and their faces on its pages for decades.

Taken together, Time’s changes seem to be tending toward the Economist’s style of essays and columns rather than hard news reporting.

“We have to be both timely and timeless,” Stengel says. “That’s what I think keeps the magazine around.”

Stengel also wants to keep people coming to Time’s Web site, which has been the beneficiary of resources cut from the print publication. He points to Von Drehle’s coverage of the shooting massacre at Virginia Tech.

“David went down to Blacksburg, filed for, and also wrote a great piece for the magazine,” he says. “That’s the idea now—there’s nobody who’s all one and none of the other. Everybody gets that.”

Stengel says readers are getting great reads from Swampland, Time’s online political blog. Ana Marie Cox, famous for creating the gossipy, R-rated content of the Wonkette web site, is Swampland’s brand-name writer. Joe Klein pitches in.

Says Stengel: “It’s been a roaring success.”

In fact, Swampland is hard to distinguish among the hundreds of political blogs. Yes, Cox adds her trademark snarky tone, Joe Klein’s insights spice up the site, and Halperin will bring his years of experience in connecting with the “googling monkeys” he branded while overseeing ABC’s political blog.

But Swampland wanders across the same terrain covered by newspaper blogs from the Washington Post, the New York Times, and dozens of others, including Slate and Salon.

In Von Drehle and Grunwald, Stengel has placed his bets on two fine Washington journalists. But can they keep Time magazine from seeing its readership and ad pages continue to decline? If the answer to survival is Swampland, then the marriage of Ana Marie Cox and Mark Halperin could either fire up the site or burn it down.

Survey: Newsprint is people's preference

Survey: Newsprint is people's preference
A poll commissioned by an industry group shows newspapers still reign.

Newspapers are still the reigning source of news, advertising and information, according to a recently released survey conducted by American Opinion Research. Eight in 10 adults read a newspaper per week, and Florida readers are 6 percent more likely to pick up a newspaper on the weekdays and 7 percent more likely to read a Sunday newspaper than the national average, the survey said.

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The survey was commissioned in December by the Florida Press Association, a nonprofit organization for newspapers and journalism-related businesses. It was conducted by American Opinion Research, which is headed by a former pollster from USA Today, which could raise some questions about the ethical foundation of such a survey.

In the 51-page report, findings included:

About 82 percent of Florida adults read a printed newspaper during an average seven-day week.

Print newspapers are the most-used venue for public notices. Two thirds of those surveyed said they would read less public notices if they were moved online.

About 66 percent of adults use the newspaper as their main source of local sales and shopping information.
The study paints a rosy picture of an industry that's recently experienced some turmoil. Circulation has been dropping for newspapers nationwide for years. Statewide, The Orlando Sentinel recently slashed 24 newsroom positions, and The Florida Times-Union implemented a hiring and salary raise freeze in February, citing declining advertising revenue.

But newspapers' monetary woes are a separate issue from the survey's results, said Dean Ridings, president and CEO of the Florida Press Association.

"The real estate downturn has affected a lot of different media but certainly newspapers," he said. "In addition to the Realtors not selling [homes] and not advertising, the title companies, the home big-box stores are slowing advertising - it's all related to real estate as well. Those have had a huge impact on the revenue of newspapers."

The survey also noted that printed newspapers are losing traction to the Internet when it comes to job, automotive, real estate and major appliance advertisement services for readers.

"Newspapers have lost ground," Ridings said. "But we still have the advantage when it comes to credibility."

The survey findings seem to be sound and comparable to those of national studies, said Rick Edmonds, a media business analyst for the Poynter Institute, a nonprofit institute that studies journalism and ethics issues.

"A contributing factor to the statement about Florida readers reading more and in higher numbers than average could be the higher-than-average age of our population," Edmonds said. "It's factual and a good point, but there's a lot of shifting as the years go by with readers who used to be seven days a week readers and now they read two days a week. When you add all that up, that's a contributing factor to the loss of circulation."

And what about the potential ethical quagmire posed by the survey being commissioned by an institution that stands to gain from positive results?

"It is the kind of survey that points to some of the positives, and there's nothing particularly wrong with that," Edmonds said. "The Florida Press Association is a source of information and research but they're also in the business to promote the industry and that's OK, too."

Florida Press Association's Ridings insists that credibility was critical in disseminating the information, and he was shocked by such positive results.

"We get so lost with the problems that we're having that we tend to lose sight of the overwhelming evidence that newspapers are still a source of information," he said. "For us as an association, credibility is more important than hype. Our members are very skeptical."

It all came down to hard boiled-facts, according to Anthony Casale, CEO of American Opinion Research and former USA Today pollster. "We get paid whether the numbers are good or bad."

Thursday, May 17, 2007

Magazine Suspends Its Run in History

Magazine Suspends Its Run in History

After more than 50 years American Heritage, the magazine that furnished not just the minds but, in its original hardcover format, the dens of generations of American history buffs, is suspending publication, its editor, Richard F. Snow, said last week.

The bimonthly magazine, which is owned by Forbes Inc., has been for sale since January, and in the absence of a buyer, Mr. Snow said, the publishers have decided to put the next issue, June-July, on indefinite hold. For at least the time being, however, American Heritage will continue to maintain a Web site.

That leaves Mr. Snow and his staff, which has dwindled to four from a dozen, in limbo, where they have been since just before Christmas, when they were informed that the magazine was going on the block. “It’s a little like sailing the Flying Dutchman through the fog,” Mr. Snow said. “On the other hand, I’ve been here for 40 years, so I can’t really bitch about job instability.”

The magazine has always been a bit of an anomaly among American publications.

The circulation is currently 350,000, or as high as it has ever been, and hundreds of those readers can still be reliably counted on to write in arguing about the true causes of the Civil War or, as happened recently, to point out that the author of a World War II article doesn’t know the difference between the M-1 rifle and the M-16, which didn’t come in until Vietnam.

American Heritage was founded in 1954 by James Parton, Oliver Jensen and Joseph J. Thorndike Jr., refugees from Life, who from the beginning broke most of the rules of magazine publishing. They determined not to accept ads, for example — on the ground that there was a “basic incompatibility between the tones of the voice of history and of advertising” — and instead charged a yearly subscription of $10, a figure so steep at the time that readers were allowed to pay it in installments. They also published in clothbound, hardback volumes with full-color paintings mounted on the front.

The format was an instant hit with readers, who instead of tossing back issues often shelved them in their bookcases, but it initially confounded the United States Post Office, which decreed that American Heritage could use neither the book rate nor the periodical one. That ruling was eventually overturned, but not until the magazine had almost bankrupted itself by paying for parcel post.

The first editor of American Heritage was Bruce Catton, a Civil War historian who wrote in the inaugural issue in December 1954 that “the faith that moves us is, quite simply, the belief that our heritage is best understood by a study of the things that the ordinary folk of America have done and thought and dreamed since first they began to live here.” In the beginning, at least, that meant a fair amount of WASPy nostalgia and a steady ration of stories about the Civil War. That inaugural issue, for example, includes a piece about a Union general who was falsely accused of treason in 1862, as well as articles about the country store, the Fall River steamship line and a lament by Cleveland Amory about the decline of New York men’s clubs.

Mr. Snow, 59, went to work in the American Heritage mailroom in 1965, when Columbia University insisted he take a little time off, and joined the staff full time when he finally graduated, in 1970. He has been there ever since, and in 1990 he became the magazine’s sixth editor, succeeding Byron Dobell.

Either he was a perfect fit to begin with, or over the years he has taken on many of the characteristics of his workplace, for he now closely resembles his own magazine. He is quite youthful looking, on one hand (probably because he is one of those people who mature early and then never change), and a little old-fashioned on the other. He speaks in perfectly turned paragraphs and may be the last person left in New York to unself-consciously use “indeed” as an exclamation.

He favors gray suits and sweater vests, his telephone manners are impeccable, and he has a bubbling, high-pitched voice that turns a simple “hello” into something that resembles the opening bar of a Broadway show tune. Like his magazine he has an almost insatiable curiosity and is particularly expert on the Revolutionary and Civil Wars, not to mention Coney Island amusement rides at the turn of the last century.

Mr. Snow has been at American Heritage long enough that he can remember when it was an empire in the mid-’60s, employing 400 people, with the magazine as a flagship for what was in effect a publishing company selling books, many of them by some of America’s best-known popular historians, by direct mail. He was managing editor in 1980, when the magazine ceased publishing in hardback (except for subscribers who wanted to shell out extra for what Mr. Snow now calls a “padded, leatheroid edition”), and in 1982 when, bowing to economic necessity, it began soliciting ads.

“We all felt very bad about taking advertising,” Mr. Snow recalled. “But it had the odd effect of making us feel we were in touch with the world. There was a sense of a living connection to a process that was actually sort of fun — or at least it was fun while we were getting ads.”

American Heritage remained more driven by circulation than by ads, however. According to Scott Masterson, a senior vice president at Forbes and president of American Heritage, the magazine was losing money when Forbes bought it in 1986 and then bounced back for a while. But in the late ’90s, Mr. Masterson said, it failed to reap the kind of profits that many magazines did, and after 2001 it experienced the same downturn that afflicted the magazine business in general and had trouble recovering.

Part of the problem was the Internet, Mr. Snow said. “We’re really a general interest magazine,” he said. “We don’t play to a history buff in any narrow sense — like the Civil War re-enactors, for example. They can go on the Web and get thousands and thousands of hits.”

Three years ago Mr. Snow and Mr. Masterson decided to embrace the magazine’s aging readership and rejiggered American Heritage to appeal more specifically to baby boomers, mostly publishing articles about things that had happened in their lifetime. The formula was an editorial success, Mr. Snow said, yielding articles like one that appeared in the February-March issue about the Wrecking Crew, an unheralded studio band that played on many hit records in the ’60s and ’70s. But it failed to provide the hoped-for bump on the business end. “Forbes has been very, very patient,” he said. “but basically they’ve been carrying us for a while.”

Over lunch recently at Keens — another venerable New York institution, decorated with old clay pipes and playbills and where he pointed out, for the sake of accuracy, that the famed mutton chop is really lamb — Mr. Snow lamented that the next issue of American Heritage might never get into print.

“We’re just about finished with the issue, and we have a particularly fine piece by Teller, the nontalking half of the Penn and Teller team,” he said. “It’s a superb piece of writing, an essay about a fellow named David Abbott, who was a great American magician.”

Mr. Snow added, “You know, some issues are better than others, but I don’t think there’s been a single one where anything really bored me.”

He said he was still unsure about his own fate, but if need be he could go back to writing historical novels. “I’ve written four,” he said. “Two were loathed by everyone who read them, but two actually got published.” And no matter what happens, he has worked out a crucial point of his severance: He gets to keep his Royal manual typewriter.

“That was the typewriter I was assigned in 1970, and it will follow me to the grave,” he said, and he added: “I wish this were more a sign of granitic stability, but in fact it’s a sign of my computer incompetence. I use it just to type labels, but it works beautifully. Every year someone comes in and cleans it. I don’t think he’s paid by Forbes. He’s some spectral presence who just turns up.”

Newspaper Industry Proclaimed "Vibrant, Growing"

Newspaper Industry Proclaimed "Vibrant, Growing"

According to recent provisional data from the World Association of Newspapers Paid-for newspaper circulation went up 1.9 percent year-on-year to more than 510 million paid-for copies in 2006, and the number of new paid-for titles grew to more than 11,000 for the first time in history.

Gavin O'Reilly, President of WAN and Chief Operating Officer of Independent News & Media Ltd., said "The prognosis for newspapers is actually quite different to conventional wisdom... Those of us in the newspaper business are very confident in the future... producing relevant and compelling products for our local markets, aggregating growing audiences and showcasing them to advertisers."

Based on preliminary figures from more than 200 countries and territories, to be published next month:

Paid-for circulations grew 1.9 percent over 12 months and 8.7 percent over five years. With free newspapers, global circulation grew 4.3 percent year-on-year.
Free daily newspaper circulation more than doubled over five years, to 40.8 million copies a day

More than 1.4 billion people now read a newspaper daily
Paid-for daily titles surpassed 11,000
Print is the biggest advertising medium in the world, says the report, with a 42 percent share. Newspapers alone are the second largest, with 29.4 percent of global advertising spend.
Advertising revenues rose 4 percent in 12 months and 15.6 percent over the past five years

More than 6 billion US dollars have been invested in newspaper printing and production equipment in the last 18 months
O'Reilly noted that "Hidden in those figures is the fact that newspapers... actually represent more than the combined advertising value of radio, cinema, magazines and the internet."

Wednesday, May 16, 2007

What's Happened with Industry Mentoring?

What's Happened with Industry Mentoring?
Marketing, Management and Economic Notes from Dr. Joe Webb

05/16/2007 -- Publishing guru Bob Sacks has written a provocative piece called "Where are Today's Mentors?"

"...there is one aspect in this new world environment that has me worried and concerned. It is the area of mentorship where, it seems to me, we have fallen behind and by that loss as an industry we have been greatly diminished.

What has happened? When and where did we lose the skill set and the will to teach the younglings? Have we so trimmed our business models and our work force that there is just no time to teach and mentor? Have we lost sight of the power of the properly groomed apprentice? Is there just not enough time now with the diminished workforces to add the burden of schooling for the future?"

I wrote back to Bob and this is what I said...

Today's mentors? You mean you want young people to learn from the upper- and mid-level executives who dismissed the Internet, desktop publishing, cross media, and ran bloated, bureaucratic self-protective organizations? Okay. I guess we need to cultivate more narrow-minded bonus-focused executives to discourage the young people below them so that, in frustration, those young people can they out on their own and start their own businesses. If that's what we want, then mentoring is a great idea. Everyone can learn a lot from viewing a bad example. Many successful businesses were created by inspired executives who could not make headway in the organizations they were in.

Seriously, mentoring comes from age diversity in organizations, not just a plan. In many job cutting schemes, middle-management is cut the most, which creates a discontinuity in organizational succession. When companies stop growing, as many big publishing companies have, there can be a serious age-imbalance that interrupts traditional passing of knowledge as one generation looked out for another. What this means is that managers start making old mistakes in new ways because there is no one there to stop them.

Industry growth can cover a multitude of sins; industry decline exposes them and creates new problems. The lack of mentoring is one of them.

There is another issue. Many young people are in a marketplace for which additional education is quite common. For example, one-third of all business students will have MBA's about 10 years after they graduate. Much of what was passed in the mentoring process is now passed in additional outside educational endeavors that were not available in the past.

Technology has also changed things, and standardized them. Desktop publishing has standardized trade practices that were sometimes unique to organizations that would have otherwise required a mentoring process to impart.

I've reflected on my comments a bit more, and I have a couple of things to add. Colleges may emerge to be more about networking than ever. In the past, distance became a primary reason for no longer staying in touch with fellow graduates. The first graduates who have FaceBook, MySpace, instant messaging, and the like, are only now being granted degrees. This could get interesting from a mentoring perspective.

Businesses are getting smaller because of the large varieties of support services that they can buy from others. For example, the ratio of graphic designers who work for design firms compared to those who work as freelancers was a ratio of 3:1 in 1997. We are getting to a stage where that ratio may become almost reversed by 2010 when my analysis of Census data indicates it will become 2:3.

Who mentors a freelancer? Because communications have changed, the networking that used to occur as a result of proximity is now expanded. Those freelancers may be more plugged in than ever... and the mentoring process that was intrinsic to working for a firm in years past might become more powerful among connected freelancers.

McPheters Nixes

McPheters Nixes
Wednesday, May 16, 2007 8:00 AM ET

REBECCA MCPHETERS IS CANCELING PLANS to launch a new service, called, because of a lack of interest from publishers and an insufficient financial report, according to a report posted online at Mediaweek. In the article, McPheters said her company had raised less than half the $5 million necessary to launch the new service, which counted on support from both media-planning agencies and publishers. McPheters added that many publishers were apparently deterred by the threat of greater transparency in their audience measures. However, she reaffirmed her own belief that greater transparency is ultimately in publishers' best interests. Her plans for the new service were originally announced in October 2005. Funding shortages delayed rollout twice--first to the beginning of 2006, then the beginning of 2007.

Thomson Seals Reuters Deal

Thomson Seals Reuters Deal
by Erik Sass

THE THOMSON CORPORATION WILL BUY Reuters Group PLC for $17.2 billion, the companies announced Tuesday, in a deal that will create the world's largest news and market-data organization. The deal received approval from the Reuters Founders Share Company, a special custodian council empowered to veto deals that it believes endanger the company's mission. It must still clear regulatory hurdles, including antitrust statutes. The new company will be headed by Reuters' chief executive, Tom Glocer.

Provided there are no layoffs, the deal will combine Reuters' roughly 15,500 employees with Thomson Financial's 9,300. (Thomson Corp. has 32,000 total employees, working in divisions covering legal, health care, scientific and tax and accounting news.) Thomson raised some of the funds for the deal with last week's sale of its educational division, including its textbook publishing business, for $7.8 billion.

The buy comes after several strong years at both companies.

In 2006, Reuters' revenue rose 8% to a total $6.6 billion, as profit rose 7% to $1.3 billion on a year-over-year basis. In 2006, Thomson Financial saw revenue rise 6% to $2 billion, while profit increased 13% to $379 million. Together, the companies will control roughly 34% of the news and information market, edging out competitor Bloomberg LP.

The upsides: Thomson strengthens its financial-reporting resources, and Reuters gets exposure in Thomson's other specialty areas. Plus, the companies expect to save about $500 million a year through efficiencies resulting from the deal--again, no word on layoffs.

Both companies' bread-and-butter is still subscription revenue for their business and professional-information products, according to Patrick Quinn, president and founder of PQ Media, which tracks various business information markets. But as price competition with Bloomberg heats up, they may begin incorporating advertising to offset subscription costs. All the elements are there, Quinn noted--including desirable audiences of engaged, well-heeled professionals, high potential for contextual targeting and the digitization of content delivery.

"They really set the tone for leveraging static content into the digital, interactive format over the last decade," Quinn recalled. "As the overall B-to-B information service categories continue to overlap more and more--from digital content to magazines to events and trade shows--there are going to be more opportunities for value-added marketing programs, including targeted advertising."

Quinn says we're not seeing that at the moment, because the companies don't need the extra revenue--they currently get a premium price from their institutional subscribers. "But if price becomes more of a challenge going forward," he says, "I could see them adding that to the model."

Tuesday, May 15, 2007

Magazine Publisher Is Selling Special-Interest Unit for $1.15 Billion

Magazine Publisher Is Selling Special-Interest Unit for $1.15 Billion

The publisher Primedia said yesterday that it would sell its Enthusiast Media division, which includes magazines like Motor Trend, Soap Opera Digest and Surfer, for about $1.2 billion in cash to Source Interlink Companies, which is controlled by the billionaire investor Ronald W. Burkle through his Yucaipa investment firm.

The unit, which Primedia said in February it would consider selling, includes more than 70 magazines and 90 Web sites. It leaves Primedia with its Consumer Source business, which publishes free consumer guides.

The move comes after Primedia agreed to sell its hunting and fishing magazines to the private equity firm InterMedia Partners for $170 million in cash in December.

Primedia expects $1.15 billion in net proceeds and will be debt-free after the sale.

Source Interlink, which is based in Bonita Springs, Fla., said it expected the all-cash deal to add to adjusted earnings per share excluding one-time costs.

Source Interlink manages retail checkout areas for more than 1,000 retail chains and makes in-store displays. It also manages the delivery of magazines and other entertainment products like DVDs to retailers and consumers.

The deal is expected to close in the third quarter. Source Interlink said Enthusiast Media would operate as a division and would be led by Steve Parr, who heads the group at Primedia.

Primedia said that certain stockholders affiliated with the private equity firm Kohlberg Kravis Roberts & Company who own 61 percent of its shares unanimously agreed to the deal.

Primedia shares rose 34 cents, to $2.83, while Source Interlink shares fell $1.01 cents, to $5.79.

The Consumer: Terms of Engagement

The Consumer: Terms of Engagement
by Paul Parton

Ah, the perils of a monthly column. As usual, the things that I'm reacting to in early March will seem like ancient history by the time you read this. But, at the risk of seeming redundant, I was struck by Procter & Gamble exec Jim Stengel's keynote speech at the 4A's media conference this spring.

In many ways, the speech was a fairly familiar call for advertisers, media companies and agencies to embrace the consumer more fully. (Specifically, he suggested that marketers and agencies enter into a relationship with the consumer, rather than focusing on selling and telling.)

But a couple of points stood out. First, I hadn't realized that "telling and selling" was a P&G mantra -which explains in many ways why that approach to marketing is so ingrained. What gave me more cause to think, though, was why it's taking creative and media agencies so long to wake up and smell the Folgers.

Why are the traditional approaches to marketing communications still so widespread? Why is there still so much telling and selling? Why is the media industry still driven by buying rather than planning? Why is there still so little focus on the consumer?

Granted, even the most lumbering large agencies (creative or media) will supplement their TV campaign presentation with a little online advertising these days. Hell, they might even present (or at least talk about) viral communication. But at the end of the day, those things are really just repurposed forms of traditional media. A Web banner is usually little more than an animated billboard. Viral recommendations from traditional agencies generally come down to putting commercials online.

These things, though, are examples of media neutrality - or of the idea that it doesn't matter whether you're on TV or on the Web, as long as you connect with the consumer. When agencies endorse this concept, it makes them seem more progressive than they actually are.

Unfortunately, the reality is that media neutrality is the first baby step toward engaging with people the way that people want to engage with brands. Media neutrality is really easy. Because essentially, media neutrality comes down to different forms of the same thing - advertising.

What is significantly more difficult - and yet significantly more important, too - is discipline neutrality.

Being discipline neutral means that you're just as likely to propose a direct marketing solution to a communications problem as you are to present an advertising solution, a search solution or a PR solution.

Discipline neutrality is more difficult to embrace than media neutrality because it demands a working understanding of the strengths and weaknesses of a variety of different communication strategies and the ability to execute them.

Discipline neutrality demands that everything starts with a granular understanding of the consumer how they live, what's important to them and how they engage with the category and the brand. The task, then, is to build a communications plan from that understanding with no preconceived ideas about the form that plan will take or the disciplines or channels that will be used.

Consider, for instance, an agency tasked with jump-starting the sales of a brand of canned soup. The conventional approach would involve creating a TV and print campaign that would, say, extol the benefits of soup as an aid to weight loss. The ads would run in daytime talk shows and women's lifestyle magazines.

The media-neutral approach would be to do the same thing but take it further by sponsoring a segment on "The Biggest Loser," seeding the campaign in weight-loss forums and encouraging bloggers to write about the soup.

The discipline-neutral approach would be to understand how people used the soup and what kind of relationship they had with the brand. It could turn out, for example, that the soup was generally consumed at lunchtime, but only by people with microwaves in their offices. In this case, the discipline-neutral approach could consist of designing a self-heating soup can and launching it with sampling programs at major commuting locations and in city delis.

That kind of approach is the only way brands will ever really be able to develop a relationship with consumers. It's the opposite of "telling and selling." It's understanding customers and finding ways to engage them in a relevant way with genuinely useful innovation. Who'd argue with that?

Paul Parton is the brand-planning partner at The Brooklyn Brothers, a creative collective.

Monday, May 14, 2007

Major Magazine Distributor Acquires Primedia Enthusiast Magazines

Major Magazine Distributor Acquires Primedia Enthusiast Magazines
by Tony Silber

Source Interlink Companies, one of the leading magazine distributors, announced today that it is acquiring Primedia Enthusiast Media (PEM) in a stock purchase for approximately $1.2 billion in cash.

A public company based in Bonita Springs, Florida, Source Interlink also distributes DVDs, music CDs, and books. It generated about $1.9 billion in its fiscal 2007, which ended January 31.

Source Interlink is controlled by Yucaipa Cos., a supermarket-holding company owned by billionaire businessman Ron Burkle. Last week, Folio: reported that insiders were saying the Burkle bid was coming on strong, although one source told Folio: the Burkle bid (mentioned to be in connection with American Media) was not being taken seriously. “It is a stunning development that a publicly owned distribution company controlled by Ron Burkle is buying one of the largest portfolios of enthusiast magazines,” one source said Monday morning. “It’s shocking. The valuation is significantly higher than they would have gotten from others.”

Indeed, Source Interlink also paid significantly more than sources in the last few weeks indicated the company might get. PEM, with revenue of about $524 million and EBITDA of about $100 million, turned out to command an EBITDA multiple of about 12-times.

To fund the acquisition, Source Interlink has secured a financing commitment from Citigroup Global Markets. It was unclear at presstime whether American Media was involved.

Source Interlink has been on a buying spree in recent years. In 2004, it acquired Empire News, and in 2005, it acquired Chas. Levy Circulating Co. for $30 million, giving it about 20 percent of the single-copy magazine-distribution market.

“Over the last several years Source has driven the consolidation of a fragmented and inefficient channel for the distribution and merchandising of home entertainment content at retail and the newsstand,” said Source Interlink chairman Michael Duckworth. “This acquisition is a first step to leverage what we have built by transforming Source into a fully integrated media company with both print and digital content. Primedia Enthusiast Media's industry-leading special interest magazine titles and consumer Web sites diversifies our earnings streams and accelerates our growth.”

Following the completion of the transaction, PEM will operate as a division of Source Interlink and will be headed by Steve Parr, PEM’s current president. He will report to Duckworth.

PEM is the leading special-interest magazine publisher in the U.S., with over 70 magazines. Its portfolio includes: Motor Trend, Automobile, Hot Rod, Lowrider, Soap Opera Digest and Soap Opera Weekly, Power & Motoryacht