Magazines: Change Or Die

"The charm of history and its enigmatic lesson consist in the fact that, from age to age, nothing changes and yet everything is completely different."
dude Aldous Huxley (English Novelist and Critic, 1894-1963)


Magazines: Change Or Die
BY Russell Flanner
http://www.forbes.com/media/2007/05/14/china- media-internet-biz- media_cz_rf_0514chinamedia.html

Beijing - A rise in the percentage of ad spending allocated to Internet and mobile media will intensify pressure on magazine publishers to adapt a fast-changing business landscape or die off, speakers at a key international publishing industry conference said in Beijing on Monday.

"The magazine industry faces more and more competition," said John Rose, a consultant with the Boston Consulting Group. Companies that don't change will "erode off into the sunset."

Rose was one of more than 1000 delegates that gathered for a three-day meeting of International Federation of Periodical Press in Beijing. China's economic growth and buoyant advertising revenues have made the country one of the bright spots for the media industry worldwide, especially ahead of next year's summer Olympics games to be held in Beijing.

Yet rather than China, much of the discussion focused on the Internet's impact on traditional publishing companies. Magazines as a group in the past several years haven't been tracking the growth in overall advertising spending, and readers have allocated less time to the magazines that they do read.

The ever-improving availability of news and content on the Internet and mobile devices has increased uncertainty about the long-term earnings outlook at once-mighty newspaper giants, and led investors to pummel their shares in the past few years. A case in point: The $4.1 billion market capitalization of Chinese outdoor advertising firm Focus Media, founded in 2003, today exceeds that of the New York Times Co., at $3.6 billion.

An especially tough challenge for traditional magazine companies is that new rivals often come from businesses that had previously not been considered as such, Rose said. Publishers in countries with relatively advanced Internet infrastructure face a relatively risky future if they don't adapt.

Still, change sweeping the media landscape will bring opportunity. IDG, one of the world's largest publishers, has seen revenues from print ads decline of late, yet 35% annual growth in Internet revenues is more than making up for the loss, said Patrick J. McGovern, the company's founder and billionaire chairman. IDG expects half of its revenues to be generated online by 2010, compared with as much as 35% today, he said in a speech.

McGovern views the Internet as a good place to try out new ideas for publications before they are launched in print because of relatively low start-up costs and the opportunity to survey readers. Besides success in introducing its U.S. titles in Chinese-language editions, the Massachusetts company has successfully invested in several Chinese firms that have gone on to list in the U.S., including Ctrip and Baidu.com, he said.

IDG recently repositioned itself from a more traditional publishing company to one which views itself as "Web- centric" and treats print publications and events as ancillary activities, he said. Indeed, how magazine publishers can move from a focus on a single product- -magazines--to being more brand-centered was another theme of the day.

For magazine publishers looking to adapt to the changing technology landscape, personnel are a critical factor in success or failure, Rose said. Many print magazine editors more than 40 years of age are reluctant to embrace change, and in general, magazines executives aren't so likely to think about how integrate their operations into new media, he said.

However, Steven Pleshette Murphy, CEO of Men's Health magazine publisher Rodale Inc., cited the integration of editorial management and across different distribution channels--such as print and the Internet alike--as a key factor in his own company's success.

Rose suggested that magazine publishers consider hiring executives from non-media companies to spur new thinking.