Feb 22, 2022 - Economy

Digital giants eye magazines to spur growth

Consumer magazine revenue, by type
Data: PwC; Chart: Kavya Beheraj/Axios

The U.S. consumer magazine industry shrunk by more than 20% in the past five years, due largely to print advertising declines, per PwC data. But the rate of decline is expected to slow slightly in the next five years, thanks to new efforts from online media companies to acquire and digitize traditional print brands.

Why it matters: "If you make the right acquisition in the right vertical ... it can give you real scale that is meaningful and major clout in that vertical very quickly," said Jason Webby, chief revenue officer at Future, which owns over 200 print and digital magazine titles, including The Week, Marie Claire US and Kiplinger.

Driving the news: Condé Nast last year posted its first profit in years in 2021, thanks largely to investments in digitizing and streamlining its current editorial operations, per the Wall Street Journal.

  • The company has hired about 300 product and technology staff over the last year, a spokesperson tells Axios.
  • It's invested in new translation capabilities and personnel across 32 markets and 26 languages to help broaden the reach of its individual publications.
  • On average, 40% of any of its brands' traffic, including Vogue and GQ, comes from outside the country where it is published.
  • A majority of its advertising revenue is now digital.

Be smart: Recent deals show how much modern media companies have become reliant on print magazine brands to grow their online empires.

  • Dotdash, the digital media company owned by Barry Diller's publicly traded internet holding company IAC, acquired Meredith Corp.'s National Media Group for $2.7 billion last year, in large part to boost its commerce business.
  • Recurrent Ventures, a venture equity-backed digital media company, has recently relaunched three brands as digital sites only, like Mel Magazine, Popular Photography and Car Bibles, to help scale its digital ad business and grow its audience.
  • Outside, a lifestyle media company home to dozens of outdoor enthusiast brands, says it has around 500,000 digital subscribers to its membership program, in addition to 1 million print subscribers across its array of magazine titles, like Women's Running, Backpacker and Peloton Magazine.
  • Future says it now drives over $1 billion in e-commerce sales annually, thanks to its consistent investments in acquiring and digitizing print brands. Most recently, it purchased Dennis Publishing for $416 million, giving it access to titles like The Week and PC Pro.

Yes, but: There's always a balance between "honoring the legacy of these brands and finding the right means of moving them forward," said Lance Johnson, the CEO of Recurrent. And often, that includes pain points.

  • Dotdash Meredith last month said it would cut print editions for six Meredith titles, including EatingWell, Entertainment Weekly, Health, InStyle, Parents and People en Español, eliminating roughly 200 jobs.

"While a lot of titles will die, there will be new things invented," said former Vanity Fair editor Graydon Carter, who launched a new digital magazine brand called Air Mail in 2019.

  • "I don't think anybody has taken an existing magazine and made a real effective digital version of that," he said, although he acknowledged that some magazines, like National Geographic, have done a good job migrating to digital.

The big picture: Print brands are becoming more attractive targets because moving toward digital "is not as painful" as it used to be, Webby notes.

  • "Years ago, when print and digital were just first coming together ... there was a really stark difference to go from a print CPM (ad rate) to digital CPM, and making up that difference was really difficult," he said.
  • Today there is "really well established infrastructure for selling digital ads," Webby notes. "The difference isn't that stark anymore in ad revenue on a digital versus print page.
  • "The Internet eliminates the biggest, messiest part of the magazine production business," Carter said.

What to watch: As more print brands go to digital, many are finding success with online subscriptions and commerce.

  • Puck, a new subscription digital media company, launched last year to bring a magazine feel to digital news.
  • "Magazines are the perfect technology. If you don't like what you're reading, turn the page," Puck co-founder Jon Kelly said last week, quoting magazine magnate Jann Wenner while discussing Puck's business model.
  • In a letter to shareholders, IAC CEO Joey Levin said last week, "We will no longer govern ongoing print decisions by whether an advertiser is willing to advertise, but by whether a reader is willing to purchase."

Bottom line: "It’s the golden age for journalism, just not the golden age for (print) magazine distribution," Carter said.

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