While Marc Andreesen sounded the death knell for all forms of traditional media in Sun Valley, Fitch Research this week took a closer look at the state of the consumer magazine industry. And the state of that industry is, unsurprisingly, not that strong.
The cost for a digital media startup to enter a market continues to drop, while both subscription and single copy circulation have dropped across the industry. Numerous titles have been shut down, while others, such as US News & World Report, which has announced a shift from a weekly to every other week, are clearly under pressure. As Conde Nast editorial director Thomas Wallace jokes, for magazines "flat is the new up". There have even been calls recently for Business Week to move to an online-only form. This should come as little surprise. How many consumer magazines do you subscribe to today as compared to ten or fifteen years ago?
While the future may not be overly bright for this segment, the report points out some advantages that consumer magazines have over their newspaper bretheren.
First, the consumer magazine space has always been hotly competitive and established titles have experience in fending off fresh upstarts. As a result, these companies tend to be nimble, especially when compared to newspapers, accustomed to a static duopoly.
Magazines may also benefit from a shift to national advertising, driven by big box retailers. Magazines, with their niche market focus and reasonable costs, provide an attractive value proposition for many advertisers. While newspapers have been crushed by the shift of classified advertising to the web, magazines have little exposure in this area.
OK, so, the downside for consumer magazines is not as horrible as it is for newspapers, but is there any upside to this market? Phrased another way, other than the fact that people may not want to bring their laptop to the bathroom, are there compelling reasons to believe that the magazine industry has a rosy future?
In my opinion, the biggest strength that magazines offer right now is brand recognition. While online brands like TMZ or Slate have developed a strong following, they still can't match the name recognition of People or Newsweek. Depending upon the segment, magazines probably have another five to ten years in which to leverage those brands to build category-leading online properties. And some segments, particularly fashion, will probably retain a significantly longer shelf life in print, due to their visual nature and the ability to read them while lounging at the pool.
Fitch expects magazines to lose advertising share and sees overall industry consolidation with lower quality titles shuttered. At the same time, they expect the stronger brands to retain reasonable circulation and remain attractive to advertisers. It's bound to be a bumpy ride and the best thing most magazine publishers can say right now is "at least we're not a newspaper".
