Category: Big Business

I enjoyed this article about Condé Nast’s new digital publishing guru/savant, Scott Dadich. (Well, I was filled with resentment and curmudgeonism at first, especially when I read that he’s only 34 years old, but I got over that quickly and decided to read the piece on its own merits, rather than in terms of my failure.) Mr. Dadich’s colleagues praise him as a magazine visionary, focusing on his work in building a digital version of Wired. That success led to his new role as executive director of digital magazine development at Condé Nast, where he’ll try to repeat that magic and simultaneously re-engineer the publishing workflow. Over the course of the article, I also appreciated his willingness to rethink what a magazine is once it’s freed from its physical constraints, and to convince executives to take him seriously.

“The only reason magazine design looks the way it does is because it’s the literal, physical limitations of two pieces of paper,” he said.

“With this,” he said, gesturing to an iPad sitting on a couch, “we wiped the slate clean. We have one pane. We have these many pixels. We have this proportion. How are we going to use it and how are we going to tell a story?”

It’s an interesting question he raises, and I’m glad that Condé Nast is going to let him pursue it, but I don’t think it’s the one that’s going to “save publishing.” It’s all well and good to develop a whole new idea of what a magazine is, and add all sorts of content that isn’t available in print to build a different consumer experience, but that doesn’t answer the flipside-question: who’s going to pay for it?

And if you search through that article, you’ll find that there isn’t a single instance of the word “advertiser.”

What the magazine industry allegedly learned from the plummeting ad sales that accompanied the recession, is that they’ve been giving their magazines away too cheaply. For years, they used cheap subscription rates to draw in readers of certain demographics that they could then sell to advertisers. When advertisers pulled back in late 2008 and throughout 2009, publishers were stuck mailing magazines to subscribers at a pittance. When Newsweek went up for sale, the dossier indicated that it had $40 million in subscription liabilities (as in, that’s what it owes subscribers for future copies). It sold for a buck, plus assumption of liabilities and a sincere desire not to fire half the staff.

You know what? The model of advertisers subsidizing cheap subscriptions isn’t changing. Major consumer publishers haven’t buckled down and started raising subscription rates to anywhere near cover price, despite their professed need to build up that revenue source. How do I know this? A few months ago, I subscribed to Esquire (a Hearst mag, not Condé) for two years at the cost of $10. That price doesn’t even cover the postage for more than an issue or two, much less pay for the writers, editors, sales staff, back-office personnel, real estate and other overhead. Sure, that’s anecdotal, but you can find that subscription on Amazon; today it’s at $8 for two years. In fact, here’s an image from an e-mail that I received from Amazon this very morning:

(Note the rates at the top of each column.)

Now, there are magazines out there that don’t discount heavily for subscribers. I have subscriptions to both Monocle (75 GBP/year for 10 issues) and Fantastic Man ($40/year for two issues); the latter puts virtually no magazine content on its website, while the former decided to make a newspaper edition of itself this summer. The only thing further from an iPad version would be if they chiseled an issue in stone. Neither mag is mass market (Monocle does seem to be popping up on a lot of newsstands), but neither one seems to be posting multimillion-dollar losses every year.

I don’t know if Mr. Dadich avoided talking about advertising, or if the writer, John Koblin, or his editor chose to focus on the design/re-think to the exclusion of the advertising model, or if no one thought it was worth discussing.

Mr. Koblin does point out that, following the wild success of the first iPad issue of Wired, the second issue’s sales-figures haven’t been made public. The first ish sold 102,884 copies at $4.99 each. Apple takes a 30% cut from all app sales, so Condé Nast was left with $359,373.81 in circulation revenues, plus whatever ad money it brought in.

That math’s not in the article. There’s a reference to “new revenue streams, much of it from the digital experience,” but that’s the about it for the business side of the business.

I don’t think most journalists like to write about how their own sausage gets made, nor how ad dollars can subtly dictate editorial content. The New York Observer, which published the profile of Mr. Dadich (as well as an interesting story on the recent decision of Khoi Vinh to quit his role as design director of nytimes.com), was allegedly losing $2 million a year before it was bought by a young real estate magnate. And that was in 2006, prior to the advertising apocalypse of 2008-??.

The whole “sexy new model, never mind the money” vibe of the article actually puts me in mind of another Condé Nast property: Vogue. I meant to write about The September Issue when Amy & I watched it a few months ago. It’s a documentary about the making of the 2007 fall-fashion issue of Vogue, which clocked in at 840 pages. The movie does a wonderful job of showing the tensions and rivalries that exist at Vogue, and beautifully sets up Grace Coddington as a sort of “better sister” to the iconic Anna Wintour as they work on the biggest issue in history.

Here’s my big problem with the movie: You can’t put out an 840-page magazine unless your advertising staff posts mammoth, record-breaking sales. We get a brief scene of a pep talk by publisher (which basically means “head of sales,” for readers not involved in publishing) Tom Florio in the beginning, but zero mention of all the pages of ads that have to be sold to justify that giant page-count. That’s a story too, and its omission speaks volumes (to me, a paranoid).

So don’t get me wrong: I think it’s great that Condé Nast is trying to rethink magazines for the tablet computing era. I hope Mr. Dadich manages to develop non-traditional ideas for more magazines as they go digital, while keeping them from simply cannibalizing the content of their websites. Also, it’s awesome that design guys are getting their due.

But at some point the sales guys are going to have to figure out a way to get advertisers and their agencies on board, or all that groundbreaking technology and design in the world will go for naught. After all, as messed up as it sounds, the biggest business success in the past 10 years has been Google, a company that makes nearly all its money by . . . selling little text ads on search results.

Reading material

New York Observer: “The Savior of Condé Nast: Scott Dadich Is The New It Boy of the Mag World”

New York Observer: “It’s Not You, It’s Me: Design Director Khoi Vinh Leaves The Times at Paywall Altar”

Slate: “So, You Bought the New York Observer: Unsolicited advice for new owner Jared Kushner”

The Awl: “Nick Denton: On the Web, Female Trumps Male, Youth Trumps Age”