Maybe the third time is the charm.
Three years before Don Graham and Jeff Bezos talked about selling and buying The Washington Post, the Graham family bid goodbye to its second favorite son, Newsweek. Sid Harman, then 91, optimistically bought it for a buck, taking on $50 million in liabilities and promising a rebirth. Within three months, Harman struck a deal with Barry Diller and Tina Brown merging Newsweek with The Daily Beast, creating an unusual creature that could not be easily cataloged.
A year later, acknowledging failure, IAC sold Newsweek — once a proud No. 2 to the inventor of the newsweekly, Time — for a pittance to IBT Media. “I wish I hadn’t bought Newsweek,” Diller said, calling weekly print in the digital era a “fool’s errand.”
The buyer seconded that notion. “We are 100 percent digital company and so that’s been our forte,” said IBT CEO Etienne Uzac. “In the future there might be some opportunity for print but not right now.”
The siren call of print, though, is just too seductive, even as each successive ownership has gotten a generation younger. Uzac, 32, and IBT cofounder 31-year-old Johnathan Davis share neither the name recognition nor the longstanding love of print with the Grahams, Harmans, Browns, or Dillers — but print beckoned to them nonetheless.
This Friday, the new print Newsweek, which hadn’t been published since the end of 2012, hits the stands. Maybe “hits” is too strong a word. At a whopping $7.99 a copy, it should perhaps land on a soft pillow, the better to protect the paper quality that is promised to be twice that of long-time nemesis Time.It may seem like a turn of events around a familiar storyline: the reckoning of once-iconic news brands, national and local (“The newsonomics of the print orphanage, Tribune’s and Time Inc.’s”). In fact, the IBT’s Newsweek gambit is more interesting. It’s a mixmaster of many trends of our day, including the ascendancy of reader revenue models, the central place of powerful platforms in digital publishing, and the use of analytics to drive new news businesses forward. The Newsweek push and IBT Media’s wider efforts combine lessons from Vox Media, The Economist, The New York Times, and even Time.
The newest Newsweek strategy is both old-fashioned and radical. It’s old-fashioned in the sense that it is reviving a ghost print brand with printing presses on two continents. It’s radical in its pricing. Even the high-flying, high-quality weekly New Yorker only charges about $79 a year, while Time goes for $30 and The (monthly) Atlantic for about $25. Newsweek is going way beyond those prices.
The print launch is all wrapped up in a lovely package, led by magazine veteran Jim Impoco. In fact, that package — with design by Robert Priest and Grace Lee — seems almost anachronistic, a throwback to another era of plush and flush magazines. In a sense, the newest Newsweek is trying to create its own category: NewsLuxe.
If $8 seems a bit rich for a newsmagazine, subscribers can pay the equivalent of a still-high $3 a week for a new subscription. The new Newsweek, I’ve found out, is joining the all-access parade with this planned pricing:
The pricing had better work. The Newsweek paywall is going up this week, as the print launch (party at SXSW) is readied. Davis, who also serves as chief content officer, says the business model is heavily dependent on reader revenue. He expects that 80 percent or 90 percent of the new Newsweek’s income will come from readers, with only 10 to 20 percent from advertising.
Whether this experiment turns out to be a great new way to fund journalism or the makings of a spectacular failure, you have to give Davis and Uzac credit for rethinking old paradigms. They’ll tell you they didn’t expect to go into print. They looked at the low-priced print model they inherited — “the more you printed, the more you lost” — and figured the business is “upside down.” With the new high pricing, each copy printed, they say, will be profitable.
To be sure, Newsweek isn’t planning on selling hundreds of thousands of print subscriptions. Its goal, says Davis, is 100,000 U.S. subscribers and 100,000 in EMEA (Europe, Middle East, Africa) within 12 months; other licensing agreements will produce other editions on other continents. Its initial press run: 70,000. That’s down from about 3.3 million at Newsweek’s height.
The bet: that many of older Newsweek subscribers, longing to renew their habit, will re-subscribe. The company is poised to mine its lists of somewhere between 200,000 and 400,000. Those names and data have now passed through several owners and incarnations, so their reliability is a significant question for subscription conversion.While Newsweek will get lots of attention this week for its seemingly anachronistic print launch, its digital pricing also breaks new ground. It’s going to market with a metered paywall, one powered by Europe’s Piano Media, now making its first big foray into the U.S. after successful launches in central and eastern Europe and more western European publishers queuing up.
The paywall isn’t unusual; the pricing is. Charging $39.99 for digital-only access is high, especially considering that the seeming competition, Time, can be gotten — in both print and digital — for no more than $30 a year.
What makes the revivers of a ghost brand believe customers will pony up?
“We’ll deliver the quality of a monthly every week,” says editor Jim Impoco. Impoco is a well known talent in the magazine world, with U.S. News, Fortune, Men’s Journal, and the short-lived but highly regarded Portfolio magazine among his career stops. That means investigative reports and storytelling and visuals that fit the quality of the paper they are printed on.
Impoco’s acceptance of the Newsweek job was in part based on the place he believes it can occupy in the contemporary world, with more than 2 million Twitter followers.
He’s assembled a talented staff of 30 full-timers, plus additional contractors. Impoco says he doesn’t believe that the star system is the new thing in digital news (“The newsonomics of David Pogue and the Pujols effect”). The star is the brand, the up-from-the-ashes Newsweek.
— Newsweek (@Newsweek) March 3, 2014
Its New York staff is largely filled out, and its London newsroom got a jumpstart today, as it named Richard Addis to head up its EMEA edition, out of London. Addis is the former editor of Canada’s Globe and Mail and London’s Daily Express.
Under Impoco, the new Newsweek should be an impressive, worthwhile read. The question is whether it can be sufficiently impressive to win large paying audiences fairly quickly. Even if it offers a lively product online, the paywall is sure to send many testers returning to the free Slates, HuffPosts and BuzzFeeds. The meter will allow some sampling, of course, but it is going to be tough to get readers to click that $9.95-for-three-months button, much less the $40-for-a-year one.
What could determine the success or failure of the new Newsweek?
— $21 million in 2013 revenue, with profits of about $500,000 last year. Davis says the business has been profitable since 2010, four years after its founding. The main revenue is digital advertising. Davis says the site is able to pick up advertising CPM rates in the $8-12 range using ad networks.
— 48 million global and 24.3 million U.S. unique visitors.
— 150 editorial employees, about half in New York City and half in London, among 240 overall.
So who are these guys? They are self-funded, bootstrapped entrepreneurs; Johnathan Davis worked first as an engineer, not a journalist, and says he was pretty much Writer No. 1 for the International Business Times as well as its coder. Uzac got the idea for IBT and started working on it as he studied at the London School of Economics. The Times story made public the Moonie murmurs about the company, which they dismiss.
Common to their work: scalable technology and analytics drive much of the business. They’re savvy at the tricks of the digital trade to spur traffic.
International Business Times takes in no reader revenue and is almost wholly reliant on advertising. The IBT product is surprisingly traditional and newspaper-like in its style and presentation; it doesn’t emphasize voice. In fact, it’s hard to categorize what indeed IBT is. It lacks the global-centric spunkiness of start-up Quartz or the always-something-happening vitality of Business Insider. Its staff costs are relatively low, and you won’t see it much quoted around the web. It does, though, seem to percolate along.
With that background, neither cofounder has much experience with reader revenue, premium products, or top-level national journalism. Nor does either have experience with print, or magazines. Davis says the new Newsweek is based in part on The Economist’s higher-priced, reader-revenue-oriented strategy — though he hastens to add its attitude is different.
Newsweek is a big, splashy, upscale play. Everything about it — new redesigned print, atmospheric pricing, an early paywall — says premium, yet its young owners have little to no experience in the premium world. They may bring a refreshing skepticism about the way print magazines have long been done — the conventional wisdom of building a large, advertiser-satisfying subscriber base on cheap subs — but they may be getting in over their heads.
There may be room for the new model — and kudos to the newest Newsweek owners for testing it. If it does work, experience tells us it’s likely to take several years to prove out, and that may test the financial limits of this bootstrapping effort.
As we approach mid-2014, we’ve got Newsweek getting one more (maybe its last) chance at survival and Time shape-shifting once again, as Time Inc. spins off uncertainly into the publishing future. For a genre long known for cycling back to the same subjects over and over, the cover story of the year appears to be: Can Newsweeklies Survive the Digital Age?