How Newsweek Can Be Saved

A Magazine Turnaround in 5 Game Changing Moves

[For enhanced digital view — http://bit.ly/savingnewsweek]

I love Newsweek. I grew up with it and would hate to see it close its doors.

That, or a fire sale, appears to be the grim reality they’re facing with last week’s second restructuring in 3 months, which included the firing of 3 dozen staffers at parent company IBT.

Unfortunately, you can’t cut enough staff to make your business successful when you have a flawed/outmoded business model. The model itself needs to change.

If they had the stomach for it, here’s a 5 step plan that would turn Newsweek around and set them up for long term stability and success.

Step #1: Kill the Print Edition

Let’s do some quick vest pocket calculations to see how profitable the economics of their print edition are. Here’s what they currently charge for subscriptions:

At these print subscription rates they are generating top-line revenue somewhere between $1.24-$1.90 per issue.

If we estimate that printing & mailing to their 200,000 global circulation averages $1.00 per issue, this means they are grossing just .24-.90 per subscriber, per issue, BEFORE you take into account all the staff and marketing costs it takes to generate those paid print subscriptions in the first place. It’s nowhere near the revenue they need for a business that has as much overhead as they do (see the masthead graphic below).

Well then, maybe they’re making their money on print ad sales?

Back in the day when they had millions of subscribers they were able to get hundreds of thousands of dollars for a single ad page. Here’s their rate card today, with their far more modest circulation:

When I settled in to do a count of ad pages in a recent issue, in order to project their annual print ad revenue, it took me far shorter than I expected because there was only one ad in the entire issue. Maybe I missed a couple or maybe all the pages on Donald Trump were product placement, but it doesn’t appear that advertisers are beating down Newsweek’s doors to pay for ads in their print edition.

As a former print publisher it pains me to acknowledge that the best days of print are behind us. It’s time (no pun intended) for them to find a new lane where they can be a leader again.

“Being a leader in business isn’t hard, just find out where the herd is running and go get out in front of them.” ~ Self-made billionaire & consumer advocate, Bill Bartmann

For some time in media, readership and ad dollars have been running towards digital. Newsweek needs to get out in front of the herd and reinvent itself as a new breed of digital publisher.

Step #2: Staff and Operate as Modern Day Digital Media Company

Take a detailed look at Newsweek’s staffing on their masthead:

Count them and you’ll find 64 editorial staffers — not including marketers, circulation, sales or parent company execs. That’s amounts to one full time editorial person for every page they produce in a typical issue these days. More importantly, it’s a sure-fire formula for red ink.

To reinvent themselves as a modern digital media company, they need to have a lean approach to content creation that allows them to produce world class content on a daily (not weekly) basis. Here’s what this would look like:

• (1) Editor-in-Chief (a brilliant editorial architect and curator)
• (3) Editors (talented writers, gifted at taking solid submitted content and editing it to make it great)
• (2) Editorial Recruiters (great communicators who work with content contributors, persuading them to develop and contribute their content to Newsweek)
• (2) Graphic Designers (skilled in both graphic design and video production)

A total of 8 full-timers on the editorial payroll. Freelancers, paid on a per assignment basis, can supplement when demand spikes.

What about all the writers? Why should you pay staff writers when you have tens of thousands of people who would give 1–3 of their toes to write for Newsweek. And we’re not talking slouches either. Just take a look at the quality of the people lining up to give amazing (and free) TED talks as an indication of willingness. Instead of money, give accepted contributors something more valuable, an “About the Author” page where they can promote whatever they want. That’s a fair exchange that most will jump at in a country second.

Breaking news? Forget all the T&E costs it takes to support staff writers in the field. Let the people already on the scene contribute (cost: free).

Investigative journalism? Newsweek has the platform, give others access to it and watch the quantity and quality investigative reporting you get (cost: free).

A-List interviews? Let resourceful freelancers go do great interviews on your behalf, using your pre-set editorial guidelines (cost: free), and you’ll get every great interview you already do and more.

Make the world your editorial staff. And, when you inevitably get mediocre submissions where the information is solid but it’s written like a college term paper, you use your talented staff editors to whip it into shape and make Newsweek worthy.

Step #3: Stop Charging for Subscriptions

Let’s not get distracted by the debate of whether a publisher deserves to be paid for their content. Of course they do, and that’s irrelevant.

Let’s deal in reality. Today, with so much high quality free content available on the Internet, there are only a precious few readers who are willing to actually pay for their content, and this is what they look like:

Newsweek needs to stop fighting this costly, losing battle and open up their content for the world to consume. Paradoxically, in doing so, they will find a luxurious silver lining….

This is because the instant Newsweek announces that it is tearing down their paywall and giving everyone free access to their sought after content, they’ll reap a positive PR bonanza and millions of new readers each month coming in to read their content.

The even better news is that they can make more money from this “free” audience, than they ever could from a far smaller group of paid subscribers.

Which brings us into dealing with head on with the all important monetization issue…

Step #4: Stop Publishing Content on Your Website

The stories formatted in infinite scroll web pages on Newsweek.com get monetized primarily through low cost banner ads. Banner advertising is publisher self-harm in its purest form.

Think about this…why should an advertiser pay a higher rate to be inside Newsweek’s magazine, when they can reach the exact same audience on newsweek.com with a low cost banner ad for 1/100th the price.

Answer: They shouldn’t.

A business that relies on customers taking actions that go directly against their self interest is not a good business. Newsweek needs to slam shut advertiser access to their audience through the banner advertising loophole. From now on they should only publish content inside their digital magazine software, where they can command premium advertising rates.

Step #5: Reinvent Newsweekly Digital Magazine Advertising

Instead of offering boring banner ads no one reads, like every me-too publisher, Newsweek must change the game by giving advertisers a value proposition they literally can’t say “no” to. Here’s what that looks like, beginning with ad features:

• Advertisers get an infinite number of full pages in their ads, all are interactive and linked together (it’s digital, why should they have limited space?)
• Animations to stop readers and capture their attention
• Video to demonstrate products and tell a detailed story
• Lead capture inside the ad at the moment the prospect shows interest
• Credit card transactions so readers can make a purchase, right within their ad, without ever leaving Newsweek
• Live broadcasting so advertisers can use their ad as a full blown communications platform

Then, Newsweek put’s the “cherry” on top of an already compelling proposition, by giving advertisers these two pricing options:

• Name Their Price. Throw out the rate card that prices Newsweek out of many advertiser’s budgets. Instead, Newsweek let’s them spend as much or as little as they want. When their budget is used up, their ad gets pulled out of the magazine dynamically and replaced with another paying customer.
• Pay-on-Performance. Advertisers are only charged when a reader has actually read their ad (determined by a click or the reader spending 10+ seconds on their ad.) If a reader flips past an ad without clicking or spending at least 10 seconds on it, the advertiser pays precisely $0.00

[Note: If you think the last two items are risky consider this. It is precisely these two features, derided at their inception, that catapulted Google into the dominant advertising company of our generation. Today, roughly 1 in every 12 ad dollars on the planet goes to Google, in large part because advertisers love to set their budget and only pay for results.]

The Result: Newsweek’s NEW Economics

So how would this new advertising approach impact Newsweek’s ad sales? Let’s look at a conservative scenario:

• If Newsweek got just 2,000,000 readers into their digital edition each week (they currently already get 2,400,000 monthly visits to their website)

• And each reader read an average of 1 ad per session (a click or spending 10+ seconds on the ad.)
• And Newsweek charged just $1.00 per verified view (they probably could easily get $5.00)

This scenario would yield $24,000,000 in annual digital revenue.

And, if instead of 2,000,000 readers per month Newsweek had 8MM+, like a few years ago, they’d generate $96,000,000 annually.

Advertising Actually Gets Easier to Sell

What Google learned was not only is the is model very profitable, but it also removes the friction out of the sales process, as customers buy, without needing to be sold.

This short video above, from trade magazine 24Seven Annuities, illustrates how compelling of a value proposition can be made to advertisers.

Imagine if a marquee brand, like Newseek, did something like this. It very well could make the front cover of Advertising Age.

The Alternatives
I see only two alternative approaches:

1) A sale. Trim costs and look for a buyer. No doubt, for the right price, someone will bite.

2) A miracle. I don’t mean this sarcastically, rather this is meant to describe something we can’t forsee today. Maybe print bounces back. Maybe, Time folds. Maybe Jeff Bezos wants to bring Post Newsweek together again. Slowing the rate of decline, buys more time and with more time comes the chance to see a new path forward without making significant changes.

This isn’t some visionary “what if” thought experiment either. The technology that enables this functionality and business model actually exists. It’s called MagTitan and you can see it in action here. (Disclaimer: I’m the founder of Of Eleven Media, the parent company of MagTitan.)

While digital publishers easily embrace this model as obvious and common sense, no doubt it will be a tough pill to swallow for Newsweek. With nearly a century of print/paid subscription business model encoded into their DNA, it will be hard enough to get their minds around what is required, yet alone execute on the changes necessary for survival.

I’m hoping they do.