Magazine Economics

The uncertainty that continues to linger over the nation’s economy left its mark on the magazine industry in 2005. While some titles still saw gains — People and Us Weekly, for example, had increases in advertising pages and dollars — others suffered through a hard year. For all of 2005, ad pages were up a mere 0.5% and dollars 7% for all titles (not including the Sunday newspaper magazines) according to the Publisher’s Information Bureau, which tracks ads throughout the year.1

The bad news for magazine ads for yet another year may raise questions about the economic health of the industry in the long run. Economic times may be uncertain, but they are by no means bad, with growth in gross domestic product somewhere around 4%. Those kinds of numbers, combined with a relatively robust stock market, have meant good news for magazine ads in the past. It may be that the structural changes in the media environment — the growth of online outlets, readership and ads — are beginning to have a bigger impact on magazines. Indeed magazines, with niche readerships that allow targeted ads buys, are perhaps more directly in competition with the hyper-targeted world of online ads. The ad trend will bear watching in coming years, particularly if the economy grows stronger.

Over all, newsstand sales numbers were poor in 2005. By mid-November they were down 3.4% for the industry as a whole. But again, celebrity titles seemed an exception to the trend; their sales grew by nearly 9%. In Touch Weekly saw its newsstand sales climb 49%, while Us Weekly was up 33%.2

If there were doubts about the depth of the struggles traditional news magazines are facing, they may have been clarified in December when Time Inc. announced it was laying off 105 people, including some high-ranking executives.3 One of the biggest casualties was Eileen Naughton, the president of Time magazine. The Time cuts followed on the heels of a reorganization at Business Week that sliced off 60 jobs.4 And a month later, as January 2006 came to a close, Time announced the layoff of another 100 employees (see News Investment).5

Even in a relatively gloomy year for ads in magazines, the biggest news magazines were particularly down. Time and Newsweek both saw double-digit dips in ad pages in 2005 and revenue figures were down almost as much. Many of the other titles saw a split year, with pages down and dollars up or vice versa. The exception was, again, the Week, where the numbers were all positive.