2005 Annual Report - Magazine EconomicsAt first glance, the economic news in the magazine industry is very good. The recession appears to be over. For all of 2004 ad pages were up 3.8% and ad revenues up 11.1% for all non-Sunday-newspaper magazines reporting with the Publisher's Information Bureau, an organization that tracks ad pages and dollars throughout the year.1 Those increases were the highest since 2000 and were helped by a strong close to the year in pages and revenues. Looking at just the month of December, ad pages were up 10% and ad revenues up 17% over 2003.2 Newsstand sales continue to be a bit of bad news in a sunny picture. Such sales, which began falling 1999, appeared to continue their drop last year. In first half of 2004 the top 100 magazines sold 36.8 million copies from the newsstand, down from 37.4 million in first six months of 2003.3 Over all, news magazines did pretty well in the 2004 economic market, according to the Publisher's Information Bureau. The number of business and entertainment titles listing with the Bureau shrunk slightly in 2004, with business losing two titles and entertainment losing three, but the news genre actually added a title. "The Week," from Dennis Publishing, began listing its ad-page and number data with the PIB, bringing the number of news titles to nine. And judging from its number it is experiencing significant growth with its content model, summaries of the week's news in short, tight stories. It joins Time, Newsweek, U.S. News and World Report, The Atlantic, The Economist, Jet, National Journal and The New Yorker in our news magazine collection.
Among news magazines, the story is indeed complicated. There are vast differences in circulation and ad dollars among the members of this group, creating two different tiers (the Big Three and the rest). Different economic models are at work in each. The Big Three, with their mass audiences, have special advantages in terms of advertising - their pages get more eyes, so they can charge higher rates. The nontraditional titles charge less for ads, but also charge higher rates for subscriptions - more than twice as much in the case of The Economist. For this reason they are somewhat less susceptible to soft ad markets, though they are obviously still affected by them. There are more complicated differences as well, as this chapter will outline. Among the nine news magazines that list with the Publisher's Information Bureau, all had increases in ad pages and eight, all but The Atlantic, saw increases in ad dollars, in 2004. There were big differences, however, in the size of those increases. A break seems to exist in how the two tiers perform in an advertising market that is bouncing back, but not fully recovered. Ad pages for the bigger, mass-audience magazines seem to come back first. All of the Big Three weeklies saw sizable increases in ad pages - over 5% - for 2004. Most of the non-traditional magazines saw smaller increases.4 As for ad dollars, as we noted last year, the figures are notoriously inaccurate. Figured off rate cards, they usually don't take into account discounts magazines offer to entice advertisers. The figures may be particularly deceptive for magazines from the Time/Warner empire, which offers package deals to advertisers who choose to buy pages in several magazines. Still, using this measure can be helpful in understanding the difference between the Big Three magazines and the nontraditional news-oriented journals. All of the Big Three saw double digit increases in advertising dollars in 2004, with long-struggling U.S. News leading the way with an increase of 21%, from $202 million in 2003 to $245 million in 2004. U.S. News also experienced the largest jump in ad pages, a 16.7% increase. The numbers were a significant break from the past, in which U.S. News has seen ad pages and ad dollars declining, and could signal a change in the magazine's fortunes if it continues.5
But those numbers may be a bit deceptive. U.S. News is starting from lower numbers, which makes its increase look larger if growth is figured by percentage. It is true, for instance, that U.S. News added 355 pages of ads in 2004, more than Time and Newsweek, which added 244 pages and 143 pages, respectively. But because the magazine had hundreds fewer ad pages than Time or Newsweek, its percentage increase looks more dramatic than it actually is as, one can see from a look at the ad pages for the three together.6
If one were to add The Week to the ad-dollar and page figures, that magazine would have been the winner far and away. According to the PIB, the magazine, which targets younger readers, saw a very significant 25% increase in ad pages in 2004 over 2003 - to 523 pages from 417. It also saw an incredible 66% increase in ad revenues, from $6.5 million in 2003 to $10.9 million in 2004.7 Those figures would still place the magazine at the bottom in terms of ad pages among news titles, but its dollar number would move it ahead of National Journal. Next year, if the magazine is still listing with the PIB, we will include it in the charts in this section. If the numbers are correct, they suggest that the magazine may have found a home in the news field, and perhaps with the demographic that news outlets across all media are eager to target, 20- and 30-somethings. Among the nontraditional news titles with a time line, The Economist had the most solid 2004 with increases in ad dollars and pages. But that trend followed a few very lackluster years. In fact since 2000, when the economic slowdown first hit in the U.S., the magazine's ad pages have declined. Its 2003 performance (2,142 pages) was the lowest it had been since 1988, the first year for which the Project gathered data. Again, this trend may have something to do with how ad dollars return to the magazine industry after a recession or during bumpy economic times - going back to the trusted big-circulation magazines first. (The same trend is seen in the news and entertainment titles.) But the magazine appears to be bouncing back now. Its 2004 ad pages rose to 2,198, a 2.6% increase over 2003. And The Economist's ad dollars shot up a dramatic 19.2% in 2004 to $65,117,463. 8 The Economist is helped by the fact that its subscribers pay more for their magazine than Time and Newsweek subscribers pay. If you were to rip a subscription card from the Economist it would show $98 for a year's worth of issues; for Newsweek the figure is $42. That extra $56 per subscriber isn't enough to make up the difference in ad rates that Newsweek can charge with its 2.7 million more readers, but it isn't insignificant either. A magazine that truly lives by subscription dollars, National Journal, had a decent 2004 with both ad dollars and pages rising by small amounts - 8.9% and 1.4%, respectively. But the inside-the-beltway publication probably cares the least about those numbers; its annual subscription rate is $1,700. The Atlantic Monthly, which like the National Journal is owned by publisher David Bradley, saw a mixed 2004, with ad pages rising while ad dollars fell, interestingly by almost the same amount - pages up by 16.2%, dollars down by 16.9%. This obviously is about changes in the magazine's rate structure - cheaper rates equal more ads, but less money. And Jet, aimed largely at African Americans, saw both numbers increase slightly.9 The New Yorker, whose subscriptions are also growing, may be seeing the effect of that growth. Its ad pages rose a scant 0.3%, but its ad dollars rose by more than 10%.10 In August of 2002 The New Yorker officially increased its guaranteed circulation with the Audit Bureau to 875,000 from 850,000.11 But it should also be noted that The New Yorker is owned by Advance, a very large magazine publisher, which means the unreliability of the ad-dollar figures could be magnified. Advance, which owns the Condé Nast empire, can work deals with advertisers to buy pages in many titles at once, possibly at discount rates. Finally, the ad-dollar figures, while only rough estimates based on rate cards, paint an interesting picture of the state of the news magazine landscape. The one large advantage the Big Three have is their mass audience, which allows them to charge much more for ads. But what is the long-term effect of that mass audience's being slowly chipped away? The ad-dollar trends on a single chart indicate one possibility.
The New Yorker, whose circulation is not even half that of U.S. News, is rapidly gaining on the bottom player of the Big Three in ad dollars.12 And ultimately the magazine's ad success may suggest a map for other nontraditional titles. It may be possible for the nontraditional magazines with smaller but more elite and affluent audiences to at least get near the playing field of the mass-audience titles. And the desirability of the nontraditional audiences could at some point trump the mass audience. The key here is how mass the mass audience actually is. For the time being, the difference in circulation is still so great that Time and Newsweek find themselves playing on a different field, but it may be that by chasing an increasingly shrinking "mass" audience in a segmenting culture they are putting themselves in a box. 
2005 Annual Report - Magazine Economics |
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