Magazines on hunt for new revenues

Gideon Spanier
14 Feb 2011

Could magazines do a better job of using their trusted brands to sell more goods and services? While the magazine industry awaits the release of six-monthly sales figures on Thursday, savvy publishers are thinking long-term - about how to generate additional revenue beyond print circulation and advertising.

Of course, iPad and e-readers are a big opportunity but take-up is still relatively low and it remains to be seen just how much digital and mobile can match the power of print. Web advertising has generated little income so far.

In the meantime, there are other ways of raising revenue. Empire, Bauer's top-selling film magazine, is launching a three-day movie entertainment event at the O2 in Greenwich on 12-14 August. Billed as Empire presents... Big Screen, it will feature preview screenings, Q&A sessions with stars and directors, live action stunt shows and merchandise.

Bauer hopes it will attract tens of thousands of paying visitors and become an annual event like its MCN (Motor Cycle News) Show in Docklands. "It's an important and growing part of the business," says Bauer chief executive Paul Keenan.

Meanwhile, the London-based Condé Nast International is expanding overseas with its Vogue Café, GQ Bar and Tatler Club ventures, already launched in Moscow. Interestingly, the branded restaurants are opening in some cities where the magazines are not sold.

Closer to home, Condé Nast Worldwide News store is opening next week beside the publisher's Vogue House HQ in London. Designed by architect Lord Rogers' son Ab, the store will be a brand experience, selling magazines and showcasing the latest digital editions.

Condé Nast has other plans, including charging delegates to attend conferences run by its technology title Wired. "We are only doing things that are brand-consistent with the magazines," says Nicholas Coleridge, UK managing director of Condé Nast.

There is nothing new about magazines looking to spin off events, sell merchandising, or extend into radio and TV. The difference now is that there is a renewed urgency as many media owners see sales and advertising come under pressure in the digital age.

Not everyone puts it like that - those close to Conde Nast say they aren't seeking new revenue because of any fall in print income as sales are up.

However, the magazine industry is undergoing major change. Some heavyweight owners - Hearst's National Magazine Company, Condé Nast and Bauer - remain committed. But consolidation is in the air. Hachette Filapacchi has sold its titles to Hearst; rumours swirl that America's Time Inc will break up IPC; and BBC Magazines are on the market.

As Arnaud de Puyfontaine, chief executive of NatMags, has said: "The collapse of advertising in 2008 and 2009 has been a tipping point, which has amplified the pace of change and led to a change of the business model."

In the race to seek out new revenue, most publishers are clear about two things: The print brand and quality journalism remain integral and any "brand extension" must fit with those core values.

"Printed magazines remain the beating heart of the brand," says Keenan. "This activity [extending the brand] is a really good driver of growth but it needs to sit on a really brilliant magazine and radio business."

For most publiser, around 5-10% of revenues presently come from beyond advertising and circulation. The aim, in some cases, is to move into double digits. But de Puyfontaine says 50% should be a target, claiming that publishers should get more insight from customer data they already have, particularly from loyal subscribers, and then translate that into sales in the
e-commerce age.

This is what the new owner of Reader's Digest, private equity firm Better Capital, is trying to do. Reader's is hardly the best example - an unglamorous brand that collapsed into administration - but Better Capital reckons there is a decent underlying business. Only 15% of revenues come from the magazine while 85% are from direct mail and selling books and DVDs to its database of 500,000 customers.

Keenan believes a specialist brand such as MCN is better for e-commerce - selling biker gear, equipment and insurance - than a mainstream brand such as fashion title Grazia where there is tough competition from retailers.

So Keenan has launched a new commercial division, Bauer Access, to work more closely with media agencies on other ideas that go beyond advertising - for example, creating editorial content that might be funded entirely by a brand. This might feature not only across the magazine, broadcast and digital but also an event or experience which can generate publicity and social media buzz.
"Consumers and audiences value content for the content, not necessarily for its provenance," he says.

There is another way to protect established editorial brands - by investing in new digital businesses outside magazines. Analysts credit Hearst in the US and German publishing firms Holtzbrink (an investor in discount website) Groupon) and Burda for savvy venture capital
investments.

The message is clear: Publishers are getting creative with their brands when it comes to looking for new revenue.