Yesterday, Wash Po.-owned Newsweek announced a series of changes it will be launching in February. The changes are not just minor tweaks for their publications, but a major shift in philosophy. Newsweek now plans to change the way it delivers its content, emphasizing the web more and its print version less, and might also distribute content through phones. Its print magazine will in a way be more bloggish in style, with more opinion stories than straight news reporting and pictures, in an effort to get more links and traffic to their website.
While much of the commentary has focused on potential jobs cuts, what is really big about this story is the paradigm shift it is setting for print media– i.e. writing stories for a print magazine in a way that they will drive traffic to the website, more controversial POV reporting, more opinions and commentary, etc. More traffic, more revenue from the website. But will Newsweek be able to monetize their website in a way that it can be an engine of future growth and profit for the company? WashPo. hopes so, and competitors are watching closely to see the success- or failure- that Newsweek will have.
Newsweek will probably drop its rate base considerably next year. Currently, Newsweek guarantees it advertisers 2.6 million readers, but could drop their rate base from anywhere to 500,000 to 1 million. Magazines sell ads based on their rate base, which is the circulation you guarantee to advertisers in exchange for your rates. If you don’t make the ad rate base that you promise, advertisers might demand cash, free ads, etc. Right now, Newsweek’s ad revenue is down 21% for the year, similar to competitor Time, whose ad revenue has fallen 17% this year. Everything in the media business is vulnerable right now, and print weeklies are losing readers and ad revenue.
In addition to changing their style, Newsweek will be cutting staff through buyouts. The magazine’s staff is already pretty slim after 111 buyouts this spring, but Newsweek plans to offer more buyouts to save money.