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From Publishing Executive Magazine: Mr. Magazine™’s M.O.: 3 Lessons Magazines Can Learn from Cable

August 10, 2011

Change is the only constant in our magazine business; however, most apply that change to content and design rather than their business model for a changing magazine industry.

Since its birth, the American consumer magazine has followed a variation of one business model: circulation revenue from single-copy sales and subscriptions, and later advertising. In the early days, circulation was the major source of revenue; later, advertising became the major source, reaching a whopping 80 percent of the total revenue. When the economy collapsed in September 2008, the advertising market dried up, leaving the magazine industry facing a major crisis.

Add to that technological advances, expansion of digital media and the creation of tablets, and it’s clear that signs of the demise of the magazine industry’s business model were written all the over the wall. All of a sudden, industry leaders started talking about the need to reinvent the business model and to become more “consumer-centric” rather than “advertising-centric.” With the economy rebounding and digital solutions explored, the talks about the new business model have dried up, and we are back to our old ways.

1: Content and 2: Price
For years I have felt that cable television has been the best thing to ever happen to the magazine industry, and that we can learn and apply a lot from both its content and its business models in our own business. From its very beginnings, cable television has followed a consumer-centric model, regardless of how much advertising was later added to its programming. Consumers had to pay a price (and a high price, for that matter) for the premium channels they wanted to receive. That price came on the heels of free television when all consumers had to do was pay for the television set. Today, the average family pays almost $70 a month for cable services—compare that to free television just 30 years ago.
Having more choices means less time spent on different channels, but it also means paying much higher prices for those channels. The more specialized the channel, the more specific the amount of time spent with it and the higher the price paid for it. Whether it is the Playboy Channel or HBO, people are willing to pay more for it.

The same should be the case with magazines. Having 10,000 titles available for the general public today, compared to 3,000 only 30 years back, does not translate to selling more magazines. In fact, the opposite is true. More means less. However, for example, when an almost ad-free magazine caters to the needs of a specialized, literary-minded audience who are interested in food as a culture, Lucky Peach magazine is born with a single-issue price ($10, in this case) that is equal to almost a two-year subscription to a host of general-interest magazines.

3: Distribution
In addition to the price and content, the distribution method of cable television provides the magazine industry with a last, but not least idea for sales and distribution. Cable is sold via bundles, not per channel. A few tests are taking place worldwide regarding the business of selling media via bundle rather than individual entities. On a recent trip to the Netherlands and to the United Kingdom, I witnessed magazines sold via bundles on the newsstands. Three, four and up to seven magazines bundled in one unit—aimed at a targeted audience, and sold at a discounted price—are available to customers to purchase.

Back in the days of broadcasting, folks were able to get one, two or three channels, based on the receiver they bought. Today, a basic cable package is at least 30 channels or more. No individual choices, but starting with the basic and going up with the specific bundles the customer needs, from sports (as many channels as you are willing to pay for and as specialized as multichannel packages for specific sports) to movies, to adult programs, to news, etc. Trying to sell magazines as a specialized bundle may also be another way to promote the consumer-centric model that can survive both the technological changes and the advertising-dependent business model.

No matter what the next step is, one thing is for sure: Doing the same thing over and over again is, as the Chinese say, insanity. We must change our business model, and we must change today. Tomorrow is already too late. PE

Samir Husni, aka Mr. Magazine™, is founder and director of the Magazine Innovation Center at The University of Mississippi’s Meek School of Journalism and New Media. He can be reached at samir.husni@gmail.com and can be followed at MrMagazine.com.

This column appeared in the current issue of Publishing Executive magazine. Click here to check it out and the entire current issue of Publishing Executive magazine.

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3 comments

  1. Great article…. but as to this statement:

    “Today, the average family pays almost $70 a month for cable services—compare that to free television just 30 years ago.”

    That may be true but the larger question is… how many can even view channels without a cable or dish connected to their televisions.

    This has become steadily worse over the years. Younger viewers wouldn’t notice but as someone growing up in the 70s we were able to view channels without much of a problem without something digital attached. That is no longer the case.


  2. also.. with the statement “having 10,000 titles available for the general public today, compared to 3,000 only 30 years back” totally neglects the effect the internet has had on the magazine industry.

    A lot of the content of these publications can be had FOR FREE on the internet with has attributed sharply to the drop in magazine readership and will be a determining factor going forward.

    Cable is also not immune from the effects of the internet especially with the rise of Netflix. The only reason cable really still has a hold is because of the deals made by HBO and the like to ensure they receive the latest content first.

    There’s a lot of people that would cut the cable cord if Netflix’s streaming stable was ever beefed up.


  3. I read with interest your recent column on what Magazines could learn from Cable, and I was sorry you didn’t take it to the fourth level. Having spent many years at Saatchi (during Cable’s infancy) and MTV Networks (during its “maturity”), I can tell you that the decision to create an audience-based rather than a circ-based metric was critical in growing the medium.
    For the first couple of years, the medium was measured on “universe,” eg, circ, the number of subs a network could claim. Like magazines, this was an easily available number, and worked pretty well as long as cable was bought by advertisers as a new, experimental, almost R&D purchase. But as soon as it had become clear that cable networks were competing not with other cable networks but with the broadcast networks for a pool of “TV dollars.” Each of the networks, led by Turner, went (sometimes kicking and screaming) to Nielsen to be measured on the same metric as broadcast.

    Some publishers, including Time Inc., have been very vocal about the need for magazines to adopt an audience-based currency, or be the last man standing. We need a metric that is timely, accountable, and most critically, comparable to other media, who are our real competitors.



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