Can a New Magazine Survive?
The predicted demise of John Kennedy's George and the launch of Tina
Brown's Talk raise the question: What are a new magazine's chances for
survival?
If the magazine is intended to reach a broad, general-interest audience, the
answer is: not good. The total number of magazines published in the United
States has actually soared from 2,500 in 1985 to 5,500 in 1998. But this is
entirely due to special-interest magazines with names like The Asthmatic Day
Trader (imaginary) or Martha Stewart Living (real). Even here the
odds are against a newcomer. More than 1,000 new magazines were launched in
1998, and half have already folded--most after one issue. In general, only
three out of every 10 new magazines make it to their fourth
anniversaries.
Among general interest magazines, the only newcomer to survive and thrive is
Condé Nast's Vanity Fair . ( InStyle and Entertainment
Weekly , both published by Time Warner, might also qualify, depending on
your definition of "general interest.") Condé Nast is privately owned, so
actual financial data are not available. But it is widely assumed that
Vanity Fair , though making money now, is far from recouping its early
losses. Even ultimately successful magazines spend many years and many millions
before reaching profitability. Unsuccessful magazines spend the money and never
become profitable. How much money? George's start-up costs were said to
be $20 million. Rumors about the cost of launching Talk range up to $50
million.
Why? Partly for the same sorts of reasons that any new business must spend
money before it starts coming in--hiring employees, stocking up on yellow
notepads, throwing a launch party, etc.--but mainly because of the cost of
acquiring subscribers. You mail out masses of subscription offers (i.e., junk
mail) and are happy with a 1 percent to 2 percent response. It can easily cost
$50 or more for a glossy monthly to acquire a subscriber who pays $12 or $15 a
year. Then you are thrilled if half of those renew at the end of a year.
Even an unsuccessful magazine can have a large circulation if it is willing
to pay enough for subscribers. Success comes when you have a high renewal rate
and new customers are easy to entice to replace dropouts. Then your
subscriber-acquisition costs plummet. Even so, the average subscriber may cost
more to acquire than he or she ever pays. But meanwhile your large and loyal
audience entices lots of advertisers. At best this takes years.
Of course, even a money-losing magazine can always survive indefinitely if
its owner is willing to cover the losses. The Weekly Standard , owned by
Rupert Murdoch, has joined the New Republic , the National Review ,
and other older magazines in the tradition of magazines subsidized for
political reasons. But there is another, more amorphous and less acknowledged
tradition of money-losing magazines kept alive for reasons of general glamour
and corporate synergy. Talk , co-owned by Miramax (a division of Disney)
and the Hearst Corporation, may survive and even thrive in that tradition.
And then there's the Internet, where there are no postage, printing, or
paper costs. And there are no subscriber acquisition costs either, since
Internet magazines are given away free (though Internet magazines do spend some
money on marketing). The theory is that advertisers--who don't seem to mind the
lack of paying subscribers--eventually will cover the entire cost with a bit
left over for profit. So far, this remains a theory.
Next question?
