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Economics

Economics

Data on the economics of news magazines reveal three notable trends.

First, while other genres have improved financially, news magazines have remained stagnant in terms of the ad pages they sell. In part this may be due to the fact that the news genre, unlike others, has not added any wildly successful books in the last decade.

Second, among the big three news magazines, there has been something of a shaking out. While the three were bunched together in ad page sales in the mid-90s, Time has now established itself as the clear leader, with Newsweek a strong second. U.S. News & World Report is third and losing ground. Some of Time’s growth may be due to its ability to sell ad packages to several books as part of the Time Warner empire.

Third, The Economist and to a lesser extent, The New Yorker, are the two news magazines enjoying growth in ad pages and revenue. In the past 15 years, their revenues have more than doubled and their ad pages are neck-and-neck with genre leader Time – though The New Yorker has long been an ad page leader, this is a new development for The Economist.1

The Industry as a Whole

Overall, the economic figures for the magazine industry look relatively stable. But looking deeper, there are some noticeable trends over the past 20 years and, more particularly the last decade, which bear notice.

Operating Profit for the ’Average Magazine’
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Magazine Publishers of America, Financial Review of Consumer Magazines 2001
* ’’Average Magazine’’ is an MPA composite of 65 different publications
Ratio of Ad to Editorial Pages in the ’Average Magazine’
1997 – 2001
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Magazine Publishers of America, Financial Review of Consumer Magazines 2001
* ’’Average Magazine’’ is an MPA composite of 65 different publications
Profit Margin of the ’Average Magazine’
1997 – 2001
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Magazine Publishers of America, Financial Review of Consumer Magazines 2001
* ’’Average Magazine’’ is an MPA composite of 65 different publications
’Average Magazine’ Revenues and Expenditures
1997 – 2001
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Magazine Publishers of America, Financial Review of Consumer Magazines 2001
* ’’Average Magazine’’ is an MPA composite of 65 different publications

A look at the “average magazine,” a Magazine Publishers of America composite of 65 publications, shows a healthy industry as of 2001.

While revenues and profits took a hit with the recession of 2000-01, profit margins stayed above 15 percent. Average profits never fell below $13 million.2

Even more encouraging for journalists, publishers during the recession did not allow a smaller volume of ad pages to dig too hard into editorial pages. The “average magazine” was thinner in 2001 than in 2000 – 158 pages versus 174 pages the previous year – but considering the drop in ad pages due to the weak economy, it could have been worse.3 As ad pages fell in 2001, publishers allowed editorial pages to increase as a percentage of total pages. Some analysts also suggested that magazines might have benefited economically after September 11 through more newsstand sales, which bring in more profit than subscriptions. The terrorist attacks also may have led editors and publishers to publish more news pages, since events were so momentous.

The Numbers by Genre

Some genres, however, are much healthier than others and over the last decade the differences have become even clearer. The Publishers Information Bureau collects ad page and dollar figures for companies representing 85 percent of consumer magazine advertising volume in the United States.4 To examine their data, we organized the magazines by genre along the same lines as Mediamark.5

A clear picture quickly emerges, and news magazines are the big loser. Ad dollars and pages are increasingly going to places other than news magazines. Some of the reasons for the shift are fairly obvious. The segmentation that hit television with cable and grew with the Internet hit the magazine industry earlier. Many of the new books that appeared from 1980 forward were niche service magazines aimed at specific groups, like Bicycling, PC Magazine or Lucky, the last a magazine aimed at shoppers.

The numbers show the explosion and fragmentation. In 1980 there were 103 magazines listed with the Publishers Information Bureau. By 2003 there were nearly 250, with most falling into the service magazine niche.6

At first glance it may seem unfair to compare news magazines with the other genres here. News magazines, after all, are just one segment of a large industry and was

Magazine Ad Pages, 1980
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Publisher’s Information Bureau, 1980 annual report
Magazine Ad Pages, 2002
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Publisher’s Information Bureau, 2002 annual report

bound to take a hit with the explosion of other genres and niches. (See Usage) But despite the explosion of magazines, the entertainment/pop culture genre still managed to increase its overall share of the ad pages.

Magazine Ad Dollars by Select Genres
1980 – 2002
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Publisher’s Information Bureau annual reports
Magazine Ad Pages by Select Genres
1980 – 2002
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Publisher’s Information Bureau annual reports

Even with a steady number of publications, however, news magazines should not have seen ad pages decrease the way they did. The growth simply was not there for many of the big news magazines. Compare ad pages in some of the bigger magazines in 1992 and 2000, for example. In 1992 Newsweek had 2,109 ad pages and U.S. News had 2,170 pages, while People had 3,281 pages. In 2000, Newsweek had 2,415 pages (an increase 15 percent) and U.S News had 1,857 (a decrease 14 percent), but People had 4,227 pages (an increase of 29 percent).7

The growth in entertainment and lifestyle magazines is striking, especially since 1995. The number of ad pages has grown by nearly a third since then and ad dollars have grown by more than 80 percent. Since 1980, ad revenues have increased 500 percent for that segment, compared with just 300 percent for news magazines.8

The rise of entertainment and lifestyle has been stable and consistent. And though there have been some notable flameouts, such as George and Talk, the genre overall has not only grown, it has produced spin-offs as well. Time Warner’s People magazine alone has led to the creation of Teen People, In Style and People En Español.

In fact, while Time Warner has launched five entertainment titles listed on the PIB list in the last 15 years (the above titles and Entertainment Weekly), it has not begun a single new news magazine.

Business Magazines

Business magazine ad dollars grew more as well, rising from $262 million 1980 to $1.5 billion in 2002, a nearly six-fold growth. Nevertheless, as was evident in the hit these magazines took in 2001, this genre’s fate seems more closely tied to the overall health of the economy and the stock market. Case in point is the unreal spike in pages and dollars that business publications enjoyed in 2000. It can be best understood by looking at the flash and crash of a single magazine, The Industry Standard. In 2000 it had more ad pages than any magazine listed with the PIB.9 By 2001 it had folded. In other words, good business is good business for these magazines. When the bulls are running and stocks are rising, investors want to know the value of their portfolios. When the bears are playing, people would probably rather read about anything else.

For the magazine industry as a whole, however, the changes over the past 20 years can be understood simply, the ad growth the industry as a whole experienced has the least effect on news magazines. In 1980 news led the three genres in ad dollars, with pop culture/entertainment close behind and business a distant third. In 2002, news was in third, fairly close to second-place business and many lengths behind the leader, pop culture/entertainment.

Changes in the newsmagazines

Advertising pages and ad dollar figures show changes in the big three news magazines over the past 15 years. Since the late 1990s, there has been a trend playing out among them, a consistent and well-defined first, second and third place finish among them. Time is on top, followed by Newsweek, with U.S. News & World Report bringing up the rear. As recently as 1994, the three magazines were bunched up closely in ad pages, with U.S. News actually leading, but in the last 10 years more separation has occurred.10 U.S. News’s slip downward seems to have gained momentum as Time and Newsweek, while riding the ups and down of the economy in general, have done relatively well. If the trends continue it could be that at some point in the near future the big three could become the big two.

Time, which has had the most success with ad pages in recent years, is also part of the giant of the magazine industry, Time Warner. And within this industry, the “synergy” created by the number of magazines owned by this media giant has been beneficial. Being able to sell advertisers pages in all its high-profile, high-circulation books at one time (and at a discount) has led to an unquestionable advantage for the megamedia company. And Time Warner has had a good run recently for all its magazines in terms of ad pages and revenues. From 1990 (its first year listed with the Publishers Information Bureau) to 2002, Entertainment Weekly’s ad pages climbed from 906 to 1,864. InStyle, which was launched as a special issue in 1994 before gaining a regular publication schedule, saw its ad pages climb from 196 to 3,030 in 2002.11 And People, too, had large growth over the period. Perhaps, then, while the AOL Time Warner merger may not have provided the publisher with added advantage over its competitors, the strength of the publishing arm of the company may have helped buoy its bottom line.

Ad Pages in the Big Three News Magazines
1988 – 2002
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Publisher’s Information Bureau annual reports

Elite Newsmagazines

Also noteworthy is the success of smaller-circulation news magazines, particularly The Economist and The New Yorker. In terms of ad pages, these two magazines have done very well over the past decade, and as of 2002 sit ahead of all but Time. The New Yorker is part of the Advance Publications group, which includes all Condé Nast titles; The Economist is part of the smaller London-based Economist Group.

Ad Pages in the Other News Magazines
1988 – 2002
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Publisher’s Information Bureau annual reports

When ad dollars are figured in, however, the big three still hold a sizable lead, with U.S. News’s declining position becomes clearer.

News Magazine Ad Dollars, by Magazine
1988 – 2002
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Publisher’s Information Bureau annual reports

Economic Conclusions

The long-term financial outlook for magazines in general seems strong. There has been growth in ad pages and ad dollars across the board. But within the news genre, things are more stagnant. The number of magazines is flat and, while ad revenues grew between 1988 and 2002, ad pages declined.12 What does this mean? The news genre is at least in need of reinvention and may, indeed, be saturated. There is also a note of caution for the magazine industry in general. The rising cost of circulation through the mail makes that branch of the revenue stream very weak and could threaten the long-term health of the industry.

Footnotes

1. Magazine Publishers Association, Publisher’s Information Bureau statements 1980 – 2002. http://www.magazine.org/Advertising_and_PIB/PIB_Revenue_and_Pages/

2. Magazine Publishers Association, “Financial Review of Consumer Magazines 2001.” p. 12

3. Magazine Publishers Association, “Financial Review of Consumer Magazines 2001.” p. 22

4. Magazine Publishers Association, Publisher’s Information Bureau statements 1980 – 2002. http://www.magazine.org/Advertising_and_PIB/PIB_Revenue_and_Pages/

5. We started by using categories created by Mediamark Research, a firm that collects data on magazine readership. In some situations, where magazines were listed in several categories or listed in questionable categories, we assigned it to a different group. The Economist, for instance, is listed as a “Business & Finance” publication. But the magazine calls itself a weekly news and business publication and much of its content is related to general news – certainly more than a standard business publication. And the New Yorker, which is listed as “General Interest” with Mediamark, regularly deals with the news, not just in newsmaker profiles, but also in longer think pieces on important news topics. People magazine, on the other hand, is listed under “Entertainment, Lifestyle and Pop Culture,” but also under “News.” We put it under Entertainment, Lifestyle and Pop Culture as that is its primary coverage mission.

6. Magazine Publishers Association, Publisher’s Information Bureau statements 1980 – 2002. http://www.magazine.org/Advertising_and_PIB/PIB_Revenue_and_Pages/

7. Ibid.

8. Ibid.

9. Ibid.

10. Ibid.

11. Ibid.

12. Ibid.