Submitted: The Two Sides Team November 5, 2013
The print magazine is thriving and the circulation of American magazines is very stable, Michael Clinton, President, Marketing and Publishing Director of Hearst Magazines, told Samir "Mr. Magazine " Husni at the Folio: Media Next Conference in New York City Monday Oct. 28.
via Mr. Magazine – October 30, 2013
The print magazine is thriving and the circulation of American magazines is very stable, Michael Clinton, President, Marketing and Publishing Director of Hearst Magazines, told me during his appearance as a guest at the standing room only Samir "Mr. Magazine" Husni and Bo Sacks Show at the Folio: Media Next Conference in New York City Monday Oct. 28. His revelations and advice may surprise you as he talks about the printed word and the digital world we live in.
Mr. Clinton noted that magazines are paid content in a world of free content, and in the case of Hearst, a 126-year-old entrepreneur, everything is paid content. Whether you buy the print edition or the digital edition you have to pay a separate price for each edition.
In the midst of the question and answer session Mr. Clinton asked the audience to guess the percentage of digital subscriptions on the tablets compared to that of print: 3% was his surprising answer to an audience that was guessing 20 and 30%.
However, Mr. Clinton is quick to add that Digital is now the third channel of revenue in the magazine media business complementing advertising and circulation revenues. If you're in the print business today you can't just wear a print hat, he told the audience.
The aforementioned words of wisdom and many more you will discover in this lightly edited highlights from the conversation with Michael Clinton. I believe you'll find it an eye-opening reading experience.
On hope in the magazine industry during a time of great transformation:
I'll just open by saying that perhaps a provocative statement that many of you will find interesting is that the print magazine is actually thriving. And you may all say, "Huh? What do you mean by that?" And what I do is I go to the consumer because what has happened with the print magazine industry is pre-during and post the recession, what we learned is that overall circulation of magazines in this country actually remained very stable. And if you think about what a magazine costs – it's not a lot of money – if you buy a copy of a magazine or a subscription, but if you think about what stress people went through during the recession, you don't have to buy a magazine to live.
So some people might have thought we would see magazine circulation plummet from the consumer point, but actually it was just the opposite – it remained very consistent. I might add that it is paid content in a world of free content. We ask consumers to pay money for our content, which is a completely different model than the free web and/or other information that's available out there.
On the percentage of total magazine subscriptions that are delivered on tablet devices in the industry:
So let me ask my favorite trivia question that I ask people when I'm sitting next to them on airplanes or in media meetings or in groups like this. And I'll just ask you to yell out a number. What is the percentage of total magazine subscriptions that are now delivered on tablet devices in the industry? Throw out a number. The answer is three. Most people say 30. Most people think there's been this massive transformation of magazine subscriptions onto tablets and they will say 30 or 35 percent, which is part of the urban myth of what is the reality in terms of the consumer. It is three percent.
On the struggles of moving people from the printed product to the tablet:
Some of the complications are that discovery is a real problem for consumers. It's hard to find a magazine on a digital newsstand. You have many, many different newsstands now so you can go onto iTunes, you can go onto Zinio, you can go onto Next Issue Media, you can go onto lots of different places. So discovery is a problem. I don't know how many of you have tried to authenticate from a print subscription to a digital subscription, meaning if you paid for your print subscription you can get the digital copy at no cost. That's called authentication. I've tried it on a couple of different magazines that I subscribe to personally. It's very, very hard sometimes.
The downloading process, the whole technology, you finally give up and say it's not worth it because it's very complicated and that's a problem we need to sort out as part of this process. We did just an interesting study with people who did not renew and by the way on the tablet subscription we have great renewals, we have great demographic profiles and we have great engagement, but we also have people who have not renewed now that we're cycling. And when we go back and ask them why they haven't renewed, it's generally two things. One, they've gone back to print because they just prefer the print experience, or two, the technology and the clunkiness of it frustrated them in terms of getting the download into the shelf and forgetting that the new issue had come.
You know, when you get a magazine in your mailbox you're sort of reminded that your favorite magazine is here – great. Sometimes when it's downloading onto the shelf you forget that your new magazine has come. So that's part of the technology as well, we like to be reminded.
On the importance of digital as a third channel:
We, as mentioned, are the leader in the number of subscriptions we have on tablet and we have a very, very aggressive plan and a big investment. That's because we do believe in this as the third channel.
So I would argue that if you're in the business of starting or running a magazine, the beautiful story is you now have three channels of distribution. You have the newsstand channel, you have the print subscription channel and now you have the digital subscription channel. And I always make the analogy, for those of you who know the beauty business, when Sephora was born it was a great story for the beauty manufacturers because they got a new channel of distribution aside from department stores and traditional means.
So we want to embrace this in a big way because we think it will grow. Last week at the magazine conference I think our CEO said that we have an aggressive plan up through 2017 to almost triple that number, so we've got a very big initiative and we think it's a great new channel to cultivate and develop.
On insisting that consumers pay for the print AND digital versions of magazines:
I think for those of you who are thinking about this or doing this I'm just going to give you a bumper sticker line that is our mantra and that is "fee not free." So what do I mean by that?
You know if you go to Barnes & Noble and you buy a physical book, when you leave the store do they give you a free download to download that book on your tablet? No. When you go to watch the movie Gravity, when you are walking out of the movie theatre do they give you a coupon to download the film on Netflix? No.
If you choose to watch a film on your tablet or you choose to buy a book on your tablet, regardless of if you've bought the physical or have the physical experience, you pay for it. So our point of view in our company is if you have a paid subscription you're not going to get the tablet subscription for free. If you want the tablet subscription, you buy it.
Some people will have both and some people will have one versus the other but we would argue, thank you Steve Jobs, that he taught the consumer that you pay for content and so when you go on iTunes and you're buying a song or you're buying a book or you're buying a movie you're actually paying for that product on that platform.
On customers insisting on print over digital:
I think you know I talked about what we do to the consumer, you know when we put out a new magazine as we are with Dr. Oz The Good Life, which is coming Feb. 4, we are always promoting the print magazine to our consumer base. I'll give you one example and then I'll switch over to the advertising side.
When we launched HGTV 18 months ago we had the most aggressive plan ever in terms of offering the consumer both the print edition or the tablet edition. So everything we did to market to the consumer was to serve up the tablet edition just to also see what kind of take rate we would get. And we generated about 750,000 print subscriptions and we generated about 70,000 digital subscriptions and I keep going back to "It's the consumer, stupid." The consumer will make the choice what they want.
So what we know is that in putting out new products and even in our renewals and our direct mail efforts with the print product versus digital that that still seems to be the No. 1 choice in how they want the product.
On not being able to just wear a print "hat" today:
Listen, if you're in the print business today, and this might get into another discussion about skillsets and how do you grow a career and how do you build a career; if you're in the print business today you can't just wear a print hat.
You know, we call it the ecosystem of the brand, I'll take Cosmo for example. Cosmo has 17 million readers in its print edition but when you look at all the other platforms, when you go to Cosmo.com, that's 13 million uniques, and by the way only 10 percent of them overlap with the print subscriber. If you go to any of the social media platforms, you have Cosmo on Facebook, Twitter, etc. You have Cosmo Tablet Edition, which is the manifestation of the print edition on the tablet. They're actually the leading women's edition in terms of tablet edition.
You have Cosmo on Sirius radio, we have Cosmo in 63 countries, we'll launch next fall Cosmo Live, which will be a 2-day empowerment conference for millennial women.
So we think about it in the context of the ecosystem of the brand. So how do you build the brand community? Print is at the core, but all of the other platforms, we have to be vigorously cultivating and developing because we can bring people into our brand story through other messages and other formats.
On the evolution of the required skill set for an editor:
Our editors are constantly thinking about what content do they produce for the various platforms. And it's interesting, we just completed a major millennial study with three cohorts: 14-20, 21-30 and 30-plus. What's interesting is the millennials.
When we were kids we watched TV, we were on the phone and doing our homework and our parents would say, "How can you concentrate when you're doing all three?"
Today they're doing nine things and they're on different platforms – they're digitally wired. But they use each platform for different things. So they use Instagram for one thing, they use Facebook for another, Twitter's their newsfeed, Facebook is their spy, etc., etc.
So our content people will have to know how to adapt content for those platforms. You can't just put it out because each one is emerging as a different source of information. It's complex, we're constantly learning, we're constantly training and we're constantly evolving.
On harnessing the skill sets of digital natives to help drive a magazine's digital component:
What I would suggest that someone do is go out and hire a 21 year old or somebody just out of college who is a digital native and say to them, "Your job and your only job is to be our social media expert. I want you on our sites every single day posting content that's relevant for our particular brand." And let them loose.
You will find that young, digital natives are very inventive and innovative as to how they go about developing social media. So you don't necessarily have to spend a fortune with regards to some of these things. But you have to have some kind of a digital offering because it's what the consumer wants from your brand.
On Hearst as a 126-year-old entrepreneur:
We want to know everything new that is emerging. We want to play in every space, we want to play in the print-e-commerce space, we want to play in a more robust digital space i.e. being more, but you know respect our legacy and our DNA. We want to be able to understand what Blipper is before everybody else does and be first to market with it.
We're often times first to market and test, trying different kinds of new concepts – digital concepts in particular. Programmatic buying I mentioned.
So we sort of view ourselves as an entrepreneur so that we can stay as nimble as we can. We are fortunate that we're a private company so we can invest some money in the new, emerging technologies and try and test different kinds of things. If you don't there's that great expression: "innovate or die." If you're not constantly thinking about this then you will miss the mark.
But that being said, you know what we continue to respect and continue to acknowledge, and I'm the guy that has to ultimately, with my publishing team, bring in the revenue, is that the revenues are still predominately print based.
So advertising and circulation combined still represent 90 percent of our revenues. And I don't see that changing in any huge way in certainly the next few years. So look at the legacy. Constantly doing innovative things on the print side, which I can get into if you want, but then also being very, very entrepreneurial on the digital side so that we can grow and evolve that part of our business as well.
On the struggle to successfully monetize mobile advertising:
Consumers' eyeballs are shifting and a lot of those eyeballs are obviously shifting to this device, the smartphone, as well as the tablet to an extent and will continue to grow. And the advertising dollars are not necessarily following where the eyeballs are.
Now part of that is that no one has cracked the code yet on meaningful advertising solutions, advertising units on mobile devices. The mobile device is very hard to monetize from an advertising standpoint. So someone has to crack that code and figure out what is going to be the mobile experience in terms of advertising without it being viewed as intrusive and/or an annoyance for the consumer. So that will happen over time.
On the importance of advertising in magazines:
One of the things we think about a lot in the magazine business is what is our USP. What's our unique selling proposition to the consumer and to the advertiser?
And one of the things which is a great benefit to us, and this may not surprise you, but you know research after research after research proves this out, that in the magazine experience, the print experience, the consumer actually wants the advertising. It's part of the experience.
I love reading Outside Magazine. Outside Magazine is one of my personal favorites and I spend as much time in the advertising because it shows me a lot of new products that are coming out in the outdoors space.
If you love fashion magazines, think about what your issue of Harper's BAZAAR would look like in terms of the experience without any advertising. You'd probably feel half empty.
So one of the things we know is that consumers actually embrace advertising in our medium, which is really a compelling story that we can tell the marketers who are trying to get the consumers' attention in a very fleeting, ADD world where people are constantly seeing messages fly by them every single day. They actually, when they're on the printed product, stop and look at the ad because they want to see what the new golf product is in Golf Digest or what Prada is doing in fashion. So that's a great story for us to tell.
On career advice for young people:
Careers are always a bit of performance, and skill, and luck and timing. It's that elusive mix of all of those things. And I think the core of it is performance because when you do your job and you do it best and you excel, people who are in my seat notice that and have an eye on, in my case, who will be the next publisher of one of our magazines because they've excelled and performed in the job that they're currently in.
And what I look for is not only just the performance but the vision. What is their vision of what their assignment is, not their own personal vision of who they are, but the vision of what kind of new innovation are they bringing to what they do and that is always a good way to propel someone to the next place.
And in addition to that you need to be ready to jump when the opportunity is there and when the opportunity arises – that's the timing piece. I cannot underscore the importance of having a mentor. I have had two very great mentors in my career who are still my mentors and I mentor people as well. It's important to hitch your wagon onto someone who can help develop and you can brainstorm and you can be totally open to in terms of putting it all out there.