Newsweek’s Failed Strategy
When we want to learn about strategy, we often gravitate to successes, yet failures are often far more instructive. Newsweek’s failed strategy gives us a great opportunity to do just that.
For those who missed it, last week the Washington Post company announced that they would sell the magazine, which they have owned since 1961, citing mounting losses and no clear path to profitability. The announcement was in stark contrast to Time Inc, which announced a very good first quarter.
The failure of Newsweek is especially interesting because it comes on the heels of a new strategy and redesign launched just short while ago. So it’s worthwhile for us to take a look at what the strategy actually was and why it failed.
The Great Re-Position
Traditionally, newsweeklies have reported the news, but with a different perspective than newspapers. Their weekly format allows for more in depth reporting that puts the week’s events in context. The extra time also enables innovation, such as compelling but difficult to create infographics that help pull the jigsaw pieces of a story into a coherent whole.
Newsweek’s editor in chief, Jon Meacham decided to break away from reporting and put out a collection of opinion based essays. He felt that this would attract a smaller, but more upscale readership.
The basic idea was that the increase in ad rates and decrease in printing costs would make Newsweek profitable. The results are in and they are clear. This strategy was a loser. To see why, let’s first look at some more successful models.
The Foreign Affairs Model
The most obvious place to look for an analogue to what Meacham was trying to achieve is Foreign Affairs, the most influential journal about world events. It was here that George Kennan published his famous X article which influenced the US strategy of Soviet containment for 50 years.
The journal is everything that Meacham wanted Newsweek to be: influential with an uber-readership. However, a closer inspection should have alerted Meacham to the danger of the path he was taking.
Firstly, Foreign Affairs is published bi-monthly, not weekly. Furthermore, although Foreign Affairs has access to the best academics and policymakers, much of it is crap. However, the few outstanding articles in each issue make it a must read in some circles.
Finally, Foreign affairs is not as a business, but rather an arm of the Council on Foreign Relations, a non profit organization whose primary mission is to serve it’s members. Moreover, it has varied sources of funding, such as member dues and donations, so it doesn’t even have to break even.
The Atlantic Monthly Model
Another possible model is the Atlantic Monthly, which successfully publishes an in-depth magazine that covers politics, business and culture. Like Foreign Affairs, it attracts the upscale readership that Meacham covets, but is run as a commercial enterprise. However, the similarities end there.
Monthly magazines, with their higher page count and slower pacing are focused on their feature well – usually four or five stories of greater length than a weekly can hold. Monthly magazines also offer greater production values and are expected by advertisers to deliver niche audiences. Weeklies, on the other hand, are expected to provide wide reach.
Another point of interest is the Atlantic’s approach to their web site, which is updated constantly and features extremely active bloggers. They also have an affiliated product called the Atlantic Wire, which offers a useful guide to opinions on the web by providing thematically group links.
The web model works and the audience numbers are impressive.
Why the Strategy Failed
By now it should be clear why the strategy failed. Jon Meacham’s magazine was targeted at…Jon Meacham! It is important to note that there was never anybody else’s name associated with the strategy: no publisher, marketer or ad sales specialist. It was a decision made behind the Chinese Wall that editors like to build around themselves.
The notion that offering a magazine consisting mainly of one-page opinion pieces would attract a better quality audience than reporting flies in the face of any apparent media reality. (If you want a truly upscale audience, sports beats news everyday of the week and twice on Sundays).
In fact, the repositioning of Newsweek never really seemed like an commercial strategy at all, but rather an editorial vision. Even worse, Meacham doesn’t seem to be backing off a bit. In his letter to readers, he seems to continue to believe that since he regards its mission to be important, Newsweek should continue to live on as a commercial concern.
Given that the lives of over 400 employees hang in the balance, that’s an astounding conceit.
A Sustainable Model
As the continued success of Time and the growing US presence of The Economist in the US can attest, there is a sizable demand for weekly news reporting. Having run a similar business in the Ukraine, I can speak from some experience. A newsweekly brand can be successful both in print and on the web.
The crucial thing to understand is that you differentiate at the margins. Without going into too much detail, we had a particularly telling example when we ran into problems with our web edition, which unlike the magazine focused on a newswire.
We found that adding more in-depth features had little immediate effect on overall usage, but did affect loyalty and time on site. After some months, audience started growing again and within a year we were back out in front of the pack.
The usage numbers never changed much, less than 10% of page views were affected. However, that was enough of a draw to make us the preferred newswire. The specialty content augmented the reporting, but could never replace it.
And that’s where Meacham went wrong. He assumed that people who shared his interests would not only forego basic reporting, but also be more attractive to advertisers. By all accounts, this reflected the views of Meacham and his inner circle, but very few others were consulted.
It’s admirable to have a vision, but only sensible to check in with reality every once in a while.