Mktg - The Economist of Scale

Lucia Moses

U.S. News & World Report’s decision last week to abandon the weekly model follows its move to Web-based service journalism.

Such a radical step isn’t in the cards now for larger rivals Time and Newsweek, although they’re also under pressure as readers and advertisers shift online. Still, circulation economics would seem to dictate that they’ll continue to cut rate base while aiming at a smaller, opinion-leader audience.

Both have recently cut their circ guarantees and issued redesigns inspired by the 747,254-circ Economist. The British import has grown rapidly in the U.S. the past decade, helped by a global editorial perspective and clever marketing. While smaller, its readers are younger and richer than those of the U.S. newsweeklies, also attracting a different ad base.
Pharma, financial and auto are among the top five categories for Time and Newsweek, while
The Economist gets the bulk of its ads from business/technology, financial and schools/camps/seminars, per TNS.

With the ’08 election behind it, the 2.7-million circ Newsweek next year is expected to make dramatic changes and further reduce its rate base. The title has been running more personality-driven cover stories to connect with readers, a likely indicator of the direction editor Jon Meacham will take the magazine while devoting the Web site to news. Newsweek declined to comment on its plans.

If they forego circulation by cutting rate base, the reigning newsweeklies would likely have to raise subscription prices and ad rates, a move magazine consultant Martin Walker called risky.

“They get the pharma and auto because of their circulation,” he said. “As they move down, it makes it hard to reach their numbers.”

Walker also questioned the titles’ upscale push. “Time and Newsweek are Macy’s,” he said.
“The Economist is Bloomingdale’s.”