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What Ate the Periodical? A Primer for Web Geeks

We’ve all heard an awful lot about the painful transition newspapers and magazines are going through. Two decades after the arrival of the web, the search for durable, profitable business models that make sense in the digital age goes on.

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And in case you hadn’t noticed, it hasn’t been going particularly well. Most of these organizations still haven’t figured out how to fend off the gremlins gnawing away at their balance sheets—to say nothing of how to reverse the trend.

The internet changed the business of publishing in ways that are excellent for readers, authors, designers, and publishers, but it’s kicked the proverbial chair out from under lots of business models that were established prior to its arrival. Everyone can feel the effects of the publishing industry’s struggle to figure out exactly what value it offers, how to deliver it, and where to go from here.

There is a real need for the services these organizations provide, and a real opportunity for those of us who make our living working on the web to help guide the way. But before we can help solve the problem, we need to understand its history.

“Newspaper” and “magazine” are labels that speak to format and topicality, and plenty has been written about both. But they also speak to how those entities are structured as businesses. What, if anything, did the internet change about those things? And what qualities endure despite the shifting tides? Let’s take a look.


Ads have long been central to how mass-market periodicals make money. But late in the last century, advertising’s share of revenue began accelerating. Today it’s not uncommon to crack open the ledgers of a mainstream periodical and find ad revenue making up 80 percent of its total income.

Under this kind of influence, publications—the best of which always excelled at targeting audiences—evolved into exceptional ad delivery vehicles for their tidy bundles of demographic joy. While the ad market was flush, there were few attempts to check this trend and diversify revenue sources. The industry cast its lot with advertising.

Then the internet ate advertising.

The last decade has seen a total cratering of the advertising market for newspapers and magazines. What happened?

On the one hand, precision metrics arrived with the internet. Clickthrough rates, time spent on site, and a host of other statistics became directly measurable and easily comparable, letting us evaluate the effectiveness (and arguably the real value) of ads. This information could only be guessed at a few decades ago, when ad pricing leaned on hefty doses of speculation and artful salesmanship. The web’s data-friendly nature forced ad sales departments to quantify and show their work.

On the other hand, the highly tuned, ultra-targeted advertising practiced by the likes of Google and Facebook brought new competitive pressures. The previous generation of advertising targeted fairly broad demographic tranches: “eighteen- to thirty-five-year-olds,” “Esquire readers,” or “jogging enthusiasts.” To a potential ad buyer, those targets can seem hopelessly crude compared to putting a barbecue ad in front of someone who just searched for backyard grills (the Google play), or feeding the right concert ad to someone whose musical preferences and social calendar you’re keeping tabs on (the Facebook approach).

There’s plenty of debate over whether these approaches really work, or possibly even constitute a paradox, but the economic effect is the same: They drive the price of old-fashioned, mass-market ads—and the per-capita profits thereof—down. (Oh, and it just so happens that Google and Facebook also have unprecedented audiences, so they can compete head-to-head with those good old-fashioned mass-market ads on reach, too.)


Many of us have been trained to think the internet set the expectation that newspapers and magazines should be free online. That’s partly true, but the fact is that subscriptions were already highly undervalued at most organizations by the time the internet arrived. And it’s largely because of advertising that this happened.

You see, while the ad dollars were piling in, many media companies doubled down, deliberately lowering their newsstand and subscription prices below the break-even point in a gambit to increase circulation. The bigger your circulation, the more you can charge for all those ads you’re packing in—the prevailing wisdom being that the more people saw an ad, the more it was worth. (That circulation number was so important to the bottom line that an industry scorekeeper was set up just to keep tabs on it.)

And the loss they were taking on those dirt-cheap subscriptions? You guessed it—covered by the resulting gain in advertising sales. Publishers were incentivized to gut the price of their own consumer products. Drop the price, sell more issues, get more money back in the form of higher ad rates. To the point where some periodicals were (and still are) handed out for free, just to be carriers for ads.

Insert incredibly vicious cycle here.

The deeply subsidized status of subscriptions meant their perceived value was quite low in the eyes of many publishers. When it came time to decide whether or not to offer subscriptions online, plenty of advocates saw it as a no-brainer. Their play was already about volume, and the internet looked like the biggest volume play in history. Subscriptions online? No thanks, we’ll go free and make up the difference with ads that will reach an even larger audience. You don’t miss what you never really thought you had, right?

And it worked, for a time. But now that the bottom has fallen out from under ads, companies are looking for ways to claw their way back to healthy subscription businesses. A select few are just starting to show signs of progress, often by offering services in addition to subscriptions.

Data transformed into services

Subscriptions and ads weren’t the only legs of the stool that got broken. The other one was data. What exactly does “data” mean in the context of a periodical?

For a newspaper or magazine, data is valuable information collected and presented to the reader that falls outside the purview of core news and editorial content. Think classifieds, want ads, job listings, apartment rentals—even the weather report.

In the past, it was enough for a publication to spend a little time and money gathering this data up and printing it. It was a front-loaded activity, resulting in a largely passive (but useful) product. Readers did most of the footwork, leafing through pages and following up whenever they spotted something useful. And it was damn lucrative.

But this enterprise was quickly outdone by savvier players on the web. Startups that understood passive information has far greater value when it’s transformed into something you can act upon immediately, and in context. Get rid of that highlighter, pal. See that job listing? Just click on it. Boom, you’re done.

Data that’s turned into something actionable via included tools becomes a service. And that service has greater value, both to the end user and to the bottom line of the company presenting it, than passive data alone. The likes of Monster.com, Craigslist, and eBay took data to its next logical step online.

There’s nothing about this that newspapers or magazines couldn’t have done; they just didn’t realize the potential fast enough. The possibilities weren’t self-evident to the leadership at many of these companies, and others surmised audiences would keep coming to them just like they always had. That didn’t turn out to be the case, and static data no longer pulls its own weight at most operations.

A way forward: separating business from presentation

The most obvious thing the internet changed for newspapers and magazines is the physical manifestation of the medium itself. But while the internet introduced new material forms—webpages, device apps, APIs, and the like—they actually speak very little to the damage we’ve just surveyed.

Instead, when it comes to the business side of things, creating new paths for periodicals means recognizing which parts of the equation no longer exist, which new pieces replace them, and which components aren’t coming back at all. As web and app design capabilities evolve to include those of previous media, it’s important to recognize that those things do not constitute business solutions in and of themselves. Conflating presentation-layer technology with business models can be a costly distraction.

Now is the time for web developers, designers, and digital strategists of all stripes to lead experiments with making (and saving) money from the things technology and the web are good at: reach, scale, disintermediation, and a multiplicity of sources, both institutional and civilian. Smartly used, these attributes can help construct the next generation of newspaper and magazine businesses—ones that focus more on opportunity than on loss.

While the game may have changed for publishing’s old economic mainstays, the potential of its digital future remains largely unrealized.

It’s up to folks like us to help write it.

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