Some will argue this is further proof that print is in decline. But really, Time Warner’s decision is just further evidence of how much the advertising business has changed during the past five years.
Magazines once provided a specialized venue for advertisers. Space was limited. Only so many advertisers could buy space in a given issue. Publishers commanded premium prices. And advertisers had no choice to but to pay top dollar if they wished to reach that target audience.
Fast forward to the Web world. Millions of digital pages exist. There is not enough advertising to fill all those pages. Ad space is suddenly a commodity. Consequently, the price advertisers pay has plummeted. It should come as no surprise then that Web ads command roughly one-tenth the revenue a typical print ad draws. This shift is forcing a restructuring in publishing and advertising.
Publishers are hoping that tablets and mobile devices will pick up the slack. But revenue from digital magazine products has yet to catch up. Meanwhile, traditional print magazines are struggling. They can’t cover their overhead even after making big staff cutbacks.
Time Warner has been trying to figure how to revive its magazine business. This past week’s spin off decision comes after Time Warner’s failed effort to combine its magazine titles with Meredith Corp, another successful family of magazine titles that is fighting for its survival.
Time Warner has been pruning off many of the pieces it fought so hard to assemble a decade ago. The company said it will now focus on cable and film.
The picture was much different just a decade ago. Time Inc., Warner Brothers, Turner Broadcasting all joined hands to form a massive media conglomerate.
The crowning achievement was supposed to be a merger with the former dial up Internet service called American Online.
In 2000, AOL purchased Time Warner for $164 billion. Synergy was the word. Wall Street analysts touted the deal, saying shareholders would get rich. Customers would have access to a rich selection of broadcasting and print content. And all this great content could be delivered on multiple platforms, capturing readers and ad dollars.
At least that was how it was supposed to work. Time Warner CEO Jeff Bewkes has called the deal one of the worst mergers in corporate history.
The merger ended up producing more syner-baloney than sizzle. Then, the magazine advertising business fell apart, making matters only worse for Time Warner.
This is hardly good news for journalism or the people interested in producing quality content.