The Trials and Economics of Newsweek

The Washington Post Co. said yesterday that it would seek a buyer for Newsweek. The announcement comes a year after the newsmag unveiled its redesigned book and a new strategy to shrink its subscription base to its most valuable readers and to model itself after "ideas" magazines like The Atlantic. Since Newsweek is arguably the most famous magazine brand recently put up for sale, it's worth using this opportunity to step back and ask what's happening and why.

First, the numbers. The company's magazine division (essentially, Newsweek) lost $29.3 million in 2009 even after the magazine shed over 100 staffers and reduced its circulation by more than 1 million copies, Jeff Bercovici writes. Ad revenue fell 37 percent last year, and is down more than 40 percent in the first quarter of 2010.

Newsweek is in deep trouble. Why? Part of it stems from the interplay between the Internet, falling advertising revenue and the rise of opinion journalism that has deeply impacted the magazine. I offered a rough theory yesterday, and this is my effort to clean it up a bit.

Let's think about what the Internet does to both the economics and style of journalism. First, economics. As news-reading eyeballs migrated from the printed page to the Web, newspapers and magazines have found it difficult to monetize their work. Why, you ask, if more people are reading? Part of the answer is, the Web is free. Another part of the answer is time. According to a recent Pew survey, newspaper readers spend 200X more time with an actual newspaper than with its online cousin. Moreover, the survey found that up to 40% of all news traffic is driven by search engines. In print, readers are dependable and patient. Online, we're fickle and fleeting. And advertisers reward the Web's fickle and fleeting audience with cheap ad rates.

In addition to turning reported news into a commodity, the Web's blink-of-an-eye news consumption experience gives preference to the provocative. Provocation in the news usually comes by way of opinion (but not always*). As a result, most of the heroes of online journalism are provocative opinion makers. Bloggers didn't invent opinionated analysis, or opinionated reporting. (I never meant to give that impression. Indeed, I have no doubt that if Robert Novak were born 50 years later, he would have been a compulsive, and compulsively readable, opinionated reporter/blogger.) But the Web is psychologically tailored to reward efficient, provocative, opinionated thinking because it is essentially a blink-of-an-eye medium.**

As opinionated, provocative voices thrived online, old-school publishers -- who have lost millions in the heyday of the Internet -- tried to lasso that sensibility into their pages. New York Times and the Washington Post blew out their op-ed section online and included extra pages in their weekend opinion section. Time expanded their columnist rosters in the last few years. Newsweek did the same.

In fact, Newsweek did more. Editor in Chief Jon Meacham was unambiguous about trying to create an Economist for the United States: a newsweekly that was no longer about news, but rather about analysis and opinion -- or, if you prefer, ideas. This wasn't crazy. In fact, it conveyed a keen understanding of magazine economics. As James Fallows explains, magazines of arguments are more likely to thrive at the lower level of readership to which Newsweek was already trending. Opinion magazines tend to top out around 100,000. Ideas magazines live in the mid-to-upper hundred thousands. Newsweeklies have tried to live on a couple million, but they're struggling mightily.

So it makes sense that Newsweek, facing steep losses with 427 full-time employees, would try to climb down from its newsweekly perch and reposition itself between news and opinion as an ideas magazine. The problem is that it's built to live with a circulation it can no longer achieve. The burden of its accrued costs are, in Fallows' inspired phrasing, like "a 500-seat restaurant for a kind of cuisine that only 100 people are going to want to eat on any given night, or flying a 747 between Fresno and Bakersfield."

Fallows is right. The most accurate, most specific explanation for Newsweek's troubles is the mastodon argument: it's basically a creature that cannot survive in this environment. But here's the broader picture I see: the same factors that are punishing magazine revenue are also pushing mags to be more opinionated and provocative. Meacham's instinct to turn his newsweekly into a magazine of arguments was informed by both magazine economics and the stylistic trends throughout journalism.

It's easy to look back and say Meacham should tried to add more opinion, or more cultural reporting, or more cash cow gimmicks, like Top 10 lists, that can sustain the serious reporting that gives weeklies their soul. But now it doesn't really matter. Maybe Jon Meacham got it all wrong. Or maybe he was right. Maybe he was just a guy with good ideas on a ship that was going to sink, anyway.

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*You can have provocative graphs and reported essays too. Indeed, long-form provocative essays from The Atlantic magazine account for some of the site's most clicked pieces. But they take months to report and edit, whereas writing the headline "Health Care Reform Will Cover America with Death Panels" takes no time at all.

**This is too long an interlude to include in the main piece, but I can't help thinking that this mirrors the moral of Malcolm Gladwell's story in Blink about the Pepsi Challenge. In short: Pepsi consistently wins the Pepsi Challenge, but consistently loses in overall sales. Why? Because it's so dang sweet. Sweetness is good for a one-sip reaction. But people don't drink soda in shots. They drink it with food. Coca Cola's subtle pruniness is the perfect compliment to a meal but it doesn't do well in sips against Pepsi. To round out the metaphor, the large-scale, established newsmags and newspapers are used to a world of Coca Cola. They're used to readers sitting down with them for a while. But the Internet Age is something like a world of Pepsi Challenges, where pageviews -- the currency of the Web -- are measurements of instinct and instant gratification.