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Erik Wemple
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Posted at 03:13 PM ET, 10/19/2012

Can Newsweek make it as a premium tablet thing?


(John Moore - GETTY IMAGES)

When the bosses of Newsweek/Daily Beast announced yesterday that they’d be canceling the print edition of Newsweek at year’s end, they didn’t bail altogether on the brand. Newsweek, they promise, will just switch platforms. The idea, according to a memo from management, is to launch “Newsweek Global” as a premium product “supported by paid subscription and . . . available through e-readers for both tablet and the Web.”

Laughing met that claim. Felix Salmon of Reuters wrote, “The chances that Newsweek will succeed as a digital-only subscription-based publication are exactly zero.” Previous attempts to pull off the premium-tablet trick, Salmon noted, have failed — most recently, Huffington, a similar dream that “lasted exactly five issues before bowing to the inevitable and going free.”

Why take the word of a trusted business expert with strong evidence to support his well-stated position? Better, perhaps, to check with U.S. News & World Report, a formerly bound newsweekly that went online only in 2010. A company memo declared at the time, “We can’t sit still. We have to keep improving the existing products while selectively creating new ones.”

Among the products that U.S. News offers is a paid iPad magazine that launched in 2011 at 99 cents per month. Sounds a bit parallel to the platform that Newsweek is looking to colonize. So how much of U.S. News’s total revenues does the digital magazine deliver?

When asked that question, U.S. News Editor Brian Kelly could barely keep from scoffing. “I mean, 1 percent or something like that,” he says. “I think it’s a good growth platform, but it’s a long ways away.”

Since it cannot rely on millions and millions of dollars from tablet subscriptions, U.S. News relies on news you can use. The way Kelly tells it, the magazine launched a column in 1948 to help consumers, and it never stopped feeding that particular franchise.

Have a look at the U.S. News site. Yes, there’s news. But there are also categories: Health, science, education, travel, law and cars. Within those verticals rests a business model. U.S. News generates and maintains data that folks will pay for — about a million pages of data per year.

Example: U.S. News publishes a college guide for students that runs $29 per year. It sells about 50,000 subscriptions per year, according to Kelly, who notes that the publication, in turn, sells its data straight to colleges and universities as well, at prices between $10,000 and $20,000.

The publication is huge on rankings — colleges and hospitals, plus about 20 others. When a high-ranking entity wants to place an advertisement or billboard somewhere using the U.S. News logo to tout its standing in these rankings, it pays a price in the “tens of thousands of dollars” for the privilege. There are dozens of such clients, says Kelly.

All of which is a long-winded way of saying that U.S. News & World Report isn’t financing its newsroom with news. “Our news pages get maybe two clicks. Our college pages get 10,” says Kelly. “It’s hard to make money in news, but we don’t have to make money on news. A lot of the money we’re making is in data. We’re rebuilding, expanding our news coverage becasue we’ve already paid the light bills with our data business.”

Though total U.S. News staffing — business plus editorial — is half what it was in the magazine’s heyday, says Kelly, it now stands at 180, up 50 employees from its gloomy bottom of two or three years ago. “We’ve been hiring,” says Kelly, who says the magazine is profitable.

When asked what supplemental, non-news revenue streams Newsweek is developing, spokesman Andrew Kirk cited a “very robust” conference series — e.g., Women in the World summit — plus an e-book division called Beast Books and special issues that the magazine will publish on tablet next year.

By  |  03:13 PM ET, 10/19/2012

Tags:  newsweek tablet premium, newsweek print edition tablet, newsweek tina brown tablet, newsweek felix salmon, newsweek business model, newsweek u.s. news and world report, u.s. news and world report business model, u.s. news and world report rankings

 
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