Newsweek’s Failed Strategy
When we want to learn about strategy, we often gravitate to successes, yet failures are often far more instructive. Newsweek’s failed strategy gives us a great opportunity to do just that.
For those who missed it, last week the Washington Post company announced that they would sell the magazine, which they have owned since 1961, citing mounting losses and no clear path to profitability. The announcement was in stark contrast to Time Inc, which announced a very good first quarter.
The failure of Newsweek is especially interesting because it comes on the heels of a new strategy and redesign launched just short while ago. So it’s worthwhile for us to take a look at what the strategy actually was and why it failed.
The Great Re-Position
Traditionally, newsweeklies have reported the news, but with a different perspective than newspapers. Their weekly format allows for more in depth reporting that puts the week’s events in context. The extra time also enables innovation, such as compelling but difficult to create infographics that help pull the jigsaw pieces of a story into a coherent whole.
Newsweek’s editor in chief, Jon Meacham decided to break away from reporting and put out a collection of opinion based essays. He felt that this would attract a smaller, but more upscale readership.
The basic idea was that the increase in ad rates and decrease in printing costs would make Newsweek profitable. The results are in and they are clear. This strategy was a loser. To see why, let’s first look at some more successful models.
The Foreign Affairs Model
The most obvious place to look for an analogue to what Meacham was trying to achieve is Foreign Affairs, the most influential journal about world events. It was here that George Kennan published his famous X article which influenced the US strategy of Soviet containment for 50 years.
The journal is everything that Meacham wanted Newsweek to be: influential with an uber-readership. However, a closer inspection should have alerted Meacham to the danger of the path he was taking.
Firstly, Foreign Affairs is published bi-monthly, not weekly. Furthermore, although Foreign Affairs has access to the best academics and policymakers, much of it is crap. However, the few outstanding articles in each issue make it a must read in some circles.
Finally, Foreign affairs is not as a business, but rather an arm of the Council on Foreign Relations, a non profit organization whose primary mission is to serve it’s members. Moreover, it has varied sources of funding, such as member dues and donations, so it doesn’t even have to break even.
The Atlantic Monthly Model
Another possible model is the Atlantic Monthly, which successfully publishes an in-depth magazine that covers politics, business and culture. Like Foreign Affairs, it attracts the upscale readership that Meacham covets, but is run as a commercial enterprise. However, the similarities end there.
Monthly magazines, with their higher page count and slower pacing are focused on their feature well – usually four or five stories of greater length than a weekly can hold. Monthly magazines also offer greater production values and are expected by advertisers to deliver niche audiences. Weeklies, on the other hand, are expected to provide wide reach.
Another point of interest is the Atlantic’s approach to their web site, which is updated constantly and features extremely active bloggers. They also have an affiliated product called the Atlantic Wire, which offers a useful guide to opinions on the web by providing thematically group links.
The web model works and the audience numbers are impressive.
Why the Strategy Failed
By now it should be clear why the strategy failed. Jon Meacham’s magazine was targeted at…Jon Meacham! It is important to note that there was never anybody else’s name associated with the strategy: no publisher, marketer or ad sales specialist. It was a decision made behind the Chinese Wall that editors like to build around themselves.
The notion that offering a magazine consisting mainly of one-page opinion pieces would attract a better quality audience than reporting flies in the face of any apparent media reality. (If you want a truly upscale audience, sports beats news everyday of the week and twice on Sundays).
In fact, the repositioning of Newsweek never really seemed like an commercial strategy at all, but rather an editorial vision. Even worse, Meacham doesn’t seem to be backing off a bit. In his letter to readers, he seems to continue to believe that since he regards its mission to be important, Newsweek should continue to live on as a commercial concern.
Given that the lives of over 400 employees hang in the balance, that’s an astounding conceit.
A Sustainable Model
As the continued success of Time and the growing US presence of The Economist in the US can attest, there is a sizable demand for weekly news reporting. Having run a similar business in the Ukraine, I can speak from some experience. A newsweekly brand can be successful both in print and on the web.
The crucial thing to understand is that you differentiate at the margins. Without going into too much detail, we had a particularly telling example when we ran into problems with our web edition, which unlike the magazine focused on a newswire.
We found that adding more in-depth features had little immediate effect on overall usage, but did affect loyalty and time on site. After some months, audience started growing again and within a year we were back out in front of the pack.
The usage numbers never changed much, less than 10% of page views were affected. However, that was enough of a draw to make us the preferred newswire. The specialty content augmented the reporting, but could never replace it.
And that’s where Meacham went wrong. He assumed that people who shared his interests would not only forego basic reporting, but also be more attractive to advertisers. By all accounts, this reflected the views of Meacham and his inner circle, but very few others were consulted.
It’s admirable to have a vision, but only sensible to check in with reality every once in a while.
– Greg
I’ve seen so many otherwise smart people fall victim to launching tactics without formulating a strategy. It seems like Meacham chose to put his tactic into play without finding a strategy that spoke to the Newsweek audience. It’s not always conceit that is the root cause of this. But often in the news business it’s easy for newspeople to come up with “the idea” (tactic) and force it on the market rather than letting marketers come up with a plan that addresses the needs of the audience. Often the idea is doomed from the start since it’s based on something other than market need.
Great post, as always, Greg. Thanks.
.-= John Cavanaugh´s last blog ..Meet The New Boss. Same As The Old Boss. =-.
John,
I think that editors often fail to take a “Cartesian view” (i.e. assume that their perceptions are invalid until verified). In my experience working with publications, it’s one of the hardest things to make them understand.
Although, it must be said, marketers fall into the same trap often as well.
– Greg
Very interesting article and great insight Greg.
My area is Change Management (a name I’m not fond of but that’s what is in the ether!). Most CEOs, MDs, etc fall into the trap you outlined for Jon Meachem. Whether they believe it or not, they often act as if (a) they’re infallible (b) they understand what the market wants because hey, its what they want and (c) if they build it, they will come. As your example portrays, it doesn’t necessarily work like that.
What is also important but doesn’t get a lot of airtime is the fact that when people (academics and commentators in particular) promote a strategic approach, they can find any amount of ‘successful case-studies’ to ‘prove’ their particular strategy. So if, in your ‘successful case-studies’, you like the CEO as hero, innovator, leader, contrarian – take your pick – or the CEO as enabler, team-player, social philosopher – again take your pick – you (and they) can find examples to support those approaches.
On the flip side, you can find ‘failed case-studies’ to do something similar but where I think your example wins from a learning perspective Greg is how the ‘situational’ element determines success or failure of a particular strategic (or tactical) approach. Your comparisons/contrasts to the other Models delivers the key learnings as opposed to the often cursory and usually lazy commentary often to be found in the ‘CEO is a hero’ if the business is successful or ‘a prize chump’ if unsuccessful, with no research into all other attendant factors.
To take the thinking further, hindsight is 20:20 vision. Every case-study is presented as a series of facts and when you get to the last paragraph the success or failure is analysed based upon the actions taken or not taken. Once the outcome is known, it becomes relatively easy to say “oh this went wrong because..” or “that was the key to success”. In this case Greg, the ego of the CEO does appear to be to blame. What would be really insightful would be if Mr Meachem actually outlined the thinking behind the failed strategy – then we would get in to some real learning and insight!
Robert,
Thanks for writing such a thoughtful comment.
Just for the record, Meacham wasn’t the CEO, but the Editor-in-Chief. I think the failure was that it was an editorial strategy without any serious marketing or sales input. He was quite clear about why he thought the strategy was the right one, he just had his facts wrong.
– Greg
I also blogged about this on my business journalism review blog, SeanReadsTheNews, last week. My impression is that Newsweek tried to make who was writing as important as the news they reported with mixed results editorially and straight-out disaster economically.
My post is here: http://seanreadsthenews.typepad.com/seanreadsthenews/2010/05/new-york-times-newsweek-for-sale.html
Good post.
Thanks, Sean.
– Greg
Our family had been a Newsweek subscriber for about 50 years, so we’ve been through lots of changes – Color! Reformats! New Sections!
But we could not take the latest redesign. Why? It wasn’t the length of the articles, though that was a contributing factor. Not the just breezy information but maybe more than I wanted to learn. BUT the biggest losers for me were the typographical changes – fonts were too small, sans serif, and the whole magazine seemed to be darker than previous issues.
I struggled through it for four months but just could not renew. It’s a shame to lose such long-term subscribers, but such is the speedy way of life these days.
Sorry to be naive, Greg, but I just find it difficult to believe that Meacham would have the “freedom” to put his plan into play without having primary and secondary market research results, a business plan and a group of advisers. It has been my experience that even the folks holding the purse strings have to have agreement and buy-in from their team. What happened did everyone simply sit around and agree with him without challenging his thinking?
.-= Marion Guthrie´s last blog ..Seven Steps to "Social" Enlightenment =-.
Thank you for a great post Greg. However, allow a few observations. Ultimately, “news” in periodical form is antiquated and editorial opinion is no longer in short supply; let alone one as bias as Newsweek. What busy people need/want is honest analysis of the news to help them through the mud and weeds. Publications with an obvious agenda fail to provide this so subscribing, impulse buying or reading such drivel is no longer worth the time.
Julia,
Thanks for pointing out the design angle.
– Greg
Marion,
There’s a lot of truth to what you say. Donald Graham certainly had to sign off and of course there must have been some business side people involved.
However, editors can be enormously powerful. Anna Wintour, the editor of Vogue (and the inspiration for The Devil Wears Prada) had the entire program of the famous Milan Fashion Week changed to suit her schedule.
By all accounts, this was Meacham’s strategy, nobody – not even Meacham – has suggested any differently.
– Greg
Anthony,
That’s a widely held view in some circles, but doesn’t explain the success of Time, The Economist and The Week, all of whom are reportedly doing very well.
Thanks for sharing.
– Greg
Great post as always!
I love how this blog always leads me on, through all the links, to a range of other interesting sites.
Keep up the good work….
Chrıs,
Thanks. I’m glad that you’re finding it useful.
– Greg
Good post and nice comparisons to demonstrate that a niche strategy can work. A newsweekly such as Newsweek occupies a dangerous middle ground between news and thoughtful opinion, so lots of short opinion pieces doesn’t really serve either end well. In my opinion the content is not that remarkable either, so Meacham was playing a poor strategy with a weak hand.
A strong vision is good only when it is right, but there are more leaders with vision then there are leaders whose visions are right. Out here in Silicon Valley we are used to failed leaders with strong visions. Most of the time they are entrepreneurs so when they fail no one notices. Bigger entities are supposed to have Boards and other brakes to ensure there is a rational basis for the vision.
Bruce,
You make a good point that I glossed over. Meacham’s Newsweek just wasn’t very engaging editorially (I’ve never been an editor so I stay away from journalistic critiques).
Trevor Butterworth of Forbes made a similar point in a head to head comparison between Newsweek and The Economist. You can find it here: http://www.forbes.com/2010/05/11/jesus-newsweek-media-magazine-opinions-columnists-trevor-butterworth.html
Thanks a lot for your comment.
– Greg