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Magazine giant Time Inc. struggles to adapt digitally

Time Warner’s decision to shed its Time Inc. magazine unit underscores the challenges facing the industry.

Associated Press (2010)

Time Warner’s decision to shed its Time Inc. magazine unit underscores the challenges facing the industry.

LOS ANGELES — From Sports Illustrated to People to its namesake magazine, Time Inc. was always an innovator. But now, with the troubled magazine industry facing its greatest challenge, the company Henry Luce founded is struggling to find its way in a digital world.

Time Warner's decision to shed its Time Inc. magazine unit last week underscores the challenges facing an industry that remains wedded to glossy paper even as the use of tablet computers, e-readers and smartphones explodes.

Although the new devices might seem to present an array of opportunity for Time's 95 magazine titles, many publishers have found the digital transition troublesome. Digital editions of magazines represented just 2.4 percent of all U.S. circulation in the last half of 2012, or about 7.9 million copies, according to the Alliance for Audited Media.

"We have to get much better at capturing those (digital) readers," said Mary Berner, president of the Association of Magazine Media.

Before publishers can accomplish that, they need to address a number of problems, experts say. The range of free content on the Web has given some readers the impression that it's not necessary to pay for the digital versions of magazine stories. Also, there's no industry standard for pricing.

Berner acknowledges that customer confusion is part of what's preventing the industry from selling more digital copies.

"There used to be a couple ways you used to be able to get a magazine: You could subscribe or buy it at the newsstand. Now there's 25 ways. Joe Average consumer just isn't that clear on it yet," she said.

Advertisers are making matters worse. The ad industry has been slow to warm to the notion that they still need to pay top dollar to advertise in the tablet editions of magazines, when much cheaper website ads are just a finger-swipe away.

The magazine industry's slim but growing digital subscriber base could help convince advertisers of the value of magazines.

"Tablets have reinvigorated magazine ad revenues," said eMarketer spokesman Clark Fredricksen.

But even as overall magazine advertising revenue grows, it's not expanding nearly as fast as U.S. ad spending as a whole. The predicted turnaround won't return the industry to pre-recession levels — and it may come too late for Time Warner Inc.

$3.4B

Revenue at Time Inc. in 2012, about 38 percent below its peak in 2004

$420M

Operating profit in 2012, down from $934 million eight years earlier

.FAST FACTS

Digital growth

Research firm eMarketer predicts that while print magazine ad revenue will remain flat at about $15.1 billion until 2016, digital ad revenue will grow from $2.7 billion to $4.1 billion over the same period.

Magazine giant Time Inc. struggles to adapt digitally 03/11/13 [Last modified: Monday, March 11, 2013 10:06pm]
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