Can a New Magazine Survive?

The predicted demise of John Kennedy’s George and the launch of Tina Brown’s Talk raise the question: What are a new magazine’s chances for survival?

If the magazine is intended to reach a broad, general-interest audience, the answer is: not good. The total number of magazines published in the United States has actually soared from 2,500 in 1985 to 5,500 in 1998. But this is entirely due to special-interest magazines with names like The Asthmatic Day Trader (imaginary) or Martha Stewart Living (real). Even here the odds are against a newcomer. More than 1,000 new magazines were launched in 1998, and half have already folded–most after one issue. In general, only three out of every 10 new magazines make it to their fourth anniversaries.

Among general interest magazines, the only newcomer to survive and thrive is Condé Nast’s Vanity Fair. (InStyle and Entertainment Weekly, both published by Time Warner, might also qualify, depending on your definition of “general interest.”) Condé Nast is privately owned, so actual financial data are not available. But it is widely assumed that Vanity Fair, though making money now, is far from recouping its early losses. Even ultimately successful magazines spend many years and many millions before reaching profitability. Unsuccessful magazines spend the money and never become profitable. How much money? George’s start-up costs were said to be $20 million. Rumors about the cost of launching Talk range up to $50 million.

Why? Partly for the same sorts of reasons that any new business must spend money before it starts coming in–hiring employees, stocking up on yellow notepads, throwing a launch party, etc.–but mainly because of the cost of acquiring subscribers. You mail out masses of subscription offers (i.e., junk mail) and are happy with a 1 percent to 2 percent response. It can easily cost $50 or more for a glossy monthly to acquire a subscriber who pays $12 or $15 a year. Then you are thrilled if half of those renew at the end of a year.

Even an unsuccessful magazine can have a large circulation if it is willing to pay enough for subscribers. Success comes when you have a high renewal rate and new customers are easy to entice to replace dropouts. Then your subscriber-acquisition costs plummet. Even so, the average subscriber may cost more to acquire than he or she ever pays. But meanwhile your large and loyal audience entices lots of advertisers. At best this takes years.

Of course, even a money-losing magazine can always survive indefinitely if its owner is willing to cover the losses. The Weekly Standard, owned by Rupert Murdoch, has joined the New Republic, the National Review, and other older magazines in the tradition of magazines subsidized for political reasons. But there is another, more amorphous and less acknowledged tradition of money-losing magazines kept alive for reasons of general glamour and corporate synergy. Talk, co-owned by Miramax (a division of Disney) and the Hearst Corporation, may survive and even thrive in that tradition.

And then there’s the Internet, where there are no postage, printing, or paper costs. And there are no subscriber acquisition costs either, since Internet magazines are given away free (though Internet magazines do spend some money on marketing). The theory is that advertisers–who don’t seem to mind the lack of paying subscribers–eventually will cover the entire cost with a bit left over for profit. So far, this remains a theory.

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