Bloomberg is putting Businessweek behind a paywall as Michael Bloomberg’s financial news and information company looks to shift the magazine’s main source of support from its advertisers to its readers.
The 88-year-old financial magazine expects to have fewer subscribers but charge them more. It is the latest publisher to seek an alternative revenue stream as it faces an erosion in print advertising and the digital ad duopoly of Google and Facebook.
The new strategy, unveiled on Thursday, is part of Bloomberg’s second big overhaul of Businessweek since the financial data group bought the magazine for $5m in 2009. In addition to a redesign of the weekly print edition, Businessweek is introducing an app that will feature a limited selection of news stories each day and a daily email newsletter.
“We’ve tried to focus on smart, clever people who have more money than time on their hands,” said John Micklethwait, Bloomberg editor in chief. “We know that from the terminal, from what Bloomberg has achieved, [the goal] is to find people who are willing to pay money to get very high-quality information and journalism. That’s what we’re trying to replicate.”
Since Mr Micklethwait joined Bloomberg in 2014, he has streamlined editorial operations, cut jobs and refocused coverage on six core topics: business, finance, markets, economics, technology and politics.
Bloomberg does not disclose financial results but analysts estimate it generates 80 per cent of its $9bn in annual revenue from its eponymous terminals. Its investment in consumer media is meant to build relationships with influential decision makers who may not use its main product.
“This multi-platform approach is our core strategic advantage,” said Justin Smith, Bloomberg Media chief executive. “We want them listening to Bloomberg radio on the way to work . . . watching digital video at lunch, reading our emails and newsletters on their commutes. By evening we want them to lean back and read Businessweek or our Markets magazine.”
But pressure may be growing for its media properties to contribute financially as well. Bloomberg saw its second-ever drop in terminals last year because of cost cuts at the banks and financial institutions that make up its core customers, according to Burton-Taylor International Consulting, which tracks the financial data industry.
Mr Micklethwait and Mr Smith announced their intention to revamp the money-losing Businessweek in November as part of a wider shake-up. In a memo to staff, they referred to “deep challenges” facing the magazine that would require “deep change”.
Its business model has “not evolved as quickly as the market around it — and does not have enough of a focus on digital innovation”, they wrote.
The publishing business is being rocked by steep declines in print revenue that have yet to be matched by digital gains. Global magazine ad revenues are forecast to fall 10 per cent and newspaper ad revenues 9 per cent this year by Magna Global, the media buying agency.
Magna predicts US print ad sales will drop a steeper 13 per cent to $18.1bn in 2017, leaving newspapers and magazines with just a third of the $54bn in revenues they captured a decade ago.
Publishers have responded by tightening belts. Time Inc, owner of Fortune, People and Sports Illustrated, eliminated 300 jobs this week and is pursuing the sale of some titles. The New York Times and Wall Street Journal have offered buyouts to slim down staff. The Guardian is shifting to a smaller print format.
Many news brands have also turned to digital paywalls, concluding that charging readers can build a more sustainable business than wooing advertisers.
The “major success” among US magazines that charge for online access is Condé Nast’s New Yorker, said Ken Doctor, media analyst at Newsonomics, who says the weekly title now gets 55 per cent of revenue from readers.
“The price of admission to be able to consider having a viable reader revenue business is, you have to have the right frequency and you have to have a uniqueness of content,” Mr Doctor said.
Businessweek’s paywall will consist of two tiers. For $50-$60 a year, subscribers will get access to its website, the app, a newsletter from the magazine’s editor, and six to eight special print issues. For $87 a year, or $102 outside the US, subscribers will also receive the weekly magazine and get access to quarterly conference calls and livestreamed interviews with business leaders. Without a subscription, readers are limited to four online articles a month.
The new pricing is a substantial increase from the average $40 per year that Businessweek charges for the print magazine. Mr Smith said the aim is to position the title at “the premium end of the market”. As a result, the magazine has cut its rate base — circulation promised to advertisers — from 1m in January to 600,000, phasing out bulk subscriptions and what Mr Smith called “the lowest value subscribers”.
“We’re focusing on the core audience of people who are prepared to pay more for what we think is a better and more comprehensive product. That is worth something to those people,” Mr Micklethwait said.