How Digital Blindsided the Smart Money
SmartMoney, the personal-finance magazine owned by Rupert Murdoch's Dow Jones & Co., will deliver its final print issue today. The publication will continue online as SmartMoney.com.
As a going-away present to readers, the staff pulled together a cover story featuring eight "parting lessons" learned over 20 years as a print magazine. With nary a hint of irony, No. 8 pronounces that "Digital Is for Real."
You mean it's not just a passing fad? The article quotes an industry consultant pointing out the, um, blindingly obvious: "Better communication and information-processing technology have created losers as well as winners in all kinds of industries." Even the dumb money knew that -- a decade ago.
Magazine and newspaper content has been widely available for free online since the late 1990s. As a result, readership has increased for many publications. Instead of attracting more advertising, though, media companies' finances have been depleted. Newsonomics has been in a downward spiral: Editor & Publisher reports that newspaper circulation fell by almost 10 million from 1999 to 2009, about 17 percent of the total. Print advertising revenue has been nearly halved in the same timeframe, according to a Wall Street Journal article. The decline is slowing, but online ad revenue still isn't growing quickly enough to compensate for the loss of print ads.
News Corp., the owner of Dow Jones, seemed to think it could stop the Internet's creative destruction when, two years ago, it took complete ownership of SmartMoney by purchasing the 50 percent that Hearst Magazine owned. Bad move, Rupert. The problem hasn't been one of circulation: According to the official scorekeeper, the Audit Bureau of Circulation, SmartMoney's circulation in 2002 was 822,436. As of June 30 this year, it was 817,225. The problem, instead, is that advertisers can target potential customers in ways other than through glossy magazines, and when advertisers purchase space online, they pay a fraction of what a full-page ad would have cost.
The SmartMoney article goes on to say that, "as just about anybody with a job knows, the digital-driven world is anything but settled and secure." Lots of people without jobs know that, too.
The digital revolution is responsible for layoffs among SmartMoney's print staff. The online version will be produced by a total of just 15 people. But the editors don't seem to want to talk about that in their "parting lessons."
Read more breaking commentary from Bloomberg View columnists and editors at the Ticker.