When the dot-com boom fizzled, the business magazines that covered that huge story similarly flamed out. The Industry Standard closed, Red Herring went south, and Business 2.0 was on death’s door. But in 2001, Time Warner bought Business 2.0 and combined it with its own eCompany Now magazine. Though Business 2.0 finally reached break even after years of struggle — and an ill-fated pay wall online — Time Warner recently announced it would close Business 2.0, folding its staff into Fortune magazine rather than selling it out to a rival.
Most accounts of the closure of Business 2.0 point out the tough year it’s had in advertising sales, down 30% in revenues for the first six months of 2007 compared to the same period in 2006. But there’s more to the post-mortem of the magazine, including a self-inflicted wound by corporate owner Time Inc. with its failed sales reorganization, and the defection of business magazine advertisers into the arms of the online world.
To best understand the final demise of Business 2.0, you need to go back to April 2006 when Time Inc. announced with great fanfare a new Business and Finance Network that combined the sales forces of Fortune, Money, Fortune Small Business and Business 2.0 magazines, along with the CNNMoney.com online portal. The idea was to have a unified group selling all the titles so there would be less overhead costs and a simpler pitch to advertisers from one person instead of four.
But for Business 2.0, the Time Inc. strategy was the kiss of death. The magazine lost its dedicated sales force, and Fortune salespeople were less interested in selling Business 2.0 than Fortune. Worse yet, the people who could have made the new strategy succeed — the magazine publishers atop each publication — were demoted to regional sales staff positions, demoralizing them, according to one former longtime Business 2.0 staffer. (The former employee would only speak to me without attribution because of the sensitivity of the subject.)
“They took all these people who were publishers, which is as high as you can get without going to corporate,” the source said. “They took all these people and basically bumped them down to fancy regional sales managers. The very people who would have implemented the plan and made it successful had just been demoted…The salespeople were told, ‘You’re going to sell Fortune and Money and Business 2.0 and Fortune Small Business, and do package deals with CNNMoney.com.’ Which is a good idea in theory, but in practice it didn’t work out.
“The Fortune salespeople just didn’t give a f—- about selling Business 2.0. The Money people didn’t really know Fortune and the Fortune people didn’t know Money. I don’t know how much they saved, but they lost more money than they saved. It was all pressure from Time Warner to show earnings growth at Time Inc….So a year later, Business 2.0 wasn’t getting any ads. The plan had been disastrous.”
The most recent advertising numbers from the Publishers Information Bureau shows the damage done: In the first six months of 2007, ad revenues were down 30% at Business 2.0, down 15.6% at Money, and even down 10.5% at Fortune. Could Business 2.0 have done better in that period without the reorganization? That’s hard to say, but similar niche business mags like Fast Company (up 13.9%) and Inc. (up 7.4%) certainly fared better in the same period. (Click on the chart here to compare various magazines’ ad sales in that period.)
“Time Inc. didn’t know what to do with [Business 2.0], and the sales strategy didn’t help,” said Chris Roush, an associate journalism professor at the University of North Carolina-Chapel Hill and Talking Biz News blogger. “It needed its own sales force. It was also overshadowed by Fortune and Money. It would have thrived being owned by a smaller publishing house where it would have been the top dog. But Time Inc. wasn’t even willing to sell it to a competitor because it knew that the subscriber base and content would have given them support to battle Time Inc. publications.”
Time Warner spokespeople were trying to get me an official comment on the reorganization and its affect on Business 2.0, but it didn’t arrive by posting time — though I will update this post when and if it does. It’s telling, however, that the architect of the revamped sales staff, Chris Poleway, is no longer with Time Inc., and the company recently announced a new reorganization that gives more power to specific magazine titles — and reuses the old division name, Fortune Money Group.
The Trouble with Business Magazines
Business 2.0 editor Josh Quittner says the problem with Business 2.0 wasn’t a lack of readership, but a lack of advertising. He told me the magazine had more readers than ever before, about 630,000, but lost out on a key source of advertising.
“We had a cruel irony: readers, but not enough corresponding advertising,” Quittner said. “Where that advertising went is the better question. Look at the meltdown of Detroit over the past two years. Auto advertising was our biggest endemic until then, and totally kept us on the right track through the (seemingly) bleakest part of the tech meltdown. When tech returned as a story though — bringing us new readers — tech advertising either stayed on the sidelines or flowed to online sites. But auto advertising collapsed.”
Indeed, Borrell Associates predicts that $2.8 billion in automotive advertising will be sold online this year, rising to $4 billion by 2010, and making the Internet the #2 medium for car ads after TV — and ahead of magazines.
The U.S. magazine business in general isn’t doing as bad as other mediums, with TNS Media Intelligence finding that the magazine sector saw ad sales rise 4.6% in the first six months of 2007. That compares to TV dropping 2.4%, newspapers falling 5.8% and radio losing 2.7% — while Internet display ads were up 17.7%, surpassing radio’s haul.
But it’s a different story for American business magazines, with many of the leading magazines hitting tough times. BusinessWeek was down 12.6% in ad pages in the first six months of the year, and revenues were less than half what they were during the booming first half of 2000. Fortune lost 17.5% of its ad pages in the first half of ’07, with its revenues at about 54% of the level they were at the 2000 peak. Only Forbes has had some revenue growth recently — up 8.8% in revenues in the first six months of the year — though ad pages were down 3.4%.
The problem is two-fold for general business magazines: Advertisers believe that the target audience for these magazines — affluent men — are all online and off of print. Plus, the stories of business magazines are being told in an array of other lifestyle magazines, with business becoming ever more ingrained in our culture. Both UNC’s Roush and Quittner believe that advertisers are wrong-headed in moving money online at the expense of print magazines.
“I think advertisers are driving [the push online], even though there are more readers for print than online,” Roush said via email. “Don’t get me wrong. I love online. But let’s not throw the baby out with the bath water. [Advertisers love online] because it’s the new thing, and they see the growth rates of readers. Still, online readers are not the same as print readers. They don’t spend as much, based on the numbers I’ve seen. Maybe they will one day, but not right now.”
Samir Husni, chair of the University of Mississippi’s Department of Journalism and known as Mr. Magazine, believes that business magazines have seen their bread-and-butter content snatched up by so many other sources.
“If you recall back in the ’80s, environmental magazines were hot and everyone was launching environmental magazines,” Husni said. “And then in the ’90s, technology magazines became the hot thing. But then when both the environment and technology became covered in every other magazine, it got down to just one magazine in each of those fields. Same thing has happened with business. It’s become a way of life, and not just limited to business analysis.”
Husni thinks that Fortune and BusinessWeek aren’t pure business magazines anymore, becoming lifestyle magazines to gain bigger audiences. But that, in turn, has alienated the core business readers, as well as core advertisers. Husni says the momentum is with pure regional and city business magazines such as D Business, a publication covering Detroit business that he likes.
While Roush and Quittner — and a group on Facebook — are mourning the passing of Business 2.0, Husni believes that it had lost its raison d’etre.
“The whole concept of Business 2.0 has become a generalized concept,” Husni said. “Every business magazine has become a Business 2.0 magazine. So it lost its DNA…[Business 2.0] was sacrificed on the altar for Fortune and Fortune Small Business. And that’s why [Time Inc. didn’t] want to sell it because it would create more competition. It was the candle that led the way and melted. There’s no such thing as Business 2.0 any more. All businesses are Business 2.0. It had a built-in lifecycle to it.”
The obsolescence of Business 2.0 as a concept — now that almost all companies have to consider an Internet or technology component — might presage trouble for the raft of Web 2.0 companies as well. Will people want to attend a Web 2.0 conference in five years’ time? Husni says that magazine publishers now plan new titles that will last 12 to 13 years, with four years of losing money, four years of making money, and four years after a retooling or revamp — before shutting down. “Publishers have to learn that nothing lives forever,” he said.
How to Start Business 3.0
So how would a publisher start up a magazine devoted to the intersection of technology and business today? Would it be in print and online, online-only, or some innovative combination of the two? There was talk between Business 2.0 and Michael Arrington of TechCrunch to combine forces and be bought by an outside investor — though Time Inc. squashed any such plans by taking Business 2.0 off the sales block. I also wondered if many of the old readers of Business 2.0 and the Industry Standard were now getting their news from blogger/journalism online outfits such as GigaOm and PaidContent.
Quittner says he still believes in the print medium, but would probably take a different tactic if he were re-launching Business 2.0 today.
“I would create a social network that was for entrepreneurs, to help them find each other and find talent they need,” he said. “And I would have a staff to write articles that would be given away for free and used to bring people into the social network. Then we could show a degree of engagement that would appeal to advertisers while delivering to users the kind of information they’re begging for. I don’t think online-only is the way to go….We all make these connections to different kinds of media, and we find something that connects with us, we want to hold it, we want to touch it, we want to carry it around like a flag. ‘I’m a member of the Business 2.0 club.’ And that’s why I don’t think print magazines will die.”
Quittner would publish the magazine in print in a more targeted way. He says he would do newsstand sales only in places that have a proven track record, like at airport kiosks. Plus, he would sell two types of subscriptions or one-off editions: a green issue with recycled paper and low production values that would have a low price; and a glossier, high end version for coffee tables and collections that would cost $15 to $20. “It would actually be very easy to do something like that through Qoop.com,” Quittner said. “I’ve talked to them about it.”
Meanwhile, there’s been talk about a comeback by the Industry Standard as an online-only publication by IDG. While Quittner and Husni aren’t enamored with online-only magazines, IDG has said it will launch new projects online before going to print.
BuzzMachine’s Jeff Jarvis, who started Entertainment Weekly for Time Inc. in days of yore, is one who believes that the company blew its chance for online innovation with Business 2.0.
“If there ever was a magazine that should have been primarily online and primarily a community, it was Business 2.0,” Jarvis wrote on his blog. “But no, it’s dead now. And that’s a shame. Why the hell it didn’t start online or transition to online is beyond me. Business 2.0 should not have been a product but a community; it could have been the magazine that shows how that’s done. It even had a community on Facebook eager to save it. But, sadly, this magazine was made by a 1.0 company that just didn’t understand how to think like a place instead of a thing.”
For more reading on the demise of Business 2.0, and trends in business magazines, check out these articles and blog posts:
Business 2.0 – publishing 1.0 = 0 by Jeff Jarvis at BuzzMachine
Business Magazines — Changing with the Times by Bert Peller in Folio magazine from 1991
Declines in Ad Revenues for Business 2.0, BusinessWeek and Money in June by Chris Roush at Talking Biz News
Geoff Dodge is leaving BusinessWeek by Lisa Snedeker at Media Life
Memo About Reorganization at Fortune Money Group by Vivek Shah, group president of the Time Inc. division
Shuffling for the Sake of Shuffling at Time Inc. by Jeff Bercovici at Portfolio.com
Taking Care of Business 2.0 by Rick Aristotle Munarriz at Motley Fool
Time Inc. Picks Publishers At Hard-Up Fortune, Money at MediaWeek
Time Inc. Business Unit Reorganizes, Sheds Group Publishers by Nat Ives at AdAge
Time Inc. to Close Business 2.0 by Brad Stone at the New York Times
What do you think? Should Time Inc. or someone else have saved Business 2.0 or was it a concept past its prime? What do you see as the ideal way to start a business technology magazine today, and how would you mix online and print content? Share your thoughts in the comments below.
Photo of Josh Quittner by Scott Beale.