• by David L. Smith , October 14, 2002

I could not help but notice the trend these past several weeks in print vehicles covering the Internet and the “new economy.” Forbes closed ASAP (a magazine that a short while ago had been merged with “Best of the Web”). Upside finally breathed its last breath, after having the death rattle for over a year. Red Herring was purchased by its primary backer and fled across town to avoid the big lease that many companies (including ours) have been stuck with from the heyday. PC Magazine significantly reduces its pages devoted specifically to the Internet.

For many, this is an “I told you so” moment. Those that did not believe in the new economy somehow take pleasure in these changes. Others reported the changes as proof that the Internet run up was over and done with. All have missed the point.

The point is that the Internet and other Interactive media have become mainstream. Go through an issue of any traditional business publication. Yes, there are Internet articles that abound. But the concept of using the Internet has transcended the how to articles and the dedicated articles on Internet successes. It is imbedded in the mainstream articles themselves. Blurbs about supply chain management being one of a number of factors to increase a company’s bottom line, etc. Sure, there are some companies that still don’t get it from an advertising standpoint. But I would bet that somewhere in that company, there is someone doing something with the Internet that has little to do with their advertising, their website or maybe even their Webmaster. This person might be in finance, purchasing or manufacturing. Check it out. If you want to get a company involved in Interactive advertising that is not currently a believer, this person may be your biggest potential backer.

There are three sides to the magazine publishing business: edit, advertising and circulation. The circulation of these publications was to Internet centric companies (of which there are many fewer), VC’s (which still abound but with smaller head counts), Web marketing specialists and what we called IBUMs (Internet Business Unit Managers). There are just plain fewer of these people around today. In fact, many companies have transitioned to the point where their Internet operations are integrated with the line units that they belong in, rather than being freestanding units. Not everyone can run his or her own online store.

The advertising part of this business took the hardest hit. And let’s face it; advertising is what keeps magazines in business. Yet, as an advertiser, why pay the premium to reach those interested in Internet in business in 5-8 different magazines when I can reach them at a much lower CPM in traditional business publications. Now that the edit is embedded in other stories and the Internet has truly become ubiquitous (a word we liked to use when it was not yet…), I can reach the people I want so much more cheaply. Again, take a look at the current issue of any of the major business pubs and you will see tons of ads that could have run in The Internet Standard, Upside, or The Red Herring in it’s heyday, etc.

In fact, magazine advertising as a whole is holding up quite nicely, with a 9.2% increase versus year ago in September. Granted, September 2001 is not a great month to compare to from a business standpoint, still, any increase these days is nice when so many things are going south. And, year to date shows a 1.5% overall increase in ad dollars, even though pages are down. Sure, there will be more fatalities. The Internet sector is not the only one to be hit. Just last week, Time Inc’s Mutual Funds magazine announced its last issue.

Also interesting is that two rather vital publications survive in this category, each with it’s own niche (I am not counting the Red Herring as vital quite yet). The (now) venerable Wired survived the move to Conde Nast quite nicely. While the art direction is not quite as far out there as it was, it remains a stunning publication. And there is no question that it is still far ahead of other publications in information about how technology affects business, the social scene and all other aspects of life today. Business 2.0 took a whole different tack. Time Inc bought the name and folded their eCompany Now into it. They did a strange agglomeration, keeping the Business 2.0 circulation, look, feel, name and attitude, folding it in with the eCompany staff and circulation. The combination worked and this publication continues to do a fine job in the sector. As for the Red Herring, they may survive if they can get past the inevitable lawsuit from the landlord they just fled from. But they can be expected to pull back towards their roots of young company evaluation rather than the larger canvas that they painted on for a while.

Net, net, the demise of many new economy magazines is real but represents an evolution rather than a contraction. Readers and advertisers have moved on to the mainstream publications. The new economy is taking over the old economy. If you don’t think so, talk to some of the strikers who were on the picket lines at Pacific Coast Ports last week. They were striking to prevent the replacement of their paperwork cadre through computerization. Sure, there were other issues, but the inefficiency of the current system vs. ports like Singapore was at the top of the list. And the effect of the Web and computers on the labor market is a whole other story…