(Reuters) - The Economist Group’s chief executive, Andrew Rashbass, says the problem with most magazines today is that they have traded the courage of their convictions for commercial interests.
To illustrate this, Rashbass pulls up on his smartphone a July 2010 cover of The Economist with the headline “Shifting Sands” and a picture depicting then-Egyptian President Hosni Mubarak disappearing into a sand dune. He says the magazine ran that story six months before the Arab Spring began.
“That’s an example of a non-commercial idea that became very commercial,” said Rashbass.
“The problem a magazine like Newsweek has, for example, is that it can’t do uncommercial week after week.” He quickly qualified his remark by saying he had not read Newsweek since Tina Brown took control of the weekly magazine. Her first issue came out in March 2011.
Figures from the Audit Bureau of Circulation released on Thursday showed that The Economist increased its combined print and digital paid circulation by just under 1 percent to 1.59 million during the July-December 2011 period, marking the first time it passed 1.5 million circulation.
Print still dominates the weekly magazine’s audience, with 1.49 million people reading articles in that form compared with 100,000 reading them digitally. In North America, The Economist’s largest market, circulation increased 1.3 percent during the period to 845,000.
It took The Economist, established in 1843, 161 years to break the 1 million circulation barrier in 2004. Rashbass predicts the magazine will crack 2 million within five years, with more than half of that coming from digital platforms.
“Twenty years ago people were saying that The Economist’s covers weren’t newsstand oriented, and 20 years later they still aren’t, but that doesn’t seem to matter,” said Reed Phillips, managing director at boutique media investment bank DeSilva & Phillips.
The Economist’s growth comes amid a punishing environment for print magazines, which have seen their bottom lines steadily decline as readers and advertisers migrate to digital platforms.
For example, Time’s paid circulation fell 0.5 percent for the six months ended December 31, 2011, to 3.3 million, while Newsweek’s fell 1.8 percent to 1.5 million. Among business publications, Bloomberg Businessweek reported a 1 percent gain in total paid circulation to 932,500.
The New Yorker was one of the few magazines that increased its paid circulation in the last six months of 2011, as it grew by 2.2 percent to 1.05 million.
Newsstand sales, a barometer of the overall industry health, have been declining for years, dropping nearly 10 percent in the second half of 2011.
The Economist, however, has been able to post record profits over the last four years. The company reported a 9 percent increase in revenue to 347 million pounds ($545 million) and a 10 percent increase in operating profit to 63 million pounds ($99 million) in the fiscal year ended March 31, 2010. Figures for its most recent fiscal year will not be available until June.
Part of The Economist’s growth can be attributed to its subscription prices. An annual print subscription, with full digital access, costs $139 in the United States. The magazine’s website and mobile app have free and paid content.
The Economist Group, which is 50 percent-owned by Financial Times publisher Pearson PLC and includes a conference division, business-to-business unit and the political magazine CQ Roll Call, is less dependent on print advertising than many other magazines. Only 30 percent of its revenue comes from print advertising and about one-third is derived from digital.
Martin Walker, head of magazine consulting firm Walker Communications, attributes The Economist’s success to its contrarian approach. While other newsweeklies are delivering more graphics and shorter articles and rushing into video production, The Economist is increasing the number of long-form stories it carries and has no ambition to produce video.
“Mass intelligence” is the term Rashbass uses to describe what the magazine wants to achieve through its content. He sees The Economist as a way of bringing elite media to the masses.
“There’s a huge opportunity for people to be challenged by the media,” Rashbass said.
The Economist has eschewed video partly because Rashbass does not believe there is real money in it.
He argues that good quality video is expensive to produce and does not get enough viewers to justify the investment.
“In contrast to U.S. companies that are looking to broaden their revenue streams through video and social media, The Economist wants its content to stand out even more as exceptionally high quality and worth paying for,” Phillips said.
Or, as Rashbass put it, “Mass intelligence, that’s how we’ll win.”
(Editor’s note: the reporter on this story worked for The Daily Beast prior to its merger with Newsweek)
Reporting By Peter Lauria