In my post, “McGraw-Hill: Beating the Street” I have discussed McGraw-Hill’s overall business prospects, which looks good with lower double-digit growth in 2007. However, BusinessWeek, McGraw-Hill’s crown jewel is struggling and I am going to talk about it here.
BusinessWeek, is one of the most widely read business magazines, with more than 4.7 million readers each week. Of late, BusinessWeek has been going through tough times and its site has not been able to take full advantage of the growing online movement.
BusinessWeek, as a part of the corporate restructuring exercise, discontinued its European and Asian publications in December 2005 due to mounting losses, which resulted in 60 job cuts. Late last year, BusinessWeek fired 12 of its most experienced employees, which included top-notch editors. For the full year 2006 Business Week’s revenues were flat.
BusinessWeek’s subscription and advertising rates were reduced in 2006. In the second half of 2006 BusinessWeek’s total circulation fell almost 7 percent. Stephen Adler has been making a lot of changes at BusinessWeek without much effect, I must say.
So is the crown jewel of McGraw-Hill turning out to be its Achilles’ heel?
BusinessWeek lost IBM, one of its biggest advertisers, in mid 2006 as it was not willing to give IBM the discount it wanted. Could it be a sign that marketers are finding more efficient alternatives for advertising? With the online ad market booming and providing better targeted advertising opportunities, the answer is yes and these are telling signs that should prompt BW to put throttle into its online business.
The BusinessWeek site attracts professionals and decision makers with a very high average HHI of over $90K. The site commands high ad rates of $40 to $108 CPM. The revenues of BusinessWeek.com grew by 45.7% in 2006, which is good growth, but much lower than the 80% jump the site registered in the first quarter of 2006.
BusinessWeek has been trying hard to regain its past glory. The site has launched its mobile edition BusinessWeek.mobi and introduced videos, podcasts and slide shows to generate interest but it needs to do much more than this to get consumers and marketers interested.
Though the BusinessWeek site has community features (blogs), it still does not leverage user-generated content well enough. The blogs of BusinessWeek.com are sub-mediocre and the site has failed to take advantage of its excellent Anchor content to engage a vibrant User community. In my piece, Newspapers, Roll Up! I discussed how newspapers and magazines need to generate strong Anchor Content, but also layer in business models and software infrastructure, such that User Content can flourish around the Anchor Content. BusinessWeek, so far, has miserably failed to capture this trend on their site. As a result, the online community does not “hang out” on the site.
Will Adler and company revive BusinessWeek in 2007 and put the crown at its rightful place in the McGraw-Hill family or will it be another disappointing year for BusinessWeek? Depends on the management’s willingness to rev-up its online properties. There are many options on how they would do so. They could acquire savvier business and finance blogs like GigaOm and Seeking Alpha which have cracked the code on user content and engagement. GigaOm is getting close to generating a couple of million page views a month, and has a strong fan following. Seeking Alpha has a different model. It aggregates writers from all over the web, and presents to their audience a consolidated view.
The equations that BW needs to balance are:
* How much Anchor Content needs to be generated to pull a significant amount of User Content, that can then support enough ad-inventory to allow the business to be profitable.
* How much traffic can a blogger generate around himself / herself with a minimum investment? This would be driven entirely by the quality of the blogger.
* Can they become a profitable aggregator of User Content?
Business Week’s success was once driven by quality writers. Today, its survival is going to be driven by being able to pull together a constellation of voices that a large number of people have interest in listening to, and engaging with, not insipid ones that cannot shape public opinion.
Finally, they need to explore the aggregator business models, whereby, a good “Pro-Am” balance can be achieved.
We will have to wait and see what happens, though the rumblings coming out of BusinessWeek are not very encouraging right now. It would be sad to watch an institution crumble, because it really doesn’t need to!