From Karla:
In Wednesday's Wall Street Journal:
Time Inc. Makes New Bid
To Be Big Web Player
By MATTHEW KARNITSCHNIG
March 29, 2006; Page B1
In the fall of 1994, before most people had even heard of the Internet, Time Inc. took a bold step: It put much of its premium print content online for free, launching Pathfinder, a Web-based trove of its magazines, including Time, People and Money.
The move appeared to position the company to seize an early lead in the fledgling medium. Time Inc. had vast news-gathering resources and huge archives of text and photos, and Gerald Levin, the cerebral CEO of its corporate parent, Time Warner Inc., was a zealous advocate of the opportunities of the digital age. But instead of staking out new territory, Pathfinder fell off the map, plagued by strategic missteps and internal wrangling.
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Now, Time Inc. is in the midst of another major effort to turn itself into a leading Web player. And this time, there is evidence that the publisher's management is willing to fundamentally alter the way the magazines are run to make the Web push work.
In recent months, Time management has taken steps to dissolve the divisions between its Web and print operations. It has made selling ads online a priority and demanded that writers produce more copy for its Web sites. It is also expanding the sites to include more video, blogs and photographs. Former "Wonkette" blogger Ana Marie Cox has been hired to write for Time magazine and its revamped Web site, alongside Andrew Sullivan, another well-known blogger and columnist. Time Inc. has even launched an irreverent Web site aimed at young male workers called Office Pirates.
"What's abundantly clear to us is that there is a really attractive, smart readership who are younger than they are older and who get what they are looking for from the Web," says Time Managing Editor James Kelly.
Driving the newly aggressive effort is a recognition that amid problems for many categories in the print-magazine industry, some core Time Inc. print products are losing steam even as Web competitors are proliferating. Last year, advertising pages at Time magazine, the company's biggest by circulation, slumped 12%, according to the Publishers Information Bureau. Fortune was off nearly 10%, and Sports Illustrated dropped 17%. The first two months of this year weren't much better. Most worrying for Time Inc.: a 21% drop at People, which accounts for about one-third of the company's operating profit, after a record year in 2005. Time Inc. executives say they fear some of the declines may be permanent as more money flows to the Internet.
Time Inc.'s ability to establish itself on the Web may even affect whether it stays part of Time Warner. While the business has long been a reliable producer of cash for its parent, earning $1.2 billion in operating profit last year, its growth lately has been only modest compared with some of the company's other divisions. Some senior Time Warner executives regard the magazine unit as an unnecessary appendage and acknowledge privately that it may be cast off if its growth prospects don't improve.
Over the past decade, Time Inc. has tried and abandoned several Web strategies. Pathfinder, for instance, was shuttered in 1999, after going through about $75 million and five changes of management. Time also tried linking its magazines to CNN's online site, offering some of their content on the Web free of charge. After Time Warner merged with America Online in 2001, Time Inc. reversed course. In an alliance with AOL, Time's magazines were put behind the AOL curtain so readers had to pay to read the magazines online.
Each venture ended in disappointment, hampered by an editorial culture that viewed Internet operations as a backwater. Some editors worried that expanding online would cannibalize their core print product. At People, the online operation used to be "like a distant moon," says Managing Editor Martha Nelson.
The first sign that attitudes were changing came in 2003, when Ms. Nelson merged the online and print newsrooms at People. The following year the site was relaunched, sparking a resurgence at People's online edition, which is now reaching many readers who don't buy the print version, though little of the magazine content is available free. Page views of People.com rose fivefold through the end of February to 512 million, according to Time Inc.
In January, Time Inc. started a new partnership with CNN, putting all its financial magazines onto a site half-owned by the cable network called CNNMoney.com. The site, which offers free access to the content in Fortune, Money and Business 2.0, ranks third among financial Web sites behind the financial sites of Yahoo and MSN, and it is now expected to earn a bigger profit this year than Money magazine. Traffic has also surged at SI.com, the online version of Sports Illustrated.
Daniel Okrent, who headed Time Inc.'s new media division in the late 1990s and later served as public editor at the New York Times, believes the publisher's latest efforts are promising. "I think they're really serious about it this time," he says, pointing to the success of SI.Com, which has focused on putting more original content on the Web. "This isn't a second-class Sports Illustrated," he says. "This is as good as the magazine."
Time Inc.'s biggest online challenge may be to remake its flagship. For decades, Time's influence was a force to be reckoned with its cover one of the most coveted and feared places in all of journalism. Though still respected for its analysis of politics and world events, Time's pre-eminence in the media world has been eroded in recent years amid the growth of 24-hour cable news, the Web and niche magazines.
Time still has a huge print circulation of more than four million, but its aging readership has made it less appealing to advertisers. It has kept circulation artificially high by offering cut-rate subscriptions, charging as little as $15 for an annual subscription, compared with $114 for People. With a profit of just $50 million in 2005, Time generates only one-eighth the earnings of People.
To compensate for its limited resources compared with large daily newspapers, Time has focused its online strategy on commentary, in the form of blogs and short analytical articles from its correspondents. Last week, the publisher gave the site a new look to make it easier to navigate, and it is planning another major overhaul this summer. Instead of trying to follow every major news event, the site has sought to focus on areas where editors think it can excel. [my emphasis added] When Vice President Dick Cheney shot a friend in the face in Texas last month, for example, the site churned out four quick articles providing analysis and background.
Despite its makeover, Time has a long way to go to be as dominant on the Web as it is in print. But its editors say they're convinced the Web hasn't passed it by. "If the stories are there, people will come," says Stephen Koepp, a Time deputy managing editor who also oversees Time.com.
![[chart]](http:///C:/DOCUME%7E1/VALLAN%7E1/LOCALS%7E1/Temp/msohtml1/01/clip_image001.gif)
Now, Time Inc. is in the midst of another major effort to turn itself into a leading Web player. And this time, there is evidence that the publisher's management is willing to fundamentally alter the way the magazines are run to make the Web push work.