Posted by: Jon Fine on April 27, 2009
Conde Nast Portfolio, the very big and glossy bet on a monthly business magazine made by the very big and glossy magazine company touted in its title, was shuttered today. Editor In Chief Joanne Lipman informed staffers of the news at an all-hands meeting hastily called at 9:45 AM. Lipman had been informed of the company’s decision earlier this morning at a meeting with Conde Nast Chairman Samuel I. “Si” Newhouse.
A Conde Nast spokeswoman said essentially the entire 85-person staff of Portfolio and Portfolio.com, including Ms. Lipman and Publisher William Li, will be leaving the company. (UPDATE 5/4: Contrary to what Conde Nast spokespersons said about Li leaving the company, today Li signed on as Associate Publisher of the company’s Conde Nast Traveler.)
In an utterly digital-mad media environment, there was something almost appealingly atavistic about the boldness of the Portfolio launch in the spring of 2007. The company spent big to put out a new monthly magazine, and lured in major talent—poaching Ms. Lipman, to cite but one example, from a top position at the Wall Street Journal. It launched a Web site so ambitious that, as one company insider familiar with the details put it, the cost of launching Portfolio.com alone far exceeded the cost of most print magazine launches. (In October of last year, the company severely scaled back the scope of Portfolio.com and cut the frequency of the magazine from monthly to 10 issues per year.)
The common pricetag placed on Portfolio was "over $100 million." But in a November 2004 interview I conducted (which is locked up behind Ad Age's subscription wall) with Conde Nast CEO Charles O. Townsend, he implied it takes at least $150 million to launch a Conde Nast-styled magazine:
JF: Say I have a check for $25 million and [I] say, ``Start up a magazine.''
Mr. Townsend: (Laughter) First of all, $25 million doesn't begin to prime the pump.
JF: OK. It's four times that.
Mr. Townsend: Make it six times that. If I got a check for six times that, I would start Domino [the shelter magazine launched in 2004 that Conde Nast shuttered earlier this year].
Running a business title had long been a dearly held notion for both Mr. Newhouse and Mr Townsend, who's commonly called "Chuck." They thought there was a hole in Conde Nast's portfolio (sorry) of magazines, which primarily targeted upscale women. They believed that a business magazine--when added to fashion titles GQ and Details and its smaller golf magazines--would significantly bulk up its audience of upscale men. They had pursued Forbes at one juncture, and, when I spoke to Townsend in 2004, the idea of a business title was clearly on his mind. When I asked him what one magazine he would like to buy, he answered "BusinessWeek."
But a neat idea for a monthly magazine doesn't always translate into marketplace success. Portfolio's editorial product was regularly run through the media-on-media spanking machine, but, while inconsistent, it had more to offer readers than it was commonly given credit for. The problem is that neither readers nor advertisers responded. According to it most recent circulation statement, which covers the last six months of 2008, more than 20% of its total circulation of 449,000 came from what's known in the magazine trade as "verified subscriptions." "Verified" circulation involve the cheaper kinds of subscriptions that place magazines in doctor's waiting rooms and in nail salons; it is a circulation form viewed with skepticism (if not outright scorn) by advertisers. Having verified circulation account for 20% of total circulation is an unusually high percentage, even for a new-ish magazine.
While all business magazines--including BusinessWeek--have been hard hit by the recent ad downturn, Portfolio's numbers were by far hurt the worst. In the first quarter of 2009, its ad pages dropped over 60%, on an ad page base that wasn't particularly large to begin with. Conde Nast staffers correctly pointed out that this drop compared two issues on '09 to three in '08--but even adjusting to an apples-to-apples comparison resulted in an over 40% falloff at Portfolio, steeper than any of its competition.
Conde Nast made a classic mistake of spotting a consumer magazine "opportunity" based on advertising and demographic considerations, not actual reader demand. (And judging from the last few years' worth of ad pages at most business titles, there may have been too many of them on newsstands even before Portfolio launched.) It debuted at the end of a business boom, not at the beginning of one. It came at a time when business is a moment-by-moment bloodsport uniquely unsuited to being chronicled by a leisurely monthly frequency.
The shuttering of Portfolio, among other cutbacks at Conde Nast, means that not even a magazine company well-known for keeping struggling titles alive (generally for reasons that are more personally-driven than market-driven) can elude current media realities. Conde Nast's ad pages were especially hard-hit in the first quarter of this year, as consumers slammed purses and wallets shut and avoided the kinds of high-end purveyors that grace its magazines.
The simple calculus of this moment in media is that a magazine with no demonstrated reader or advertising appeal cannot survive. (Don’t laugh. In flusher times, many such magazines lived on for years.) Portfolio came to the game with all the advantages a magazine could hope for—a deep-pocketed owner; a place at the table of a big company that specializes in assembling cross-magazine ad deals; run by a company that values the primacy of the printed page above all else. And it couldn’t make it into its terrible twos. Portfolio ultimately proved that sometimes a great notion turns out to be pretty not-great when exposed to the harsh light of day.