Everywhere you look, newspapers and magazines are trying to figure out how to evolve in an online world. Some have merged with online outlets, like Newsweek did with The Daily Beast, while others — including the New York Times — are busy putting up paywalls to try to retain readers. But The Atlantic took a more radical approach to surviving in the web era: It set out to deliberately disrupt its own business, rather than letting someone else do it, and while the experiment isn’t over yet, it seems to be paying dividends for the magazine’s parent company.

A feature in the New York Times on Sunday details how the magazine, which has been around for over 150 years, hasn’t turned a profit for more than a decade — but is now looking at recording a healthy profit of almost $2 million for 2010. How did it manage to do this? According to Atlantic Media president Justin Smith, who joined the company at a low point three years ago, the magazine imagined itself as a venture-capital backed startup in Silicon Valley “whose mission was to attack and disrupt The Atlantic.” As he described it to the New York Times:

In essence, we brainstormed the question, “What would we do if the goal was to aggressively cannibalize ourselves?”

The first thing to do was to remove the walls — both literal and figurative — between the web side and the print side of the publication, both in terms of the business operations and the editorial division. Another wall that came down was the website’s paywall (are you listening, New York Times?). Younger writers with web experience were hired, and advertising staff were given the freedom to sell print or online ads, so long as they hit their targets. The magazine also branched out into conferences and other brand-extension experiments, and it hired superstar blogger Andrew Sullivan.

The result? Revenue at The Atlantic has almost doubled since 2005, hitting $32 million this year, of which half is made up of advertising revenue. Digital advertising accounts for almost 40 percent of that number, compared with less than 15 percent at some other traditional print publications, and the amount of digital ad revenue is up by close to 70 percent over 2009. The addition of traffic draws like Sullivan has undoubtedly helped — he accounts for almost 25 percent of the site’s 4.8 million monthly unique visitors, a number that’s up 50 percent over last year.

As the NYT feature notes, not every traditional publication is going to be able to do what The Atlantic has done — or at least, not as easily. It’s a relatively small business compared with giants such as Newsweek and Time magazine, and has a single motivated owner. But The Atlantic had plenty of one thing that was crucial to its success: desperation. According to owner David Bradley, who bought the magazine in 1999, “Atlantic had so serially failed that it was overwhelmingly likely the next thing we would do was fail, and the next thing we would do was fail.”

That sense of desperation provided just the impetus that the magazine needed to remake itself — and not just a little, but from the top down and from the inside out. There are plenty of traditional media outlets who could use a bit more of that desperation, as they tinker and fidget instead of making the hard changes that need to be made.

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Post and thumbnails courtesy of Flickr user David Daniels

The nation’s second-largest cable operator will be the first to go. CEO Jeff Bewkes said today that Time Warner would split off the remaining 84 percent of its cable division with details to be worked out later. Then we’ll look for a spin out or sale of the diminishing AOL access line business, which Time Warner plans to separate from the flailing Platform A advertising business.

The logical next step is a retreat from the publishing world with magazines such as Fortune, People and Time going on the block. What will be left are the movie businesses, including Warner Bros. and New Line Cinema, and cable TV properties such as HBO and TBS. Those units brought in sales of $5.5 billion during the quarter but are under continued pressure from the Internet. Like an aging matron, Time Warner appears to be taking refuge in the arms of old Hollywood.

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