@ FIPP: Condé Nast Sees Online Profit Now Harder, Will Return

imageJust one word from Condé Nast International chairman Jonathan Newhouse sparked the first spontaneous round of applause of the FIPP World Magazines Congress. His answer to the question of whether printed magazines will disappear: “Nonsense”. Newhouse’s speech to the magazine faithful failed to mention either his recent Wired UK launch, the company’s layoffs here or Condé’s closure of Portfolio, but still read as an extended love letter to the medium of mags – he has no time for doom-mongering, though he accepts there are big problems ahead for the industry which he said faces a leaner future, and for his own company…

Online challenge: “Those publications which don’t have a vibrant, content-rich website will soon find themselves marginalised, out of the game,” said an energised Newhouse. But are Condé Nast’s sites profitable? They used to be: in 2007 “quite a few of the Condé Nast websites made money” but monetisation has been “harder” in the downturn. But he added: “The web will make money, lots of money, for international magazine brands in the years to come.”

Digital share declines: He’s loved magazines since collecting Marvel (NYSE: MVL) comics as a boy, but Newhouse admits there are “a few problems on the horizon” for the industry now: “Magazines’ share of advertising spend is gently declining as digital media takes more of marketing budgets.” He said mags’ global share of total ad spend had declined from 14 percent in 2003 to 11 percent now, though he added the caveat that all traditional media are feeling the pinch from digital’s rise.

Media diversification: Newhouse said it was now inevitable that “some of the reader attention that now goes to magazines will now go to other media: websites, social networks, mobile telephones, publicly placed video and probably media which have yet to be invented yet”. He’s suitably convinced that e-readers are part the future, especially when the price of manufacturing comes down while mobile phones will become “as important if not important than the computer” for publishers and “any publisher that is not developing mobile content is taking a risk”.

Global saturation: The global success of brands like Cosmopolitan, Elle and Conde Nast’s own GQ is proof enough for Newhouse of the enduring value of printed magazines. But he admits Conde Nast’s international drive may be reaching its peak: “There is only one planet Earth; there is only one US; there is only one Russia… We have expanded our key products into the richest and highest potential markets.” There are exceptions — the company recently launched a UK edition of Wired, but generally Newhouse admits it has lost its “ability to expand into virgin markets… unless we find readers on Mars.”