Internet entrepreneur Jay Penske has added a crown jewel to his fleet of Hollywood publications, acquiring 107-year-old Variety magazine in a deal announced this morning.
The purchase, widely reported at $25 million, fits a familiar narrative of web usurping print, and gives Penske a veritable entertainment empire. But the sale also reflects a growing inevitability for many publishers: the best price for most forms of consumer content is free.
First, some background on the deal: it was announced on the site Deadline this morning by Variety’s longtime former deals columnist. Variety, which targets both Hollywood types and celebrity-fixated consumers, had reportedly been on the block for some time. The deal finally closed after owner Reed Elsevier agreed to lower the purchase price from $40 million and supply Penske with financing, according to The Wrap.
The purchase, coming six years after Penske acquired Deadline.com, will complement other online entertainment properties like HollywoodLife and Movieline. The sale also reflects Variety’s dwindling clout as its print fortunes declined and its influence waned next to competitors like Deadline and the Hollywood Reporter. As we reportedly earlier, Variety’s revenue has dropped dramatically in recent years from $90 million to as low as $30 million.
On one level, the Variety reflects a common story in which a famous publisher is surpassed by digital newcomers that are unencumbered by legacy costs or print-based priorities. It also makes clear, however, that a subscription model for consumer content is not viable in most industries.
In the case of Variety.com, the publication relied on a paywall, which yielded a reported 17,000 subscribers but seriously impaired its traffic compared its traffic compared to rivals. Under Penske, the paywall is expected to be phased out quickly.
Meanwhile, the CEO of Reed Business Information told Bloomberg that it divested Variety in order to focus on “online paid content services” — read databases.
What we’re seeing in other words, is a bifurcation in the world of paid content between free consumer (and even trade pub fare) on one hand and subscription data and research on the other. This trend is also reflected in the launch of the Atlantic’s Quartz which is seeking to disrupt paid publications like the Wall Street Journal and the FT by offering business news for free — and then, it is rumored, using the publication as a way to groom readers into paying for higher priced research products.