The Economist is printing money.
The Economist Group, which includes the magazine’s worldwide brands, CQ Roll Call, an intelligence unit, and other initiatives, saw operating profit jump 10% in the year ending March 31.
Closer to home, the magazine’s North America edition continues to show solid growth in advertising revenue as well as subscriptions.
That second revenue stream is vital because the magazine’s business model depends on subs, which cost most than $120 per year.
Paul Rossi, Publisher and Managing Director of The Economist, and Executive Vice President of The Economist Group in North America, says The Economist derives roughly 60% of its revenue from subscriptions. That’s a much higher percentage than traditional publications in the United States, and a ratio that works very well in the present economic conditions where advertising dollars are decreasing.
“I think it makes sense at one level from a pure business school level,” Rossi told Business Insider during an interview in his office on Wednesday. “We extract the value where we create the value. We believe the content is the value proposition. We don’t believe access to the audience is the value proposition.”
Although he admits The Economist did not make as much money during the boom times as magazines that were fuelled by advertising dollars did, he’s smiling today.
The plan is to extend the philosophy to the online space, where readers have to pay $110 per year for access to the site. (They also get access with a print subscription.) That may seem like a lot, but it’s working. Since November, they have had over 2.5 million downloads across the iPhone and iPad apps. An Android app is in a soft-launch phase. Sales of digital-only subs are strong, although single issues sales are surprisingly low.
Rossi worries that reading time will decrease as people switch to the digital version – “Moving from print to digital is absolutely happening. It’s not an additive, it’s a substitute,” but says earlier figures indicate readers spend as much time with the magazine on an iPad as they do with the print version. (He does admit that the early adopters of the apps are probably some of the magazine’s biggest fans.)
Finding the publication’s target demographic can be difficult.
“When you get readers in a room, they don’t look the same,” Rossi says. “They are a completely eclectic bunch of people, but they all draw together on this curiosity, this worldliness.”
The good news is that there are potential readers everywhere. The Economist currently boasts a total brand audience of 5 million, lower than publications such as Time and Newsweek but higher than The Week. According to Rossi, the magazine’s “universe” is between 13 million and 21 million in the US, so there is plenty of room to grow. It’s a marketing problem, not a product one.
“If you give people in the demographic time with the magazine, they like it,” he says.
In fact, the longer readers spend with The Economist, the more they like it. Offering 12 issues for $12 converts many more readers into subscribers than offering four free issues.
Critics say The Economist is a badge and that instead of reading the magazine, people put it on their coffee tables to look intelligent. Rossi says figures show subscribers do actually read it, but he also believes it’s fine for a magazine to be a symbol, although “we have to be careful that we don’t make it too brandish, snobbish, and remote.”
In the new magazine order, The Economist finds itself positioned in an optimal place: Americans are becoming more worldly, the business’ financial model makes sense, and the publication translates well into the digital space.
For 168 years, The Economist has been true to its motto: “A severe contest between intelligence, which presses forward, and an unworthy timid ignorance obstructing our progress.”
Increasingly, it looks as though the brand will continue for at least another century and a half.