Time Sees the Future and its DrunkenStepfather

NEW YORK ( TheStreet) -- Time, Fortune, People, Essence, Sports Illustrated.

Time Inc.'s roll call reads like the New York Yankees high-salaried line-up. These days, of course, the Yankees priciest players are injured or nearing retirement.

Time, the largest U.S. magazine publisher, will be spun-off later this year by its parent company, Time Warner ( TWX). To thrive as a standalone business, Time may need of shot of youth and spunk to flourish in the age of tagging, following and "going viral."

Peter Kreisky, who has been advising media companies on strategy for more than 25 years, calls the company's No. 1 title, People magazine, "one of the most successful yet underleveraged brands in the business." Kreisky says he's "guardedly optimistic" Time can figure out how to increase sales as a standalone company but, frankly, he's not sure.

People boasted 3.6 million print and digital subscribers during the six months ended Dec. 31, 2012, making it the ninth-largest magazine in the country, according to data compiled by the Alliance for Audited Media. (The two largest circulation magazines were published by AARP; No. 3 is Game Informer, a trade magazine.)

Time magazine was No. 11 and Sports Illustrated sat at No. 14. People's total reach, which includes pass-along readers and newsstand sales, equates to 42 million people per week, said magazine spokeswoman Kathryn Brenner, citing data from Gfk MRI, the consumer research firm. Some 10 million follow the magazine on Twitter, Facebook ( FB) and Instagram, she said.

Considering the size of its exposure, Kreisky said People hasn't done enough to make itself as ubiquitous within the cultural zeitgeist as it could be. For much of the late 20th century, the 39-year-old weekly all but owned the category of celebrity news/wild-and-crazy-things-that-happen-to-ordinary-people.

But times have changed. People.com now goes head to head with flashier, racier and sexier Web sites such as TMZ, dlisted, Celebitchy and DrunkenStepfather.

"Time's source of strategic leverage has historically been scale," Kreisky said. "That only applies when you put a ringed fence around the industry. But that ringed fence has been breached by the new digital competitors. Leadership by the old measures is increasingly irrelevant."

People.com's online experience, says Avi Savar, founder and CEO of the brand marketing agency Big Fuel, requires a makeover that will have to start with the company's overall strategy. The Web site, he said, is dominated by teases for its print publication -- a very bad sign. Clicking on a story leads users to pop-up ads for the print subscriptions as well as another for Netflix ( NFLX). Some portions of People.com remain restricted to those without a print subscription.

"If the primary purpose of your digital properties is to drive paper, you're thinking about it backwards," said Savar, who started Big Fuel in 2004 and the sold it two years ago to Publicis Groupe ( PUBGY), the world's third-largest advertising agency. "As for pop-up ads, that's a very old-world experience and people don't take to that today."

Savar is a new-fangled advertising exec, so his jargon can be unwieldy but instructive. Users are no longer passive readers, he says, they're "content curators." Users, or consumers, aren't just reading stories online, they're "interacting with your brand." The People brand, he says, needs to be "re-invented and become more social by design."

"This is about more than just a neat app or neat Web site," Savar said. "This is about experiencing content through a brand. It's about where the content travels and how it's consumed. People has to be more of a technology company and technology platform than a paper platform."

The same could be said for Time magazine, Sports Illustrated and Fortune, says T.S. Kelly, CEO of The Media Strategist, a business development company. These are venerable titles but they've lost ground in the branding game to Huffington Post and Politico, ESPN The Magazine and DeadSpin as well as Bloomberg BusinessWeek.

Time's newsstand sales and subscriptions declined in 2012 as advertising pages fell by 12, according to the Pew Research Center.

"Despite its title, Time is not real time," Kelly said. "The circulation number is a metric from yesterday. More important is the integration between other dimensions of consumption: content sharing, time spent on the site, the interaction rate. What users do next is arguably more important than exposure to the content itself."

That's all easier said than done, and the risks are enormous. Sales of People's print publication are a major slice of Time's revenue, so executives obliged to meet hard and fast sales targets may be disinclined to tinker with the current business model. In fact, People's print advertising numbers are growing, a sign that the brand continues to have traction. Ad dollars in the first quarter totaled $250 million, a 9.6% increase from the same period a year ago, according to the Association of Magazine Media.

But changes may be inevitable. Time, which publishes 21 U.S. magazines and operates an assortment of titles in the U.K. and Mexico, posted $3.4 billion in revenue last, a 7% drop from 2011. The company's operating income was $420 million, though that, too, was less than in 2011, a decline of 25%. Kreisky says the company may be forced to close titles that aren't the No. 1 or No. 2 in their category.

Turning around or redefining Time Inc. isn't an easy task. Yet, guideposts exist.

Kreisky points to The Economist and the Atlantic as older magazines -- one a weekly, the other a monthly -- which have been successfully remade for the modern-day user. The Economist, for one, could have degenerated into your (grand)father's magazine -- but it didn't. The same goes for the Atlantic, which went full bore on columnists and made subjects such on urban planning surprisingly sexy. The Atlantic's new online business magazine, Quartz, is smart and polished.

Time need not morph into BuzzFeed, Gawker or Mashable to grow sales but it may need to rethink its brands and business model to be a successful standalone company. But the future may not be all that gloomy. After all, the Yankees won Monday.

-- Written by Leon Lazaroff in New York

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