"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.
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.