Magazine publishers see future, but no profit, in shift to Internet
HANNOVER: In 1980, the aspiring global media baron Rupert Murdoch turned to the president of his U.S. newspaper operations, Donald Kummerfeld, and, as he was wont to do, made a bold prediction.
Context & Ripple Effects
Rupert Murdoch has been making bold media predictions since 1980, when he forecast the future to his U.S. newspaper president Donald Kummerfeld, and the question of whether he can execute on the digital version of one was already live by early 2006, when Business Week asked whether Murdoch could win on the web. This report from Hannover extends that question beyond one mogul to the whole magazine industry: publishers say the audience is moving to the Internet, yet none of them can point to a profit coming from it.
First-order effects
- Magazine publishers face a widening gap between where their readers are going (online) and where their revenue still is (print), forcing continued investment in web operations that lose money today.
- For Murdoch's News Corp, the pattern repeats its own bet-making: having promised investors broadband details for BSkyB at a July conference in 2006 and predicted near-free voice calling alongside eBay's Meg Whitman in 2005, the company is again staking capital on a future it cannot yet monetize.
Second-order effects
- Publishers who delay the shift risk losing readers permanently, so even unprofitable web spending becomes defensively mandatory — every competitor's investment forces the rest to match it without knowing when returns arrive.
- Advertisers gain leverage: with audiences migrating but no proven online profit model, they can push rates down across both print and web inventory while publishers absorb the transition cost.
Third-order effects
- The industry is heading toward a structural test of whether advertising-supported content survives the move online at all — if the current pattern holds, the eventual battleground becomes who dares to charge readers, reversing the free-content assumption publishers are now building on.
- Media ownership consolidates around groups like News Corp that can fund years of loss-making digital expansion, squeezing out smaller magazine publishers who cannot sustain the wait for profit.
The trend: Print publishers are committing to an Internet-first future faster than anyone has found an online business model to pay for it.