Economist essay

Red Wires represented a break from the publication’s famous Red Poster campaign, a series of billboards that claimed, in often less-than-obvious ways, hat readers of The Economist were particularly smart and successful (see Exhibit 2).

Well-known Red-poster phrases included You can so tell the people who like don’t read The Economist,” and “I never read The Economist. Management trainee. Aged 42.

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” In contrast, Red Wires, which was shown in movie theatres, presented no clever puzzle. And the young trapeze artist, dress shirt Nantucket, appeared to be an unlikely Economist reader. This, of course, was the point of the new campaign.By 2009, The Economist Group’s management team, led by chief executive Andrew Rashness, had come to live that the magazine’s target audience had increased substantially because more and more readers developed an appetite for sophisticated and challenging information. The change, which Rashness called “a new age of Mass Intelligence,” reflected a general trend that appeared to soften many traditional patterns of consumption. For example, consumers could be seen to mix and match mass brands and luxury products – an Asset flight with Pravda luggage or pizza with a glass of champagne.Similarly, readers seemed to be prepared to consume both elite and mass media. Rashness explained: In the era of Mass Intelligence, people move between mass and more challenging media quite happily.

They are a great target for advertisers, both because of who they are and how they think. 1 To seize this opportunity, The Economist needed to re-think its position in the market. John Megalithic, editor-in-chief, described the new reader: It is surprising how many travelers at airports buy The Economist and US magazine at the same time.In terms of how we think of ourselves commercially, it is no longer rich business people who are our target. We are now aimed at the curious reader. 2 The Economist was perhaps an unlikely publication to attempt such a drastic change. Unlike many of its peers, which reeled from the global recession and the continued flow of advertising dollars to internet publications, The Economist continued to deliver substantial growth and impressive operating results (see Exhibit 3 for financial information).

In 2009, circulation of The Economist increased by 6. 4%, Economist. Com page views jumped by half, and the Group’s operating Professors Felix Borehole-Gee and Brat And and Research Associate Leslie Gomez prepared this case. HAS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright 0 2010 President and Fellows of Harvard College.

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This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Bitter Shopping in Strategy and Competition 2015 taught by Sane Derivate, Concordia University – Canada from June 2015 to December 2015. 710-441 profit increased by 26% to EYE million.

These results were all the more remarkable because the competition struggled to cope with the cyclical downturn and the dramatic structural changes in the publishing industry: Condo© Nasty closed its magazine Portfolio; McGraw-Hill sold the unprofitable Business Week to Bloomberg L. P. ; Time magazine announced a major restructuring effort; and Newsweek attempted to radically re-position itself to save a sagging business.

4 Selling challenging information to a larger audience also seemed audacious because there was a long-running trend towards simplifying, perhaps even dumping down the news.One study found that the average length of television sound bites shrank from 43 seconds in 1 968 to less than ten seconds two decades later. 5 By 2005, almost 50% of adults in the U. S.

Reported using comedy shows such as The Daily Show, The Tonight Show, and Late Night as an important source of news. 6 Not surprisingly, these shows were far less effective than traditional sources of news at providing memorable political information. 7 And entertainment appeared to replace information more generally. In 2003, politics accounted for 16% of stories aired on U. S.

Elevation networks, down from 37% in 1977. In 2007, the comparable number was 5%. On cable, the share of politics declined from 29% in 2003 to 7% in 2007.

8 And there was some evidence that even this level of reporting exceeded audience expectations. In an exhaustive analysis of news coverage in the U. S. In 2007, the Project of Excellence in Journalism, a non-partisan research institute at the Pew Research Center, concluded: The media and the public often disagreed about which stories were important in 2007 [The audience] showed less interest than the media in the crisis inPakistan and certain aspects of the Iraq debate, such as General David Petrels’ September appearance before Congress. To the extent that the press covered distant parts of the world, people in some ways thought even that was too much. 9 But The Economies editorial team saw things differently. John Parker, globalization correspondent, wrote in an article for Intelligent Life, another magazine owned by The Economist: People want more intellectually demanding things to see and hear, not fewer. Taste has become fantastically heterogeneous: people do indeed watch and read whatever they Want; intellectual snobbery s breaking down.

0 The trapeze artist in Red Wires jumped easily from one wire to the next. Would The Economist be able to do the same? Founded in 1843 to provide its readers with “original leading articles, in which free-trade principles will be most rigidly applied to all the important questions of the day,” The Economist had long offered a global perspective that defied easy categorization (see Exhibit 4 for a timeline of critical events). Despite its name that suggested a narrow focus, the magazine covered a wide range of topics, including politics in just about every nation on the globe, business, science, and the arts.Although “a belief in free trade and free markets” characterized the publication’s Hallucinating its political stance often surprised. Megalithic explained: The Economist considers itself the enemy of privilege, pomposity and predictability. It has backed conservatives such as Ronald Reagan and Margaret Thatcher. It has supported a The publication was named The Economist because its founder, Scottish hat maker James Wilson, wanted especially to influence “men of business.

” To do so, he insisted that all the arguments and propositions put forward in his paper should be subjected to the test of facts.That was why he called it The Economist. 2 Americans in Vietnam. But it has also endorsed Harold Wilson, Bill Clinton and Barack Obama, and espoused a variety of liberal causes: opposing capital punishment from its earliest days, while favoring penal reform and decentralization, as well as – more recently – gun control and gay marriage. The Economist’s most famous editor, Walter Baggage, who served from 1 861 to 1 877, broadened the range of topics to include politics and an increased coverage of America.At the eve of the Second World War, one half of The Economist readers were outside Britain. Despite being described as “slightly n the dull side of solid” by some critics, the magazine became required reading in the corridors of power, steadily gaining influence but not a large number of readers. When Baggage quit as editor, circulation stood at 3,700.

By 1 920, The Economist sold 6,000 copies. Circulation did not reach 100,000 until 1970. In its long history, the newsweekly had weathered a multitude of difficult economic environments, including the Panic of 1866, and the Crash of 1929.But the Great Recession of 2008/2009 and the contemporaneous structural changes in the world of publishing were more fundamental still in the eyes of any observers.

During this period, the worldwide market for magazines contracted considerably. In the United States, 54 magazines closed in 2008 and another 369 shut down in 2009, leaving 7,383 publications in circulation. For the total market, readership had remained fairly stable since the late asses, and even in 2009 circulation declined by a mere 0. 4%. Advertising revenue for all magazines in America, however, took a dive in 2008 (-7. %) and fell off the cliff in 2009 Ad pages declined even more drastically (-25. 6%) (see Exhibit 5 for information on selected titles). 1 2 One of he few bright spots for the industry was increases in online visits to magazine websites (see Exhibit 6 for selected titles).

Publishers, however, observed even this trend with mixed feelings. While online readership was welcome, online ads suffered from the “10% problem,” the fact that online ads sold at far lower prices (perhaps as little as 10%) than print ads. 13 Given the turmoil in the industry, The Economist had performed remarkably well.

The magazine’s circulation increased by 9% in fiscal year 2008 (ending in March) and 6. 4% in 2009, reaching nearly 1. 4 million readers worldwide. Ad venues in the SIS grew by 24% in 2008 and 26% in 2009.

14 The Economist’s success was in no small part a North American story. Circulation in the region had grown by more than 150% in the past decade to reach 811 ,OHO. (Circulation in Continental Europe was 230,000, 1 80,000 in the U. K. , and 130,000 in the Asia-Pacific region).

Readership was considered to be higher than circulation as each copy was typically read by more than one person.In the US, for example, readership measured in the Immediate Research (MR.) survey was 2. 35 million. Many wondered how The Economist had been able to achieve its position. The Atlantics Michael Hirsch asked: “Given that [Time and Newsweek] are faltering, how is it that a notionally similar weekly news digest is not only surviving, but thriving? ” 1 5 There were many differences across The Economist and its competitors, ranging from idiosyncratic quirks – the publication called itself a newspaper although it was published in a magazine format – to profound differences in editorial outlook and business model.Content The publication offered Its readers each week a 65-page survey of global events with an emphasis on analysis and commentary.

To fit a week’s worth Of events in its pages, most articles were short, between 500 and 700 words. As Andrea Klutz, California correspondent for The Economist, explained on his own blob: 3 That’s in effect a blob entry. Most people don t realize how much harder it is to write a short article than a large article. The folks at the New Yorker can blather on and on (“On an overcast Monday afternoon, I strode across Fifth Avenue to interview John Smith, We have to get to the point.There should be some nuance, some color, and we should cover the main bases, but all in 500 words! It’s frigging’ difficult. 16 In choosing stories to cover, the publication’s editorial team of about 70 writers paid scant attention to readers.

Clive Crook, former deputy editor, explained: The editorial side of the enterprise spends little time worrying about what readers might want. In this insecure age, the larger part of the media industry thinks about little else but what readers, viewers, and advertisers might want?the better to serve them, or condescend to them, or pander.The Economist has always been much more interested in the world, and in what it thinks about the world, than in the tastes of its readers or anybody else…

I suspect that if The Economist ever tarts to worry very much about the new readers it would like to reach, in print and on the Internet, and to think about how it should tailor its content more deliberately with them in mind, then that will be the moment when its business starts to conform to industry averages. 7 The Economist’s global audience reinforced this attitude, said Megalithic: If you had to adapt a message to be commercially attractive to readers in Texas, Cairo, and Germany at the same time, you’d go crazy. It is far easier to say what you think rather than worry about whether the reader will think it is important. The Economist had the same content worldwide each week, apart from the occasional regional cover to highlight a particular, regionally relevant story, and the re-ordering of sections to put the content about the region first.

Not everybody agreed that superior content explained the success of The Economist. Hirsch commented: [The Economist] has never been quite as brilliant as its more devoted fans would have the rest Of us believe…

The writing in Time and Newsweek may be every bit as smart, as assured, as the writing in The Economist. But neither one feels like the only magazine you need to read. But you must – or at least, reliant marketing has convinced you that you must ? subscribe to The Economist.

8 Sean Brimley, author of the bestselling Advertising Handbook, agreed that marketing was critical: What is fascinating about The Economists marketing campaign is that it has never emphasized the quality of the editorial product, but it has always concentrated on the Selfridges of the readers… It is a badge brand – one that executives like to be seen with, but are hardly ever seen reading… The publication’s marketing reflects the fact that the self-image and self-esteem of the readers is more important to the brand’s success than the laity of the product.

9 Crook cautioned not to make too much of the title’s snob-appeal: Skeptics note that the paper does not inspire the same devotion in Britain, its home market, as it does elsewhere and especially in the United States. This arouses the suspicion that snobbery?the Barberry-raincoat factor?has something to do with it..

. People buy the magazine more to make a statement about themselves, more to ease their embarrassment over 4 Competition 201 5 taught by Sane Derivate, Concordia University – Canada 710441 not knowing which fork to use, than to read it. But it would be easy to make too much of this.

A BMW has snob appeal, after all, but it still has to be a good car. 20 Organization The editor-in-chief at The Economist was appointed by an independent group of trustees, and not by the chief executive or the board as was common at other publications. In his role as editor-in-chief, Megalithic was supported by a cadre of section and departmental editors who played a critical role in the publication process.

This group, specialists in their own right, commissioned and edited reports from the magazine’s correspondents, and they wrote most of the magazine’s “Leaders,” a half-dozen opinion pieces that opened each issue.The core of the editorial process was the famous Monday morning meeting during which the publication’s editors and correspondents discussed the issues of the day in a robust intellectual debate that was often reminiscent of university-style seminars. “These debates are critical in shaping what The Economist covers and which policy positions it advocates,” explained Megalithic. “It is like a large, chaotic family…

I like the openhanded and inquiring culture, the pervasive irony, the informality and quirkiness,” said Klutz. 21 Enthusiasm for debates was no coincidence.Megalithic and many editors and correspondents had attended Oxford university which opened the doors to the world’s most famous debating society, Oxford Union. 22 A strong belief in having plenty of generalists distinguished The Economist further. The magazine assigned its correspondents to a new beat every three years. Klutz, who had covered insurance, Asian business, technology and the State of California in the past 10 years, knew the experience: For over 1 60 years, our culture has been built upon moving on, thanks to an ingrained faith in generalist over specialization…

Taking a new beat is a terrifying experience. Each time I have done it, I felt as though were stepping onto a bee hive naked. And this is fantastic. You ask questions that make your interviewees gape. Bizarre questions, off-beat questions- questions that are either so illogical or so logical (as in obvious) that no specialist would ever dare ask them, even if he could conceive them to begin with. 23 Although the personal perspective of editors and correspondents was critical, they remained anonymous. The Economist was published without bylines because “what is written is more important than who writes it.

Matthew Bishop, New York bureau chief, explained: It is absolutely fundamental to our success and o produce the quality of analysis we do. As an individual journalist, I would prefer to have my own name on my work. But what that does is insulate the journalist from rigorous debate and accountability that is in The Economist. Any article I propose have to be ready to argue it through with my editor and also my colleagues. Because we don’t have our name on the article, we all stand and fall by all of the content This changes completely the internal dynamics…Having this group of people here, and having this long record of debating means we see things going on differently than our competitors.

It’s to just one individual, it’s a group narrative. If you put bylines on it, it will make it much harder to maintain that. 24 Klutz’s feelings were more mixed: When joined The Economist in 1 997, I loved the anonymity. I had no name, no personal brand, and I felt that from my first day my articles had the same chance of being on the cover as anybody else’s. Expend as much effort on a tiny “box” as on a huge Special Report.Admittedly, during the past eleven years, there have been moments when I wished that my 5 For the exclusive use Of B.

Shopping, 2015. Cumulative work might have given me a personal brand. Eventually become known as writers. We don’t. 25 Writers at the New Yorker Business Model The Economist’s audience was attractive to worldwide advertisers. Newsweek CEO Tom Sachems explained: As a non-American magazine, The Economist has been forced to take on a global perspective, attractive to worldly, aspiration readers that advertisers will pay a premium to reach. The audience they’re speaking to has a global life and The Economist has a global voice.

6 Despite the attractiveness of its audience to advertisers, The Economist relied to a far greater extent than its competitors on subscription income. Its cover price was $6. 99 and subscribers paid $1 27 per year for 51 issues – “and this at a time when we’re told information wants to be free and newsstands are disappearing,” commented Hirsch . 27 Subscription prices for competing magazines were typically far lower, 47 cents for Newsweek, 77 cents for Business Week and 89 cents for Fortune. The 50 largest magazines in the U. S. Had cut subscription prices by 10% in the 2005 to 2009 period. 8 At the same time, The Economist had become more expensive: “We get more money out of our readers than advertisers, and that’s a very different model,” said Alan Press, senior vice president for marketing in the Americas at the Economist Group, “We’ll never discount the kind of content we have.

“29 Some argued that The Economist’s model was unique and that it would not work for other magazines. John Reese, vice president for consumer marketing in the Sports Illustrated group, said, “Sports Illustrated could theoretically charge $100 a year and have a much smaller circulation, but we wouldn’t be maximizing what the enterprise could make. 30 “It’s amazing how price- sensitive people are,” added David Ball, vice president for consumer marketing at Meredith, which owned magazines like More and Fitness, Honestly, we’ve tested raising it 50 cents and we see a drop-off ? sometimes startlingly high.

’31 But The Economist was not alone in pursuing a subscription-centric business model. People, a magazine of celebrity and human-interest stories, had raised its subscription prices to levels comparable to The Economist’s ($104 per year, an average of $4. 09 at the newsstand) while slightly increasing the number of readers. Our strategy right now is to maintain a premium price on both sides of the equation ? subscriptions and ad rates,” said Paul Canine, president and group publisher of Time Inc.

‘s style and entertainment group. 2 Print Competition News and commentary on global affairs and business were available from many sources. In the United States, Time and Newsweek covered issues similar to The Economist’s. But Klutz did not consider these publications to be the closest competitors: don’t [think] that Time and Newsweek are our main rivals.They are not. Who is? This is a subtle question.

We are in 208 countries. In each county we compete with magazines and newspapers, radio and television to some extent, and the web. In America, readers in our segment are more likely to read the New York Times, the Wall Street Journal, the New Yorker, The Atlantic ND Wired than Time and Newsweek. Even F-robes and Fortune and Business 6 Week are not direct comparisons (they are business magazines, whereas we, despite some impressions to the contrary, cover everything). 3 The Economist’s success had not gone unnoticed, of course.

Many observers saw in Time’s and Newsweek re-positioning an attempt to more effectively compete with The Economist. David Carr, media reporter for the New York Times, noted: “The new Newsweek will no longer attempt to report and annotate the week’s events ? an expensive, unsustainable approach to making a weekly news magazine… Instead, the remained magazine will include reported narratives that rely on intellectual scoops rather than informational ones and pair them with statistic argument. 4 Not everyone was convinced that a focus on in-depth commentary and reportage would save Newsweek and similar magazines. Hirsch claimed: Even as Time and Newsweek attempt to copy The Economist’s success, they seem to be misunderstanding what it is, exactly, that they should be copying. By repositioning themselves as repositories of commentary and long-form reporting.

.. The American newsweeklies are going away from precisely the hint that has propelled The Economists rise: its status as a humble digest, with a consistent authorial voice, that covers absolutely everything that you need to be informed about. 5 Scope The Economist was the most important business in The Economist Group. Other publications included Refinance, aimed at treasurers and Scoffs, Intelligent Life, a life-style magazine for the European market, and a number of titles and information businesses aimed at those who needed to know about the people, politics, and legislation in Washington, DC and Brussels (Roll Call, Congressional Quarterly, Congress, European Voice).

The Economist Intelligence unit (ICE), founded in 1946, provided economic analysis and forecasts to companies.

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