Corner Office Interview: Growing Paid Circulation: A Foreign Concept?
With members such as Angelina Jolie, Brian Williams and Fareed Zakaria, the Council on Foreign Relations (CFR) would seem to have no problem growing its membership. CFR's magazine—Foreign Affairs (ForeignAffairs.com)—however, faces the same challenges as most magazines today—increased competition from existing and emerging online sources, consumers in a down economy who scrutinize every purchase (and subscription), and a fast-paced, tech-driven society where long-form content is often perceived as old-school or unbefitting of today's on-the-go, bits-and-bytes, instant-access-oriented marketplace. But unlike many other magazines, the 88-year-old Foreign Affairs—which explores issues in American foreign policy and international affairs—not only still derives 90 percent of its revenue from print, it continues to grow its paid circulation and newsstand sales. Its strategy? A focus on content, playing to its strengths and opportunities, and some plain-old smart business acumen.
Despite its continued print success, however, complacency has not set in, nor has resistance to a multiplatform future. Foreign Affairs has been proactive with its Web strategy, ranks among the top publications on Amazon's Kindle, and is currently putting finishing touches on its overall mobile strategy.
Here, Publisher David Kellogg shares with Publishing Executive details behind Foreign Affairs' growth, print and digital strategy, and biggest challenges.
During a period of decline for many magazines, Foreign Affairs has seen consistent growth; to what do you attribute this?
Kellogg: Since 2001, paid circulation has grown by 40 percent to 155,000, and single-copy sales have doubled. One reason is that [Foreign Affairs (FA)] serves two markets that reinforce each other—a vertical market, including the international business and policy communities, and a more general audience of influential opinion leaders who may not be foreign policy specialists. Another reason for the steady growth during a tough economy—in addition to first-class editorial—is that we have had to focus on profitable, quality circulation growth, because we don't have the advertising revenue as a subsidy. While this limited the upside, it also built a solid, reader-driven foundation for the business.
How much revenue is generated by ad sales?
Kellogg: 25 percent to 35 percent.
Where are ad sales growing most significantly?
Kellogg: We are seeing substantial growth in corporate advertising, especially in the energy and financial categories, and in high-end international travel, which … we have been focusing on recently. We are also seeing continued strength in the publishing and educational market, including graduate schools.
What percent of your ad revenue is currently print-driven versus digitally driven?
Kellogg: Print is still predominant—about 90 percent of the total. Online is building, especially through our weekly e-newsletters that now go to over 80,000 opt-in readers.
What role does your website play in your overall business strategy?
Kellogg: ForeignAffairs.com, which we relaunched a year ago, is central to our strategy for audience development, conversions to print subscriptions, subscriber account management and advertising.
What content strategies are working best for you online?
Kellogg: We currently use a modified pay-wall model, with daily … Web-only content available for free, but reserving most print content for paid subscribers. We open up a handful of pieces from each new issue that we believe will generate the most traffic. We … also open up selected, older print content if it becomes newly relevant, or if there is a Web-only article that refers to it. Access to all the print content requires registration, because one of our goals is to develop a pool of registered users who we can then convert to paid subscribers. This model is working well, and we will be testing moving Web-only content behind the registration wall, too.
Have you seen this impact your subscription or newsstand sales? If so, how?
Kellogg: The impact on subscription sales has been positive, because of the continued strong conversion numbers on the site. It's harder to gauge the impact on newsstand sales, but we believe the model also supports those, because it allows visitors to sample FA without removing the incentive to buy.
What percentage of subscriptions currently come through your website?
Kellogg: Approximately half of our new business, plus a growing number of renewals from subscribers who use the website to manage their accounts. Our goal for renewals is to convert subscribers to our continuous-service program.
Has the number of Web-sold subscriptions changed recently and, if so, why?
Kellogg: The conversion rate has held constant, but because overall traffic has increased, the absolute number (and percentage of total new business) has grown. And by introducing the "registered user" class on the site, we have a constantly refreshing pool of responsive prospects to promote.
Print content as far back as 1947 is available online, yet you also sell back issues. Do you sell many?
Kellogg: No. That is more of a service for libraries or long-time subscribers who want to build their collections. … There is an active market for back issues on eBay, too, along with the Tom Waits CD of the same name!
What are other primary revenue drivers?
Kellogg: Licensing and permissions, list rental. The academic market is important, not only for the current revenue it generates, but because many readers are first introduced to FA in college.
Are you integrating user-generated content into your site? If so, how and with what impact?
Kellogg: Yes. The site relaunch last year introduced commenting on all articles, and we are seeing some interesting discussions developing around articles. … We are also actively building a following via social media, because we want our readers to communicate on whatever platform they prefer.
Your content is, well, not for those with short attention spans. Long-form content is sometimes criticized in today's fast-paced marketplace. Is the "3,000-word feature" still working for you?
Kellogg: Some essays can even run 5,000 or longer. You're right, long-form is not for everyone. But it does help to differentiate FA from the competition, because it allows a level of treatment of an issue that no one else provides. There are other benefits, too. FA is now available on e-readers, and long-form is perfect for that reading experience. Since we launched on Kindle less than a year ago, we have consistently ranked as one of its top 10 magazines. It also may benefit our online model; because people tend not to read long-form online, we are building an audience via Web-only content, but getting paid for the long-form content.
How important has a mobile content strategy been to you?
Kellogg: This is at the top of our list, and we are in the process of developing a mobile platform right now. This will also help us internationally, where mobile is even more advanced than here.
What is the biggest challenge you face right now as publisher?
Kellogg: The same information revolution that allows FA to reach a global audience with zero incremental marketing cost has supported a proliferation of new websites and blogs against which we now must compete. And that competition can be fierce.
What are your plans for addressing that challenge?
Kellogg: That growth in competitors has expanded the … audience that is regularly consuming content on foreign policy, and this hands us an opportunity to expand significantly our audience base. FA can thrive in this new ecosystem, but we have to assume the game will keep changing, and so will we.
What do you see as the biggest opportunity for FA?
Kellogg: [Our] largest growth opportunity is in the global market. In the last eight years, non-U.S. circulation has grown at five times the rate of U.S. circulation, largely through newsstand and subscriptions sold via the website. And that was with limited marketing investment. We believe with the new tools we have, FA can create a new community of readers globally, and … in turn, add more value for our U.S. readers. A new digital subscription we plan to roll out in the fall will be an important step for expanding international readership—eliminating the cost and delay of international delivery of the print magazine, and at a lower price to the subscriber.