Variety and Deadline Hollywood make interesting co-stars
The sale of 107-year-old magazine to a blog company for a bargain price is a reminder that paid-for is not a panacea
The disruption of America's entertainment business media is practically worth a film script in itself. Last week, Variety, which has tracked the business of show since 1905, was flogged off in a "fire sale" for a widely reported but unconfirmed $25m (�15.6m). The purchaser, just to spice things up, is not another long-established media organisation but a "blog company".
The vendor, the business publisher Reed Elsevier, reportedly both dropped the initial price from $40m and helped the trade paper on its way by throwing financing in as part of the deal with Penske Media Corporation, whose main asset to date has been Deadline Hollywood. Two factors make this takeover more than just another "mag-buys-mag, who cares?" story.
One is the rise and rise of Deadline Hollywood, a blog property powered by the output of the highly mythologised Nikki Finke, who, if you believe hyperventilating US media columnists, is a cross between His Girl Friday's Hildy Johnson and Satan. The second is that amid much talk of remaking media business models, Variety has suffered at the hands of competitors despite being behind a fashionable paywall.
Variety's financial decline is a tale of internet disruption, with both newcomers such as deadline.com and stronger competitors such as Hollywood Reporter proving that a venerable brand is no protection. Only six years ago, it made 30% margins on turnover of more than $90m a year. Now its revenues are halved and its profits, if informed speculation is to be believed, are well below $10m. Jay Penske, the young owner of PMC, is backed by a hedge fund, Third Point, and the purchase might also be interpreted as a mopping-up operation to squeeze more value out of the consolidated entertainment brands.
Finke's Deadline operation has played no small part in the disruption. In a compelling and rare profile of her for the New York Times in 2009, David Carr identified the relentless and visceral nature of her Hollywood coverage as what made deadline.com a must-read. Finke simply did what many web publishers aim for but few succeed at.
She worked harder, wrote more, and fitted the medium better than her competitors. Detractors point out that she has also ditched some of the conventions of print, for example by using anonymous sources, mending the archives to better reflect facts, and, being partial rather than neutral (her coverage of the 2007-8 Hollywood writers' strike was undisguisedly on the side of the writers).
A day after the deal was announced, Penske wasted no time in revealing what he plans to do with variety.com ? the paywalled site that has 17,000 subscribers, but, according to comScore's August figures, has a monthly unique readership of 320,000 compared with 2.4 million for deadline.com and 5.1 million for HollywoodReporter.com. Jay Penske told staff last Wednesday that the paywall will be phased out, while publication in print (but perhaps weekly only, not daily as at present) will continue.
At a time when newspapers' declining fortunes have been accompanied by the suggestion that everyone will be in a retreat to paid content, Variety is a reminder that paid-for is not a panacea, particularly if you don't have a better answer to keeping the web's reach while safeguarding revenues.
Broadly based media have so far struggled to achieve a range and depth of information that people will willingly pay for and, more importantly, which is hard to replicate. Articles, however well-researched, seem unlikely to be the answer by themselves, as the demand for better real-time information entails publishers fundamentally rethinking their offerings.
One possible solution is the refining of a better hybrid model, which keeps a high level of audience engagement and therefore influence through free, but finds a way to value information for specialist markets more aggressively. A two-speed specialist offering on these lines has been developed by the political site Politico, with its Politico Pro subscription service, and potentially underpins Quartz (qz.com), Atlantic Media's business news startup.
One final extrapolation should be made from the Variety sale. Here is a 107-year old magazine finding a new home and financing, alongside three or four still-young brands. Also crowding the same ground as the Penske sites are a large number of new outlets, professional and amateur. The reordering of assets can only go so much further before bringing the curtain down on titles makes more sense than prolonging the inevitable.
Source: http://www.guardian.co.uk/media/2012/oct/14/variety-deadline-hollywood-interesting-co-stars
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