An Offer I Can't Refuse

In yesterday's snail mail came an extraordinary offer from a magazine I respect and admire--Inc., the journal for entrepreneurs. It was one of those subscription offers we all get from time to time. But this one offered the lowest price I have ever seen for a mainstream business magazine: $5 for a year's subscription or $10 for three full years. The latter offer provides 30 issues of the magazine for 33 cents a copy, less than the cost to mail the magazine. Add in the costs of reporting, writing, editing, design, art, printing and paper, and it's not hard to see that Inc. is losing quite a bit of money on every issue it sells. My guess is that the cost to produce a single issue of Inc. is closer to $1.50 to $1.75. So Inc., which is owned by Mansueto Ventures, my former employer at Fast Company, is willing to take a loss of well over a dollar an issue to get me as a subscriber. And this is for an exceptional magazine of very high quality, smart writing, and attractive design.

Why? Largely because it's doing what almost all magazines do: it's trying to maintain a circulation or rate base that is higher than it's natural demand. By keeping its rate base at its current level, it can charge advertisers a higher price than it otherwise could. Inc. is hardly alone in playing this game. Pretty much every U.S. magazine has the same strategy. If you're the circulation director of a publication, you have a simple choice: pay large direct mail costs to get new subscribers who really want the magazine, or lower your subscription costs to a point where you're pretty much making an offer that is hard to refuse. Although I have never paid for a subscription to Inc., I'm filling out a check for $10 right now. As a magazine junkie and a new entrepreneur, I simply cannot refuse this offer. Inc., you got me.

About My New Company

There are all kinds of questions I'm getting about my new company from friends and colleagues. So I thought it might be helpful to lay out my answers for everyone to see.

Why C-Change?

For the past five years, we’ve been witnessing nothing less than a sea change in the media business. The media monopolists are dying. More nimble, low-cost models on the web are quickly replacing them. Readers are increasingly abandoning print and moving to digital—on the little screen of your mobile device, the bigger screen on your laptop, and the biggest screen in your home. There’s nothing in the short-term future that will slow this trend down. If anything, analog media brands have only begun to feel the pain. What’s next will be truly devastating and those changes spell unprecedented opportunity for new media entrepreneurs.

Why are you starting your own company?

I passionately believe that the future of media is digital and that newcomers have tremendous advantages over incumbents. Most of traditional media remains in a complete meltdown, dragged down by high costs, old ways of thinking, and legacy work processes. As tough as the past three years have been for traditional media, the next three are going to be nothing less than brutal: more closures, greater losses, increasing layoffs of highly talented journalists and editors.

That’s also why we’re going to see a media boom in the next three years, the launch of tens of thousands of new media entrepreneurs on the Internet. Many of them will fail, but many more will flourish and replace the brands our fathers and grandfathers grew up with. The success of Huffington Post, Politico, Drudge, GigaOm, TechCrunch, and other media enterprises on the web have shown us a path forward. But it’s still very early days and the new followers are going to have lots of advantages over the first movers. I’m thrilled and excited to be part of this revolution.

What makes you so sure you or anyone else can succeed at this game?

I have three fundamental beliefs that inform my thinking: 1) Print advertising will never come back. There are just too many options for advertisers today and too much pressure on rates. Sadly, success in print will be measured in single-digit declines, forever. 2) Online advertising will never offset those declines nor save print. There’s far too much competition online and far too much available inventory; and 3) Users will not pay for content, unless they’re convinced it has immediate and tangible value. Very little journalism meets that standard today. Do we really need 57 versions of a story on Bernie Madoff pleading guilty?

If you agree with these absolutes, they can liberate your thinking about what’s going to happen next in media. Why? Because they tell you that nothing less than radical transformation is needed to survive and to thrive in the analog space. And there’s precious little revolutionary thinking among the traditionalists. That’s why newcomers have great advantage at this time of transition. The great management guru Peter Drucker said it best: "The problem in our lives is not the absence of knowing what to do, but the absence of doing it.” I’m going to do it.