Since you returned to Hearst last year as president of the publisher’s magazine division, you created a position called head of content extension. What does that mean?
Yeah. David Kang has that role. But what we’re very excited about is that the latest wave of technology is focused on getting people to pay for our content. So if you can imagine the first wave of the Web—and one of the collective mistakes we all made is that we gave our content away for free—the top people doing Web content all said it wasn’t something that needed to be paid for. Now you just look over the last year—through the creation of Nook Color and iTunes and the new Apple IOS and especially the Kindle Fire—now it’s all about creating devices where people can consume a great deal of content and pay for it. And so as the publisher of great content and also the owner of vast archives, this is the best possible news imaginable for Hearst.
Hearst claims about 300,000 digital magazine subscribers, up from basically nothing a year ago. Since tablet subscriptions are new, are those numbers good?
It was basically zero at the start of the year. We think that number is going to grow very rapidly now with the creation of a fourth distribution channel, the Amazon Fire product. So this next wave of technology allows us to build businesses that will have much more consumer revenue than we’ve had in the past. Just to keep in mind, our websites are 100 percent advertising in terms of the business model. Let’s call our magazines 75-25, advertising to consumer. Our goal for all of our tablet products is 50-50, between the consumer piece and the advertising, and in that way we hope to mirror what the cable industry has. The cable industry is very high functioning.
Hearst embraced e-readers early on, but I always hear about how that business model favors Apple and Amazon and leaves the publishers wanting more. Am I wrong?
The business model favors those who have the ability to build very large pools of credit card-enabled accounts—like iTunes, Barnes & Noble, and Amazon. It favors those that make the transaction very easy for consumers. So if you’re in one of these environments and you just get the urge to buy, it’s pretty easy. But if you have to be in a place where you have to find your credit card and go through the registration, you inevitably lose people—so it favors those who build big communities of buyers.
The conventional wisdom is that Hearst’s stable of magazine titles are aimed toward mass-market, middle-of-the-road readers, maybe even housewives. Are they going to bother with these innovations, be they e-readers or social media or what have you?
I think we’ve learned something interesting. When Apple’s product first came out—the iPad—the screen is so great and it does so much. And so we thought this was going to be the only device where our content would work. But I think that we’ve been proven wrong. When the Nook Color came out—which is not a device that does as much as the iPad, but that you can read—it taught us there’s a pretty big market for people who want a replica product. And I think we also found that the Nook device is very popular among women because it fits in your purse. It’s a smaller physical footprint. That’s why we’re very bullish on what Amazon is doing.
Your career in the magazine business began long before Twitter, Facebook, Nook, and iPad. Do you ever miss the days when the industry revolved around a printing press?
Absolutely not. The business is more exciting and more dynamic than ever, and so I don’t wish it was 1959 or 1979 or 1999. And, if anything, if we would have met five years ago and I told you we were going to build a substantial digital business with meaningful consumer revenue, it wouldn’t have seemed possible. But technological change has brought this to our doorstep. So we’re excited as we can possibly be by what Apple, Amazon, and Barnes & Noble are doing. It’s fantastic for our business.