Why Newsweek’s Digital Move Makes Sense

And why it probably won't last

No one really believes Newsweek is going to create the first successful subscription-based digital publication, when that format has been a failure so far. But even if it doesn’t, the approach makes more financial sense that folding Newsweek altogether, cutting its frequency or confining its presence to the Web, as some have suggested.

The company line at parent IAC is that people will embrace a curated weekly news magazine with an iconic name as a respite from the nonstop news available online. But the better reason may have to do with the 1.4 million subscribers Newsweek owes a weekly issue. As the clock winds down on the print edition, Newsweek will start promoting its digital edition in print and online, encouraging subscribers to make the switch. Those that convert won't need to be paid a costly refund.

U.S. News & World Report took a similar approach when it folded its weekly product. It converted many thousands of subscribers to a weekly digital publication, eliminating the need to issue them refunds on their remaining subscriptions.

Conversions probably aren’t going to make a big dent in Newsweek’s circulation liability, though, as digital editions have remained a tiny portion of the magazine industry. And time will tell if anyone who takes the digital subscription will renew.

So a digital edition could make a dent in the reported $30 million in circulation liability, while Newsweek could get another magazine to take over the rest. It’s reportedly in talks with Time over such a deal. (Time wouldn't comment; Newsweek hasn't yet replied to a request for comment.)

Without printing and postage costs, Newsweek can put out a digital edition relatively cheaply. When its existing subscriptions run out, unless those hundreds of thousands of subscribers materialize, Newsweek could quietly fold it.