There’s been fallout big and small from the firing of Time Inc. CEO Jack Griffin, but the most significant was surely the loss of the company’s digital head, Randall Rothenberg.
Rothenberg’s hire just two months earlier was important for its own sake; his exit leaves the publishing giant without a leader to unify its strategy for the digital world.
Rothenberg was Time Inc.’s first chief digital officer, and given the competition for talent in the field, his hire was widely seen as a coup that spoke to Time Inc.’s digital commitment, an area in which it—like most publishers—hadn’t previously excelled. In saying it wouldn’t replace him, Time Inc. seems to be saying things are just fine the way they were.
But falling back on the status quo is itself a risky move. Something has to replace the loss in print business that all publishers have been experiencing (Time Inc.’s happens to be lagging its expectations so far this year), but Time Inc.’s digital strategy of focusing on paid apps is a business model that’s still unproven.
That’s where Rothenberg, with his industry stature and digital experience as CEO of the Interactive Advertising Bureau (a job he since returned to), could have come in handy. While his role was designed to be an advisory one, he had a broad mandate that included coordinating the company’s sprawling digital efforts and looking for new revenue sources, including acquisitions.
With the market for print advertising shrinking—Time Inc.’s revenue was $3.7 billion in 2010, down from $5 billion in 2007—the company is trying to get consumers to pay for content on mobile devices, but doing so will require reversing years of consumers being trained, through discounted subscriptions and free Web sites, to pay little or nothing for magazine content. There’s also risk in thinking consumers will port their magazine subscription habits over to their mobile devices, despite the popularity of paid mobile apps.
(In a December survey by Business Insider, iPad owners reported that far from abandoning the free Web, they spent the biggest percentage of their iPad time—38 percent—browsing. Games and other apps, meanwhile, took up just over 27 percent of iPad time.)
It’s true that the company has some digital bench strength in Fran Hauser, who recently was promoted to president of digital for Time Inc.’s Style and Entertainment and Lifestyle Group; and John Cantarella, digital president for the company’s news and business titles. There are examples of success coming from individual brands: Sports Illustrated, in a continuation of its aggressive digital development, was the company’s first brand to announce an “All-Access” subscription plan that lets consumers access the magazine on the Web, in print and on Android mobile devices. The sports title also has rolled out a series of new digital products tied to its Swimsuit franchise.
Time Inc. also announced plans to make Time, Fortune, People and SI available for subscription on the HP TouchPad when it’s introduced later this year. On the Web, People surpassed 1 billion page views in January, probably a magazine first.
Still, All-Access falls short of its promise. Time Inc.’s magazines still aren’t available for subscription on Apple’s iPad, which is anticipated to be the dominant device for some time. EMarketer forecasts the iPad will represent 88 percent of U.S. tablet sales in 2011. (Apple announced subscription terms for publishers two weeks ago, but Time Inc., along with other big publishers, was mum on whether it would accept them, saying it still needed to work through questions about consumer data.)
But the company also lost some Apple expertise when Monica Ray, a consumer marketing executive and the company’s Apple point person, was scooped up by rival Condé Nast last summer. And in another more recent digital loss, Time Inc. Digital president Kirk McDonald left during Griffin’s short tenure.
Time Inc.’s past efforts to prop up its paid subscription model have been spotty. Maghound, a Netflix-like service for the magazine industry that Time Inc. launched in 2008, never caught on. And Next Issue Media, an e-reader publishing consortium in which Time Inc. is a charter backer, is far behind schedule in launching its promised digital newsstand.
“A couple of titles are strong [digitally], but it’s not enough,” said Audrey Siegel, president and director of client services at TargetCast tcm. “Next Issue Media hasn’t done anything. Monica [Ray] left. I think there’s a vacuum right now.”