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I read with great interest, the recent announcement that The New York Times will be starting a wine club on the heels of the Wall Street Journal and San Francisco Chronicle wine clubs, which have already been launched. This did not come as a surprise to me; the motivation was obvious: the piece went on to say that the paper was “seeking new revenue” and that their 2nd quarter results showed a decline in sales of 21.2%. All three newspapers cover, rate and review wine and all three newspapers are now selling wine.
As you probably know, Wine Enthusiast Companies not only has a publishing business, Wine Enthusiast Magazine, that rates and reviews wines but a separate commerce business, Wine Enthusiast Catalog, that sells wine cellars and accessories. Wine Enthusiast Catalog has a sister company, WineExpress.com which does, in fact, sell wine. The editors of the magazine have nothing to do with our division that sells wine. It is the same integrity expected of the journalists at The New York Times, Wall Street Journal and San Francisco Chronicle.
The ownership of media and commerce companies by a single entity is not a new development. Time Warner was always in the product-selling business while they have owned magazines, TV and radio stations. Disney, for example, produces movies in both its Touchstone and Pixar divisions, some of which may be reviewed by critics that work for ABC News (a network owned by Disney). I am quite confident that these film critics would not think twice about giving a lousy review to a movie that might have been produced by Touchstone.
As advertising revenue declines due to difficult economic conditions which impact marketer’s product budgets, so does the economic viability of media models such as newspapers, magazines, radio and television. This has nothing to do with the internet, (more about this in my next blog). This loss of sales behooves pure media plays to find new sources of revenue. This is precisely what is driving The New York Times to commerce and this is what will create more combined media/commerce companies in the future.
Without commerce, companies whose survival is based on paid subscriptions from readers (which is now more often than not available free on-line) and advertising revenue (which is in a steep decline) have an uncertain future.
I believe in the commerce/media model as long as potential conflicts of interest are carefully audited and exposed. The most valuable asset any media company has is its audience and they need to monetize this asset by marketing goods along with their advertisers. The alternative is more bankrupt companies and vast unemployment in this country.
As I write this, Reader’s Digest has filed for Chapter 11; this makes my point strike home even more profoundly.
What do you think about being offered wine or other product offers from The New York Times, Wall Street Journal or Wine Enthusiast Catalog?
What alternatives do major media companies have if their two main sources of revenue (subscriptions and advertising sales) are disintegrating?
Adam Strum is the Founder and Chairman of Wine Enthusiast Companies and Editor and Publisher of Wine Enthusiast Magazine.
Filed under: Opinions and Commentary, Wine Ratings, Wine Retail
3 Comments
3 Responses to “Media and Commerce Converge for Survival”
Please Wait
August 19th, 2009 at 4:45:57 PM
I agree that it is sad (and somewhat troublesome) to see a decline in printed materials. There is nothing like curling up with the Sunday paper, a magazine or a letter from a loved one. Somehow, the same information when presented on a computer screen, seems much less personal.
Is it posible that major media companies are simply too big? Who is diseminating their information? Is it personal? Do I feel like a valued customer or just another e-mail address on a list serve? Social media might be a baby step in the right direction, but truthfully, I find there is nothing like honest-to-goodness customer service to keep people coming back to my business.
August 20th, 2009 at 5:57:54 PM
Dear Amber,
The funny thing is when I speak to my daughters via email or text message there is always somewhat of a lack of communication. It’s odd but people simply are developing strong bouts of phone phobia. It’s amazing what can be communicated via the phone or better yet in person that is missed or mis-understood electronically. Nevertheless, there are major advantages in being able to communicate in a myriad of ways and I am a strong proponent of letting the chips fall and not “diss” ing any form of communication. At Wine Enthusiast Companies we try to participate in all forms of out reach and keep an eye on new technology since if you don’t quickly change in today’s evolutionary enviroment you will fall behind very quickly. I find it it all very exciting and stimulating to create change. Business has always been Darwinian and the strongest, smartest and most dedicated will always win in this survival of the fittest.
Thank you for commenting on my blog!
August 30th, 2009 at 2:06:18 PM
After reading your post it makes sense that they are doing this, but I have to say it caught me by surprise when I got the evite to subscribe to the Wall Street Journal’s wine of the month club. While I was intrigued I was also a little put off by the notion. However, I must assume it’s been a success or why would the Times be following suit?