How The Economist Continues to Present Itself as an Attractive Option in the Midst of a Dying Newspaper Industry and Rising Media Giants
It is human nature to associate oneself with positive or affluent social groups in order to boost one's own social standing and self esteem. This phenomenon can be explained by Henri Tajfel’s Social Identity Theory, where individuals tend to use group membership as a method of social categorization. The Economist understands the importance of this, and has monetized this human tendency by presenting itself as a ‘must read’ magazine- if one wants to be deemed intellectual and successful by their peers- as can be seen by their infamous ‘Red Poster’ campaigns.
Despite the 2008 recession negatively impacting major magazines like Times Magazine, Business Week, and Newsweek, The Economist didn’t just manage to survive the crash, but flourished. In 2009, its print circulation increased by 6.4% and the group's operating profit increased by 26%. While other magazines began to reduce their cover prices to recover from the recession, The Economist increased it to $6.99 per magazine and $127 for 51 issues per year. It followed a more stable business model that relied on subscription/circulation revenue over ad revenue, thus removing the third party factor that affected other magazines and newspapers as the digital age gained steam.
However, this unique business model only works due to The Economist’s brilliant organization and marketing strategies. Contrary to its narrow title, it covers everything from politics, foriegn affairs, business, science, and the arts. Operating in 208 countries, and priding itself on its global perspective, the magazine delivers short, punchy articles, with an emphasis on analysis and commentary, in 65 pages each week. The Economist’s refusal to ‘dumb down’ their news like other outlets, and their intellectual debate like approach to discussing content, is refreshing to readers who are looking for modest and authorial writing that promises to cover everything they need to know. The Economist has created a brand image for itself that directly correlates with their readers’ sense of self image, thus allowing it to sustain its current business model.
Currently, The Economist faces the same issues other news and magazine outlets continue to struggle with as the internet and new digital media increase competition, encourage parasitical aggregators, and take away third party ad revenue. The Economist, however, appears to have successfully embraced this new environment and change in consumer attitudes by mirroring the format of their print edition, but adapting it to the internet to create a space for intelligent debate. The content put out on the internet and in their print editions is similar but not the same. By welcoming the readers into their world, with web only features like ‘Tea with the Economist’, unique running blogs, and daily news analysis, they can justify a high online subscription number to these forums and archives.
Their reliance on subscription revenue over ad revenue isn’t affected by third party aggregators and falling ad prices as much. The Economist ensures fresh content on the web by employing channel editors, much like print editors, for their online articles. While the release of the Kindle threatened to substitute magazines, The Economist worked around this by offering a Kindle subscription for only limited access, thus creating a need to have access to everything. The Economist acknowledges the impact of popular aggregators such as The Week and Huffington Post, which rewrite content quickly and cheaply, or rely on citizen journalism, but also realizes the fact that these sites are responsible for driving 21% of the traffic to main news outlets, as compared to Google with 22%.
A new cultural shift called ‘mass intelligence’ is beginning to shape consumer attitudes. As highbrow culture clashes with consumerist culture in interesting and complex ways, The Economist can maintain its superior stance over other outlets by making use of the elitist model, as they already have an established brand and identity, and creating a loyalty membership strategy with more and better content. By marketing themselves to everyone, and projecting the highly sought after image of what an Economist reader looks like, they can attract more curious readers and begin expanding their audience.
https://store.hbr.org/product/the-economist/710441 (Source, you can also read more about the history of The Economist’s business model and revenue here!)
Vaishnavi Naidu is a rising sophomore at NYU. She studies Journalism and Psychology and is a staff writer for Under The Arch, a student run magazine under Washington Square News that focuses on personal prose and poetry. She also co-hosts a radio show with WNYU 89.1 FM called Bollywood Beats in the New York area and is an on the ground reporter for The Rundown, WNYU’s Journalism podcast. In her free time, you’ll find her exploring New York City and or looking for a place to hang just one more memento up on her wall.
Tina Lin is a high school junior from the suburbs of Ontario, Canada who loves to draw. Her work has previously been recognized by the Scholastic Art & Writing Awards. Despite not having much of it, in her free time, she can often be found sketching, embroidering, playing with her cat, or with her headphones on, laptop open, and blind to the rest of the world.