On Friday I was down in Tampa trying to sell my book, iPhone Millionaire, on the Home Shopping Network. Yesterday, Newsweek announced that they were terminating the print version of the magazine. What do these two things have to do with each other?
A lot, actually.
Let's start with Home Shopping Network (HSN). Who watches it? The channel's prime time is between midnight and 1am, and get the same number of viewers, I think, as a mid tier cable channel.
But let's compare the two.
A mid tier cable channel generates about $15m (£9m)in income from advertising in a year. HSN generates about $9bn (£6m) in revenue from the same size audience. Isn't that impressive?
It makes you wonder why the other channels even bother with all the expense and difficulty of producing programmes, trying to get audience attention and then selling spots to advertisers in the rather tortuous and Rube Goldberg-like construct that, having seen the ad, they will then go out, get in their cars, drive to the store and buy the stuff that is being advertised. What are the odds on that? What percentage of people who see an ad actually buy the stuff? Could it be close to .001%? I bet it is. On the other hand, what percent of people watching HSN actually pick up the phone (or buy online) the stuff they are seeing? Is it close to 70%? I bet it is.
Which is the better business? HSN.com alone did an astonishing $1bn (£62m) in revenue every quarter last year.
Which takes us to Newsweek. Once a great magazine, today Newsweek is a sad shadow of itself. The staple is often thicker than the magazine.
The content has actually improved, but if there are no ads (and there aren't any) there is no magazine. So Tina Brown is going to fold Newsweek into that other iPad-based non-performer, The Daily.
Two failures for the price of one. And why are they failing? Becasue they don't have any revenue.
As Facebook has so clearly shown, advertising doesn't work on the web. Who wants to look at it? Who cares?
But buying stuff on the web or cable? That works. Clearly.
Maybe Newsweek should take a lesson from HSN? They should. But they won't. It's not in their DNA. They like advertising. Unlike pretty much all of their readers.
Michael Rosenblum is president and chief executive at RosenblumTV.
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