Finance Matters

Archive for January 19th, 2010

Hearst Magazines Digital Media group just relaunched their social shopping site Kaboodle.com. The site, which Hearst bought in August 2007 in a reported $30 million deal, is what they call a “product-discovery engine.” On Kaboodle, one million users can find and recommend 6 million products  from leopard print Snuggies to towels shaped like desserts. 

The news comes the same day as an announcement from Time Inc.’s that the company just acquired StyleFeeder, a similar search and discover product engine.

In an interview last week in Hearst tower, Chuck Cordray, senior vice president and general manager of Hearst’s digital media division, told us Hearst is not necessarily planning on acquire any other digital businesses soon. But they will be launching a few of their own sites in 2010.

Site launches

Popular Mechanics will get an overhaul later this year, along with an entirely new web site coming in the fall. “It’s something completely new for us,” Cordray said, and declined to give further details.

After Hearst digital broke off from iVillage in 2007, and launched more than 14 individual sites for titles like Cosmopolitan and Marie Claire. They also went on a spending spree, buying a whole bunch of sites including teen network eCrush, men’s online network UGO and Kaboodle. They also launched The Daily Green and MyPromShopper.com. Since they broke off from iVillage, Hearst doubled Web traffic and increased unique visitors by 79%, according to Cordray. The digital magazine network currently brings in 153 million page views, from 15.1 million unique visitors per month, he said.

Paywalls

The company doesn’t plan to put a paywall in front of any of those users, and risk losing advertisers, Cordray said.

“It’s a bad strategy for us,” he said. “When we are growing [online] ad revenue by 20% our business is growing. To shut down access to that business doesn’t seem to make a lot of sense to me.”

Going mobile

Cordray said building trendy mobile apps won’t be a major focus for his division, despite Hearst magazines like Esquire creating mobile versions of their magazines, the company releasing its Skiff reader and a planned partnership for a digital magazine store. His group has launched nine mobile-enabled sites (m.esquire.com, m.cosmopolitan.com, etc.) so readers can find magazine content on their phones, he said. Individual magazine publishers at Hearst can decide whether they would like to build a mobile issue.

Individuals apps are just an experiment, not a sure-fire strategy for the future, according to Cordray.

“As we look at where we can get the higher ad revenues, it’s just not quite the right strategy for us to drastically increase our mobile” applications, he said. He would rather focus on increasing Web-based ad revenue, visitor stats and print magazine subscriptions.

Cordray said more than 3 million magazine paid subscriptions were sold online in 2009–meaning more people were buying bundled editions of print magazines through Hearst web sites. The company held some limited-time promotional deals, like $5 yearly subscriptions to O, Food Network Mag, Cosmopolitan, Marie Claire, Esquire, Harper’s Bazaar, Smart Money and others, to increase those subscription numbers.

Looking forward

In September 2007, Hearst bought RealAge.com, a consumer health website. The New York Times reported that the deal cost Hearst $100 million. But the advertising potential based on the amount of information the site had about its readers, who answer lots of quizzes and engage with online tools, were worth the deal, according to Cordray. They expanded on that same kind of model with the launch of RealBeauty.com last September. Acquiring any existing site will cost more than just launching their own, he said. 

“We would have to look hard at anything we acquire to see if it’s worth it,” he said.

Previously, the Business Insider offered a few suggestions.

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See Also:

• Time Inc., Hearst, Conde Nast Say Print Ad Revenue Will Rise (From the Dead)
• Hearst Shows Off Its Snazzy E-Reader, The Skiff Reader
• Conde, Hearst, News Corp, Time, Meredith Finally Announce Hulu For Magazines

Welcome to Twitter, Bill Gates!

The Microsoft cofounder and philanthropist just joined Twitter, Twitter cofounder Biz Stone tweets.

Bill’s first tweet was “Hello World,” a computer programming reference. His second was a note to “American Idol” host Ryan Seacrest.

He’s also retweeted Time Magazine and Seacrest.

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See Also:

• Twitter.com Vs. The Twitter Ecosystem
• British Guy Makes Airport-Terrorist Joke On Twitter, Royally Screws Up His Life
• Facebook And Twitter Will Always Be Lousy Businesses

What happened to the travelers check? The business that built American Express survived the invention of the credit card but began to crumble in the late-nineties. It has been in decline ever since.

There’s not much literature on the subject, although we’re sure that somewhere deep in the vaults of American Express there are researchers trying to find an answer. This was once a big and growing business for the company. It’s decline has to be painful.

If we had to hazard a guess, we’d say that travelers checks are a victim of deregulation and innovation. The first blow came when US courts ruled that banks could install ATMs without running afoul of rules that restricted interstate banking. Those rules were later repealed, leading to a huge build of ATMs and the rise of debit cards.  For domestic travel, travelers checks simply became unnecessary.

For international travel, the spread of electronic banking technology seems to be the culprit. We’ve withdrawn local cash from ATMs in places as far out as Chiang Mai to Costa Rica. In countries where ATMs are not available, cashing travelers checks tends to result in huge haircuts anyway. Best to start with local cash. (via Paul Kedrosky)

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From The Big Money:

As people consider the role of the financial media in the economic collapse of the past several years, a common refrain is that the media fell down on the job. The point has its merits: While there was some intrepid work done on individual mortgage lenders, for the most part neither the financial trees nor the economic woods were particularly well-illuminated. The Columbia Journalism Review has assembled a thorough, and gimlet-eyed, analysis of the media’s failures.

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See Also:

• Overstock CEO Patrick Byrne Names Steve Cohen And Mike Milken As "Sith Lords"
• Meet The Sith Lords: The 20 People Alleged To Be Part Of A Shadowy Short-Selling Conspiracy
• Oh Sith! Chanos’ Fairfax Problem Could Hurt The Shorts

General Motors CEO Edward Whitacre shocked the automotive world Monday when he stated that the 2011 Chevrolet Volt hybrid would “sell in the low 30s” and “we’ll get a margin on that,” Green Car Advisor reports.

That’s because it won’t. GM spokesman Dave Darovitz had to correct Whitacre, revising his statement to mean that after a $7,500 credit, the car would sell for somewhere in the low $30,000 range.

The $7,500 refers to a federal tax credit that purchasers of the 2011 Volt will receive.

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See Also:

• GM’s Volt Will Get 230 Miles Per Gallon City Rating
• Henderson Out Because Whitacre Was Sick Of Having To Backseat-Drive Him
• GM Working On More Hybrids Than Just The Volt