Reader's Digest may still claim 100 million readers a month for its 48 different editions in 19 languages, but those readers aren't getting any younger, and the once-mighty media company is struggling to find ways to attract a new generation of subscribers. The fact that the firm last week said its fourth-quarter earnings would be below analysts' expectations, and that it was reshuffling senior executives, indicates a level of uncertainty about the Digest's future.
While the company isn't yet ready to take the lid off its new-media plans, it's clear that the Internet will play an important role in finding new readers and expanding ad revenues. One possibility is an America Online-type service that would create a family-friendly virtual community, with greater safeguards against exposure to possibly obscene or upsetting content.
"We're out to reach new, younger customers," Sarah Hammann, director of new business development, said Monday. "We're going after an audience that's 18-plus. We want to make sure our material appeals to as broad an audience as possible."
She declined to discuss specifics of the company's Internet strategy, but did note that of some 15 million US subscribers, surveys show they have more personal computers among them than readers of the top four PC magazines combined. Moreover, the print version of Reader's Digest regularly receives "hundreds of thousands" of submissions from readers every month.
Such interactivity would only be enhanced by a strengthened online presence. At present, the Digest has two key Web sites: Reader's Digest World and a directory service called LookSmart that catalogs some 200,000 hand-picked sites. Hammann said three-quarters of visitors to the sites are under 45, with "Humor" being the most-trafficked area. Some 60 percent of online readers are women, and they hail from about 80 different countries.
"We're a player in any mass market," Hammann observed. "We look at the Internet as a good opportunity for Reader's Digest down the road."
While the magazine certainly boasts a well-known and well-respected brand - which won't hurt in attracting online advertisers - it's questionable whether that brand will find a following among cooler-than-thou Net surfers with a hankering for edge and attitude. Even dressed up in multimedia bells and whistles, Reader's Digest remains, well, Reader's Digest.
"There aren't a lot of people in my age group - I'm 34 - who read that title," noted Kate Delhagen, an analyst at Forrester Research. "The Internet isn't their core competency. They have huge inroads to households, but their online efforts have largely failed to date."
That could change, but first the Digest needs to spruce up its more established interests. To financially kick-start the company, the Pleasantville, New York-based firm said it would slash the dividend paid to shareholders and use the money instead to help fund a US$400 million "strategic-growth program" announced in April. In any case, Reader's Digest Association, the magazine's parent company, isn't hurting for cash, with net income of about $80 million last year.
Reader's Digest was founded in 1922, and now calls itself "the world's best-read, best-selling magazine." Whatever else one wants to say about the company, no one can argue with its reach. "By virtue of our scale, we're well-penetrated in virtually every demographic segment," Hammann said. "We're now looking at other markets and distribution channels that can reach that scale."
An online service, she added, would make a perfect "adjunct" for the magazine. Beyond that, the Digest isn't yet ready to say.
