FEATURES: WHEN THE BUBBLE BURSTS - Like the market they report on, magazines in the internet and high-tech sector are facing tough times

It's hard not to notice that new-economy magazines, which once arrived inch-thick on office desks and newsstands, are rapidly shrinking in size. Publications like Wired, Red Herring and The Industry Standard, that used to rival issues of Cosmopolitan and Vogue, now barely make it to a hundred pages. Ad sales for magazines covering the dotcom sector have plunged, with too many salespeople left trying to wring ad revenues out of bleeding dotcoms and staggering technology companies. Layoffs that were initially limited to internet and tech news websites have started to spread to print publications. As most publishers will admit, those internet magazines that relied heavily on dotcom cash last year are having to raise ad rates, combine issues, and search for new funding and partnerships. Some news publications are claiming that their advertising base has broadened, with placements from companies in the upscale-consumer and mainstream sectors, as well as financial services. One thing is certain: like the technology industry itself, the technology magazine industry is coming off a phenomenal year. Consider Business 2.0, which pulled in an astounding 328 ad pages for its May issue last year. The title's May 15 issue this year brought in only 40.16 ad pages - an almost 88 per cent dive in ad sales. The Industry Standard, which last year tripled its advertising revenue and sold more ad pages than most other tech magazines in the industry, increased its ad-page count by 139 per cent in the first 10 months of 2000, compared to the same period in 1999. The title, which took in 224 ad pages for its May 15 issue last year saw advertising drop to 29 pages in its May 14 issue this year, representing an 87 per cent decline in advertising. Red Herring too made news as it announced the lay off of 54 workers, or 20 per cent of its staff, as it continued to dismantle an expansion plan undertaken during last year's blitz in tech advertising. The firings marked the third round of cutbacks made by the publication since the third quarter of last year. Red Herring, along with other US titles, went on a hiring spree when the size of some editions swelled to more than 600 pages. It also switched from monthly to bi-weekly last year. Although Red Herring was able to charge higher rates for advertising space as it almost doubled its paid circulation to about 325,000, the title's ad revenue fell for the first time in April this year, dropping 24 per cent from last year to USdollars 4.8 million. That's not say US-based tech titles are the only ones suffering. Asian internet titles are also feeling the pinch as competition heats up and revenues fall. And there are signs of a chilling market everywhere. Probably not the most auspicious time for Penton to launch its Internet World title in Asia, then. "I think it is quite important when you look at this market you also distinguish between the internet industry, which is relatively small, and the enterprise and corporate market, which includes the medium to large enterprises," says Internet World publisher, Robert Ferguson. It's not the dotcoms, but the mainstream corporate market that Internet World is targeting. "The enterprise and corporate market is the number one spend for any company at the moment. It's not IT any more, it's more internet-related information that people want. This isn't just e-business: it's the back-end logistics, e-procurement, it's all the seamless integration and other issues which we feel at the moment no one is really covering in great detail. "If you ask anyone about the pre-eminent brand for internet magazines, there's no ready answer. I think maybe if you look at the more IT side, Computer World would come up. But, if you ask people what the pre-eminent titles are for internet-related or e-business information, it's going to be The Industry Standard, Red Herring, Business 2.0. Those are not Asian publications, and their distribution here is limited to around 500 to 1,000 copies in each market, which is quite small. There is still room for a high-standard new-economy magazine here." Many Asian titles are vying for that position. The advertisement director of Singapore-based Intelligent Enterprise Asia (IEA), Caroline Quek, claims that the publication has doubled advertising this year and has already met its sales target for 2001, albeit the magazine was only launched in March. "We started out during the period of e-business hype when a lot of dotcoms were launching. At the same time there were also a lot of news websites coming up. Our magazine is for CEOs and decision makers. During our launch, circulation figures were 15,000 and after fine-tuning, we now have a 14,500 circulation base, which at the moment is mostly in Singapore. "We believe the tech industry is still spending, so are other sector such as banking and finance. The problem we had last year was that not many people knew what the magazine was about. Now we have a readership and our advertisers feel safer spending with us because we have proven ourselves. But the shift for us has been from tech to business. The other factor was that when we launched, many clients had already committed their budgets for the year, which meant that we spent much of last year building relationships." Another magazine staking its claim to be the leading Asian internet title is media's sister magazine Revolution. Publishing director Andy Bridge says advertising support for the title has been encouraging since its launch last year. "Obviously the recent downturn has had an effect, but we never set ourselves up as a dotcom magazine or a pure technology magazine. We're a business and marketing title looking at new media, and whatever the current fallout or readjustment, it's obvious new communications platforms present new opportunities and new challenges for businesses in general and marketers in particular." Bridge adds the magazine's advertising was 20 per cent up on its targets at the end of last year. The region's internet titles are facing increased competition from broader publications such as BusinessWeek and Asiaweek, which recently re-invented itself as 'Red Herring meets Fortune meets Vanity Fair'. The Time Inc-owned magazine launched with the new tagline 'Redefining business'. Ferguson adds that competition from business titles for tech-savvy readers is likely to continue. "The general business books such as BusinessWeek, Asiaweek, The Asian Wall Street Journal, Fortune and Forbes make a very broad market for business-related news, but all of them have just jumped on the internet bandwagon because the information need for corporate executives is very great now. They have come out with tech supplements that we are likely to see more of." Newspapers are getting in on the act, too: the South China Morning Post is extending its tech coverage from a weekly supplement to daily coverage in its business section. And internet magazines also have to compete with news websites and email newsletters. AdXplorer CEO Antony Young comments: "Shame on anyone in the online marketing business that doesn't choose the online publication ahead of the printed version as their first read. The online titles generally offer more up-to-date info, better interactivity through chat, and more regular contact via newsletter services. And I can say from experience that these get much better response from their advertising. "What makes this magazine category tough is that they face competition from the online players, which are of a high standard, and general publications that are more heavily covering internet stories. Look at the freshly re-launched Asiaweek - they see themselves talking to the young, wired and rich. There is only room for probably one player in this crowded space that can be financially supported with advertising. The one left standing will likely be the one most committed to adding insightful perspectives." Some of the biggest victims of the dotcom gloom have undoubtedly been content sites. The editor-in-chief, Asia of internet.com, Elaine Ee, recently announced the site would "no longer publish individual newsletters based on city or country sites in Asia". Ferguson explains Internet World will not be making its content available online in the near future. "If you look at the online properties at the moment, they are having a tougher time than anybody. Internet.com has closed its Hong Kong operation and I think the information needs of internet industry executives are probably met by what is out there at the moment, so until we can come up with something more valuable, or a better offer, I don't think we're going to do that." With a circulation of 16,000, the first issue of Internet World is out this month. Ferguson remains optimistic, but strikes an understandable note of caution. "We will of course be struggling as well. It is a tough time for a launch in the second quarter with tighter budgets. And I think we will see a lot of consolidation in the market. There will be a divide between those that are going to retrench, such as internet.com, and more established titles that are going to make a real go of it."

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