Reader’s Digest Files for Bankruptcy

readers_digest_bankruptcy

Reader’s Digest, the largest magazine publisher in the world just filed bankruptcy.  In times past that would be a complete shock for most Americans.  Reader’s Digest magazine has been that ubiquitous checkout stand magazine in grocery stores since I was a tyke.  And today this massive magazine publishing empire stands on the brink of extinction like so much of the print publishing media.

Reader’s Digest has been trying to make a transition from the noise and pollution of gigantic printing presses to an eco-friendly and Internet saavy media powerhouse, but the gap has been too large to bridge.  Years ago they simply described themselves as a publisher of a world-wide magazine, but today their self-description has evolved.

Reader’s Digest Association is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader’s Digest, the world’s largest-circulation magazine, operates 65 branded websites generating 22 million unique visitors per month, and sells approximately 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y.

What happened?  The world is changing, and consumers have dropped traditional print publications with no sense of loyalty.  It is logical when you think about what consumers are doing.  They have opted for a free and convenient up-to-date Internet with unlimited choices in stark contrast to increasingly expensive magazines and newspapers, which are already out of date when they are purchased.  Not only do consumers have to go the store and purchase a print publication, or subscribe to it and wait for it to arrive every issue, but consumers  then have large quantities of paper to burn or throw away.  While consumers’ have not moved away from print magazines and newspapers because it will save billions of trees and all the pollution that goes along with the industry, it certainly is an important issue that most of us are keenly watching.

The real killer for the Reader’s Digest is that businesses no longer find their expensive advertising campaigns in the publications to be  as effective as they once were.  In general, roughly 80% of a print newspaper’s income comes from business advertising, and reader subscriptions account for a small part of the remainder.  With readers migrating away from the Reader’s Digest, and with traditional print ads losing their effectiveness even for those readers who remain, it is inevitable that advertising dollars would shrink even while the costs of printing keeps escalating.  It’s a business model that seems doomed to failure in a rapidly evolving Internet Universe.

The Reader’s Digest has been moving as rapidly as they could to bridge the gap between an archaic business model and the moving target of consumer preferences.  Unfortunately, they have not been able to move fast enough.

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