Maxim-izing Details

Maxim-izing Details

Maxim-izing Details

Moneybox
Commentary about business and finance.
Feb. 8 1999 7:30 PM

Maxim-izing Details

Magazine publishing is a business, which normally would mean that magazine publishers could be counted on to place the highest premium on profitability. In practice, though, other considerations--higher circulation, better buzz--take precedence over profits. Still, even magazine publishers like to think of themselves as hardnosed businessmen, with the curious result that decisions that don't do anything to improve the bottom line are explained away as designed to do just that.

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Take Conde Nast's dismissal last week of Details editor Michael Caruso, who was fired after his magazine was eclipsed in circulation and in buzz by Maxim, the magazine for men who thought Rush Week was the best time of their lives. Caruso was replaced by Maxim editor Mark Golin, whose only previous editing jobs included a tenure at Prevention's Web site and a little less than a year at Cosmopolitan. While Golin insists that he's not going to turn Details into Maxim, it's, well, hard to understand why Conde Nast would have hired him to do anything else.

The assumption behind Caruso's firing is that Details, which was reportedly losing $7-$10 million a year, has a better chance of becoming profitable if Golin can work the magic that has boosted Maxim's rate base--the circulation it guarantees advertisers--to 650,000 readers. And if that were the case, you might think of this as a smart decision (although you do want to ask Si Newhouse: "You have billions of dollars. Is publishing Maxim really what you want to do?").

The problem here is that boosting circulation is no guarantee of anything. Even now, Details already has nearly twice as many ad pages as Maxim, and its ad rates are higher. From a business point of view, then, Details doesn't lose more money than Maxim because it has fewer readers. It loses more money because it has the production values and cost structure of a top-of-the-line fashion mag without the ad dollars to support it. Maxim, by contrast, looks cheap, reads cheap, and presumably is cheap to produce. To make a Maxim-ized Details profitable, then, Golin would have to do more than just accelerate the changes Caruso had already made. (In the last three months, Caruso has Maxim-ized the magazine, apparently to real success, since newsstand sales for the past two issues were up 40 percent.) Golin would have to restructure the magazine's entire business model. But generally that's a publisher's purview, not an editor's.

At the same time, we don't have any idea whether Details really does lose more money than Maxim. Maxim's parent, Dennis Publishing, is private (like Conde Nast), which means that it doesn't have to disclose any substantive financial information. And it's British, which is even worse (even public companies in Britain are close-mouthed). So Maxim could actually be losing money steadily, and we wouldn't know it until it was shut down.

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The same is true of Maxim's vaunted circulation explosion. Maxim has yet to have its circulation officially audited, so in theory we don't if there really are 650,000 people buying the magazine every month. Let's assume there are, though. Does that mean there will be 300,000 additional people buying it six months from now? Maxim insists there will be, and last month announced that its rate base would be increasing to 950,000 by July of this year. It was this announcement that really got people to jump on the "Maxim is on fire" bandwagon. (A column in Time this week, in fact, errs and says that Maxim already has that many readers.)

Now, magazines always project rate-base increases, since advertisers plan their budgets well in advance. But a rate-base increase of this size--nearly 50 percent--is unusual, as is the six-month lead time. How does Maxim know that it's going to continue to be the fad of choice? If it knows that it can get that many new readers, why doesn't it do it now instead of waiting until July? What happens if its editor gets hired away? Oh, wait, that already happened.

It may very well be that when July rolls around, nearly a million men will be reading Maxim. But to treat the 950,000 rate base as a fait accompli--as Conde Nast appears to have done--seems like a strategic mistake. (Arguably, in fact, by making its announcement Maxim made it more likely to come true.) Like software companies who paralyze competitors by promising new products--vaporware--that may never materialize, Maxim may have bluffed its way into leadership. Call it vapor circulation.