'Best Life' and the Fallacy of the Fake Hit

Have you noticed that virtually every time a magazine shuts down, the accompanying coverage points out how fast it was growing just before the reaper arrived?

The latest example is Rodale's Best Life, which got the bad news today, according to Gawker, which has the memo. The Men's Health spin-off was supposedly up over 20 percent in ad revenue last year, and even made Ad Week's Hot List, but somehow it still failed to meet Rodale's "internal benchmarks."

And that's far from an aberration. Domino, which suspended operations in January, grew its circulation by 81.5 percent in the first half of 2008, and earlier had been named Ad Age's launch of the year in 2006. Hallmark magazine doubled its rate base and increased ad sales by 30 percent and still got the chop. And so on.

Of course, a lot of this has to do with simple math. The fewer subscribers or ad pages a magazine has, the easier it is to generate impressive but meaningless year-over-year comps.

But it's also a function of the magazine industry's uniquely perverse economics, which incentivize the appearance of momentum at the expense of solid fundamentals. To a far greater extent than in, say, TV or newspapers, magazine ad sales depend on intangibles like marketplace heat. That causes publishers to pump up circulation with junk subscriptions and to sell ad pages at deep discounts* in hopes that advertisers will see the eye-popping growth numbers without questioning too closely how they were achieved. (This is relatively easy in the case of bogus ad growth, since the Publishers Information Bureau, which tracks magazine ad sales, makes no attempt to adjust its figures to reflect discounts. The Audit Bureau of Circulations, meanwhile, has made strides in recent years toward reports that reflect the quality of a magazine's circulation file rather than just the quantity.)

But both of these tactics come at a high cost: Subscribers have to be acquired from agents, and ad pages have to be printed and distributed. In the competitive good old days, when each new launch seemed to attract three or four copycat titles, it was arguably worthwhile to accept higher short-term losses in order to create an appearance of overnight success, which would then beget actual success. Now, with even long-established cash cows losing money, that model no longer makes any sense. Striving to create a false aura of invincibility is only a recipe for losing more money faster.

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*I should note here that not all magazine publishers discount their ad pages. Condé Nast, which published Domino and owns Portfolio, has long said it does not offer discounts.