[Staci D. Kramer] Most of the SIIA session featuring Joe Mansueto centered on the founding and evolution of Morningstar, with only a few q-and-a minutes on his recent acquisition of magazines Inc. and Fast Company. Mansueto sat down with me after the session for a more in-depth look at the magazines and their online operations. The web side is growing, bringing in 15 percent of revenue and a higher profit margin than print. We tried to find a quiet spot, not easy during a break in a room that used to be the lobby of a bank and has 65-foot ceilings.
You can download the audio here (8:27 min; 3.9 megs).
Some excerpts:

Q: What can you do to bring those two (online and print) closer together in terms of what they’re delivering to the company? Is there a reason to do that? Or do you just start accepting at this point the magazines are not ever once again going to be 3 inches think?

Mansueto: “That’s a good question—what the future of the print magazine is. It could be the future is it’s a scaled-down print version complimented by a large web presence for the magazine. That remains to be seen. I think the users will let us know what form they want to receive in content. Is it print or is it online? … I think we’re a bit agnostic about how people want to receive the content. They may each have slightly different demographics; the online user may be different than the print user. There is a common, underlying thread of content, though. All of the print content is available online but we supplement online with unique content. It’s not enough just to take the print content and put it online, That’s a failed model.  … it’s a separate staff creating content for inc.com and fastcompany.com. That’s pretty well established—you need that to be successful on the web in the magazine business.”
Q: How do you define success on the web as a magazine company?

Mansueto: Profitability.

Q:Are the web sites profitable? On their own?

Mansueto:Yes, they are.

Q: But they do rely on content. You don’t pay yourself a licensing fee?

Mansueto: No. Profit is kind of a vague term. If you look at a contribution margin, if these things didn’t exist what do they contribute to your overhead? On a contribution margin basis, they are nicely profitable. But, you’re right, if you fully allocated the cost for editorial to them, it depends on how big you make that allocation as to whether they’re going to be profitable or not. But if you say you’ve already paid these costs anyway, what are the incremental costs you bear versus the incremental revenue you receive, on that basis, they’re nicely profitable.

Q: Have you felt at any point that you’re just tossing money out a window?

Mansueto: I see it as investment—not throwing money out the window, which is an activity I don’t enjoy. But if I’m investing in something that’s building something … I believe in both these magazines. I think Inc. plays a critical role in entrepreneurship in this country. I think Fast Company plays a very valuable role in helping people improve their business abilities. These are magazines that have a strong rapport with millions of readers in this country and they’ve been neglected over the past five years and they need to be nurtured and invested in. Over time, if you do that, I think audiences respond.

The SIIA IIS coverage is sponsored by HighBeam^TM Research