Updated April 3, 2012, 9:06 p.m. ET
By LESLIE KWOH
Digital expansion has become the buzzword for the yellow-bordered flagship of 124-year-old National Geographic Society, long known for its riveting photography, atlas maps and tendency to accumulate in readers’ basements.
English-language circulation has fallen by roughly half since the magazine’s 1980s peak, to about five million, though the company has added 2.5 million subscribers by introducing more than 30 foreign-language editions.
Mr. Fahey, who took over as CEO in 1998, has dedicated his energies to expanding the magazine’s reach on multiple platforms, launching a website, forming joint ventures with television networks—where programming now comprises 56% of total revenue—and experimenting in the videogame market.
Still, Mr. Fahey says he must continue reinventing the society’s oldest asset—stories and pictures—with blogs on the news, a tiered subscription model and offerings for the iPad, Kindle and Nook readers.
The 60-year-old former chairman and CEO of Time Life Inc. spoke to The Wall Street Journal about his digital efforts, and why the print magazine may cease to exist someday. Edited excerpts:
WSJ: What’s your vision for the magazine?
Mr. Fahey: The media mix will be much richer: more photographers, video, better maps. The magazine was on a once-a-month basis, but what we envision is a magazine that’s alive and organic on a day-to-day basis. So, if you have an iPad app subscription, every day you can find out something new and cool that’s happening out in the field.
WSJ: But overall, it sounds like you’re veering away from long-form magazine features to blogs.
Mr. Fahey: Yes, that’s exactly what it is: blogs that we do, blogs that others do, and blogs we commission. We’ve got about 1,500 full-time employees, and we have hundreds and hundreds of contract employees who are out in the field doing filmmaking and photography and even some production work. The blogs would be from full-timers, contractors, people who don’t work for us, amateurs. Think of game rangers who are taking people out on safari rides. They see incredible things every day.
WSJ: How do you monetize that?
Mr. Fahey: We started selling a digital “Triple Play” of the magazine, which means you get the print edition, the digital edition, and access to our archives. As we move ahead and begin to offer more things, we’ll figure out what we can put behind a paywall, and what we can’t. There’s a lot of experimentation that will come on the pricing front.
WSJ: Does that involve raising prices?
Mr. Fahey: We’re testing a raised price. For instance, if you subscribe to just the print issue of the magazine as a new subscriber today, it’s going to cost $15. If you subscribe to the “Triple Play,” it’s $19.99. It’s a little bit more, but you get a lot more. As we go ahead, we’re not sure what’s going to be best for us. We feel pretty good about what’s happening in the book-publishing environment, where Kindle book prices are approaching the print prices.
WSJ: Digital currently comprises just 3% of your revenue. How much of the pot are you hoping it will comprise?
Mr. Fahey: It’s going to be a very large piece of the pie. If you think about the fact that our print business will become largely digital, there’s no doubt that in the not-too-distant future it will become over 50% of the revenue. The cable networks will be under siege a decade from now, but they’ll still be our main contributor for the next decade.
WSJ: Who is your current subscriber?
Mr. Fahey: The average subscriber is about 56 years old, white and leans a little bit more male. The average reader, because each issue is usually read by more than one person, is about 10 years younger. For the most part, our readers are well educated, and their household income is relatively high.
WSJ: What do you want your audience to look like in five years?
Mr. Fahey: We can migrate younger. It’s hard to do, because the reality is that there are a couple decades between the age when your parents are no longer buying for you, to the age when you have enough discretionary income to buy a lot of things that you like but don’t need. So we hope we can ultimately trade up as people become older and have more discretionary income.
WSJ: This isn’t the first time that National Geographic has had to adapt.
Mr. Fahey: Our second president was Alexander Graham Bell, around 1900. Our magazine was very academically oriented, text-heavy with very long stories. He wanted to popularize the journal and make it more accessible to the general public. His solution was to make the stories shorter, make the language more accessible, include more photographs and illustrations.
WSJ: What’s your business model abroad?
Mr. Fahey: In a number of other countries, newsstand and kiosk sales are much higher than they are here in the United States, and in some cases even higher than the subscription sales in those countries. That’s largely due to local preferences in terms of how people buy magazines, and also the strength of the postal systems in those countries.
WSJ: Has National Geographic felt the impact of declining advertising revenue that is affecting the rest of the media industry?
Mr. Fahey: In 2008, when the economy soured, advertising revenue came down significantly, and although it did come back a bit, we never came to the levels we were at before. It’s pretty clear that advertising is migrating to different places, and digital is one of those places, and another is cable television, fortunately. But unlike most magazines, our circulation revenue is a disproportionately large part of our revenue base.
WSJ: When are you planning to raise prices?
Mr. Fahey: It all depends on how digital billing works. If we can get you to be a digital subscriber, you will be billed automatically year after year. That whole process of renewal doesn’t exist anymore. On the other hand, if we want to increase the price, we probably have to stop and ask customers if they want to go to the new price. So there may be reason to stay at the lower, current price for some time if we can get that subscriber to stay with us for a while.
WSJ: Will the print magazine cease to exist at some point?
Mr. Fahey: Yes. When will that day come? I’m not certain. It’s hard for me to even imagine that it’s 10 years from now. We’re going to try to move people to digital from print as fast as we can, because we think there’s a certain inevitability that will happen.
WSJ: How many digital subscribers do you have so far?
Mr. Fahey: In all our digital platforms, we have 181,000 subscribers to the magazine. That’s including the iPad, Kindle, Nook, Web and digital newsstands like Zinio.
WSJ: What are they reading?
Mr. Fahey: The thing on our website that’s clearly the most popular is science news that’s either really interesting or entertaining. Past the news, the most popular categories are animals and photography. With the print magazine, oftentimes readers will tell us they’re interested in stories about the environment, but the fact of the matter is that’s often not what they read.
≡ photo of John Fahey by Joe Schram/The Wall Street Journal