How closely is the success of personal finance magazines, as a category, tied to the strength of the economy? Is the link stronger than it is for other categories of magazines? If so, what is the outlook for this segment in the face of a likely economic downturn?

     Obviously, we are on the front lines. But the good news for those of us in the personal finance category is that we didn't really benefit from the venture capital-funded, capital markets-funded advertising frenzy that the business-to-business folks experienced in the year 2000.
    Our category actually had a fairly difficult one this year; SmartMoney was the only magazine in the category to be up in ad pages this year. 
    SmartMoney is also the only magazine in the category to raise its rate base from 2000 to 2001 by 50,000 while everyone else has been staying flat and struggling quite a bit. A lot of that has to do with the popularity of the web site driving people to subscribe to the magazine. 
    We didn't have the kind of gold rush that a lot of the business-to-business publications had this year, so I think those will be the magazines that will be hardest hit by an economic turn down and an extended bear market.
    I don't think we are in for tough times because we haven't really artificially blown out our circulation because we focused on trustworthy editorial.
    Look at what is going on right now with the discount brokerages: all the discount brokerages are starting to offer advice. They are where we have been. All the folks in the past who were aimed at volume transactions are starting to say, "Hey, we are also good for advice." 
   I would say a difficult time would only serve us well.

We’re always hearing how more Americans are investing now than ever before, but as you noted circulation for the personal finance titles was by and large flat in 2000. Why weren’t readers flocking to these magazines while the market was booming?

     I guess I don't agree with that.
     Look at what has happened in the last 10 years. You have had SmartMoney starting in 1993 and by 2000 having an 800,000 rate base. You have Worth launching, the Individual Investor relaunch, Mutual Funds launched, you have had Family Money, you have had I don't even know how many financial web sites launch.
   In the last five or six years, there have been the launches of probably six new personal finance magazines plus the relaunching of like three others, plus probably 100 websites have been created. I would say in general a lot more people are using personal finance advice and guidance delivery systems.

The year 2000 will long be remembered as the year the flood of dot.com ad dollars reached its high-water mark and then abruptly receded. How much of that money was going to SmartMoney and to the other finance magazines, and how have they been affected by the shakeout?

     First of all, we were doing dot.com business before anybody even knew what dot.coms were because all the online trading companies were dot.com companies. 
    The good news is they are the ones that are still standing. We were getting a fair amount of what people don't realize was dot.com business a long time ago and that continues to be strong.
    As I said before, we didn't really benefit over the last year from a lot of the real nutty dot.com spending that a lot of other magazines did, whether it was retail dot.com or whether it was business-to-business dot.com. 
     The other thing that we really didn't benefit from over the last year was this abundance of business-to-business servicing-the-web advertising, which magazines like Fortune have benefited from. So to answer your question, a relatively small percentage of our ad revenue has come from the dot.com business outside our endemic category. We are lucky with that because a lot of those other guys are out of the business. It would have created a real big hurdle for us in 2001 which we don't have.

Amid all the hype and disappointment surrounding the internet, personal finance is one of the few areas that is generally considered to have real, and immediate online potential. Does the nature of their subject make finance magazines a natural for the web?

    Absolutely! The web is custom-made for personal finance. It involves being able to access not only real-time data streams, stock quotes, business news and research but tools as well. Same with sports sites, they work really well online because it is all about scores, data and manipulation of the data. 
    Besides, people are obsessed with their money, and what better place to keep your portfolio than on a web site? If you build, as we have, a fantastic portfolio tracker, then once a user puts his or her portfolio on the site they are going to the site all day long to see where they are at.

What are the biggest areas of ad growth for SmartMoney and where would you like to see more growth?

      I think for us the three major areas have always been cash, cars and computers and it continues to be that way. We had a nice growth in financial this year, we had a huge growth in automotive, and that continues to be the big growth area for us--particularly the more upscale imports. 
   They realize that the folks reading our magazine are not reading to look at pretty pictures—they are reading them to figure out what to do with their money since they have the money. 
    Technology has also been a big area of growth for us. Again, people who seem to be on top of their finances are early adopters of technology, they are using web sites early on. Beyond that we have had nice success as of late in the clothing, fashion and watches. These are areas that have come along nicely for us and we will actually put a lot more emphasis on going forward with these. Travel has also been a sizeable category and an area where we will look to see some nice growth in.

     What we have done from the beginning is try to create a magazine that the more affluent, educated, professional, managerial type would appreciate. Not one who is necessarily a financial professional or expert, but someone who has become accustomed to the type of news delivery or reporting you find, say, in The Wall Street Journal or even Vanity Fair or the New Yorker.
   There used to be a big gap between the pedantic financial publications and the more sophisticated ones like Barron's. We launched SmartMoney to fill the gap.

How will SmartMoney's identity continue to evolve? How will it continue to define itself against the other magazines in the category in the coming year(s)?

     I think that we will be staying on the course that Steve Swartz [former president and CEO of SmartMoney] put in place. The good new is that Pete Finch [the new editor] has been editing the magazine, so there will be kind of a consistency there. 
    We’ll continue to put within the pages of SmartMoney a lot of new columns, including columns on working and careers and a lot more workplace issues, as we found those are very popular with our readers. 
    The biggest thing that is happening at SmartMoney is the integration with our web site, smartmoney.com. Smartmoney.com was launched almost two years ago more as a destination site than as a companion site. 
    Now, after establishing the two separately, we are bringing them back together again. So you'll see a lot more mentions of smartmoney.com in the magazine, and a lot of companion stories online to stories that appear in the magazine.
     We're using a lot more of the magazine to drive more people to the site and vice versa. I think that as we move into 2001 there will be a lot more melding of the two. The magazine drives people to the site, and the site is also picking up a whole new group of users and introducing them to the SmartMoney name. We are garnering a lot of subscriptions online, almost 3,000 a month, so it is creating a nice little dynamic back and forth.