One Pressing Question For Time Inc’s Lang: What To Do About Apple

When Digitas head Laura Lang starts her new job as CEO of Time Inc. (NYSE: TWX) in January, she’s not only going to be filling the nine month vacancy left by Jack Griffin, who was ousted as CEO after less than five months. She’s also expected to fill the void as the publisher’s de facto chief digital officer. Among the first things she’ll have to figure out: where the publisher’s relationship with Apple (NSDQ: AAPL) is ultimately going to go.

One thing Lang will probably not be doing is any wholesale rearranging of Time Inc.’s departments. Griffin sparked a mini-revolt among Time Inc. top executives by shifting executives and altering roles as he attempted to remake Time Inc.’s operations. That had a number of Time Inc’s top employees threatening to head for the door if Time Warner CEO Jeff Bewkes didn’t put a stop to it.

I have heard some conflicting things about what Lang and Bewkes talked about regarding what went wrong during Griffin’s truncated reign, but the word is that Bewkes has not specifically ordered Lang to refrain from making any major personnel moves or department restructuring for at least six months. “Jeff is not a micro-manager,” said one source close to the CEO.

The CDO: Not all of Griffin’s structural shifts were met with opposition. Griffin’s hiring of the well-liked and respected Interactive Advertising Bureau head Randall Rothenberg as Time Inc.’s chief digital officer was generally welcomed at the company, though many executives did question the need for such a position. Generally speaking, the feeling at Time Inc. was, well, if we have to have a CDO, at least it’s someone of Rothenberg’s expertise and stature.

As CDO, Rothenberg was charged with overseeing Time Inc.’s strategy across the magazine’s editorial, advertising, content, technology, consumer marketing, legal, research and marketing services. He was also expected to examine potential digital acquisitions and ad-supported and subscription-based digital content.

The problem for someone in that kind of role is that much of the power to do anything at Time Inc. comes from the individual brands, which are divided into three group units: Style & Entertainment (People, Entertainment Weekly, Essence), Lifestyle (Real Simple, Southern Living), and News/Business/Sports (Time, Fortune, Sports Illustrated). Basically, if the brands do not report to you, you do not have the authority to make any changes.

The challenge for a CDO — Rothenberg didn’t have much time to implement any real changes, as he returned to the IAB shortly after Griffin’s exit — is how to chart a digital strategy for Time Inc.’s various (and siloed) magazines and properties.

In the months since Rothenberg left, the responsibility of charting Time Inc.’s digital strategy has been taken on by a group of senior executives representing the three separate divisions: Mitch Klaif, SVP/chief informational officer; George Linardos, SVP Digital Marketing & Business Development; David Geithner, SVP and Group General Manager (and yes, he’s U.S. Treasury Secretary Tim Geithner’s brother); John Cantarella, president, Digital, News & Sports Group; Mark Golin, Editorial Director, Style, Entertainment and Lifestyle Digital; Fran Hauser, president of Digital for Style & Entertainment; and Chris Peacock, CNNMoney’s EVP/VP.

But they haven’t been able to settle the big decisions around digital, including whether Time Inc. should accept Apple’s terms and sell subscriptions to its digital magazine apps. Although Hearst and Condé Nast have agreed to those terms and have trumpeted large download numbers, Time Inc. execs remain wary.

In contrast to its two major publisher rivals, Time Inc. does not sell subscriptions to its digital replicas. It does offer current print subscribers “all-access” to the corresponding titles they get in the mail. The reason is Apple’s policy of not actively sharing user data. Apple does, however, allow for an “opt-in function,” where publishers ask their digital-only subscribers to voluntarily share personal details such as where they live and their e-mail.

Why is this a problem? Time Inc. has 31 million print subscribers across 21 magazines. Let’s say within five years, half of those readers migrate to digital and away from print. How many digital subscribers volunteer their info? How much marketing and advertising data would Time Inc. lose?

Clearly, other publishers have made their bets. A number of publishers have told me that 70 percent of their digital subscribers have willingly provided their info to them. But there’s no way to verify that, and Time Inc. doesn’t want to wager on what other publishers are telling the press. Time Inc. may eventually try to experiment with a digital subscription for one of its smaller titles, such as Southern Living, though executives are emphatic that there is absolutely nothing in the works at the moment.

With 15 percent of Time Inc.’s revenues coming from digital — about average for major magazine publishers — Lang will be charged with figuring out ways to quickly grow digital’s share (and no, not by simply absorbing some of print revenue’s shrinking slice of the pie). As the recognized digital head, Lang will have to complete a job of building up the company’s marketing services, something that Griffin started and was also deemed crucial by the Time Inc. rank and file. Griffin formed a standalone “branded solutions” unit, which was modeled on what Griffin achieved at Meredith Corp., a month before he was gone.

It is now an accepted truth among publishers that the migration of readers and advertisers from print to digital — and the resulting diminution of print ad revenues — has forced a maneuvering that erases the traditional line between the roles of a publisher and a marketing agency.

One of the first changes Griffin made when he arrived at Time Inc. was to begin to restructure the company’s consumer marketing unit. At the heart of the changes was the establishment of a Digital Marketing and Business Development group. That was followed by the creation of new roles for Time Inc.’s refocused sales and marketing teams, with ad executive Stephanie George and Style & Entertainment head Paul Caine expanding their responsibilities.

As an advertiser, Lang knows all about what marketers’ needs are. But her lack of experience dealing directly with consumers could cause her focus to become diffuse as she tries to balance both sides and remake the company in important ways. She cannot afford to underestimate the importance of the consumer side; after all, much of Time Inc.’s earnings are derived from subscriptions and circulation, not ads (speaking of which, has anyone heard anything new about Maghound, the two-year-old web subscription service?).

Although her appointment caught most of the company’s staffers by surprise, Lang will enter her new role with a healthy supply of goodwill among the Time Inc. community. But she has a long list of issues that will test her management skills and ability to prioritize.