We've focused a lot here on the challenges facing the newspaper industry, but magazines too have a great deal of work to do if they want to compete effectively in the new, digital world.

paidContent.org conducted an interesting interview with Ann Moore, CEO of Time Inc., about the magazine giant's experiences online.

Rafat Ali: I know there was a comment you gave at one of the conferences recently, that there is a real business here in terms of the online part. What did you mean by that?

Ann Moore: I think what happened was the tipping point happened last year. For the first time ever, significant ad dollars showed up online, so the rest of us could go after it. We have been laying in wait and I think that is what we learned last year. We added significant top line and bottom line growth to our biggest sites that have made the crossover to digital, so the newsweeklies primarily, Sports Illustrated, and the business books. Sports Illustrated is a great example. We actually added up a digit on top and bottom line growth. You have to pay attention to top line growth. You cannot save your way into a transition. You have to learn how to grow top line revenues. I think Sports Illustrated will add about 18 percent to their bottom line this year. We added about 13 percent last year. That is significant. Those are meaningful numbers.

New online advertising data back Moore up on this.

Yesterday, the Interactive Advertising Bureau and PricewaterhouseCoopers announced that internet ad revenue hit $4.9 billion in the first quarter of 2007, up 26% from a year ago.

To capture a piece of that, companies like Time Inc. are leveraging their offline content to pull in online readers. Moore explains how:

Remember this: We amortize our offline editorial costs. A writer for Sports Illustrated, Tom Verducci, our baseball writer for Sports Illustrated, he writes 50+ columns for the magazine, but he writes another 60+ columns for SI.com. That is why the margins on our dot-com businesses are so high. We have 3,500 journalists who write for the print products. The work they do on the dotcom makes for very high margins on the online businesses.

Nice business model. If I were Verducci, I'd ask for a raise.

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