Spike - what went wrong?

Wednesday's Standard had a more detailed piece about the closure of Spike magazine:

Spike's demise had been predicted among the territory's small expatriate journalist community ever since it opened. Spike was launched last November and was supported by nine investors - individuals and companies - among them staff and contributors.

The magazine set out to use satire to explain the workings of the government, "at a time of heightened interest in politics, deepening cynicism about the government's ability to meet the aspirations of Hong Kong people''. The July 1 anti-government demonstrations and pro-democracy wins in the District Council elections last year were the catalysts for its launch.

The magazine offered translations of Apple Daily and Next magazine stories, and an `Expat TV' section whose fictional programmes poked fun at foreigners. The plan was to refinance it after six months, Vines said, having proved to potential investors its creators had "something to show''. While other investors were secured, the major investor did not deliver the amount they had agreed on before the company's deadline.

"We were left high and dry, I'm afraid,'' Vines said, declining to disclose financial figures. Political columnist and Spike investor Andy Ho said he thought the magazine put up a "good fight''. "People liked to read it, especially the expatriate community,'' he said.

"The problem is obviously people tended to share the magazine, rather than subscribe to it.''

Well, that's a good excuse! I don't know what evidence they have to say this - clearly they could have had a higher circulation if every reader had bought a copy, but that was never going to happen. Many magazines boast to advertisers about readership rather than circulation, and it is to be expected that more than one person will read each copy!

A reader is obviously not impressed:

Reading the reports of Spike's demise was sad, but Mr Vines comments about investors having to keep pumping in money, what a load of bullshit. A magazine is a buisness, Spike failed because it had no advertising and couldn't attract enough people to buy copies to cover its costs. Ergo either the magazine was bad, the people running it weren't doing a good job or both.

Well, obviously. It seems to me that the business plan must have been wrong. Getting initial investment from staff and contributors is fine, but if this was meant to last only six months then they always faced an uphill struggle. Establishing a magazine like Spike was always going to take a long time, and the lack of advertising was an obvious sign of this. If someone had asked me to invest in Spike after six months I think I would have had considerable reservations. So, although it is understandable that Steve Vines was upset that an investor let him down, I don't think it is at all surprising.

I'm sure it took years before Private Eye became profitable, and I'm fairly sure they had the advantage of supportive investors (Peter Cook being the best-known) who were putting in money because they liked the magazine, not to make money out of it.

The market for English language media is not very strong in Hong Kong. I don't think The Standard publishes circulation figures, and there is a good reason for that, whilst TVB Pearl and ATV World are subsidised from the profits made by the Chinese channels. It was always going to be a challenge to establish a new title, and they needed more time. If their business plan didn't allow for that, then clearly they got it wrong.

What I find disappointing is that so many people seem to have been willing Spike to fail. I can only assume that Steve Vines has made a lot of enemies in Hong Kong.

Comments

[pooreffort]

I dont know who Mr Vines is, it just seems obvious that if a magazine has no advertising it cannot survive. You cannot run a business relying on continued fresh investment. A fair number of English magazines prosper in Hong Kong and they all get adverts becuase they attract readers. Mr Vines is the publisher of Spike, so any faults with the magazine and now its demise can be directed to his door. Be honest and accept that responsibility, he would surely have claimed the glory if it was a success.

[Chris]

Well, I guess he feels bitter because the investor promised the money but didn't deliver.

Vines claims that "We always assumed that advertising would be a relatively small part of the income, and that certainly proved to be the case."

I think he is blaming the problems on the low circulation rather than the lack of advertising, but the fact remains that the business plan was flawed. As the publisher, Steve Vines has to take the blame for that.

[Ron]

All entrepreneurs know that starting a business is easy but maintaining it is tough!

Vines should have learned from Eastern Express history. Obviously, he has not.

If priced at HK$10~15, Spike could have survived longer. Buying that time with regular "cash flow," rather than solely relying on investors, should have been part of his plans. But it is a tad too late to give him any advice whatsoever.

Well, let us see how the (proposed) print edition of NTSCMP will perform. I already assume that almost 30 expatriates won't be subscribing. Yes? Or have I had one drink too many?

Cheers!

[Chris]

You're right, and Mr Vines has been involved in a number of failed ventures apart from EE, but I suppose he always hopes that the next one will be successful.

I only saw a few odd issues of EE, and the main thing I recall was the large number of syndicated articles from the Daily Telegraph.

To be honest, I'm a bit surprised by the comments about the cover price of Spike (HKMacs said the same thing). I didn't think it was excessive at all, and I wonder if they might have done better with a higher cover price and a bigger discount for subscribing. It isn't the price that stops me subscribing to more magazines, it's lack of time to read them.

As for the NTSCMP Print Edition, I don't think that's going to happen.

[HKMacs]

Let's face it, print media is dead. OK people will always buy newspapers and some specialist magazines or publications that have superior print qualities, great pictures or whatever - but a glossy satirical magazine - no way. They'd have been better off printing on cheap paper with crappy printing like Private Eye they were trying to emulate. At least that would have kept their costs down. That's how DollarSaver has managed to survive so long. The same formula worked for Target (I don't suppose that's still around, though!) As I said on my blog - they'd have been better off blogging it. Unfortunately Vines and his ilk are still living the old "journalism" and don't understand "digital".

[Chris]

It's an interesting point. I don't agree that print media is dead, but certainly life is getting tougher for them. I subscribe to several magazines, as well as reading lots of stuff on the Internet.

However, I have to agree that the format of Spike was all wrong. I think they needed to do one of two things - make it glossier and more up-market (more like Punch perhaps) or something similar to Private Eye. I suppose glossy paper must be more expensive, and if they could have cut costs they would have survived for longer.

The problem with digital media is how you make money. Vines is a businessman, and I imagine he wanted Spike to be profitable. Doing it on the web the costs would have been much lower, but how do make money out of it? How do you pay salaries?

[jab]

Expat TV, a bogus listings column, is more typical: "8:45pm Movie: The Chinese Have No Word for Love. Award-winning, tear-jerking feature film in which an expat family moves to Hong Kong and discovers that everything is shit. 11:15pm: Expat Eye for a Local Guy. Fashion makeover special, in which a group of pissed expat bankers poke fun at a local colleague's dress sense."