Newsweek, the weekly magazine once thought to be on journalistic life support, returns to print life Friday with a bang.
Its cover piece, which ran online Thursday, revealed the unconfirmed identity of the elusive founder of crypto-currency Bitcoin, birthing a literal interpretation of reporters chasing a story.
In a bizarre sequence, reporters at other news outlets rushed Thursday to the house belonging to Dorian Satoshi Nakamoto in Temple City, Calif., near Los Angeles, and waited to confirm Newsweek's piece. As Nakamoto, who later seemed to be denying his role in Bitcoin, fled the throng with a reporter from the Associated Press, a chase ensued through the freeways of Los Angeles.
"It's been overwhelming," says Newsweek editor Jim Impoco, a veteran business journalist who previously worked for Fortune, Reuters, the AP andThe New York Times. "I was happy to have low expectations, and I think we over-delivered."
Responses and criticism about the piece — written by Leah McGrath Goodman — flooded Twitter and other social-media channels, questioning her reportorial procedure and the ethics surrounding possibly outing a not-quite-public subject who had repeatedly expressed a desire to remain anonymous. Perhaps due to the controversy surrounding the losses of hundreds of millions of dollars invested in the digital currency, there has been speculation that he could be in danger and be subject to unwanted scrutiny by the government and others.
Nakamoto, 64, told the AP in a two-hour interview Thursday that he had never heard of Bitcoin until his son told him he had been contacted by a reporter three weeks ago.
The online account that was used to introduce Bitcoin in 2009 -- but has been inactive for several years -- also posted Thursday a discussion thread, claiming that Newsweek's story was inaccurate. "I'm not Dorian Nakamoto," said the account holder, whose online name is Satoshi Nakamoto.
Still, the episode was a grand public relations coup for Newsweek's new owner, IBT Media, a little-known media company founded in 2006 by a 30-year old French entrepreneur.
"It was a small operation for four years," says Etienne Uzac, co-founder and CEO of IBT (International Business Times) Media. "We didn't have more than 20 employees. Not a lot of money. We survived by doing sales calls, telemarketing cold calls. I was the first salesperson. It was really, really tough."
With online ad revenue trickling in for its other main news site, IBTimes.com, the company's revenue had grown to $21 million from about $2 million in 2010, according to Uzac.
Seeking to make a splash and explore other revenue streams, Uzac gambled on Newsweek last year by agreeing to buy the iconic weekly brand. While the terms of the deal weren't announced, it was widely known that the magazine's previous owner, Barry Diller-controlled IAC/InterActive, was desperately looking to unload it.
Founded in 1933, Newsweek came to rival Time magazine in defining the weekly news genre in the U.S. Unable to adjust to the declining print market, IAC, which tried to merge it with its other online news site, TheDailyBeast.com, stopped printing the magazine in December 2012.
Seeking targeted print audience
Uzac hired Impoco last year to staff and run the magazine, and called for a new strategy that emphasized subscription sales were as important as advertising.
The new Newsweek, printed on thick glossy paper and backed by six new advertisers, according to Adweek, is priced at $7.99 per issue and $149.99 a year. "I'm guessing print is going to lead the way for us," Impoco said. "The margins are pretty good. With targeted subscription plans, you don't have to do much."
In an interview last year, Impoco said he would avoid "snackable" news snippets and look-back-at-the-week analysis found in other news weeklies. Instead, he wanted to create originally reported long-form features that aren't found in other publications.
"Not everyone is going to want to pay that much, but we think enough people will," Impoco said. "At its peak, Newsweek had 3 million. (Daily Beast editor) Tina Brown had it at about 1.2 million. Let's say we get 15% of it back; that's pretty good. It's a targeted, selected audience. That's one of the directions the industry is moving."
Reviving print has always been a goal for IBT as it bought Newsweek, but Uzac says it also opened doors to other revenue sources. Newsweek is still a recognized brand in Europe, Asia and other parts of the world, and it was collecting licensing revenues from international partners that were translating its content and mixing with local stories. The magazine's existing digital subscriber revenue and syndication deals with aggregators that supplied its content to libraries contributed to IBT's revenue, Uzac said.
"I never thought about doing print. I was just trying to survive doing the (IBT) website, he said. "But Newsweek has opened up doors internationally — business partnerships, access to journalistic talent."
Little is known about Uzac, who says he graduated from the London School of Economics with a wish to start a news website that chronicled business and economic news for the international audience. "I felt that countries outside the U.S. were poorly served in media," he said. "I thought there was a niche that no one was doing seriously. We have aspirations to have more journalists outside (the U.S.) than (here)."
With no experience in writing, he sought a partner who could help guide him through the editorial and software coding processes. Through a mutual friend, he met co-founder Johnathan Davis in 2006, who was working as an engineer at the time.
Uzac says the company was founded with personal savings and a loan from the Small Business Administration. No venture capital money was involved, said Uzac, adding he and Davis equally own the company's equity.
IBT Media has been profitable since 2010, Uzac says, and has a staff of 240 full-time employees across its properties, including IBTimes.com, Newsweek, Latin Times and MedicalDaily.com.
While Uzac says he sought to bring "panache" to the Newsweek brand, the hysterical social-media reaction to Newsweek's cover on Nakamoto — which was one of five in contention for the relaunch issue cover — took editors by surprise. "It was getting so much traffic," Impoco said. "The reaction has been explosive."
In the story, McGrath Goodman intimates that she approached Nakamoto by appealing to his hobby of collecting toy trains.
McGrath Goodman, who didn't comment for this story, had worked with Impoco previously and was one of Impoco's first hires at Newsweek.
Impoco acknowledged that McGrath Goodman didn't initially mention her journalistic credentials to Nakamoto, but she made her identity and affiliation eventually clear, he says. "This was brought up during the editing," he says.
She responded to several critics on her Twitter account. In addressing the question about Nakamoto's personal safety, she wrote: "This man invented something that shaped our world. Should all inventors now fear murder?"