Jeff Bercovici, Portfolio.com's Mixed Media blogger, broke the news at 10 a.m.: Condé Nast is shutting down Portfolio magazine and its website. Eighty-five people, including editor-in-chief Joanne Lipman and publisher William Li, have been let go.

This is a sad, sad day. I write this news with a heavy heart: I was at Condé Nast Portfolio for two years, before joining WalletPop, and I worked on the highly scrutinized (one might even say Gawked) launch of Portfolio.com in early 2007. The magazine's launch is generally estimated to have cost Condé Nast some $150 million.

Portfolio
had the misfortune of being an interesting publication at an interesting time. It was founded to capture the extreme excess of life on Wall Street and the insane wealth circulating the globe. The world had a new class of super-rich, and Portfolio would be the magazine to document their lives. It viewed itself as a resource of business insight and lifestyle tips for executives and CEOs -- the new rock stars -- and their fans, who aspired to be like them. Some detractors, and even some admirers, viewed it as rich-people porn.

Along with the sober, prescient business analysis of Jesse Eisinger and Felix Salmon, there were eye-popping stories: how to buy an island, how to develop your own golf course, a $40,000 iPhone, a billion-dollar house. It covered smart, sane economics, and luxurious oligarch-bait.

Within a year, all that changed -- sort of. On its November 2007 cover, when Eisinger predicted major bank collapses, even some of us staffers had thought he sounded as wild as a doomsday prophet. That feeling only lasted a couple of months, until Bear Stearns capsized suddenly in early 2008. The editors toned down the lifestyle stories, keeping more tightly focused on how our business leaders were impacting the world rather than how many cars they kept in their garages. With the economic world in turmoil, it seemed like this was the right time for a magazine like Portfolio, and particularly a website.

"Conde Nast, as successful a company as it is, it's not in the business of publishing business news. It's in the business of aggregating high-end readers and selling them to luxury advertisers," Bercovici told me by phone this morning. He was, for the record, drinking a beer at his desk, upholding a sacred layoffs tradition begun at Portfolio in late October, during its first round of sweeping layoffs at the magazine and web site.

"I don't think it's a doomsday scenario," Bercovici told me, "in the sense of magazines surviving as magazines. Conde Nast is the fittest of the companies to survive that transition. The whole industry is going to be more like the British magazine industry, in terms of staffing levels and cost structure. [But] you can't beat brands like Vogue and Vanity Fair; they will survive a lot better than a lot of other brands."

If magazines want to survive, they have to rely more on freelancers, smaller staffs, Bercovici says -- and you can forget all about those glamorous, Devil Wears Prada perks. (To quote Dumb and Dumber: "So you're saying there's a chance?")

The latest and final issue of Conde Nast Portfolio is, in my opinion, one of its best. On Friday, I ran into Bill Tonelli, a Portfolio senior editor (and a decorated former features editor for Rolling Stone, who worked with such writers as David Foster Wallace). He handed me a copy of the May issue. This weekend I read it cover-to-cover in a single sitting: a first for me, with this magazine.

I've always been a bigger fan of Portfolio.com. We produced dynamic info-graphics, through the cutting edge talents of Shazna Nessa, now running AP's digital department, and Jacky Myint, and produced zany viral videos on the web. The web was the future, and under the anything-goes (as-long-as-it's-smart) leadership of Dan Colarusso, we were having fun with it. I always thought the website would outlast the magazine: We were the future!

Then last October, Condé Nast shut down Portfolio.com, sending a communal "Huh?" through the blogosphere. Isn't that backwards, in this day and age? To give up your promising digital strategy in favor of dead trees?

I remember being in the ritzy Condé Nast cafeteria one day a month earlier spotting chairman S.I. Newhouse in his usual booth, where he eats lunch with his storied editors Graydon Carter (Vanity Fair), David Remnick (The New Yorker), and Anna Wintour (Vogue), who's perhaps more recognizable to the general public as the character of Miranda Priestly in The Devil Wears Prada. On this particular day, Si looked like he'd been punched in the stomach. He was sitting with a corporate type, reviewing paperwork. The look on his face was one of terror. A month later, 30 of my colleagues and I were out of a job.

And since then, Conde Nast continues to lay off staffers. In recent months, it's shut down shelter magazine Domino and, before that, House & Garden, Men's Vogue, and Jane. No doubt Conde Nast will continue to bunker down, although it might do well to take the advice of James Surowiecki, the financial columnist in its own magazine The New Yorker who only two weeks ago wrote a column arguing that, in difficult economic climates, the companies that come out in the best shape are the ones who don't seek shelter but go for broke.

For more on the declining ad pages and editorial pages at Portfolio, read Peter Kafka's post on All Things Digital's Media Memo.

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