Street cred...but, tasteful

According to Christine Haughney of the NY Times, doing the time made Martha hip, but not richer.

While some Martha Stewart fans abandoned their magazine subscriptions and Stewart's high-thread-count sheets after she went to prison for her 2004 conviction for lying to federal investigators about a stock sale, this new generation of fans said her prison time only gives her more street credibility.

"She's such a Suzy homemaker and also did some time in the joint," said Luis Illades, an owner of Urban Rustic, where some of Stewart's store-bought decorations appeared. "That has helped cement her iconic image. Before, she was someone your mother would follow."

Crystal Sloane, 29, who grew up on a dairy farm outside Saratoga Springs, N.Y., reading her mother's issues of Martha Stewart Living, has begun her own business called "Vintage by Crystal," designing miniature animals that Stewart eventually featured on "The Martha Stewart Show."

"She's like the Jesus of the craft world," she said. "Not that I like criminals, but I heard that she just took some bad advice. Anybody can make mistakes."

But the new demo isn't paying off, as the chick is downsizing (as well as downscaling).

Martha Stewart Living Omnimedia said it would cut back two of its four magazines and lay off about 70 employees, or 12 percent of the nearly 600-person company.

This year, the company cut $12.5 million in broadcasting costs by not renewing its daily programming deal with the Hallmark Channel, breaking its lease on its television-production studio and ending its live audience for "The Martha Stewart Show."

David Bank, an equity-research analyst with RBC Capital Markets, said the company must figure out how to sell to the trendy, not just inspire them.

"The real opportunity is, 'Will they go to Macy's or J.C. Penney and buy her bedsheets and her flatware? You've got to use flatware, even in Williamsburg [Brooklyn]. That's where the money is really made," Bank said. "Who cares if she's popular if you can't monetize it?" 

And she has her limits; 

I'm not a big fan of tattoos," she said. "I don't think they have to go quite that far. They could put embroidery on their jacket. They could silk-screen a T-shirt."