The New Yorker: So can a joke be funny when no one is laughing?

David Usborne reports from New York on the cover that blew up in an august title's face

Tomorrow morning, liberal literati types across America will be reaching into their mailboxes for the latest New Yorker magazine. As ever, it will have some sort of whimsical drawing on its cover. This week's illustration, one imagines, will be politically innocuous.

The magazine and its editor, David Remnick, could, after all, use a little peace following the events of last week – the mad brouhaha generated by the wheeze that was last Monday's cover: a picture of Barack and Michelle Obama dressed as Islamic extremists in the Oval Office. Controversial? Of course. And to the right of the picture you'll notice the bin Laden portrait and the American flag burning in the fireplace.

The picture, drawn by Barry Blitt, was a joke, of course. The cartoon had a name – "The Politics of Fear" – but it was tucked away inside and only the most experienced New Yorker readers would be likely to find it. The point was simply to underline how ludicrous and ignorant the right-wing smears against candidate Obama continue to be. Like any decent cartoon, it was there to make us laugh – and think.

The trouble was, not everyone did laugh. Amid all the hyperventilation that followed among political chatterboxes on the television and in the pages of other publications, some even accused the magazine of encouraging somebody to assassinate Obama. That seemed a little harsh. The most common worry was that too many Americans wouldn't get the joke and the fibs about Obama would be given new life.

A week later, the jury is still out on whether the cover was a blunder or a boon for Remnick, a former Washington Post foreign correspondent and Pulitzer Prize winner (for his book about Russia, Lenin's Tomb) who replaced Tina Brown as editor of the revered (mostly) New Yorker 10 years ago. There is also debate over the extent to which it damaged or possibly assisted the Obama camp.

No magazine editor can complain about receiving attention, and last week , Remnick got more television-studio time than he might normally enjoy in a six-month stretch. He was perfectly comfortable defending the cover and, presumably, was celebrating the free publicity – which The New Yorker needs.

Never mind the pontificating of the pundits, what would have worried Remnick more were the smattering of reports, none substantiated, that Condé Nast, the magazine's publisher, had been inundated with complaints – not just from readers (and they did grumble in huge numbers) but also advertisers.

Getting media attention is one thing but alienating advertisers is not a luxury that Remnick can afford. After reaching profitability in 2002 following years languishing in red ink – including through the tenure of Tina Brown – The New Yorker is once again at risk of becoming a financial liability for Condé Nast and its owners, Si Newhouse and his family.

No one is being spared in the newly contracting economy, but the latest numbers for the magazine seem troubling indeed. According to the Media Industry Newsletter, advertising pages in The New Yorker were down a shocking 21.2 per cent through its 7 July issue compared with the same period last year. It is registering an annual ad-page count of 699, against 2,200 pages in 2002.

There are no statistics, of course, to measure good versus bad taste in editorial judgements. What some diehard purists steeped in New Yorker tradition find hard to stomach is that a literary and cultural magazine should be sullying its front pages with current affairs at all, let alone something so sensitive as Obama's fight against perceptions that, should he win in November, he will be sworn in on the Koran.

But The New Yorker, whose history dates back to the 1920s, is not as stuffy as it was once was, and that's down more to Brown than it is to Remnick. It was no surprise that Brown was one of the first last week to defend the cartoon. "I thought it was a perfectly justifiable decision," she said of the cover. "I personally like it when magazines take on the issues of the day."

It was with the cover, in fact, that Brown alerted readers to her arrival at the magazine's helm in 1992. It featured a cartoon of a rangy-looking punk rocker sprawled in the back of a horse-drawn carriage in Central Park. The punk, it was widely assumed, was Brown. She would shake things up – as she did.

Later in her tenure, Brown also approved an Art Spiegelman cover that generated not a little ruckus at the time. It was of an ultra-Orthodox Jew kissing a black girl on the New York subway. Though some thought it insensitive, it was meant as a commentary on improved race relations in New York. Certainly it was provocative, as was inviting the comedian Roseanne Barr to be guest editor for one issue.

If Remnick was deliberately courting attention for the magazine, his teacher was Brown (who hired him in the first place.)

The more sober media-watching types mostly chose only to quibble with his Obama cover. "Clearly this is satire," said Kelly McBride of the Poynter Institute, a media watchdog. "And satire is always sort of treading on thin ice in journalism, because a lot of people don't get satire and even if they get it, a lot of people are offended by it." It would have helped, she suggested, if the headline had not been hidden inside but printed over or under the cartoon itself.

It may be paternalistic to suggest that while seasoned New Yorker readers would instantly understand the purpose of the cartoon, the rest of the unwashed US public would not.

That complaint, rehearsed widely last week, similarly feeds into the stereotype that somehow Americans generally have difficulty understanding irony. With more and more of them choosing to get their political news from Comedy Central programmes like The Daily Show with Jon Stewart, this just seems silly.

It was Obama himself who perhaps offered the most compelling argument against running such a cartoon – that it was offensive to Muslim Americans. "There are wonderful Muslim Americans all across the country who are doing wonderful things. And for this to be used as sort of an insult or to raise suspicions about me I think is unfortunate. And it's not what America is all about."

Last week's magazine is already chip paper, but Remnick can say one thing for the Obama-Osama furore he created: it showed that in the new YouTube-Comedy Central media world, a non-animated page from a print product can still jangle a nation's nerves (and, if he is lucky, boost sales.)