["Action and reaction, ebb and flow, trial and error, change - this is the rhythm of living. Out of our over-confidence, fear; out of our fear, clearer vision, fresh hope. And out of hope, progress." - Bruce Barton
Like me on Facebook NEWSSTAND – What We Said Last Year, and What Has Happened Since Then
By John Harington
www.nscopy.com “Those who cannot remember the past are condemned to repeat it” is a frequently quoted expression, often garbled in its use, which in fact is the Spanish-American philosopher-essayist George Santayana’s modification of an earlier statement by the British philosopher, Edmund Burke, “Those who don’t know history are destined to repeat it”. That bit of literary pomposity aside, I thought I would review four points I made a year ago about the distressed state of magazine retail sales, which, it hardly needs saying, is still distressed.
1. The Consumer is Still in a Recession Mindset. In broad terms, that may or may not still be true, but how else do you explain the continuing downward trend of newsstand? Optimistically, The New Single Copy hoped that the industry would support a consumer-directed advertising and promotion program, but we admitted such an initiative was too expensive and unlikely. Well, we were wrong on that count. Last fall, Time Inc. began a massive promotion aimed at driving the public to buy more copies of People magazine at retail. Results cannot yet be quantified, but it is unlikely to have had no impact. No one expects either People, or the broader newsstand to return to 2007 levels, but stabilizing the current performance would be a welcome achievement. So there was some positive action taken on this issue.
2. Digital is Part, But Not All, of Magazine Media: This comment was aimed at senior management, who seemed capable only of talking about their great plans for their digital future. That has not changed much. However, the new lesson might be that it is not digital magazine media that is depressing magazine sales, but the explosion of digital information sources that is eating away at magazines’ traditional roles of providing information and entertainment. Successful print publishers will find unique means of fulfilling those traditional roles. No real development here, but maybe a new way of looking at the challenges.
3. The Channel Suffers From Conflicting Models: Early last year, something profound seemed to happening here, when The Jim Pattison Group, owner of The News Group (now TNG), bought a major national distributor, CMG, and was later joined in the partnership by a division of another wholesaler, Hudson Media Group. Many assumed that there might be other efforts to deal with the redundancies at the middleman levels of the distribution channel. However, that has not yet occurred, perhaps out of fear of anti-trust issues. In the meantime, TNG and CMG internally may be addressing some of those issues. Some indications of progress here, but still some distance to go.
4. Develop New Retail Classes, Improve Existing Ones: This could be the lesson of every year, and the resolution of every year as well. We talked about warehouse clubs and dollar stores. We know there has been some expansion of dollar stores, however that’s still a limited market – many stores, but smaller, and constricted by their own marketing strategy. Regarding existing stores, primarily supermarkets and supercenters, IPDA did develop a retail-directed presentation, “The Power in Print.” Trade ads have appeared in 19 issues of the leading retail trade magazines and the presentation is available to national distributors, wholesalers, and publishers. Here, an effort is being made, and, optimistically, results in 2013 will reflect them.
Newsstand – Join or Die
By Joe Berger There are enough writers now who scoff at the notion of print magazines going the way of the dinosaur that we can drop the whole “going the way of the dinosaur” or “buggy whip” analogy. In any event, while there are no dinosaurs around these days, they are a pretty big business. And, while there aren’t too many horse drawn carriages rolling around major American cities, there are still buggy whip manufacturers.
The current state of the newsstand distribution business is an altogether different nest of dinosaur eggs.
In theory, the consolidation of the newsstand distribution business should have been a good thing for everyone. For publishers, piecing together a print order became much simpler because there are fewer wholesalers of wildly varying sizes and fewer people with wildly different agendas to negotiate with.
For wholesalers, the elimination of some nearby competitors and the consolidation of their presence in key regions should have made life easier. It also provided a chance to create firmer relationships with major national retailers. There was the possibility of breaking into new national markets.
Retailers were finally able to consolidate their service levels, streamline their invoicing and payments and bring magazine distribution up to levels comparable to their other DSD delivery agents.
Some of that happened and whether or not any of it is a good thing most likely depends on which side of the table you sit on. Are you a glass half full or half empty kind of person?
What more than fifteen years of consolidation has not done is streamlined how we measure success in our business. All the links in our distribution chain look at it differently.
For an SBT retailer, a 35% sell through should be meaningless because they only paid for what they sold and they never carried the other 65% on their books (Although the savvier ones should wonder what could have sold in the space where those returns came from).
For a publisher, a 35% sell through can mean a profit if their production costs were not too high. It can also be a break even point. Or it can be a loss. It all depends on those pesky printing and shipping costs. Plus whatever else the wholesalers, retailers and national distributors tack onto the final bill. Those add ons can add up.
For a national distributor, selling a magazine at 35% is pretty much the same as a national distributor that sells it at 55% or 15%. For them, the only difference in many cases (Unless the contract is creative and has efficiency tied in) is the volume of sales. A publisher client with a 15% sell through is either on the way out of business, or about to get a lot of hand holding if they still have a stack of cash and the will to fix what is wrong. Hand holding a publisher can be expensive. On the other hand, a lot of hand holding for a +50% client at least means there’s money coming in, and the potential for more.
But in the end, what about the reader? After all, our goal here, in this little brackish, increasingly shallow tidal pool of the publishing industry is to sell as many copies of as many magazines as possible. Isn’t it?
Is the solution to meld the national distributors (ND’s) and wholesalers together? I’ve heard this idea kicked around. Ideally the goal of the ND’s is to market and advocate for the publishers to the wholesaling and retailing community. If ND’s are not there, who advocates for the publisher? Wholesalers should be invested in the success of the products they market but it often seems as though it’s simpler for them to push a button and say “No” than to dig in and try to understand what is presented to them To be fair, many on the publishing side still don’t really understand what is involved in wholesaling magazines.
And distributing magazines to the newsstand, in spite of all of the technological advances we’ve seen over the last twenty years is still very labor intensive. We don’t see as much local knowledge of the stores and markets serviced as we should expect.
There’s no denying that readers have not been picking up newsstand copies in the quantities that they used to. Sales have been declining for many years. We’ve seen some positive trends like the successful launches of HGTV Magazine and Food Network Magazine. There’s great news on the specialty front as Book A Zines and specials bring in high cover prices and high sales. Mr. Magazine (TM), Samir Husni counted
242 regular frequency magazine launches in 2012. At the same time, we have seen the declines in traditionally strong categories as well as the near elimination of some categories that were traditionally industry leaders in the last two decades. These declines wipe out the gains that have been hard won.
Maybe we’ve lost our way. In all of our obsessing over consolidating, efficiency, will we or won’t we survive, we’ve forgotten that this is a hand sell, one at a time, get the people into the stores kind of business. There don’t seem to be any short cuts to achieve that end.
There are a lot of great tools these days that should make our job more efficient. But we still have to get readers to find the rack, stop in front of the rack, pick up a magazine and then make the decision to buy the magazine. We know people like magazines, we just have to get them to buy them.