Last week began with the startling realization that there was one less wholesaler on a galley I received. La Belle News of Steubenville, OH will shutter its doors this month. The retailers they service will be taken over by Newborn, Inc. of Altoona, PA.
In the long run this makes some sense. There was a certain amount of overlap between the routes that these two independent wholesalers managed. Our modern economy does not look favorably upon duplication of efforts. In a conversation I had with a senior manager at La Belle, it was acknowledged that the company had experienced what all magazine wholesalers have experienced over the past decade: Declining unit sales, increased demands from retailers for stepped up service, fixed costs that can be cut back only so far. This makes the prospects for the future rather limited.
If anyone’s keeping count, I believe that this means there are now fewer than fifteen independent wholesale companies in the US that can trace their roots back to what was a “traditional” magazine wholesaler pre-industry consolidation. If you add in the few “secondary” wholesalers that trace their roots to the newspaper or adult book and magazine business, I think we have fewer than twenty-five companies in this category. I would guess that they generate less than 5% of total newsstand sales. Maybe even less than 1 or 2% for many titles.
Certainly TNG, Hudson and Source can trace their roots back to “traditional” wholesalers as well. But now that they service a lions share of the industry they are in a class all by themselves. There’s a huge difference in scale between even the largest ID wholesaler, and a typical TNG, Source or Hudson distribution center.
By comparison, before the 2009 Anderson News crash, independent wholesalers delivered as much as 20% of the newsstand circulation for at least half of my client publications. At my last employer, this was a number we were particularly proud of because we actively worked these accounts and our efforts were rewarded when we outsold our competitors by ratios of 3:1 or more. There’s something to be said for showing up, box of donuts in hand, ready to get down to the gritty detail that is and always has been the management of single copy sales.
However, you can’t defeat fixed costs. You can’t hide declining sales for whatever one of the many reasons you want to hang the decline on (I’d say “All of them,” but then I trend towards glib).
I’d be remiss if I didn’t mention that by the middle of last week all industry participants were startled to a high level of alertness by the giant tsunami of change that could be hurtling towards the shores of the shallow sea that is newsstand sales.
Will the wave hit us and swamp us? Or will it diminish before our eyes and can we go back to what we’ve been doing since 2009? Both options are possible depending on who you talk to. Could we see even more consolidation?
It is readily apparent that the financial arrangements that have been the foundation of this business aren’t working very well anymore. You’re in serious trouble if your delivery and sales agent does not and has not made a profit for a long time. We continue to ignore this fact at our peril.
Likewise, it is readily apparent that many publishers (at least the medium and small-sized ones I work with) don’t have more margin to hand off because they are already squeezed. Yes, a whole class of trade could walk away. Do we want to make a $3 billion dollar business a $2 billion or $1 billion business? Or is it time to create some other way of doing this that benefits all participants?
Adding on fees, increasing discount, cutting draws, shrinking racks, cutting service, cutting title lists. None of that seems to work. We’ve tried it before. It’s all half measures.
In the end, the goal of single copy sales is for the publisher to get magazines into the retailer so the readers can find and buy it. We need to have a discussion on how we reformulate our business so it’s participants can sell its products. But we need to insure that all participants in the industry have a voice, not just a few major publishers or a few service providers. Everyone in this chain needs to be involved in this discussion. Even the printers and break up agents. The future (or lack of a future) of the newsstand business will impact their bottom line too.
On a personal note: I’m really going to miss calling on La Belle News. Steubenville is a nice town to visit and it’s view of the Ohio River is quite pretty. The owners, managers and employees of La Belle were always friendly, hard-working, kind and very enthusiastic about the work they were doing. As an industry, we have always needed more people like them and it’s always what has kept me enthusiastic about my work.