Pandemic Publishing Roundtable: Jerry Lynch of MBR (Magazines & Books at Retail)

“We have opportunities available to no-one else” Article by Linda Ruth

Editor’s Note: The “Pandemic Publishing Roundtable” started a few weeks after the closing of most Barnes & Noble stores instigated a smattering of new articles proclaiming the end of that storied chain and the end of magazines at retail. While it is true that prior to the pandemic the future of single copy sales of magazines was at best a tenuous proposition, it’s death didn’t seem likely to happen any time soon. So once again, I was aggravated with the conventional wisdom of those who write about magazines.

I reached out to my colleague, Linda Ruth and together we came up with the idea of starting a weekly roundtable discussion with other members of the publishing community. We could talk about almost anything. We could invite other publishers, distributors, consultants to come and talk with us.

As we were all isolated from our places of work, the meetings became a great help this year in maintaining a feeling of connectedness to something, anything.

The article below, is the write up my colleague, Linda Ruth wrote and has also been posted in the BoSacks newsletter, and on his website. Joe Berger December 21, 2020

Winding up 2020, and our year of, our group—Joe Berger, Samir Husni, Bo Sacks, Sherin Pierce, Gemma Peckham, and me—hosted Jerry Lynch, President of MBR (Magazines and Books at Retail) to talk about what we’ve come through, and what lies ahead. Jerry Lynch talked about his faith in our industry, the unique opportunities available to us through ecommerce—and a big announcement he is almost ready to make.

Joe: We’ve spent the year reacting to the challenges that COVID threw at us; it seems, in general, we do a lot of reacting. Is there a chance for us to not be such a reactive industry?

Jerry: The challenge is going to be figuring out where retail, as a result of dealing with Covid is going to go, where it will end up, and when.  Contrary to what you’d expect, we don’t fully know what’s going on. Consumer habits have changed, and some of those changes are going to stick, but perhaps not all of them. Some of the things that businesses put in place as the result of the pandemic might have to be unwound as consumers start to change again. And additional opportunities will arise.

Meanwhile, we’ve had some positive changes; mass market and grocery are the classes of trade that have done best for us.

Bo: People have to eat. Of all the necessary resources available to the public, grocery is paramount. We have to eat 3 times a day.

Sherin: The club stores, Sam’s and BJs have done well too, although Costco has stopped carrying magazines. Why is that? 

Jerry: Costco has a unique way of judging performance. Magazines don’t fit nicely into their way of operating, and the resulting metrics don’t allow our performance, in my opinion, to be judged properly.  The timing of their decision—we had hoped the removal of magazines was temporary–did bump up against COVID, as well. We have some ground to regain there. Some retailers removed checkout entirely, seeing it as a distraction at the front end when they needed to move customers through for safety reasons.

We’ve seen some good consumer feedback around the category, and that’s giving us an entry point back in. 

Bo: People trust magazines more than any other medium. 

Joe: What is the role MBR has in presenting magazines at retail? 

Jerry: We see our role as overarching. Our involvement would be along the lines of providing good research, helping craft the story. COVID set us back. 

Sherin: If a retailer walks away from magazines, as, for example, Home Depot did, do you strategize with wholesalers how to get them back on distribution?  

Jerry: We do try to come up with a concerted effort, but remember that it’s driven by retailers in terms of who they want to talk to. That’s primarily the wholesalers and larger publishers. Our role would be to help coordinate, to make sure we’re delivering the same key messages having to do with the benefit of the entire magazine category in the store. 

Sherin: The Old Farmer’s Almanac had a direct relationship with Home Depot before anyone else, then the wholesalers got involved and turned it into a category issue. When, after years, the whole chain was lost it was a big hit.

Jerry:  Many times a decision about the category comes from higher up,  executives other than the buyer of magazines.  Those decision-makers may not have enough information or the correct information which doesn’t allow for a good understanding of the category. Where we can We work with the merchant to ensure they have the right information to take to upper management to help make our case.

Bo: My experience in our industry says there is great need for improvement, training and experience. How savvy are the buyers?

Jerry: Mixed. Book chains, terminal operators, for example, are great; in other classes of trade where publications used to have a dedicated buyer the category may now be one of many that the buyer/merchant has responsibility for or be treated as an add-on. It’s difficult to gain the expertise when the time isn’t there

Joe: and it can change in the same chain from one buyer to the next.

Sherin: Having those relationships was easier when you could go and see the buyer. They used to be happy to talk to you. Once the wholesalers took over the relationships, more of the communication went through them; the buyers have been harder to talk to. Our wholesalers need to stand up for the category and educate the retailer why magazines are important; it’s not just feeding your stomach, you need to feed your head.

Jerry: Other factors come into play as well: the decrease in sales volume, the pressures of consolidation at retail. Full service by wholesalers is seen as a real plus for retailers. That has been around for many years and recently SBT was an added big benefit for many. However, that has also allowed some retailers to be less vested/engaged in the category We need to build a love/passion for the category that gets us over those humps.  That passion is built from the product itself, the actual content of a magazine.

Bo: The magazine business is in the communication business and as an industry, we’re horrible at communicating our own presence.

Jerry: Yes, we talk about our problems all day, yet we do less well talking about our successes. We have to talk to our retailers, with good data, in a retailer-friendly format, saying what magazines mean to our mutual customer. If we treated retailers the way we do advertisers we might get somewhere.

Samir: The impulse buy, going to the store to browse magazines, has dropped off with the worsening of placement and display of magazines. When I go into a store, I might find one lane open, ten lanes self-checkout. I tell them, if I wanted to do it myself I’d stay at home and order from Amazon.

Jerry: Labor at the front end is the largest expense line by far.

Last week’s roundtable included (clockwise from L-R): Bo Sacks, Joe Berger, Jerry Lynch, Samir Husni, Linda Ruth, Sherin Pierce.

Joe: One of the opportunities we’ve been talking about is ecommerce.

Jerry: The MBR has been working with a small group of members to get ecommerce off the ground for publishers. It’s way more complex than you’d think. It’s becoming a critical item for most retailers, but there is a direct relationship between the retailer’s ecommerce sophistication and where magazines fall as a priority. As they get better at ecommerce, their interest in our category grows, so we can gauge where to put our resources based on how far along the road the retailers have traveled. Different retailers also handle ecommerce differently: in some cases, they have an ecommerce division that we need to approach; in other cases, the buyer is our link to the ecommerce people; it’s different from chain to chain.

Bo: Over the next few years we’ll continue to commodify ecommerce, making it simpler and smoother. At the end of the day, we’ll solve it, it will get more easy than it is today.

Samir: The increase of ecommerce even from Hearst, Meredith, and others, selling their own subscriptions, is up 40% YOY. How closely are you working with ANC?

Jerry: The wholesalers will be key in this. We need to work with them to ensure that, if a store offers say, 100 magazines via their online portal, every one of those 100 magazines are available in the store for pickup. You can turn items on and off at a store level. But—going back to SBT—without tracking inventory by the store the retailer won’t know how many copies they have.

Joe: Except we do through O/R. And we have more than enough inventory.

Jerry: But in an SBT environment, that O/R information often isn’t transmitted to the retailer. Long term, especially as we expand the selection, we need to solve this, because we don’t want to get sideways in operation and disappoint a customer. That will hurt us with the consumer and the retailer.

Joe: There is one additional customer to keep in mind that we don’t want to disappoint, and that’s the publisher. Too many of them are turning away from this business now.

Sherin: To that point, there are some forward-looking buyers. Harris Teeter, for example, is testing the OFA on its e-commerce site.

Joe: I keep coming back to the question of why wholesalers are not working with publishers to get a site up inclusive of all magazines in that warehouse. We have a few indy retailers that have it, but if I were a magazine wholesaler today I would use my warehouse as a source of eCommerce, and I’d set up affiliate relations as well.

Jerry: ecommerce provides a huge opportunity to link the two sides of publishing back together. Everyone in publishing, from all aspects of publishing, from circulation, from advertising, is looking at it. And the opportunities are enormous. Take one example: suppose people could buy a subscription for Prevention on the retailer eCommerce site, and next time they were in the store they could pick up that copy or have it added to their click and collect the order. That’s convenient. That opportunity doesn’t exist anywhere else. It only exists at retail. 

Or, another example, imagine the possibilities of an eCommerce generated shopping list leading the consumer to the  Food and Wine magazine next to the in-store wine display. Again, that’s an opportunity that exists nowhere else.

Sherin: Our industry has not kept up with our customers, what they want and need. Some of our customers are now buying from Amazon, or from specialty chains because newsstand hasn’t been able to provide the support to keep up with the demand.

Jerry: E-commerce has not been a high priority for retailers. But that is changing and has changed. Now it is.

Sherin: Walmart carries every one of our publications through our trade distributor because they got tired of waiting for the newsstand.

Joe: We as a group know many publishers who want seats at this table. They want to participate and help and make this happen. So how to do this?

Jerry: I expect to be able to make an announcement soon, of a step we have taken in the direction of making this happen. Let’s get together in six weeks and talk about it then.

Everything’s Gonna Be All Right (Just Different)

Permanent Musical Accompaniment to this Post: 

I had the distinct pleasure of attending the Magazine Innovation Center’s ACT 7 conference at the University of Mississippi in Oxford, MS last week. The Magazine Innovation Center was founded in 2009 by Dr. Samir Husni of the University of Mississippi’s Meek School of Journalism in response to the crisis the magazine publishing industry found itself in after the start of the Great Recession of 2008. To me, the ACT conferences (ACT means Amplify, Clarify, Testify) serve two purposes: The first is to give a small group of magazine professionals a chance to meet together and exchange information about the business in a setting that is outside the usual “industry conference” setting. The second and in some ways more important one is to allow undergraduate and graduate students of journalism and magazine publishing a chance to learn from and interact with industry professionals.

This was not my first time to an ACT conference. In fact, it was my fourth. I attended the first in 2010, the second a few years later. Last year I was incredibly privileged to give a presentation on launching a magazine onto the newsstand. This year I served on a panel that discussed what publishers needed to know in order to have a successful launch.

Overby
The Overby Center, home to the ACT Conference.

I return to the ACT conferences because I thoroughly enjoy the intimacy of the conference community and it pairs well with the depth of experience of the presenters and panelists. There is a very collegial and community feel to the meeting. If you’ve ever been to a International Regional Magazine Association meeting you may know what I’m talking about.

The other reason is the students. These are some pretty incredible people. Their mere presence defies all of the stereotypes you read about Millennials and Gen Ys. I’ll discuss that more in a bit.

If you want to know what some of the panels were like, check out Dr. Husni’s blog to see what I am talking about.

This week, the newsstand business is buzzing with the news that TNG, the largest magazine wholesaler in North America is purchasing Ingram Periodicals, LLC (IPI) from the Ingram Content Group. IPI is the exclusive magazine distributor to Barnes and Noble, Jo Anne’s Fabrics, and several hundred independent bookstores. B&N may account for as much as 75 -80% of IPI’s business according to several industry professionals.

As soon as this news was released, my email and my phone blew up with comments and questions about what all of this will mean. What is the future for the newsstand side of the magazine business?

So?

Obviously TNG will get bigger. Most likely, the IPI warehouses will close. Some IPI employees may get to stay on in the TNG organization. Others will not find jobs and will leave the industry. Will TNG look to acquire Media Solutions next? Hudson News? What will this mean for One Source, the distributor to Whole Foods who uses IPI warehouses? How will they wield all of this accumulated power?

Much of the commentary I heard was negative. Depending on your point of view, working in the newsstand business is pretty much nothing but a long hard slog from one bit of “bad news” to another bit of “bad news.”

But let’s be realistic. What’s been going on in the newsstand distribution business since the massive consolidations of 1995 – 1997 is nothing other than change. We often don’t like change but so what? It may be personal to us but to the people who implement change, it is not personal.

Change in our business came as regional retail chains gave way to large powerhouse national chains. Simultaneously, TV Guide gave way to cable television. The seven sisters of the check-outs gave way to other forms of entertainment for women. Adult entertainment magazines, the third leg of the profit triad for magazine wholesalers, retailers and national distributors lost circulation to VHS tapes, then to DVDs, and finally the internet. Those three sources of newsstand circulation were what made magazine racks in retail stores the “must haves” for retailers. Unlike our European cousins, our industry focused on check out exposure and not the mainline.

We have two large national magazine wholesalers because the large national chains that carry magazines want it that way. We lose circulation because there are many other things (like Netflix and YouTube) that compete for people’s leisure time and pocket change. Retail shopping patterns are changing. Perhaps you’ve heard of Amazon?

Throughout the past decade, we’ve heard call and response after call and response for the newsstand business to “work together”. To “solve” the problems of the newsstand. I would suggest to you that the newsstand may be the way larger publishers and retailers want it to be. Mostly out of sight, mostly out of mind. Frankly the folks in the executive suites have other things on their mind: Events, mobile web, video, subscriptions, and newsletters.  Newsstand is and always has been a small piece of the circulation pie. Just a very visible one that people like to write about.

I’ve always liked this business because I like magazines and I like characters. And there are still a lot of characters and magazines in this business. When I started this blog, I talked about surfing the waves of change. You can surf. Or you drown. It is up to us who work in this business to affect as much change as we can on behalf of our publishers. You want change? Make it so.

Why do I think “Everything’s Gonna Be All Right”?

At the close of the ACT 7 conference, Samir called a number of students up onto the stage at the Overby Center. These students were seniors in Samir’s class and their final project was to create, edit and print a magazine. I was fortunate enough to get to see some of these magazines and they were pretty impressive. as with other ACT conferences, I got to see and sometimes interact with Samir’s students.

MICACT7 Finale1
Dr. Samir Husni awards prizes to Ole Miss seniors for creating magazines as part of their final projects.

After seeing these students, let me tell you, when it comes to the magazine business, everything’s gonna be all right.

Just different. Very different.

 

The ACT 6 Conference Addresses the Newsstand

In 2009 I was excited to hear that Dr. Samir Husni (aka Mr. Magazine) had launched the Magazine Innovation Center at the Meek School of Journalism at the University of Mississippi in Oxford. I thought it was past time that the conventional wisdom was challenged. Yes, the world of information is changing. Yes, digital is the future. But did that mean that digital was the only future? While we  embrace digital, revise how we look at media and magazines and journalism do we have to dance so happily on the grave of printed magazines?

One of the missions of the MIC is to host conferences that discuss the business of publishing in an open and free ranging forum. The conferences are called ACT (ACT is the acronym for “Amplify, Clarify and Testify.”) At the first ACT conference I was thrilled to see speakers beyond the usual batch of insiders who spoke at most magazine conventions. Better yet, we got to hear from a wide range of Samir’s publishing acquaintances from overseas and learned how they were addressing the changes in the magazine world. And even better than that, the auditorium in Overby Hall was filled with journalism students, undergraduates and graduates who were there to learn about magazine publishing and what the future may hold for them.

This year, the ACT conference was in the Spring (April 20 – 22) instead of the Fall.  After five conferences that focused on a wide variety of topics, this years’ ACT featured several panels on the struggles of the newsstand side of the business.

Day One of the ACT conference kicked off with an industry overview from Tony Silber of Folio Magazine. It was followed by a very lively and informative address from Sid Evans of Southern Living Magazine.

Day Two took on a whole different form.

The conference kicked off with an historical overview of the makeup of the newsstand distribution industry from John Harrington, a consultant and editor of the New Single Copy newsletter and former head of the industry trade group, The Council for Periodical Distributors of America (CPDA). John is a long time industry veteran and he was able to lay out for many conference participants how the newsstand was organized, how it had worked for many years. Finally he explained why the industry experienced such rapid consolidation and had arrived at such a precarious position in the second decade of the 21st century.

But for any newsstand veteran, the surprise was the next panel, “Reimagining The Newsstand”. This was a remarkably open and frank discussion between several publishers, a major magazine wholesaler, and the major supplier of books and magazines to Barnes & Noble. The panel was moderated by Gil Brechtel, a former magazine wholesaler and current CEO of MagNet, a data service that provides publishers with store level information on their newsstand sales. The members of the panel were: Shawn Everson of Ingram Content, David Parry of TNG, Hubert Boehle of Bauer Media, Andy Clurman of AIM Publishing and Eric Hoffman of Hoffman Media.

While it was not that remarkable to have wholesalers and publishers on a panel discussion, this panel was more lively and open (Perhaps because we were nowhere near either coast?). Before the panel opened, each participant was given the opportunity to give a short presentation on their side of the business. This was incredibly informative. I could understand, fully for a change, the incredible pressures that TNG operates under (High fixed costs, pressures from retail customers, competitors for space within those retail customers, pressure from magazine suppliers). I could see why a publisher from another country (Hubert Boehle of Bauer) would view the American newsstand with a skeptical and quizzical eye (Germany has similar sales volume as the US, yet a higher sell through and lower remittance to the retailer). It was fascinating to hear about the transformation of Ingram from a strictly magazine and bookstore reship operation into a multi-channel company that also profited from digital production and distribution was impressive and remarkable.

Did the panel fix the newsstand?

Of course not. The challenges that face the newsstand distribution business can’t be fixed in one morning. But to my mind, this was the first of what should be many open, frank, and engaging discussions. We should continue this conversation. You can watch the presentation below:

 

This panel was followed up with another MagNet sponsored panel titled “Cover Data Analysis for Editors”. This was led by Joshua Gary of MagNet and included Brooke Belle of Hoffman Media, Josh Ellis of Success Magazine, Liz Vaccariello of Readers Digest and Sid Evans of Southern Living. From my perspective, this was another successful panel. It was refreshing to hear from editors who understand that newsstand copies are the public front door to their magazine. That something designed to appeal to a potential reader could make that part time fan of the magazine a full time paying subscriber.

 

Consider the potential streams of revenue open to magazine publishers today: Events, e-commerce, newsletters, blogs, video, subscriptions. Ask yourself, why wouldn’t you put your best foot forward with every single issue that hits the newsstand? Why wouldn’t every newsstand cover be a piece of art instead of the very last thing you think of?

I don’t know. Any art directors or editors want to chime in?

Screen Shot 2016-05-04 at 10.33.04 AM
The MagNet cover panel discusses the impact of discounted sub on newsstand sales.

In a March editorial, Tony Silber, the VP of Folio Magazine stated that the fate of the newsstand is not the same fate of print magazines. Tony correctly points out how the channel no longer generates much, if any profit. That racks are “truncated”. That many editorial pursuits have moved online. His address at the opening of the ACT conference was inspiring. But on this point I’d have to disagree. What has happened to the newsstand could very well be the fate of the printed word if publishers do not pay attention to all aspects their business. If all they do is react.

The fate of the newsstand is the fate of any business if the participants pay no attention the rumblings of their customers or suppliers. If you don’t watch and respond to trends, the fate of the newsstand is waiting for you.

If we want readers to buy newsstand copies, we have to give them a reason to do so. If we want the newsstand channel to be profitable, then the participants in the channel have to cooperate and on the same page about who, how, when and how much they will get paid.

Recently a supplier contacted one of my customers and rather (Rudely I thought) informed them that they were not profitable, that they would have to switch to another form of discount and that they would have to agree to this right now this very minute or else they would be dropped. A quick review of this distributors sales showed that their sales losses were significantly higher than anything else this title had ever experienced. Moreover the discount structure that the title was currently declared “unprofitable” had been imposed by the distributor in an earlier “either/or” declaration. In other words, the losses this distributor incurred were self inflicted. Why? Because they took their eye off the ball and didn’t think long term.

When will sales stop declining? When we give readers a compelling reason to buy. When the producers of the content, the publishers decide that it is a channel of sales that they should pay attention to. In fact, during the ACT conference, we heard from several publishers who are doing well on the newsstand precisely because they are paying attention to their business.

It’s my hope that the discussions that were started at this years ACT conference continue. The alternative is a continued drift. At a certain point, we need to stop the drift and chart a new course. That point really is now.

Things That Don’t Exist, But Would Be Cool If They Did: The Conference Room Edition

It’s that time of year again. Yes, there are parties. But there are also the last rounds of budget meetings, media plans for the soon to start New Year, meetings to tighten up editorial calendars. And, of course, the conference calls to plan the next round of …conference calls?

Out in the world of circulation, that high intensity drumbeat you hear is actually the collective hearts of circulation and audience development teams beating at +180/minute as they wonder if there’s enough last-minute circ to meet the oddly high rate base guarantees the ad team made to their customers a year ago. Will we make it? Will AAM or BPA accept it?

Last week a colleague from the newsstand world called to wonder out loud why her December prematures were so high and POS numbers so low. Were the Christmas displays actually put up in the King Soopers in Denver? And why did the Ad Manager laugh so much when she mentioned the Buehler Supermarket chain in Ohio? “It’s not even spelled the same way and Ferris was from Chicago,” she pointed out.

October’s post “Things That Don’t Exist, But Would Be Cool If They Did (Especially If We Could Bring Them To Our Next Meeting) was inspired by a few stories I had recently heard about some wonderfully failed presentations.

With that in mind, I polled some colleagues in the magazine circulation side of the business to see if they had any creative things they’d want to bring with them to their next conference room meeting to discuss end of the year circulation numbers. Here’s what they suggested would make their time in the swivel seat more enjoyable:

Things That Dont Exist Part 2

When senior management invites you into the 21st floor conference room to discuss end of the year numbers, what do you want to bring with you?