We Have Always Been at War with East Asia…And the Newsstand Has Always Been, Um, Challenging?

If I had made an entry in my diary every time someone told me in all seriousness that the single copy sales business was: Terrible, horrible, corrupt, inefficient, outdated, out of touch, wasteful, mobbed up, operated like the mafia, doomed, too busy ripping off publishers, retailers, wholesalers, consumers – to do a good job, that we should all be in jail for taking advantage of publishers…

… Then I would have a memoir considerably larger than a Brandon Sanderson novel.

That’s a mighty big book! (Source: BrandonSanderson.com

 

Nothing New Under the Sun

There is a verse in Ecclesiastes that says, “There is nothing new under the sun.” King Solomon wasn’t being a cranky old cynic when he wrote this. He was talking about the cycles of nature in life, not the rat race of the 21^stcentury world. But while the complaints about the newsstand business are often the same year after year, the simple truth is that today’s newsstand sales business is not your fathers’ newsstand business. Or mine. And my father was in the newsstand business.

Last month industry guru and prophet Bo Sacks released two opinion pieces in his newsletter. One from former Ziff-Davis circulator Baird Davis and another from former consultant and industry leader John Harrington. Take a moment and check them out.

Both articles point out things that are very clear about the newsstand:

• Sales are down dramatically
• Sales for leading AAM audited titles are down even more
• Retailers are cutting back on available space at the newsstand
• There is continued consolidation at retail, wholesale and national distributor levels

I worked for Baird when I consulted for Ziff-Davis in its earlier print life. He is a good person and not someone I think of as gloomy or full of doom. In fact, I remember him as hard working and rather clear eyed. He succinctly points out the tremendous losses we have seen at the newsstand, especially with larger AAM audited titles. There is no denying the fact that a business that was generating about $5 billion in retail sales before the big crash in 2008 is now generating less than $2 billion. Harrington, who is also on the list of good people, is the former president of the Council for Periodical Distributors of America and a retired consultant. He points out that different participants in newsstand distribution have very different goals when it comes to profitability.

But We Knew This Already, Didn’t We?

Are industry leaders going to get together and “solve” the problem of the newsstand? Probably not because there are still too many competitors vying for space on the publishing side*. Moreover, all publishers, small, medium and large have a lot of other things to focus their attention on these days. Finally, it doesn’t seem like anything will happen without the seal of approval from the major wholesaler, TNG, or the largest national distributor, CoMag.

Captain Optimist Arrives

Earlier this week, fellow consultant John Morthanos tossed a bit of fuel on the fire in an opinion piece in response to Baird’s op-ed on Bo Sacks.  John makes the case that we should look beyond AAM numbers (I heartily agree). He cites the remarkable change in title rankings at chains like Barnes & Noble and Books A Million where traditional top ranked AAM audited titles (Think Cosmopolitan or House and Garden) have been supplanted with recent launches like Magnolia Journal.

He’s right. And as someone who is addicted to publishing stats, I’m endlessly fascinated by the report. But is that the point?

Single copy sales, the sales of print magazines at retail are down. Dramatically.

And,

Retail and wholesale consolidation has reduced a publisher’s ability to be profitable at the newsstand.

And,

If a segment of your business is not as profitable as it once was, and there is little chance of it returning to the same level of profitability, you tend to cut back your participation level and focus your attention on the parts of your business where you see opportunity.

It’s true that new titles continue to be launched on the newsstand. Some, like Magnolia Journal, Pioneer Woman, and the Centennial Media SIPs sell incredibly well. However, they don’t make up for the tremendous losses we see from former market leaders. How often can we rely on high level brand awareness to create winners at the newsstand?

Let’s be realistic. Chains like Barnes & Noble and Books A Million are walled gardens. Their customers are actively looking for something to read – something in print. The B&N newsstand is well run and managed by a terrific magazine oriented staff. So is Books A Million. But that doesn’t mean we ignore the troubling signs that chains like Barnes & Noble have publicly experienced over the past few years.

Captain Skeptical?

It would be nice to think that every time a retailer chops a mainline in half or cuts 15 pockets from a check out that our wholesalers, national distributors and publisher quarterbacks rush in with the latest study from MBR and walk out with even more space. Half of it allocated to new, up and coming indie titles.

Maybe that does happen, sometimes. There are a lot of great people in our business and they do work hard to promote the category and maintain our space and viability.

But facts are facts and we’ve lost space. Despite some very visible, exciting and promising bright spots, sales are down overall.

From where I stand (I have a standing desk these days), these battles will continue to be hard-fought. We will never get away from the fact that store traffic is down. We have to acknowledge that there are a lot of distractions fighting for the public’s attention and money these days. Those of us who work in newsstand have to fight even harder to get the attention of the managers of magazine companies and the affiliated partners in the distribution chain because we are now a part of the magazine “media” business.

So, what to do? That’s easy.

Work hard. Vie for attention. Create your own promotions. Check your data. Prove your worth. Cooperate with others in the distribution chain.

Can you be both an optimist and a skeptic?

Yep.

*I am very much in favor of competition. Just in case you were wondering.

The Newsstand Can’t Catch a Break: Cosmo Gets Blindered

Any day now we could deluged by an onslaught of bad news from the upcoming AAM “SnapShot” report. Until then, we can contemplate the news that one of the nations’ leading newsstand magazines will experience some new retail challenges at two national chains.

Last week WWD Magazine reported that an organization that partnered with Hearst family heir, Victoria Hearst, The National Center on Sexual Exploitation, had won a major victory by convincing Rite Aid Drugs, and Delahaize (The corporate parent of Food Lion and Hannaford Brothers Supermarkets) to put privacy blinders over copies of Cosmopolitan Magazine because minors need to be shielded from Cosmo’s sexual content.

Let’s just pause for a moment and take a look at the August cover of Cosmopolitan.

Sure….

Cosmopolitan does have a long history of cover lines that push the margins. But let’s look at it this way, going after magazines distributed at a check out rack in a mass market retailer is pretty low hanging fruit. Maybe you can keep your minor child from seeing some “Hot Summer Sex” on a magazines’ cover. But seriously, have you checked your tweens’ Snapchat?

Victoria Hearst, a member of the founding family of the Hearst publishing conglomerate is reported as saying that she wants Cosmopolitan to be sold only to adults and have the cover wrapped like an adult (porn) magazine.

There is so much snark this publishing professional wishes to throw in the general direction of Victoria Hearst. However, unlike Ms. Hearst,  I will resist the temptation to go after such low hanging fruit.

For the record, Cosmo will be placed behind plastic blinders. That should make life slightly more challenging for wholesale merchandisers and add some costs to the single copy sales department over at Hearst. Adult magazines, porn magazines: Penthouse, Hustler, and dozens of other more aggressively sexual titles are often sold in opaque polybags that show only the magazine logo.

The Hearst corporation is quite possibly one of the most successful magazine media companies in the world. They have done some incredible work in maneuvering their  properties through the ever-changing digital and print landscape. Last year, they successfully launched the Dr. Oz magazine, a title that has half a million subscribers and sells over 300,000 copies on the newsstand. In a December 2014 interview with industry analyst Samir Husni, Hearst President David Carey sounded pretty upbeat despite the challenging environment most publishers had just navigated.

Let’s try and be serious for a moment. Or not. Are parents really all that concerned with the “smut” that their children see as they walk through retail stores? Don’t their kids already have their noses in their smart phones? And isn’t it possible that they are seeing a lot more graphic content than “Hot Summer Sex” while they browse their Snapchats, WhatsApp and Instagram pages?

In the second half of 2014, Cosmopolitan reported single copy sales of 632,000 copies with a retail sales value of $15.7 million. That sounds like a lot. Until one considers the fact that in the second half of 2007, Cosmopolitan reported single copy sales of 1.896 million copies at a retail value of $49.7 million.

That should get your attention and put the newsstand crisis in perspective, what?

Moreover, it also might explain why it feels like Rite Aid and Delahaize shrugged and said, “Whatever” when Ms. Hearst’s’ organization demanded they shield children’s delicate sensibilities from smutty cover lines.

Do you think the National Center will target these magazines next?

In the end, this campaign seems like nothing so much as an attention seeking malarkey. Children are much more at risk for injuring themselves while they walk around staring at their smart phone screens. Of course, that would presume they are walking and not sitting on the couch watching a smutty movie on Netflix.

If I learned anything while raising my two daughters, it was that open, honest, frank and age appropriate conversations got all of us much further in life than trying to hide, shield and keep them clear of today’s culture.

How would I suggest a parent handle a Cosmopolitan cover line? Simple: “Those are magazines for grown up women. Look, here’s Discovery Girls.”

That doesn’t seem hard, does it?

For the record, I’d like to point out to the folks at the National Center on Sexual Exploitation that this….

Genesis Magazine – 2011

…is a pornographic magazine. About the only place you can see one in the wild would be in an adult bookstore and a few convenience stores or traditional newsstands.

However, this…

Miley Cyrus tried to save the newsstand back in 2013.

Is a well-respected, multiple award-winning national women’s service magazine produced by a much-admired U.S. corporation.

Other than the fact that they are both magazines, there’s really no similarity.

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:

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?

 

 

The Shrinking SBT Iceberg

Last week the Alliance for Audited Media (AAM, formerly known as the Audit Bureau of Circulation), announced that it would allow for the calculation of “shrink” in determining the single copy sales of it’s audited magazines. While this wasn’t unexpected, it goes a long way towards the recognition that there’s a whole new way to look at both the delivery, sales and returns processing of newsstand copies.

Shrink is commonly considered to be copies that were stolen from the rack by the retailers customers or employees. It can also be copies that are damaged and unsalable. Sometimes copies simply disapear and can not be accounted for. Under more traditional sales terms with magazine wholesalers, if a retailers customers were engaged in poor behavior, too bad. Unreturned copies were considered to be sold and had to be paid for. Apparently under the new proposed terms of SBT that the News Group has presented, shrink will remain the responsibility of the stores. I think this is the right place for it to remain.

There are now more copies sold through SBT retailers than the traditional method of determining sales (deducting returns from deliveries). Therefore it seems apparent that once all of the calculations are figured out, every publisher, large or small, who uses the services of AAM auditing is going to take advantage of this.

This should be a benefit the three hundred or more titles that have their circulations audited.

For the rest of the print newsstand world, this may not mean all that much.

But this will: Last Friday, the IPDA (The International Periodical Distributors Association), released a link to an article that any publisher with single copy sales at an SBT participating wholesaler should pay close attention to.

IPDA is a trade organization comprised of national distributors and publishers. Their goal is to work with other participants in the supply channel of the single copy magazine and book sales industry. Throughout the year they provide a wealth of information and research relevant to the single copy sales world. They work behind the scenes with retailers promoting the sales of our category. You can subscribe for free to a daily news digest they put together outlining important details in the single copy sales, magazine publishing, and retailing industries. If you’re currently subscribing to the BoSacks newsletter, “The New Single Copy,” or Samir Husni’s blog, I would urge you to subscribe to the IPDA feed. The articles they glean will provide you with excellent balance and insight into many issues affecting our industry.

The article, by IPDA president Jerry Lynch, describes some important developments regarding SBT. In particular, it discusses the recent decision by AAM to allow for the reporting of shrink in single copy sales for audited titles and a list of “Best Practices” goals that IPDA suggests as the industry moves forward with the more universal deployment and acceptance of “Pay on Scan”.

Overall, the objectives are quite notable and make sense. They range from the goal to “Engage all parts of the suppy chain” to the recognition that “shrink and its casual factors must be identified…reported and mitigated over time.” Read the lists of goals. If we can make this work, we could see wholesalers return to some semblance of profitability. This would be a good thing because if wholesalers can be assured that their businesses are profitable, then we can all focus on selling magazines.

But as this process moves along, the questions on my mind, as a representative of smaller and medium sized magazine publishers, is two-fold:

1) Are the ultimate goals of these “Best Practices” the increased and expanded sales and marketing of magazines?

And,

2) If we know more quickly the final sales by store and chain and issue of these magazines, are we advancing forward the final payment for these magazines to all participants in the channel. Will this allow magazine publishers to share in a stabilized industry and focus on creating more publications we can sell?

At present the answer to question number 2 seems to be “No”. Two of the three major wholesalers recently requested a longer term to pay on less frequency titles (Quarterlies, bi-annuals and annuals) citing the difficulties in carrying the inventory costs associated with these longer on-sale magazines with their SBT retailers. I’ve also had discussions with wholesalers who cite slow payments from retailers as a major impediment to their long term profitability. 

I have no real problem with this technology. Quick access to sales data is very 21st century. It’s a necessary part of our work today. But the end result of this process has to be the sales of more magazines. It’s important for wholesalers to reduce their costs. They’ve been working at this since consolidation began back in the ’90’s. But you can only reduce costs so much. Now it’s time for them to be profitable. You can only do that by selling more product.

And that’s the same issue many publishers have. I recently took a call from one of my clients after posting an updated POS report to him. “I like getting this sales data so quickly,” he said. “Now why can’t I get paid more quickly too?” 

Why, indeed?