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someone told me in all seriousness that the single copy sales business was: Terrible, horrible, corrupt, inefficient, outdated, out of touch, wasteful, mobbed up, operated like the mafia, doomed, too busy ripping off publishers, retailers, wholesalers, consumers – to do a good job,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.

Re: Inside The Wholesaler Dynamic

Editor’s Note: Probably some of the most interesting series of articles on the current status of the newsstand industry and it’s future have come from publishing consultant and “Folio Magazine” contributor Linda Ruth. Linda is a veteran of the newsstand industry and has successfully added the digital realm of the publishing world to her portfolio. That’s a model I am striving to follow. Recently she’s published some articles on what the newsstand world’s “Plan B” could look like. This week’s article, included some interesting “reveals” from former Buffalo, NY wholesaler Larry Scheur. It was then picked up and re-posted by industry guru Bob Sacks. It’s sparked much reaction. What I have written below is my response to some comments, calls and emails directed my way. I suggest you read Linda’s  article to get the gist of what I am trying to say.

I never called on Larry Scheur in Buffalo and don’t know him personally. However, I do know him by reputation and I respect him for his creation of the “Buffalo System.” I’ve seen it in action in several forms and it was, in my opinion, one of the better single entry systems in use. Moreover, I do know many people who did call on his Buffalo and Jamestown, NY warehouses and they reported that the operations were well run.

But since the publication of this article, I’ve received a decent sized flow of  “See, I told you they were all corrupt!” and a “Pox on all their houses!” comments so some sort of response seems appropriate.

The former Mobile News Company. Mobile, AL

Yes, some magazine wholesalers did try to screw around with their systems. One of the reasons we know about them is because they were called out at some point and compelled to pony up and correct their ways. There’s a reason national distributors have auditors. From my experience, most of what these auditors catch are honest mistakes in the system.

Hell, I still have to correct people I meet who have heard some version of the “Phony Book Cover” returns story. The one is what, at least forty years old? It was a hoary old chestnut back when I walked into the business and there have always been multiple versions of that story. Even science fiction author Ben Bova includes a version of it in his prescient novel Cyberbooks.

Yes, many wholesalers may have made a portion of their total profit from delivery fees charged to retailers. They may have even made money from overages, shortages and the like. From my experience, however, it really depended on the wholesaler, the market that was serviced, and their individual corporate culture. If you traveled around and called on as many US and Canadian based wholesalers as I did back in the day, you got pretty good at figuring out who worked hard, who was clean, who was good at merchandising, who put interesting and effective ideas into action, and who made money in spite of themselves.

The former Austin Periodicals. Terre Haute, IN

Frequent readers of this blog know that I grew up in this business and have an excellent source of my own about how things were pre-consolidation and even pre-computerization. My father, who managed an agency for over twenty years (and the book side of the company before that) claims that he ran a very tight ship. I’m inclined to believe him and not just because he’s my dad.  Yes, they may have made some money from service charges. But most of their profits came from sales and most of their sales were from magazines (although they sold books, newspapers and ran a very profitable bookstore and school book business). Where they clean? Yes. Why? He always said it was because they didn’t want to lose an audit from a national distributor. He also felt that the few “tricks” that were talked about were more complicated than they were worth. Remember the old adage: “When you tell the truth you have less to remember?”

Were there concerns about cheating? Mostly they were about things falling off of the back of a delivery truck and into the hands of the local “Friendly Neighborhood Bootlegger”.

The former Klein News Company. Cleveland, OH

Did some wholesalers play with the float on returns crediting with their retailers? We heard that often enough. There is conjecture that it may be one of the numerous reasons the big national chains put the business up for bid. However, I’ve never had a retailer say that to me.

But all in all, this was, and still is, a straightforward business. You take stuff in, you put it out. It either sells, or it doesn’t. If you screw around with your privileges, you’ll either be caught and forced to pay up, or you will gain a reputation and no one will trust you.

As for Larry’s ideas: The time for magazine mass merchandising on a grand scale may have come and gone and neither of those solutions would solve the problem of getting the rest of the mainstream and niche titles to market. That doesn’t mean these ideas shouldn’t be explored, but I would hope that anyone who currently works in the newsstand distribution business at any level would challenge any supposed “solution” that would result in the sales of this business getting any smaller than they currently are. We know people are going into stores. We know that people are looking for magazines. If the major publishers won’t help themselves save their single copy sales, then the rest of the industry will have to do it for them because they sure as heck won’t help anyone else but themselves (And why should we expect it to be otherwise?)

The former Interstate Periodicals. Madison, WI (And one of my favorite cities and wholesalers to visit).

As for O&R “over regulating” the business. I think that is a fascinating comment from someone who had a hand in developing the order regulation system (Although I always thought the first system to market was the DataMan system). Does he regret it? The big problem with order regulation is that the sell throughs and sell through targets mean different things to different links in the chain. A 30% sell through may break even or even make money for a publisher. It may be a loser for the wholesaler. Both the retailer and the national distributor make money on everything that’s sold.

Finally, with regards to the story about the national distributor offering “skiffs” to Larry. Who am I to dispute his story? He did the right thing by leaving and the “well-respected” VP was in the wrong. Were similar offers made to other wholesalers? Maybe. Most likely, I would surmise. But that is my opinion. Show me some other business in or outside of the publishing world where everything is clean, tidy, shiny and perfectly honest and I’ll show you some Sunday morning pontificator on cable TV bloviating about something he knows nothing about.

From my experience, most “deals” between ND’s and wholesalers involved fees and payments for additional distribution and dealer adds. Occasionally additional discounts would be offered in lieu of fees. This was a successful way to launch a new title or the relaunch of a stagnant veteran. I have to confess that I did that myself more than a few times at the behest of publishers I worked for.

If I have any fear, it is that this article will be remembered not for Larry’s discussion of ideas on how to fix things, which is worthwhile. Rather, it will be used to confirm the “publics’” worst fears about a broken business model that is in dire need of repair.

Oh well.

The Zombiefication of Ladies Home Journal is Sad, But…

I had planned on banging out a few hundred words at some point in the next few days regarding the recent announcement that a venerable member of the “Seven Sisters” Ladies Home Journal was ending it’s run as a monthly. However, my more immediate concern was what that could do to front end configurations nationwide and how many new “Pay To Stay” check out plan-o-grams I might be called on to consider and pony up for. These are the things that keep me up at night.

Yesterday, after seeing some breathless articles about the LHJ’s relegation to the role of “Book-A-Zine” pop up in my feeds, I posted a rather snarky comment on my Twitter stream and earned a response from Beth Brewster, a lecturer and Director of Studies in the school of Journalism at Kingston University in London.

Reflect on that for a moment, please. I just had a “conversation” with a professor in London, England. This is one of the numerous reasons I love Twitter.

Samir Husni, Mr. Magazine, and professor of Journalism at Ole Miss rightly pointed out on his feed:

Changing frequency & adapting a new business plan, is NOT an "end-run." Why do media b2b magazine reporters thrive in spreading "death" news

— Samir Husni (@MrMagazine) April 25, 2014

There is more discussion on Samir’s account and I would encourage you to check it out if you’re not already following him (And if you’re not, you should). If you’re not following his blog, you should do that too. No doubt he’ll have something to say about this in longer form.

But I couldn’t have said it any better than the ever enigmatic D. Eadward Tree, proprietor of the Dead Tree Edition blog who’s posting this morning was titled: “Old Ladies Journal Sent to the Home”.  He kicked off his explanation of the events by saying:

“The 131-year-old “Seven Sister” title Ladies’ Home Journal was consigned today to the magazine industry’s version of the old folks’ home – “special interest publication.”

I’d invite you to follow the link and read the entire post. He points out that while the transition is a smart thing for Meredith, we do have to consider that people will lose their jobs.

Lastly, it wouldn’t be fair if I didn’t mention that while I was planning on checking out what Mr. Tree had to say, Bo Sacks got there first and included it in his daily e-blast. Along with that link was this thought from Bo himself:

“…the closing of LHJ has nothing to do with gypsy prophesies. It has to do with the nuts and bolts of a vibrant industry which, at worst, is in a transformational stage. Magazines have been born, lived a full life and died multiple thousands of times. It is normal, and what we have always done as an industry. We create, we make revenue and put mercifully to sleep those titles that no longer display the necessary sustainability for a healthy life.”

How can you not like someone who works the phrase “gypsy prophecies” into a column. Check out his entire stream of thought by following this link.

It’s encouraging that after years of living with the endless drumbeat from the fanboys and so-called “futurists” that we’re finally seeing the pragmatists and actual practitioners of this industry: Samir Husni, Mr. Tree and Bo, getting noticed for their push back against the conventional wisdom mongers. I for one, appreciate their ability to explain the life cycle of this industry.

Now if they could only solve the newsstand conundrum.