I’d declare a moratorium on it all, but at the end of the day, who’d pay any attention?
It’s as if the gods of buzzspeak had already won. Literally.
According to an article that appeared in Business Insider this week, print magazines are dying because people in check out lanes are spending all of their time looking at their smart phones and not looking at all of the magazines, iced tea, pop, candy, cookies and wiffle bats in the check out racks.
I don’t think that any reasonable person who spends time living in the 21st century would argue that many people spend much of their spare time checking things out on their smart phones. And anyone who spends time considering the impact of mobile technology on single copy sales is aware that people waiting in a checkout line may prefer to look at their smart phones rather than at the merchandise they could pick up.
But while it’s nice to speculate that smart phone technology is distracting people from spending money in the checkout, if you’re going to make a grand generalization like that, you may want to back that up with something that is generally called a “study.”
If I were the publisher of a major checkout publication and worried that people weren’t looking at my carefully posed models or beautifully laid out food designs, I’d consider trying out some of the new virtual reality designs on my cover. Entice people with attractive offers and QR codes.
Of course, we can generalize that there may be other reasons that single copy sales were down this year.
There’s bound to be a great backstory to this and as soon as I can get it, I will update here.
Note: Please keep sending your photos. It’s been enormous fun seeing views from other parts of the country. Of course, if you come across an interesting and creative display that works, I would be more than happy to post and celebrate that. Innovative titles and merchandising are the lifeblood of our business. Pending another round of interesting “Things Placed in Front Of” photos, next week we’ll return to some scheduled discussions of “Disruptive Technology” and editing (Yes, this blog in particular).
If you’ve been paying attention, the last few years were hard on magazine, book and newspaper publishers. Some of this had to do with the decline of the economy, the struggle of many over extended publishers to adapt to new technology (which is hard to do when you’re company is leveraged to the tune of a few hundred million dollars), the loss of circulation revenue as production and distribution costs crept up, and a sense that what you do is just not that interesting or important to your audience anymore.
In spite of it all, one of the surprises that I have experienced is how little the core work that I do has changed in the two years since I left the corporate world to go back out on my own. There’s a lot of new work to do, but the core remains constant. Many of my original clients are still working with me to one degree or another. Most of them are doing quite well in spite of everything our industry has thrown at them. Others are struggling and I appreciate the opportunity to help them sort out where they are going with their businesses.
Recently, a client asked me to justify the newsstand promotional expenditures that some of our retail trading partners now seem to “demand” we participate in. Below is a lightly edited version of how I explained it to them. What I had to say also fits in with where I think print, and contemporary retail, for that matter, may be going. Tell me what you think:
The commitment (of the retailers to the newsstand) shows up in several ways:
1) Neither chain has relegated the magazine section to the back of another section like we’ve seen in Wal-Mart and Target. Nor have they shunted the newsstand off to a dead aisle like you will sometimes see, for example in supermarkets or drugstores. In my last meeting with the buyer, (it was) pointed out that they’ve been able to hang onto their space in part because of the revenue that they gain from publishers continuing to promote. I know that … much of the profit they make in the newsstand department comes from promotions. ..
You see this scenario played out in many “hard goods” retailers and food retailers. Our situation is not that unique. Promotion is the profit for the retailers.
2) … chain has significantly cut the floor space that is available for the newsstand. While they’ve cut space elsewhere in what is their core business, magazine space, for the moment, remains constant. The goal of the buying dept. is to maintain their floor space presence…
…Will these (chains) stop selling print and shut down? Maybe. Maybe in two years, or five years or ten years. It’s hard to know exactly. That is why I read most of the articles that I see about this business with a … cynical eye. That isn’t healthy, but it’s one way I maintain my cool. Most of the people who write about magazine and book distribution – or even the publishing process for that matter, don’t seem know what they are writing about. They don’t know our business, our business model and, in many cases, they don’t know about the the new media that has them so excited. Their ideas for “fixing” us are interesting. But they’re ideas. If they were workable, wouldn’t we be putting them into action?
An excellent example is the offering this morning that BoSacks promoted. The first paragraph, about five sentences, contained enough misinformation to keep me busy debunking it for a week.
And I’ve already spent most of my day doing that for another client.
So what do you believe?
Sometime in the past month, I passed two years of posting thoughts, facts, and links to articles on Twitter. The experience has been revelatory in that I have learned much from the people I follow. Learning the discipline of posting to Twitter has helped me focus on the publishing business and stay on track with other tasks.
In a month or two, I will pass one year posting to this blog and two years since I left the corporate world to go and work for myself again.
This week, a new client asked me to introduce myself, via a presentation, to his senior management team. He asked me write up an introduction that would state who I was, what I believe about my end of the publishing industry, and where I think it’s all going.
In lieu of anything earth shattering report on, I thought I would share it with you:
Since 1988, I have provided single copy sales consulting services for a wide variety of magazine publishers. These companies have ranged in size from small regional sports publishers to Ziff-Davis Communications, Fox Sports and the former Emap-USA.
The one constant in this business, from the day I entered it as a newly minted professional to the moment that I put these words into an electronic file is: change. Throughout all of this time, people have wanted magazines. Publishers have strived to produce them for their readers, and retailers and distributors have tried (often successfully, sometimes in spite of themselves), to make them available to the public.
Will all of this business go up in a blaze of e-ink, Flipboard and Facebook? Maybe. But certainly not tomorrow. The beauty of a magazine is it’s durability, it’s ubiquity, and it’s simplicity. No owners manual is needed. No need to fear a power surge or a low battery alert. If you drop it in the pool or bathtub or it get’s stolen from the beach, your loss is a few dollars, not a few hundred dollars. If people didn’t want to be magazine publishers, then no one would call me saying they wanted to publish magazines. If publishers didn’t want to produce magazines then why would Samir Husni and MediaFinder vie to count the number of new title launches each quarter?
Where will this business be in two years? Five years? Ten years? I don’t entirely trust the prognostications of many of the consulting firms daily e-blasts that flood our in boxes every morning. They have services to sell and someone paid them for their research. We do know that people are snapping up e-books and digital readers and tablets. But people are also still buying print books. And the book market is very different from the magazine market.
I firmly believe that a savvy consumer magazine publisher working in today’s environment will offer the reader both a digital and print experience. I believe that in order to thrive in this market, you must have a promotional plan that complements both offerings and encourages the reader to participate in both experiences. Paper only will not work. Digital only leaves money on the table.
What do you believe?
News From The Future
by Felix Chartae
15 April 2029
The Economist reported today that Simon Freshette, a fellow at the London School of Economics believes he has located the sole cause of gigantic global economic meltdown that has plagued the planet for the past decade.
“It was Road Rider Magazine”, says Freshette. “They didn’t sell their last copy.”
Freshette, a dual PHD holder in Economics and Audience Development from MIT and Oxford explains: “On December 31, 2018 at 8:15 AM, a delivery truck from Millennial News pulled up to the loading dock of the local Walter’s Kroh Super Discount store in Tulsa, OK. Millennial News was the last distributor of print magazines in the US and Canada following the fourth consolidation of magazine distributors in North America in 2016.”
Video cameras at the back of the now abandoned strip mall show that at 8:20 AM the driver stepped out of the cab, went around the rear, and picked up the one tote for his delivery. Cameras inside the store picked him up checking into the storage room a few moments later and then moving towards the front of the store. At 8:25 AM the driver arrived at his destination. A checkout fixture located in Aisle 22t. A full view of the display rack was not possible from the camera feed, however. It was blocked by a large Valentine’s Day display in front of the rack.
Professor Freshette has pieced together what happened next.
“You have to remember that by this time, there was really only one magazine publisher left in North America with print magazines available for single copy sales. It was as if everyone had forgotten how the publishing business worked.”
That publisher was the company formerly known as AccentA (tm: An LLC for the 21st Century Reader!). AccentA was created out of the mergers and multiple bankruptcies of Time/Warner, Conde Nast, Hearst, Wenner Media, Bonnier and MidWest Bowhunting Media. In 2014, AccentA purchased Road Rider Magazine, a 30,000 circulation print publication dedicated to fat tire trail riding on the West Coast. AccentA paid the publisher, Toby Wellenstien $124 million in today’s deflation adjusted New Taiwanese Euros for the publication and it’s related digital content.
Reached via Skype Classic, Mr. Wellenstien reported that he was happy with the deal. “They had the money, I had the magazine,” he says.
Professor Freshette continued the narrative: “You must also remember that publishing industry consultants had produced studies that said that 87.65% of all single copy sales occurred within the first 18 minutes and 27 seconds of display. So by that time, retailers placed a premium on displays that lasted longer than 19 minutes. Publishers adopted these reports and were all too happy to pay the money. At the same time, magazine wholesalers were placing a high value on sales efficiency and were charging publishers a premium if the magazine did not achieve certain efficiency targets. By this point in 2018, Road Rider was all that was left.”
Cameras show the driver standing next to the closed checkout lane with a digital stop watch, his tablet and portable shredder. For the next twenty minutes, several shoppers walked past the checkout lane, but none peered around the Valentine’s Day display at the magazine rack.
“I remember really liking those chocolate bears when I was a kid,” says Professor Freshette. “We got them here in London too at our local Walter’s Kroh store but they were polybagged inside ‘Today’s Doggie’ Magazine.”
From 2016 to 2019, ‘Today’s Doggie’ Magazine was one of the last five publications available at newsagents throughout the United Kingdom.
At 9:15 AM Tulsa, OK time, the driver (who has since been identified as James Simpson III), put away his stop watch, removed the copy of Road Rider from the rack, scanned the UPC code into his portable hand held scanner, then powered up his portable magazine shredder and shredded the copy.
This simple act created a tsunami of economic events that took Professor Freshette two years of digging to sort out. We got the Professor to explain the chain to us in simpler layman’s terms.
“Fees,” said the Professor. “Everyone piled on. Walter’s Kroh, you remember, charged the wholesaler an efficiency fee and the publisher a display fee. The wholesaler turned around and charged the national distributor an efficiency fee which the publisher had already authorized the national distributor to accept. This ate into the publisher’s advance from the national distributor, which essentially meant that the publisher owed the national distributor and the retailer a lot of money.
And don’t forget,” emphasizes Professor Freshette, “ The publisher, the national distributor, the retailer and the wholesaler were all highly leveraged. None of the them really had any cash. And the publisher actually owned the national distributor through a Polish subsidiary and was an investor in the wholesaler and was a major stock holeder in the retailer. It was like they were all incestuous cousins.”
We pick up the story at 9:30 AM when the retailer received the automatic credit to their account from Millennial News informing them that the copy they had been invoiced for twenty minutes earlier was unsold and returned for full credit. Walter’s Kroh then invoiced the publisher for the display and the wholesaler for the efficiency fee. The wholesaler passed the efficiency fee onto the national distributor who automatically charged it back to the publisher.
“The final two straws that broke the camel’s back,” said Freshette ,”Was the prepaid retail display allowance and the Scan Based Trading fees. AccentA didn’t have the cash to reimburse the national distributor. The national distributor hadn’t been paid by the wholesaler because he was so leveraged from purchasing him competitors in the last consolidation. Walter’s Kroh was also heavily leveraged, why else were they charging all those fees for racks that didn’t have product on them? Once they fell, well,” shrugs Professor Freshette, “They took down the whole economy.”
We reached James Simpson III, now retired and living in an assisted living facility in Boca Raton, FL to get his views on his last days as a route driver for a magazine wholesaler and how he felt to be the person who helped facilitate the Great Global Depression which is now in it’s tenth year.
“Holy Smokes!” declared Simpson, “That was me? No way!”
“Well,” he said, after this reported pointed out to him that he didn’t really cause the Depression, he just delivered the product that caused the Depression, “I coulda got lost on the way and never made the delivery.”
“Hmmm, ” mused Professor Freshette, “The ‘No Delivery Fee’ would have done it too.”
Let’s get a few things straight, here. This is not some rant against the digital future. Or print vs. ink. This is simply a reflection on what we lose when a place for people to congregate, engage in commerce, participate in society disappears. Especially when it didn’t have to.
I’ve been to the Mishawaka store. It was like a lot of Borders stores I visited over the years and I thought it was a nice place. But clearly, these employees felt some connection. You often see that in retail and I’ve experienced it. It’s quite a rush to think that what you do matters. You can see these sorts of connections in offices and warehouses and building sites.
I’ve seen it in many of the magazine wholesalers I’ve worked with over the years. The drivers and employees on the shop floor and the managers really felt they were doing something worthwhile. For the employees of Borders#195, that’s all gone now. Some of them will find new work. Some of that work will be in better places with even more camaraderie. Some won’t. That’s the way it goes.
If you are the boss in your operation, the CEO, Director, Senior VP, Manager, whatever, do yourself and the people who work for you a favor. Be responsible with the people who work for you. Treat them well. Be kind. Be considerate. Be fair. Practice polite manners. Be firm. Be honest. Don’t be greedy. Be clear in what you ask for. Reward success. Be honest. Treat failure as an opportunity to learn. Teach. Punish the bullies and let them know they are not welcome. If you loose money, cut your salary first.
Because, when it’s all over, and in every business cycle, it always comes to an end, you won’t get this from your former employee:
I’m sure your first reaction to this title was either “Huh, what’s he talking about now?” Or perhaps, “Yeah, like I didn’t already know that, Sherlock!”
It all depends on how close you are to the single copy sales business.
I first ran into a Plan-O-Gram back in the late 1980’s. A major national chain that was most likely frustrated with dealing with 250 different levels of service from their 250 different magazine wholesalers, decided to once and for all, solve the problem of the “messy mainline magazine rack” and their 250 magazine wholesalers who were ignoring their authorized title list.
My reaction was, “Oh, this will be very interesting.”
And it was.
Back then, my work was more regional than national and wholesaler consolidation had not set in. The area I traveled amongst tended to be Midwestern and Upper Midwestern states. My “Bunny Book” (A listing of all wholesalers in the USA and Canada that was published by Playboy Enterprises) from 1990 tells me that there were 69 wholesalers in that area back then.*
The retailer created a pretty intricate set of Plan-O-Grams that clearly reflected their desire to have clean mainlines and check out racks. They were determined to have racks that “reflected” their community. There were Plan-O-Grams for all the different sized racks in their stores as well as racks for different ethnic and income levels their stores services.
But as I traveled around to my different wholesalers, it became clear that this was not going to work the way the retailer intended. While all of the wholesalers made an attempt to comply with the lists, store level service is, well, dependent on who is servicing the stores. And what goes into the stores depends on who the distribution manager is.
Please note: The pictures you will see below were taken in the last six months and reflect how Plan-O-Grams are working in today’s environment.
No matter where I traveled to, what I saw in store after store was the same thing. A leaner rack with fewer choices of titles – which is not necessarily a bad thing depending on the store. But the real display crime were the empty pockets on the mainline.
If you logo pockets on the mainline, you damn well better make sure that none of those titles are going to go out of business. Or you’ll have an empty rack. You damn well better make sure that your warehouse is capable of providing reorders if you sell down on that title. Do you really want an empty pocket on the front row? Do you really want just one copy sitting there at the end of week one on sale?
You damn well better make sure that your in store merchandisers have the flexibility and the knowledge that if they don’t have the magazine that’s supposed to go in that pocket, that they don’t leave it empty. What’s that you say? Why are you on the floor laughing? Is there a problem with in-store merchandisers? What’s that you’re asking? Your merchandisers don’t realize that an empty pocket is a dead zone? They aren’t trained to take initiative like that? They don’t realize that you’re not going to get any sales from an empty pocket?
If you don’t generate sales, you’re going to lose space.
In the late 1980’s Plan-O-Grams for this retailer didn’t work. Even the smaller wholesalers who only served a handful of stores had problems providing the required level of service to their stores.
Fast forward to the summer of 2010. Do I need to say anything else?
Plan-O-Grams are a response by the retailer to what they perceive to be a problem with their category. That perception may or may not be accurate, but it’s not the reaction that we in the publishing industry, especially we publishers who are supposed to be selling our category want to support or encourage. For far too many years, I’ve been hearing the excuse that we don’t do a good job explaining our line of product to the retailers. You’d think we would have learned how to do this by now.
(* By comparison, today, there are two major “national wholesalers covering about 90% of the business in these states, and 10 smaller wholesalers and a bookstore based wholesaler covering the rest).