Pandemic Publishing Roundtable: Jim Bilton, Media Futures and The Wessenden Briefing

By, Linda Ruth

On Wednesday, almost a full year after the onset of our pandemic, nine months from the first Pandemic Roundtable, hosted by Joe Berger and attended by Bo Sacks, Samir Husni, Sherin Pierce, Gemma Peckham, and me, we met again to review the state of our industry. Our special guest was Jim Bilton, the publisher of the annual mediafutures market analysis and the wessendenbriefing, the 7x newsletter covering print and digital trends and analysis.

While the scope of his business is international, we were particularly interested in hearing about trends in the UK, where his business is based, and how they relate to trends in the US and the rest of the world. Our conversation took us to the continuing strength of print, the re-dedication to print on the part of key retailers, and the excitement that our audience still finds in the world of print.

Jim: I was interested in reading in a past Roundtable about the direction Barnes and Noble is taking. That is such a huge part of your market; we have nothing like that in the UK. WH Smith was formerly number one in the UK, but they expanded into travel, which seemed a good move at the time, that has backfired; now magazines aren’t their main thing, stationery is. Tesco, a supermarket chain, leapfrogged over WH Smith.  Barnes and Noble is interesting because of its connection, through James Daunt, to Waterstones. But the size of the store format couldn’t work in the UK, where the rents are so high; we don’t have the big out of town malls to the same extent as in the USA. The interesting aspect, to me, is what Krifka said about focusing back on bricks and mortar, on print, and moving away from a strong digital focus.


Jim Bilton of Media Futures

Joe: We’re interested in getting your perspective on the effects of the pandemic on UK publishing, and where you expect it to take us from here.

Jim: During lockdown magazines did worse than newspapers. Sales dropped by 30% YoY, although they came back, and overall are now down about 17%. The travel sector fared much worse, of course, going into virtual hibernation initially and are still now about 80% down.  Here many UK publishers overreacted and slashed draws more than they needed to. Supermarkets held up; and independents have a bigger share than ever before. And there’s a background issue about the health of print—in terms of physical health; copies have been taken out of waiting rooms and shops because of health concerns and people have been made to feel uncomfortable about browsing at the magazine racks. This obviously hits impulse sales and discovery at retail.


Samir
: In the US, we’ve seen a big increase in people of color on magazines; are you seeing the same trend in the UK, and is it helping or hurting sales?

Jim: Yes, we are seeing the same trend, but the impact on sales is difficult to size given everything else going on in the marketplace. One launch I can point to is Cocoa Girl magazine, celebrating Black girls. We’re generally seeing lots of small launches, specialty launches, and a bit of a trend from digital to print.

Bo: Last time I was in the UK most publications had cover mounts(Polybagged magazines with attached products of one sort or anohter) ; is that still a trend?

Jim: Yes, though not quite as much as before. There’s a big sustainability issue, and issues having to do with returns. Publishers are learning to move premiums closer to content, so they relate more directly to the content of the magazine. The same has been true of events—although of course that’s less of an issue now. But we haven’t realized how exciting our world is to our readers. Everyone’s got a wine club; but audiences want the unique content a publisher has to offer. Another trend we’re seeing is publishers varying cover price depending on content and pagination.

Sherin: Varying price issue to issue is something you really couldn’t do here.

Sherin Piece, Publisher Old Farmer’s Almanac

Jim: Yes, retail hates it, it causes problems.

Joe: Have your retailers adopted Scan Based Trading?

Jim: We’re getting it in progressively through the back door—WHS and Sainsbury have a soft version, supermarkets are getting ready for it, although each has a slightly different version. The pandemic has had the effect of creating more demand for it from retailers, who are asking for it to mitigate the demands made on their in-store personnel.  

There has always been resistance from publishers, who demanded much lower shrink levels before it would be considered. Yet the industry, led by Future Publishing, has decided to take the lead – they see it as inevitable and choose to manage it up front, to take the initiative rather than being forced to do it. Now other publishers are coming along. Wholesalers say this will be margin neutral—that retailers will concede margin but make cost-saving gains. In the US the situation got out of control, everything went the wrong way all at once. By contrast, in the UK the negotiations are tough, if the retailer wants SBT they have to give something.

Joe: In the US some publishers have seen an uptick in subscriptions with the pandemic. Have you seen that in the UK?

Jim: Subs are booming—mostly print subs. With publishers worried about their future at retail, many made the mistake of going crazy with front end acquisition. Now Hearst UK, for example, has been firming up sub prices. They, like lots of publishers, were doing short-term low-margin offers to build their files. They were overwhelmed by the response and are trying to back off on that. There were a lot of people in the funnel already, and all the cut-priced subs have done has been to shovel them in more quickly, and less profitably.

Joe: What percentage would you say subscriptions have increased?

Jim: Acquisition activity increased massively, but much of this was based on short-term, big-discount offers, which are now converting at quite low rates. When all this churn is taken into account, my sense is that total subs file sizes will end up being flat year-on-year in 2020. But that’s a big improvement on the 8% year-on-year drop seen in 2019.

Bo: What trends are you seeing digitally?

Jim: Financial people like digital editions; readers don’t so much. Newspapers are going into a digital black hole in terms of revenues apart from a handful of high profile brands like the New York Times or the UK Times and Telegraph. But what digital means to magazine publishers is very different from what it means to newspapers. Magazine publishers are still wedded to the issue rather than website accessed article level streams, which is the core of the newspaper digital offer.

Samir: It requires constant upkeep to maintain a digital file, a digital list. Publishers constantly collect and re-collect names, contact information. Has anyone found a way of making money?

Joe: For example, one of my publishers had 20,000 subscribers spread across the platforms; without constant upkeep, attrition can be rapid, and they’re down to a fraction of that now.

Sherin: Our only monthly publications, the OFA Extra, is digital. We send them a notice when an issue drops, and only revisit them for renewal annually. We keep it as simple as possible. People start with so many barriers, but you have to simplify that.

Gemma: We make our digital version free to print subscribers.

Gemma Peckham, Editor Rova Magazine & Oh, Reader Magazine

Jim: That’s why most legacy publishers are holding on to print. Hearst Premium—making best out a bad situation—has lower frequency, higher pagination, and a higher cover price at its core. Digital is still a thin medium that consumers aren’t prepared to pay a full amount for. To make this difficult field profitable, we might look to e-commerce. How high can print cover prices go?

Bo: Much higher than you might think.

Gemma: Magazines are still really underpriced.

Bo: We have to continually make the transformation from a perceived commodity product to a necessary luxury product worth paying for.

Jim: In the UK, everybody is putting their prices up.

Linda: What do you see as the effect of Brexit on exports.

Jim: A lot of UK publishers are going digital-only for export sales rather than shipping print across borders. And anyway, our really big export markets are the USA and Australia, not so much Europe. The Brexit issue more has to do with cover mounts and where your paper comes from, where you’re printed, what borders are crossed on the way to creating the final finished product. For example, a garden title with cover-mounted seeds had problems getting across borders. And it varies from country to country. In France and Germany, the supply chain is tightly regulated. But as we go into Brexit, everyone has their Plan B and Plan C. 

In the UK, every link in the chain is under pressure. Publishers are feeding less product into the market. Retailers are cutting ranges and the space allocated to newspapers and magazines. Yet the recent focus has been more on wholesale. We only have two mainstream wholesalers now – Smiths and Menzies – with Smiths recovering from a disastrous diversification programme which caused them some serious financial issues. In response, some of the newspaper publishers had been looking at a newspaper-only distribution network – although this has gone quiet now. If we ever went down that route, then magazines would lose many of their current advantages – five- or six-day a week magazine deliveries, sales-based replenishment and national on-sale dates.

Samir: Vogue sold out its Harry Stiles issue in Barnes and Noble. They had to replenish.

Jim: Print still has immense power in the magazine business. Look at Amazon. Around their major markets, they offer print and digital, single copy and subscription. They understand that magazine consumers want print as well as digital. Print is still the “gold standard” and is still part of the “magazine experience”. At least for the foreseeable future. Yet there is no single, simple business model that works across every market. It’s all about understanding your own audience and delivering what they want. Not what you think they want.

A Fellow ‘Rep’ Chimes In…

A buddy and I were marveling at the changes here in the Chicago marketplace over the past year or two. Like me, my friend spent many years working in the Midwest and recalls calling on many of the former wholesalers discussed in a post last month.

The changes out here in the central Midwest are significant. Source and News Group had reached what felt like holding pattern in the last decade. The acquisition of all Kroger banners by News Group last year did not significantly impact this market. TheNews Group already serviced the Michigan, Cincinnati and Columbus banners. When Source took over CVS and Rite Aid Drugs last fall, that too was not a big change. These had been Source accounts since the fall of UniMag in the late 1990’s. The only big changes we had seen in metro Chicago was the transition of the airports and Meijer’s Discount to News Group. But in 2014, this is old news.

But now in the first and second quarter of this year we will really see the impact of the closing of the Dominick’s Supermarket chain on newsstand sales. The venerable Jewel/Osco supermarket chain has moved suppliers from the Source McCook, IL facility to the Jackson, MI News Group DC. In late Spring, the Roundy’s chain of supermarkets, which  includes the fast growing upscale upscale Mariano’s  stores in Chicago, will move to News Group service. The rest of the Roundy’s banners in Wisconsin and Minnesota also move to News Group.

Let’s be clear: No one can fault either of these wholesale distributors for trying to make a profit, expand their business horizons, or increase their market share by taking on national or regional chains. The issue, as some magazine publishers have expressed to me is that no matter how hard they work (and they do work hard), how hard they try (and they do try hard), there no longer appears to be any marginal benefit for a publisher when a retailer shifts from one wholesale supplier to another. In fact, the disruption to the distribution can significantly hurt sales.

With a promise to remain anonymous and only a little light editing, I wanted to share with you what my friend had to say. I could feel the frustration coming from the monitor in waves:

            “I have a client who has lost significant sales in CVS and Rite Aid out on the east coast due to the CVS and Rite Aid transitions. This benefited the publisher how? They get to explain this to their advertisers (especially the ones  based in Manhattan) how? Will TNG tie product in Central Michigan for delivery to the Chicago and Wisconsin market. I have a local publisher in Chicago. How does this improve things for them?

You know who newsstand consolidation really benefited? Right from start of this big mess right up until the beginning of 2008? It’s got to be the accountants and the Wall Street guys. All of this must have made their books look better. Maybe it added some cash to their bottom line. SBT has to make the bottom line look real pretty too. The inventory gets stuck with the wholesaler.

So we “modernize” and “fix an ancient and creaky distribution system” (Remember those awful UniMag Power Points?) we’ve blown up something that worked kind of OK and replaced it with something that does not work all that well for any of the suppliers in the chain, the wholesalers and national distributors, or the producers – the publishers. But it has to have worked out OK for the retailers.

That buyer from Wal-Mart Canada who was in Harrington’s a few months ago that BoSacks blasted all over the place? She is right to want to see publishers step up. She is right to want to see publishers take some ownership for the newsstand and the sub offers and the high newsstand prices.

But I want to see these retailers take some ownership for the changes and challenges they put on us. I hear a lot of complaints but we didn’t make the system this way. They did. (Emphasis mine)”

It went on this vein for some more but you get the gist. And it’s an interesting point. In all the writing you see about the “broken” newsstand system, you see call out after call out after call out for the publishers, the national distributor, the wholesalers, someone, anyone, to do something. But this started with something the retailers wanted.

Personally, I wonder if the supply side of the distribution chain has the will or ability to “fix” what is broken. There are too many disparate needs and viewpoints. The true leaders of the industry, the larger publishers, are focusing their talents, money and attention elsewhere. The small and medium sized publishers don’t have the cash, the experience or the clout to make changes.

The real advances that we will see in marketing, display and call outs to readers to come into bricks and mortar stores to buy magazines will take place on an ad hoc, piece by piece basis. We’ve seen much of this in the past few years from advances in electronic covers to social media campaigns like the Miley Cyrus cover from last year. The question is: Will we reach a critical mass in time to save the system?

In light of all these things, I still find it endlessly fascinating that once again, in the dawn of what looks to be another down year, I am working with publishers who are willing to launch new product into this “ancient and creaky” system. Heck, beyond my personal experience in the launch venue, in the past two months, Mr. Magazine ™  has ID’d another 32 regular frequency launches and 103 specials. Does that mean the world is crazy? Or hopeful?

I’m always “cautiously hopeful.” After all, I’m on the Titanic. But I’m also on the foredeck. If you recall, it’s easier to get off the ship from here.

Further Evidence: “Why Esquire Magazine Gets It”

The February Brooklyn Decker issue of Esquire Magazine that hit the newsstands this past year was not the smashing success that many, myself included,  thought it would be.  Still  the publisher rightly deserved props and kudos for being brave enough to test interactive features on the iPhone, in Barnes and Noble, and for the “Find the Esquire logo” feature throughout several US cities. In fact, Esquire gets kudos (at least from me) for continually trying stretch the limits of what they can do with their print edition. Beyond that, I give them props for their digital edition on the iPad.

February's Cover Featured Brooklyn Decker in an interactive app for iPhones that was directed at their displays in Barnes and Noble.

This week, while searching the racks for my clients latest releases, Esquire’s “Big Black Book” special caught my eye.

The current issue on display.

‘Cause it’s a “man” thing, it can’t be a “little black book”. But judging by the size of the, ‘um, “package”, this $9.95 SIP (Special Interest Publication, in case you ever wondered what SIP stood for) is a brand extension that is definitely worth the price.

Behind the cover wrap of this edition...

While there’s really nothing all that new about what Esquire is doing, and their “Big Black Book” is five years old, what really captured my interest here was their continued commitment to the production quality of the magazine, the continued desire to experiment with interesting and different covers, and the simple fact that never, ever, do they do the same thing twice.

Esquire “gets” it. That’s why they are still around. That’s why they are successful.

How are you trying to get “it”?

And, did you go to Mr. Magazine’s ACT 2: Restart Your Engines conference this week?

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