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.

Five Simple Steps To Fix The Newsstand Industry

Nope. This post won’t address the Pay on Scan issue. Nor does it contain specific financial or production advice to the remaining three biggest wholesalers. There is no “10 Point Plan!” demonstrating how our four largest national distributors can remain relevant.

Are these the right steps to fix the business? My nose has been on the grindstone for much of the past four months and these thoughts are what smacked me upside the head yesterday afernoon after reflecting on what passed for a heavily revised and reviewed print order landed in my in-box.

So…

Five Simple Steps To fix the Newsstand Industry:

1. All sales are local.

2. Sell local. Can you learn what sells in that store? If you can’t, why are you messing with that make order? If you don’t know, why are you servicing that store?

3. Promote the category. If publishers, national distributors and wholesalers can’t get together to promote our product, then who will? What reason are we giving readers to go out and “discover” our product?

4. Stop undercutting our own category with cheap subscriptions.

5. Stop whinging about digital. It’s here. Deal with it. Work with it. Learn it.

Any questions?

Upon further review, I’d add the following:

2a. Make the tools to discover what sells in that store readily available and CHEAP to acquire. Most publishers, mainline publishers at least, already give up 60% or more of their cover price to get to that store (Not including promotional dollars). They should be encouraged to understand their distribution and have input into how it is developed. After all, they know their readers. Their customers are the retailers customers.

2b. Make the tools that drive distribution more universal in nature and marketing driven. Everyone involved in distribution should be able, at a quick glance, to know rack size, number of checkouts, store demographics and store volume when they make a distribution decision.

Where’ve I been? Very busy. And there are about 12  transcripts sitting in the edit que waiting to be edited. But for a solo practioner who’s also trying to learn a new facet of the business one can either work or write blog postings. Blogging is important. But I have to admit that paying work and reasonably satisfied customers takes precedent. I hope to be back up to speed with more topics as we move towards the end of the year.

On a related front: I am intrigued with the hints we’ve received from media guru Bob Sacks and fellow consultant Luke Magerko. So far, they’ve revealed some pretty straightforward suggestions that daily practitioners like this writer and many of my colleagues attempt to practice. Hopefully there are more reveals that will hape this industry rethink, in a positive, sales growth oriented manner how we work.

Because who in their right mind wants to work in and manage a declining industry?

Why Does What Works, Work?

While the phrase “Disruptive Technology” has been with us since the late 1990’s, I didn’t seriously think about it until I began my adventure with Twitter several years ago. All of a sudden, my morning “In the office not traveling” routine was tossed out of whack. How do I fit the now necessary “Advancing my Brand” on social media into the more mundane “Stuff that pays the bills”?

To be fair, being on Twitter and here in Word Press has brought in a few paying jobs, but still.

I got to thinking about “Disruptive Technology” today when a recent post from fellow Word Press blogger Laura of “The Well Prepared Mind” showed up in my in box. Laura writes about the digital book industry and in the post, she quotes Harvard Business Review writer Grant McCracken. In “Will Netflix Flourish Where Hollywood Failed” McCracken cites the amount of data Netflix now generates about their viewers and how the use of that data could lead them down some significantly wrong paths.

netflix-logo-slice-01

Laura compared his warning to what could happen in the digital book business if data on when, how and what people were reading was suddenly used to try to tailor what kinds of books to produce.

McCracken’s point was this:

“Knowing that something works leaves us a long way from knowing why something works.”

Read McCraken’s full post here for some insight into the entertainment industry and how that world is also being turned on it’s ear by new technologies. It’s nice to know we magazine folks are not going this alone.

In considering the impact of data collection on the reader of digital books, Laura applies his thesis to digital reading:

“Readers can stop, start, reread or skip and it doesn’t really tell you anything unless you know what is happening in their heads.”

As she points out, you may have stopped reading a book because you were on the bus and needed to get off. That doesn’t mean you weren’t still thinking about the book.

Now, let’s move over to the magazine business for a moment. First, though, let’s stop at the top of the dune, look towards the bay to the east, the one that leads out to the shallow little sea that is called “Newsstand”. That’s the sea where everyone is an expert and all attention is focused because…

There’s a ton of data in our industry. And inexplicably to me, we give a lot of it away for free and without explanation or exposition. At one time, collecting it was a huge chore. As I pointed out in a previous post and more personally back in April of last year, our industry used to maintain large field forces dedicated to what was often the simple act of copying a wholesaler’s store level sales records.

That is now so 1982.

There are a lot of rules in our industry and many variations of those rules. Think about both the generic and sometimes data driven advice we give on cover treatment. It’s entirely possible to follow all of that advice right down to the letter and still…

Flop.

Consider great editing. Do you remember the wonderful literary magazines from the 1980’s like Wig Wag and my personal favorite Spy Magazine? Only The Donald seemed to dislike the latter. But where are they now? They followed all the rules about great content.

Spy's demise made Donald Trump a happy man.
Spy’s demise made Donald Trump a happy man.

You can carefully tailor your editorial and design for the target audience. Spend weeks researching the appropriate retailers and regional locations to focus the newsstand distribution. Your new magazine can reach the stands at exactly the right peak sales moment with not a copy withheld, not a truck lost or detoured, not a shipment accidentally shredded or lost in transition over the Canadian border. The weather across North America can be perfect and the economy humming and…

Flop

Maybe the weather was too perfect. No one was shopping.

For more than 10 years we have had access to both demographic data and store level sales data. We can sort it by zip code, chain, state, wholesaler, distribution center, depot, POS and almost anything else you can desire. We can compare to prior year, prior quarter, prior issue or multiple years. We can compare to red covers, blue covers, covers where the model is facing right.

Yet single copy sales have declined during this period. Efficiencies have not improved.

Has access to all of this data helped us? Or hindered us? Where we better off when we operated on “hunches”? Were we more efficient when Harry the Distribution Manager took a look at the sample, clacked through a few screens on his IBM 5151 and said, “Yeah, I like this. OK, give me 500 copies”?

Personally, I think the data has helped. At least it’s helped me. But I also know that the data only tells me what happened, not why. And when I put a few hundred thousand copies of a periodical out onto the newsstand racks, I have no real way of knowing what caused each copy to sell and the rest to be recycled. This is a sales business, not an accounting business.  I am neither an accountant nor a psychologist.

I am not sure where all of this goes, but in this post audit period, Grant and Laura have given me something to consider.

Many years ago, a client asked me to give a presentation on newsstand covers to his college level journalism class. For their final, they were divided into teams and had to create magazines. I was invited to talk about the world of circulation in general and the newsstand world in particular. I went through a pretty straightforward discussion of  how product moves from printer to wholesaler to retailer, how the financing works and how cover images can impact sales. Lastly, I discussed my role in all of this and what national distributors were.

A student raised his hand during the question and answer period.

“Why do you go through all of that?” he asked. “I just want to sell my magazine.”

Score one for the kids.

The Long Tail of Borders Books

The past two months have been a long hard slog of budgeting, reporting, meeting, writing, re-writing, making calls, taking calls and yes, believe it or not, here we are well into the 21st century, making copies.

What’s it all been about? Publishers still want to be on the newsstand. I’ve been working with several publishers who want expand their physical visibility and they want it to happen in the coming new year.

Publishers continue to participate in check out pockets. They will pay for retail and wholesale based promotions. Magazine publishers will participate in airport programs. It’s important to be “out there.”

But that doesn’t mean that we don’t have problems above and beyond the competition for people’s time and “eyeballs”. Within our own industry we need to address and solve the question of Scan Based Trading. Who owns this product? How do we square the circle when we try to market an impulse item, but manage it within the store the same way as peach rings, troll dolls or note pads because, “That’s the way the retailer wants it!”

We still have difficulty managing our distributions. Our remote, centralized way of managing order regulation takes a lot of local knowledge and instinct out of the equation. No matter how savvy the data is, now matter how good you are, no matter how well meaning, if you’ve never been to Cuyahoga Falls, Ohio and all you know about the stores there are the demographic keys and the rack size, well, you don’t know anything about Cuyahoga Falls, Ohio or the people who may buy magazines there.

So who buys magazines in this town?

But one interesting item made itself very apparent while working through all of the data I’ve been snowed under for the past sixty some odd days: The loss of Borders was not only very big, it is still being felt. Even now, as we compare issues where there was no Borders distribution in the prior year, and in some cases, where we tried to find alternative sources of distribution to replace that lost retailer, you can see and “feel” where the volume is not the same. Where the presence of the other bookstore chains and related retail expansion simply did not pick up the slack.

On a related front, I am still surprised that our industry never made an overture to the independent bookstore market and tried to expand our presence there. While it’s a small market, would it hurt to try and pick up a few points of unit sales?

There’s been a long and worthwhile discussion about finding alternate retail markets for magazines: Beauty supply stores, craft stores, auto parts stores, dollar stores, outdoor gear and office supply stores. All of our major wholesalers have divisions dedicated to these markets and they all do a good job of locating, pitching and servicing these accounts.

But from what I can see in the numbers, for many magazines, five copies in a beauty supply store simply does not take the place of more than 50 running feet of mainline space in a large format bookstore.

There’s just no way around that. And it’s just one more thing on the long list of things our industry needs to address.