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.

Things Placed In Front of The Magazine Rack Part 7 0f…The Fully Charged Edition

This just in from our US News and World Report correspondent, Mark White, V.P. of Specialty Marketing. I’ll let his words describe what he found:

The good news is that our new Secrets of the Civil War got placement by checkout that we didn’t pay for. The bad news, of course, is that the retailer committed such assault and battery against its highly profitable magazine business that no shoppers will actually see our bookazine. More bad news: The title is not displayed on the store’s mainline.

Lasts just as long, costs less, and delivers even fewer profits…

Encroachment at the front end has long been an issue for the publications that participate in check outs, with the encroachers enjoying the benefits and the “encroachees” left scrambling to defend their turf. “Things Placed In Front of The Magazine Rack” is part of an informal calculation I now consider when budgeting for check out programs.

Although in this particular case, we’d have to argue that Mark’s “encroachee” title didn’t get much benefit because of the dump display of batteries.

I wonder if there is an algorithm that would define this? Could it be turned into a charge back “Marketing Fee”? Who would have to pay the carrying and inventory costs? I’ll have to get the accounting department on that right away.

In the meantime, Mark should know that I found Secrets of the Civil War on the mainline of my neighborhood supermarket and I thought it was a really good read (I bought a copy).

If you have a good example of “Things Placed in front of the Magazine Rack”, please forward them. Checkout, mainline, specialty rack, all are accepted and appreciated.

Is our DNA Keeping the Newsstand Industry From Making a Sale?

A longtime friend and colleague has often said that “ Single copy sales is a very simple, practical, complicated, business.”

He’s right. The goal is simple. Sell stuff.

No sale here

It’s the selling of the stuff (magazines), however, that is often complicated. Product has to be shipped at just the right time. The content has to look appealing. It has to be displayed just so. It has to get to just the right mix of stores in just the right quantities so that all the links in the chain can make some money from the sale (A lot of people dip into that $4.99 cover price before the publisher takes the final cut).

All along the way, one simple blooper, one simple slip up can mean the difference between front shelf displays or a missed on-sale date. Between a small profit, break even, or a loss.

Some things are unavoidable. Adults who conduct business prepare for mishaps and deal with them. You know what you have to do when the printer mis-ships sub copies to a wholesaler. You’re going to have to sticker new UPC codes onto the cover and it will cost you. If the road to the break up agent gets washed out in a tornado, you’re going to have a delayed shipment. If the union at the grocery chain goes on strike, you may have trouble getting your product in the door. If your editorial and art team once again decided not to include you in the cover reviews and produced a stinker for what is supposed to be the biggest issue of the year…Well, that happens.

We handle that all the time.

What’s strange is the strange, the absurb, the unusal roadblocks that we now place in front of ourselves on a daily basis. How did this come about?

Here’s some examples from my daily notes. All every day occurrences that make this publisher’s representative and his colleagues (many of these were shared with me by my colleagues) wonder if we really, truly, honestly want to sell stuff anymore.

  • Require new retail authorizations to buy a “Promotion” or pay extra RDA (Retail Display Allowance) in order to gain authorization to the chain.
  • Have wholesalers deny access to any more than 10% of the newly authorized chain account (even though the market is much bigger) because….well, “because”.
  • Lose a chain authorization that you paid up front promotional monies for after one year because you were denied access to the proposed distribution by your servicing wholesalers issue after issue after issue because your sales did not meet the threshold….well, “because.”
  • Have your national distributor send out “distribution assignments” without your pre-approval or knowledge.
  • Have the national distribution assignment that did not meet your approval include competitive titles and/or goals that do not meet your publishers goals, objectives or competitive titles.
  • Have a cover review meeting with your publisher, editor and art team. At the close of the meeting have the art director note that “This was a waste a time.” and “In a year we’re going to be all digital anyway so who cares what the newsstand cover looks like.”
  • Have your circulation department spend hours re-keying sales data from industry information suppliers, wholesalers and national distributors because each link in the chain provides data in a different format and none of them match how you review and interpret the data.
  • Sit in a meeting and listen to an editor berate the “middle men” who suck all the profit from magazines. “We’d be better off dealing with Amazon and Apple,” he proclaims, “That’s where all the kids go anyway.” He neglects to connect the dots. Apple and Amazon are “middle men.” They sell other people’s stuff for a cut.
  • Pay tens of thousands of dollars in promotional monies in order to achieve circulation targets and have those targets washed away almost immediately in “scale back” allotments that do not take into account actual sales in promoted accounts.
  • Have your distribution managed by individuals who are not familiar with your title, it’s regional strengths, it’s seasonality, or the editorial content of your magazine.

IPDA released an encouraging report this week from Kable Media’s Jim Roberts detailing the interesting and innovative things some of their clients are doing in order to maintain and grow their single copy sales.

Right now, I am in the middle of a pretty extensive relaunch effort with a multi decades old publisher. The publisher has partnered up with some web based entrepreneurs who like the melding of print and digital and they are excited about their prospects on the newsstand. People still want to do this. This is good.

Doug Stephans, the president of consulting firm Retail Prophet, asked in his blog post last week, “Is the companys DNA killing your brand?” In his post, Stephans examines the numerous missteps that Avon cosmetics has made since the later part of the 20th century and their inability to adapt to new retail challenges and the 21st century’s trends in social media and retail marketing.

This is a piece of our DNA

Is our own industry’s DNA is hurting our ability to sell our product? Have we mutated into something that hurts our ability to grow? Four links in a distribution chain with differing methods of measuring sales and financial success. Perhaps our industry DNA is so mutated after all the changes in the past two decades that we’ve lost sight of our one simple goal:

Sell magazines.

Editor’s Note: This post sat in my edit que for about six days. Since it’s first draft, others in our industry have also written about our struggles to get out of our own way. 

I’d encourage you to read John Harrington’s  excellent history of how the newsstand business consolidated in the 1990’s via BoSacks.com.

For additional perspective from another industry consultant, check out Linda Ruth’s additional thoughts on magazine display by clicking on the link above.

As always, I’d love to hear your thoughts on how we can improve our industry.

Things Placed in Front of The Magazine Rack: Part 6 of…

No, I haven’t run out of things to write about. There is so much to discuss about the single copy business. Over the past few weeks I’ve received some some remarkably good material from correspondents around the country. It is nice to get these pictures and stories in a “I wish it wasn’t so” kind of way. It’s clear that my griping about things getting placed in front of magazine displays isn’t restricted to my little neck of the woods. But I guess I already knew that.

Consultant Linda Ruth of Publishers Single Copy Sales and Magazine Dojo was recently reviewing some magazine displays on behalf of one of her clients and sent along some of the things she witnessed. She also wrote a very engaging blog post on Magazine Dojo entitled, “Retail’s Failure to Honor Their Display Promise” and I encourage you to go and read it.

Strike One!

Part of the issue here is that store managers rightly have a lot of freedom to put displays where they see fit. They don’t have an enormous amount of room, magazines are at the front end, they’re already in pockets. For the most part store managers don’t have to worry about merchandising them and these one shot pre-packs need to go somewhere. So they go in front of the checkout.

As Linda points out, when pre-packs get stuck in front of a mainline, it’s the price we mainline publisher’s pay for just paying our discount and RDA. But the checkout is another animal because publishers pay discount, plus RDA, plus the rack construction cost. More importantly, it’s a three year commitment.

This would be way cooler if Barbie had made the front cover of People
Well, tea is low cal, but the aisle is closed so…

Barbies, wiffle balls and herbal teas are at best, a one week commitment.

The recent developments in the industry, most notably the purchase of Comag by News Group, the investment of Hudson News into the deal are supposed to be a “watershed moment” where we will see the elimination of overlapping marketing and distribution activities and a smoothing of the waters in the distribution channel.

From an accounting and staffing perspective, I get that.

Having all kinds of  junk dumped in front of checkout and mainline display space is nothing new – it’s been happening for years upon countless years. In the 21st century, though, it feels a little different. Magazines at retail are being challenged. Our distribution systems are fragile because there are so few avenues to market. All of them are stressed. Cost of entry has risen, not gone down.

Clearly we’re not making our case well enough to the retailers. Do they feel an obligation to maintain the space that our publishers pay a premium for? Our wholesalers are supposed to merchandise. Clearly our wholesalers are under pressure to get the job done and facing enormous amounts of competition for the space they do manage.

Years ago, the wholesalers used to maintain an industry trade group that tried to speak for them with one voice. Publishers and national distributors have IPDA, the MPA and the PBAA. There is a joint “Retail Conference”. Is it time for publishers, wholesalers and national distributors to try and speak for magazines with just one voice? Most of our disagreements are so much inside baseball. But the profitability of the product we represent is not up for argument.

Want some reading material on your picnic?

We need to do a better job engaging the retailer, checking up on our own distributions, and fighting for our space. How do we do this with circulation staffs and budgets that are shells of what they once were?

Increased “efficiencies” of all types is a noble goal. But ours is a sales oriented business.

Let’s sell something.

“TMB” (Temporary Magazine Blindness) Considered Untreatable By the CDC

News from the present: By Felix Chartae

Magazine doctors on staff at the federal Centers for Disease Control in Atlanta, GA have determined that the common disease known as “TMB” or Temporary Magazine Blindness has neither a known cause nor cure.

“We pretty much tell staffers to hunker down and deal with it,” said Dr. Tristus Adversus, Dr. Pub., a consultant to the federal disease agency.

“TMB” occurs whenever a magazine publisher walks by a newsstand and fails to see their publication on that rack. This disease is also known to strike magazine advertisers. The magazine is there, but both the publisher and the advertiser not only fail to see the magazine, but they will believe they are seeing large quantities of their competitors magazine on display.

“It’s a very unusual sort of blindness or hysteria that seems to affect only people who work in this industry,” said Dr. Adversus. “We’re not sure of the cause or what we can do to alleviate their suffering.”

It’s the symptoms of “TMB” that have both publishing doctors and the staffs at many magazine publishing companies concerned.

“Oh, the rages that we have seen are quite destructive,” remarked Dr. Adversus as he left a tony midtown Manhattan office where he had just treated several senior magazine executives and their key advertisers. “All of the data, all of the pictures, everything was right there in front of them and they simply could not see it. It made them very upset.”

“All we can really do is help them get through it. I usually prescribe a placebo and a Power Point or two. After awhile, they move onto other things,” he mused. “It’s sort of like chicken soup.”

The CDC has identified other symptoms of “TMB” including but not limited to: Anger, resentment, the firing of staff, the hiring of outsourcing consultants to replace staff. Circulation departments, in particular those now rare and endangered newsstand circulation staffs are reduced to cowering in filing cabinets during an outbreak of “TMB”. The disease can also be transmitted throughout certain portions of magazine staffs.  Dr. Adversus has identified smugness in editorial staffs, extreme smugness in digital staffs, and surprisingly, flatulence and shortness of breath in the production staff.

Perhaps the most extreme case of “TMB” recorded in recent years was reported by this blog when the both the publisher and editor of the Eagle, CO based publishing company, Outside the Groove Media, failed to realize they were publishing print magazines for two years.

“I feel kind of silly about that now,” said Peter Westleigh, the publisher of Outside the Groove Media. “But I’m better, now. I only have a few relapses here and there.”

Peter Westleigh and Wendy Ashburnham of Outside The Groove Media discuss his occasional relapses of “TMB” with this reporter. (Source: in-this-economy.com)

“Yes,” sighed Wendy Ashburnham, Director of Audience Development at Outside the Groove, “He is usually pretty OK with things. But he still can’t seem to find our magazines at his local King Sooper.”

This reporter also contacted the drug manufacturer Astra Zeneca to see if they were working on a drug regime for this disease. The company responded that while they care, they can’t help.