The New Newsstand In A Nutshell

Note: A client asked me to lay out how the newsstand industry is organized and what is going on in the business. That very short document has now turned into this follow up to the original “Newsstand In A Nutshell” document that is posted on my “Free Services” page. You can access the original here. I hope to update that soon.

What does this business look like? How is it organized? 

The newsstand distribution industry is a four tier business out of necessity and practicality. Because there are thousands of magazine publishers producing magazines for sale; retailers and wholesalers tend to prefer to conduct business with as few a number of suppliers as possible. Consequently getting a national magazine into the hands of a reader my take as many as three steps:

  • National Distributor: Many national and larger regional publishers contract with a national distributor to handle the titles’ billing to magazine wholesalers. These companies act as a bank by advancing the publisher an initial payment based on an “Estimated Net Sale.” The distributors may also market the title to retailers, manage promotional payments and have staff that will montitor and adjust the distribution. Some publishers may opt for “billing only” contracts and manage the distribution and marketing on their own. The most important responsibility for the distributor is to collect and disburse payments from the wholesalers. There are currently three US based magazine national distributors: Curtis Circulation, CoMag Marketing Group and Time Inc Retail.
  • Magazine Wholesaler: The wholesaler purchases magazines from the national distributor. The national distributor bills them for the product. The wholesaler receives the magazine from the printer, breaks it up into shipments in the warehouse, delivers it to the retailer, bills the retailer (nowadays for copies sold). Returns are processed and reported to the national distributor. Finally, they collect the money from the retailer and pay the national distributor. Prior to 1995’s consolidation, there were more than 300 wholesalers around the country. Today there are less than 100 and the wholesaler known as TNG  (Formerly The News Group) controls about 70% of the business.
  • Retailers: Retailers control access to the magazine racks through “authorized lists”. The discounts that they receive from magazine wholesalers may range from between 25 – 35% off the cover price plus a Retail Display Allowance (RDA, traditionally 10% of the cover price for all copies sold). The largest magazine retailer today is Wal-Mart. RDA used to be paid quarterly. It is now included in the discount the retailers receive directly from the wholesaler and is referred to as “Off Invoice RDA” or ORIDA.

Since the Fall of 2013, the newsstand distribution industry, has endured a series of disruptions to the business that have seriously brought into question our ability to deliver and market periodicals. Of equal importance is the question of the financial stability of the industry.  There is now a call for publishers to take a more active and proactive role in determining the fate of the business. How that will happen and what positive remedies they could provide is a question nobody seems able to answer.

What exactly has happened recently? Why all the bad press?

  • The bankruptcy and exit of Mercury Distributing in 2012: Mercury was a magazine wholesaler based in Texas that controlled most of the magazine distribution in Texas, the southwest and portions of the southeast as far as the Florida panhandle.
  • The closing of the Gopher News in Minneapolis, MN. Gopher was one of the largest remaining “independent” (family owned) wholesalers and controlled much of the business in the state of Minnesota and northern Wisconsin.
  • The bankruptcy of HDA in 2014. HDA was a “specialty wholesaler” who drop shipped magazines into non traditional retailers such as Michael’s Arts and Crafts.
  • The closing and bankruptcy of Source Interlink in 2014. Source was an amalgamation of a number of former wholesalers, specialty distributors, rack manufacturers, RDA consultants, a magazine publisher (formerly PRIMEDIA) and a publishing consulting company. On the newsstand, Source controlled about 30% of all sales and was the largest supplier for the Barnes & Noble chain.
  • Kable Media, a national distributor with more than 80 years in the business found itself embroiled in a dispute with a national wholesaler and exited the business in December 2015. Their departure left many publishers scrambling for a new national distributor and Kable appears to have left a stack of unpaid RDA bills with former publishers.
  • For the sixth year in a row, single copy sales (newsstand sales) are down. For the first half of 2016, MagNet (a company that reports on single copy sales in North America) reports sales are down yet again.

It seems like everyone is leaving the business. Who is left to distribute magazines onto the newsstand?

  • TNG: A Canadian owned magazine wholesaler (Jim Pattison Group) that has its US headquarters in Atlanta, GA and is estimated to control as much as 70% of the US market. They now operate most of the distribution in the Southeast, Southwest, West Coast, Mountain states, and Midwest. Their specialty division, TNG Specialty, acquired many of the former Retail Visions chain (RV was a division of Source Interlink that managed non traditional magazine accounts).
  • Hudson News: Separate from the retail group now known as Hudson Group. Hudson News has mostly stayed inside their traditional Mid-Atlantic, New York, Pennsylvania and New England states boundaries.
  • Ingram Periodicals (A division of Ingram Content): The bankruptcy of Source Interlink has made Ingram the sole remaining supplier to Barnes & Noble. They also control magazines into the third largest bookseller, Hastings. Ingram has the biggest list of independent bookstores and newsstands in the country and supplies non traditional magazine accounts such as JoAnns’ Fabrics and Blicks Art Supplies.
  • Media Solutions: This company is owned by the Anderson Companies, once one of the biggest magazine wholesalers prior to their exit from the industry in 2009. This is the sole supplier of magazines to the Anderson owned Books A Million chain, the second largest bookstore chain in the US. Media Solutions supplies magazines to several small bookseller chains, Sam’s Clubs and other specialty retailers.
  • There are other independently owned magazine wholesalers servicing the market as well as some specialty oriented wholesalers. But the above four control well over 90% of all single copy sales.

So what is next for the business?

The impact of the Source bankruptcy is finally fading and a new model for the business is developing. Prior to the Source collapse national distributors still offered contracts that protected, for the most part, potential losses from a wholesaler bankruptcy.  New magazine contracts do not offer “protection” to publishers in the case of a wholesaler exiting the business. This chips away at one of the primary reasons for publishers to engage a national distributor.

Where the newsstand industry will go from here remains a question. This is a business that has lost as much as half of its sales since the start of the last recession in 2008. Moreover, this  is an impulse purchase based business that has long competed with cut rate subscriptions from, television, radio, books, the movies, newspapers, and even the internet. It now competes with technology that is gaining audience by leaps and bounds. While publishers can reinvent themselves as “media” companies and produce mobile content for smart phones, tablets and portable web based technology, what will become of the printed magazine portion of their business sold at retail? While many publishers still thrive on the newsstand, where is the next People Magazine, Oprah, or Food Network?

Why would I want to put or keep my magazine on the newsstand?

People still shop. Amazon and many other online retailers have certainly made major inroads into the retail world. However, humans are social creatures and we enjoy getting out in the world, going to work, meeting with friends. Shopping is a social part of our life. Physical retailing may diminish, or it may not. This is all still very new to us and we should view many reports of about “where retailing will be in 2026” with a skeptical and questioning eye.

You want to be on the newsstand because:

  • People shop and you want your magazine where people shop.
  • If you sell subscriptions, this is a still a relatively cheap way to sell them to the public. It gives you an opportunity to pick up valuable and loyal subscribers (They already paid for a single copy of the magazine at full price). It is a good way to learn the habits of your readers.
  • You can test the appeal of cover images, story lines, pricing on both newsstand and subscription copies, draw audience to your web and mobile sites, test out new apps and other promotional items.
  • Gain national or local attention with newsworthy or controversial cover images.
  • Who doesn’t like revenue? It is still possible to make money off of newsstand sales if you pay attention to what you are doing.

The conclusion is as follows:

We’ve been saying for years that the newsstand industry is in transition because it is. Publishing wags and commentators in the trade press and consumer press like to drop a little scorn our way because our business model is “old” and “outdated” and “print is dying”. Perhaps that is so but if it is, this has certainly been a long and protracted death. I attended an industry convention in the early 1990’s where a keynote speaker (not Bob Sacks of fame) publicly wondered why we were still “smearing ink on dead trees”. This self proclaimed futurist predicted that CDRom and DVD versions of magazines was the way forward. Clearly that did not work out so well.

This is a business where there are a large number of participants who all have significantly different agendas. I see this within my own pool of publishing clients. That suggests that the changes to how we conduct our business, create, market, bill, distribute and make money from the business will happen organically. I think if we make it happen by fiat or command, the business will most likely die. Quickly.

The 1990 “Playboy Bunny Book,” an industry roster of national distributors of magazines, books, and wholesalers showed nine major national magazine distributors and as many as 300 magazine wholesalers of widely varying sizes. Each wholesaler operated within a compact and contiguous geographic market. Each of the nine national distributors had as many as fifty to a hundred or more “representatives” based in these wholesalers managing their business. Many major publishers employed their own field forces to complement the efforts of their national distributors. Aside from the major bookstore chains (Barnes & Noble, B Dalton, Waldenbooks), national retailers did business with almost all of those wholesalers depending on where their footprint.

It was rare for a retailer to get more than a 20% discount on their magazines. RDA was paid quarterly. There was no such thing as advance RDA. There were few, if any retail based promotions.

Specialty retailers like Michaels, JoAnns’ or Hancock Fabrics did not carry magazines or if they did, not on a national basis. In national and regional supermarkets, it was rare to test anything outside of women’s service, general interest, tabloid or celebrity titles in a checkout fixtures. Hunting and fishing titles, regional bridal magazines or other “secondary” categories in a checkout fixture was a rarity explained only by some regional anomaly.

If you wanted a list of where your magazine was distributed on a local basis, or even a national basis, you would have to create one on your own and if you did get one, it was because a local wholesaler cooperated. Most did not. Taking a dealer guide out of a wholesalers office was often considered a firing offense. This author was reprimanded and threatened with banishment on several cases in the pre-consolidation era for “removing” printouts of distributions (that he paid for) from a wholesalers’ warehouse.

Compiling a simple list of how many stores a magazine was in by chain was done by hand and could take weeks to compile. And that was in the dawn of the “office publishing” age.

Does that sound like how we conduct business today? Are you sure we haven’t changed with the times?



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