Magazine Newsstand Sales Drop as DM Helps Increase Subscriptions

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Thanks in large part to direct marketing efforts that boost subscription circulation, newsstand sales for the best-selling national magazines have plummeted 38 percent in the last decade and 47 percent in the last 15 years, according to a study by Gruppo, Levey and Capell Inc., New York, an investment bank specializing in direct marketing.


Newsstand sales declined 6.1 percent between 1996 and 1997, the most severe drop in about seven years, said Dan Capell, managing director of GLC and editor of Capell's Circulation Report.


Capell added that subscription circulation of Audit Bureau of Circulation members has increased by more than 39 million in the last decade, offsetting industry newsstand losses.


"The subscription offers that you receive telling you that you'll save 80 percent off of the newsstand prices, receive a free issue, get a premium or enter a sweepstakes are so attractive," Capell said. "You have to scratch your head as a consumer and say, 'I have to be an idiot to buy a copy on the newsstand.' "


But even subscription circulation isn't as healthy as in the past, he warned. More than 80 percent of the direct mail efforts wooing subscribers are soft offers -- promotions promising a risk-free trial issue.


"Soft offers are kind of tired. The free issues have been around for 20 years, if not longer, and there have been no new creative breakthroughs," Capell said. "Fifteen to 20 years ago, it was very effective. It boosted front-end response and improved net performance, but an awful lot of consumers realize they can send that in and get a couple of free issues. They have no intention of ever subscribing."


Many publishers are turning to telemarketing as an alternate direct marketing vehicle, making it the fastest-growing method for acquiring new subscriptions. The number of new subscriptions sold through telemarketing swelled 60 percent from the first half of 1997 vs. the first half of 1996, Capell said.


Competition from such companies as Publishers Clearing House and American Family Publishers also is contributing to the decline in newsstand sales, Capell said. Both inundate mailboxes with aggressive direct mail pieces offering a chance to win multimillion-dollar sweepstakes and low magazine prices.


"It's awful tough to sell copies on the newsstand when you flood the market with those kinds of offers," Capell said.


The number of national titles has grown from 2,400 to 4,200 in the last 10 years, Capell said, causing many publications to battle for the same slice of the market. Three categories appear to be eking out a slight advantage: health titles, business publications and magazines geared toward teen-agers.


Capell predicted that many publications will raise cover prices significantly, which may discourage potential subscribers but still could result in more of a profit for publishers.
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