No 'Silver Bullets' to What Ails Magazine Publishers

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NEW YORK -- A panel discussion yesterday at the Folio:Show on circulation highlighted more challenges than opportunities faced by circulators working on consumer magazines.


Not only are fewer people reading magazines, but the industry is bedeviled by declining newsstand sales amid the glut, broken infrastructure, unsatisfactory subscription and renewal rates and more demands from auditors like ABC and BPA International.


"If you're looking for silver bullets, change careers," Steve Aster, Primedia executive vice president for consumer marketing and general manager of Soap Opera Digest/Weekly, told publishing attendees.


Panelists cited single-copy sales as a top worry. The market distribution system for magazines is inefficient and ineffective, New York-based Aster said. Too many copies are on newsstands.


"The dynamic of rate base has outrun single-copy sales," he said, and "2003 arguably was the worst year of newsstand sales."


Even as newsstand sales slid 10 percent to 15 percent this year, publishers put out the same number of copies.


The privately held Forbes, by contrast, was affected little. Newsstand accounts for a small percentage of its sales. What works for Forbes are the cover and editorial content.


"The product is king," said Liberta Abbondante, vice president of circulation at Forbes, New York. "I know that product is what sells."


Susan Allyn, New York-based consumer marketing director at FHM magazine, said rate base is the heart of the matter for newsstand sales. U.S. publishers should copy their British counterparts in the way they charge for the last six months' distribution.


"[Publishers] should sell based on historical delivery," she said. "We've overcirculated both on newsstand and subscriptions. Publishers don't have much restraint. We should charge on what we delivered in the past and not what we expect."


If the industry does not reform this practice, "there are going to be wholesaler bankruptcies," Allyn said.


Aster said that U.S. readers are conditioned to low-priced magazines. This is not helped by the free content on the Internet.


"We have no pricing power," he said. "[The industry] is driven by irrational volumes."


The problems have not stopped new publications from launching in the past few years. Real Simple, FHM, In Touch and O all have garnered market share.


Take FHM, a laddie magazine import from Britain. Its combined newsstand and subscription circulation in 2000, its first year, jumped to 450,000 copies monthly. Newsstand now accounts for 470,000 copies monthly out of a 1.2 million total.


Television plays a critical role in generating reader interest and magazine sales, Allyn said. FHM, she said, pushes its cover shoots on TV programs. Likewise, O features are promoted on "Oprah" and In Touch on celebrity shows. Also, shows like "Entertainment Tonight" and "Extra" and channels like ESPN and VH1 capitalize on celebrity.


"Networks are looking for content," Allyn said. "Also, we're resonating with the right demographic … we're not your GQ or your dad's Esquire."


But FHM has spent heavily on newsstand distribution, in bookstores, airports and point of purchase.


"The minute you walk into that Barnes & Noble store, you're filtered -- you're a reader," Allyn said.


With TV, the idea is to invest in PR to reach people who are likely to buy the publication.


Bookstores were the biggest growth area for Primedia, publisher of 120 magazines.


Of course, panelists agreed that the pie was not expanding. So what is the next new thing for publishers?


Allyn is not in favor of partnership marketing because "your future, or the ability to handle it, is in the hands of somebody else." Partners may not grow at the same speed as the publisher, she said.


Still, when Allyn arranged a partnership with Canon cameras while working on a previous publication, it yielded 15,000 orders from 100,000 solicitations. But the partnership was not repeated the next year because the Canon manager changed.


Forbes finds partnerships do not work. A voluminous contract with Sprint Corp. generated only 125 subscriptions, Abbondante said. An even bigger deal with American Airlines garnered eight subscriptions.


"What's working is having [Internet] links push content online," she said.


Forbes uniquely finds little overlap between readers of its print magazine and Forbes.com. The Forbes.com audience is younger, more affluent than the Forbes reader, Abbondante said.


Online marketing, including e-mail for renewals, works for Primedia as well.


"The Internet is its fastest-growing channel," Aster said. "Ten percent of new subscriptions come from the Web."


Similarly, the Internet generates new subscriptions for FHM. Thirty-five percent of new subscriptions comes from pop-up ads online, Allyn said.


What Abbondante wants is to change the way publishers communicate with consumers. Forbes magazine, for instance, is big on cross-promoting its newsletters. It also examines why people cancel subscriptions or their reaction to prices.


"We're so trained at communicating with our customers at the end of the subscription instead of at the beginning of the subscription," Abbondante said.


Thinking out of the box, FHM used the change-of-address request to boost renewals 6 percent to 9 percent. The magazine is also following Time Inc.'s model of sending three premiums. Then there are add-ons: A calendar of models included with the January issue sold 665,000 copies at newsstand.


Not all appreciate FHM's marketing. Wal-Mart Stores Inc., a major seller of magazines, famously stopped selling Maxim and FHM at its stores nationwide. It also covered women's magazines such as Cosmopolitan with strips.


Wal-Mart told FHM the decision was based on common sense. But Allyn claimed a lawsuit from some Wal-Mart female employees a week before the sales ban and a deal a week after with a Christian mutual fund were the real reasons.


"It's OK to sell guns and ammo in Wal-Mart," Allyn said, "but it's not OK to sell women in swimsuits."


Aster, whose employer Primedia publishes a hunting magazine, defended Wal-Mart. Special promotions with the chain always generated sales, as did the placement within stores for all consumers to see.


"No one sells magazines better than Wal-Mart," he said. "If I could get a lot of retailers to do what Wal-Mart does, we wouldn't be here discussing single-copy sales."


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