What Can We Do About the Newsstand?

One thing is certain: We cannot go back to previous ways of doing business. We can only move forward.

By Linda Ruth
09/05/2012 -04:31 PM

So what’s with magazine sales in North America?

That is the question that I, along with John Harrington of The New Single Copy, Richard Alleger of Rodale, Inc., and Mike Sullivan of Source Interlink have been asked to address at Distripress this year.

Distripress, the annual international conference of magazine wholesalers, is scheduled for the first week in October.

The discussion is to be about the pressures and changes in the US magazine distribution channel. Distripress gives us all an opportunity to find out what is going on with one another, and how we are managing to deal with it. For this forum we are asked to consider causes other than digital that have played into the loss of sales year over year till the present day.

Thinking over the last couple of decades, it is possible to identify two seemingly opposing trends that have governed the sale of magazines: the trend towards consolidation and the trend towards fragmentation.

In the realm of distribution, as we all are now aware, the growth of national retailers led to a bidding for the business by the regional wholesale agencies and, in consequence, the consolidation of these wholesale agencies into large national conglomerates.

The pressures to deliver product to distant locations led to the increased expenses caused by shipping greater distances and managing distribution over greater areas. While expenses were climbing, margins were being squeezed from the other end, as national retailers demanded higher discounts from the wholesalers and other costs of doing business—fuel, union wages, and so on—climbed.

This loss in profitability at the wholesale level is considered one of the causes of loss in magazine sale at retail. As larger agencies were forced to reduce their margins with increased discounts to retailers, the resulting financial pressures forced some to reduce their investments in merchandising. Merchandising teams in some locations were increasingly comprised part-time or contract employees, and in some cases the turnover became very high, with employees lasting only a year or so before moving on to be replaced by new people. This trend, some think, has led to poor merchandising at the store level and resulting decline in sale.

At the same time the magazine market was consolidating on the retail and wholesale side, it was becoming increasingly fragmented on the audience side. By that I mean that reader interest was moving from mass-market, general-interest, largely-checkout publications to niche market special-interest publications. As sales of checkout publications dwindled from year to year, publications were launched in increasingly vertical categories.

But here’s the thing: A vertical interest publication simply cannot command the level of sales, or sustain the level of distribution, as a mass market publication, nationally or on a per-store basis. Because distribution of special-interest publications must be so much more targeted, and sales per store is so much smaller, it is harder to manage the distribution of these publications for profit, and harder to maximize newsstand sales.

And here’s the third part of the triple whammy: as newsstand sales have gotten more expensive and less profitable at every point in the distribution chain some publishers have begun to move their resources away from the newsstand and to other channels of sale. This shift in focus on the part of publishers must add to a downward spiral of sales that becomes self-fulfilling and self-perpetuating.

What can we do about all this? Our challenge must be to find fresh and innovative approaches to magazine distribution and sale, approaches that combine partnerships between channel participants and new ways of pulling sales through at the store level. A decade ago the most innovative and newsstand-savvy publishers were poly-bagging premiums onto their publications. Over the last few years they have been creating bookazines and other special-interest products. Today some market leaders have begun partnering with retailers on store-based mobile incentives or creating digital/print promotions.

One thing is certain: We cannot go back to previous ways of doing business. We can only move forward.

Linda Ruth is Principal of Publisher Single Copy Sales Services. Her book of case studies, "How to Market Your Magazine on the Newsstand," is available at BookDojo.com and at Amazon.