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Single Copy Industry Must Shrink to Survive

Will 2010 be the year?



By Buzz Kanter
12/23/2009

Magazine editors like to use January issues to make predictions about the coming year. Like many medium-size publishers, I am active in most aspects of the business. I am the publisher and editor-in-chief of our magazines (American Iron and RoadBike). As a third generation publisher with more than three decades of active single copy experience, I think a lot about its future.

I was recently on a PBAA panel to discuss the single copy industry. I was asked to briefly discuss my best predictions, best ideas and biggest gripes relating to the magazine newsstand (single copy) world.

BEST IDEA. As simple as it might sound, my best idea is to offer readers better value. How can a publisher expect to maintain or grow sales while cutting pages and/or editorial quality, especially when increasing the cover price? Given a choice of how to cut costs, I’d recommend printing and distributing fewer copies rather than holding a print order and cutting pages from the magazine.

BEST PREDICTION. In the next two years the single copy distribution system will evolve drastically. To survive, the magazine wholesalers will aggressively cut their fixed expenses, and they will finally remove the magazines that do not cover the costs of their distribution. The single copy distribution pipeline will evolve into two channels. The remaining traditional wholesalers will service 1,500 to 2,000 (down from over 5,000) titles. The direct wholesalers will handle as many as 10,000 mostly niche titles servicing bookstores with very large display racks via Fed Ex, UPS or similar arrangement. This change will force a great number of today’s consumer magazines off the newsstand and possibly out of business. On the other hand, it might make it easier for the very smallest niche publishers to finally get distribution in the bookstores.

BIGGEST GRIPE. Too many publishers are flooding newsstand racks with too many copies of too-thin magazines with too-high cover prices hoping for a miracle. Many of these magazines are packed with deep discount subscription offers.

Like all of us in the publishing world, magazine wholesalers have been actively cutting expenses. I suspect these cuts will not be sufficient to survive the many problems we all face. As overall magazine sales and sales efficiencies continue to drop, wholesalers will not generate sufficient cash flow to cover their expenses. Eventually, I believe, wholesalers will face the brutal reality that they can’t afford to distribute every magazine title the national distributors insist they carry.

For the last few years the data shows sales on the newsstand continue to drop and spread out over a very wide base of magazines that somehow manage to keep alive—but barely. Many of the industry watchers recognize the solution is to reduce the number of magazine titles in the distribution pipeline to consolidate the dwindling sales into fewer magazines. Simply put, we must rationalize each title that makes it through single copy distribution and onto the retailers racks.

“Action Without Vision Is a Nightmare”

In the next year or two there is going to be a massive shift when wholesalers finally stop viewing the sale of all magazines, regardless of cover price or sell through, as financial contributors. Only then can they look for a different model to at least break even.

Any long term solution to our problems will occur when the wholesalers handle only the magazines that generate enough income to cover the cost of distributing them. Cutting off a large number of under-performing magazine titles will mean fewer sales and less cash flow for the wholesalers. But it will also reduce their handling costs. The big question is how can the wholesalers cover their high fixed expenses by handling and selling fewer magazines. The only way to do this is to aggressively cut their already reduced fixed overhead.

Before we rush to action, consider the old Japanese saying “Vision without action is a daydream. But action without vision is a nightmare.” While we need to remove expenses and product from the system, we need to do it in a sensible manner and still have a practical way to launch and test new magazines.

By Buzz Kanter
12/23/2009







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