The speed of the newsstand sales slide is intensifying. And that’s very scary. In the first half of 2011 the unit sales of audited consumer magazines fell 10.7 percent to 329.7 million and retail revenue declined 10.6 percent to $1.272.0 million. Since 2001 unit sales have declined 47 percent and retail revenue has fallen 30 percent.
The decline is breath taking, but by now it’s certainly not news. The newsstand channel is seriously troubled, but even in its darkest hour there’s opportunity for publishers that are not faint of heart. There will be rewards for publishers that can read the tea leaves, properly interpret the trends and act decisively. Let’s look at some recent developments as a means of achieving future insight.
Hearst and American Media Increase Their Newsstand Commitment
Hearst buys the Hachette publications and increases its newsstand revenue market share by over 10 percent. American Media takes control of Source Interlink’s two soap publications (Soap Opera Digest and Soap Opera Weekly) and acquires OK! Weekly from Northern & Shell and increases its revenue market share to 16 percent. These two market leaders have made major newsstand commitments-certainly positive signs for a troubled industry.
The Pace of Publisher Consolidation Continues to Rise
The six major newsstand publishers (Time, Inc., American Media, Bauer, Hearst, Wenner, Conde Nast) now control 78 percent of all unit sales of audited consumer titles, up from 71 percent a year ago. The newsstand channel influence of these six companies will only increase in the years ahead. But other publishers can survive on the margins if the bigger players do the heavy lifting necessary to effect much needed newsstand channel reform.
Weekly Celebrity Titles Losing Appeal
These titles previously helped sustain newsstand sales. But in the last year they have lost some of their appeal. Their combined unit sales were down 15.7 percent in the first half of this year. But their market influence is still big. They have a massive 30 percent share of the audited consumer magazine market so their recent sales decline has had a huge dampening effect on the market as a whole. However, in the newsstand’s zero sum environment it’s very possible they have left room for other titles to prosper.
Rise of Low Priced Women’s Titles
Three low cover priced (less than $2.50) women’s titles (Woman’s World, First and All You) have prospered in this down market. They now represent a significant 15 percent of all audited publication unit sales. In the first half of the year their aggregate unit sales were flat and their retail revenue increased 1 percent. They are a model of how to prosper in this market and their low price appeal is an indicator of the price sensitivity of this market.
Checkout Versus Mainline Sales
Checkout sales (68 titles) fell 10.5 percent, slightly below the market average, while mainline sales decreased a little more than 14 percent. As bad as things were at the checkout they were even worse on the mainline. Retail chains concentrate their efforts at checkout to the detriment of the mainline. More publisher effort in developing new retail outlets is required in order to reverse this trend.
Male Titles Suffer the Most
Male oriented titles now represent only about 20 percent of total sales, down from 27 percent ten years ago. The decreasing demand for male titles has helped accentuate the decline of mainline sales. This is a stark reminder that the newsstand is primarily about selling women’s titles.
Electronic Editions Beginning to Impact Newsstand Sales
Wired is, perhaps, the best example of this new phenomenon. It’s believed that Wired per issue newsstand sales were about 67,000 to 68,000 in first half of this year. But they showed single copy sales of 82,000 on their ABC report. This might be an extreme example, but clearly replica edition sales are going to start eating away at the newsstand sales of many other titles.
Wholesalers in Cost Containment Mode
Wholesalers are concentrating on reducing costs to the detriment of sales. Publishers should be cognizant of how their actions affect sales.
Computer Assisted Distribution Systems Hold Promise
Publishers are discovering new opportunities for improving efficiencies by using computer assisted distribution systems driven by MagNet and/or wholesaler direct data. These systems are available at all national distributors and in some instances used directly by publishers. Their use is in its infancy and it’s expected that they will be much more effective over time. They hold out the real possibility of significantly increasing the industry efficiency levels, which would be a huge boost.
What Does It All Mean For Publishers?
The newsstand market is shrinking and morphing in some unexpected ways. But publishers, like Hearst and American Media, that stay committed to the business and are able to adapt to changing conditions are likely to prosper at the newsstand in the years ahead.