Why Bauer Media Still Believes in the Newsstand
A Q&A with Sebastian Raatz, executive vice president of Bauer Media Group USA.
It’s no secret that the newsstand is not the revenue driver it once was for magazines. However, that hasn’t been the case for Bauer Media, a company that places heavy emphasis in that space with a portfolio that includes In Touch, Woman’s World and Closer.
While data from MagNet shows that overall newsstand revenue continues to decline between 5-10 percent every quarter, it hasn’t seemed to impact Bauer here in the U.S. Evidence of that is the company is bullish in launching new titles — about a half dozen just in the past couple years.
Of course, the question is: Why does the newsstand work so well for Bauer? EVP Sebastian Raatz explains.
Folio: Bauer recently launched both a pre-teen and kids magazine. Tell us about the rationale behind that and how it fits into the company’s long-term plan.
Sebastian Raatz: We now have a product palette that targets girls from ages four to 16, while a few years ago that range was only nine to 16. Launching Girls’ World and Animal Tales turned out to be a huge blessing, and has given us the confidence to aggressively build out our portfolio further, with the plan to become part of American families for a much longer time period.
The product palette has also changed qualitatively. Our mission is to “help raise today’s girls into tomorrow’s confident, productive Americans.” Not only does that affect our existing titles (as an example, we added Candace Cameron and her daughter as columnists in J-14), but also how we launch titles. Each new magazine focuses on different skills we want girls to develop, be it creativity, motor skills, a healthy self-image, or even math and spelling. And you’ll see more of that coming this and next year.
Folio: Speaking of launches, you guys have been extremely busy over the past few years in launching Closer, Simple Grace, Girl’s World and Celebrate with Woman’s World. All of these titles are heavily dependent on newsstand sales, which is somewhat counterintuitive in 2016. First, tell us the thinking behind so many launches and, second, why are you staying with the newsstand model?
Raatz: It’s counterintuitive if you go by conventional wisdom, yes. But there are categories on the newsstand that do very well (under admittedly adverse circumstances) that allow you to launch titles and earn a good return.
Let me elaborate — I believe that the basic attractiveness of the magazine as a medium hasn’t changed. Not one bit. That’s probably controversial, so let’s talk about a few select reasons for the newsstand decline:
First, availability. The number of retailers that carry magazines has shrunk significantly between 2010 and today — depending on how you count them, by -25 percent or even more — mainly through a series of wholesaler bankruptcies. A smaller retailer network obviously has a direct impact on sales.
Second is the eradication of boredom. What do you do when you’re waiting in line at the checkout? Right… watch cat videos on Facebook. Magazines are impulse purchases. We don’t know much about how seeing a magazine converts into a purchase. But we do know that fewer shoppers see them in the first place because they look at their smartphones. And by the way, we hear that’s true for other front-end products as well, such as batteries, gum [and] candy bars. Strong evidence is that the newsstand overall is down -11 percent each year, but the mainline purchases — which aren’t as impulse driven—are down only -3 percent each year, and that’s despite a smaller retailer network, and with ever-shrinking shelf space to boot.
The last thing is consumer needs. This is the conventional wisdom — “People just don’t need magazines anymore.” Sure, the sheer utility of a magazine reporting last week’s news has disappeared. And if you look at the categories that have lost the most, it’s those that rely on information that you can easily get elsewhere, especially news about politics, celebrities, teen stars, and even fashion to a degree. These categories represent 36 percent of newsstand dollars, but 56 percent of all newsstand dollar declines between 2010 and 2015. The rest are doing better, and there are many categories that are actually up in the same time frame—again, all that despite the adverse trends I mentioned above.
The easy story is “newsstand sales are down,” and while it’s true, it’s an undifferentiated view that most of us industry insiders get sucked into too easily. We all agree that publishing magazines profitably hasn’t exactly gotten easier — and that’s why we have to dissect the market, know what’s wrong and, more importantly, what’s right. You can still launch a winning title with the right concept in the right genre. And if you’re really good, you can even reinvent an old title for a new environment.
Folio: Bauer is unusual in that its brands operate somewhat independently as print and digital entities. Coming from the print side of things, how does the digital group — Bauer Xcel — help support your print brands? And conversely, how are the print brands helping to drive digital?
Raatz: We have separate units, but we’re still one Bauer. We try to cultivate “unconditional love,” which means helping each other out wherever we can, without expecting anything in return—not only between print and digital, but also between our magazines here in the U.S., as well as at Bauer internationally. The type of support we give each other probably doesn’t differ much from that at other publishers.
Folio: Do you think success in print needs to be redefined?
Raatz: Well, that depends on your past definition of success. Our definition of success hasn’t changed: Revenues exceed cost with a decent margin of safety.
Folio: Can we expect more launches from Bauer in 2016?
Raatz: Yes, you can! Look at our past behavior, extrapolate that, and you have uncovered all our secrets for the rest of the year.
This article first appeared on min.