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Linda Ruth

For Newsstand Publishers, What is Plan B?

Linda Ruth Audience Development - 04/08/2014-15:11 PM

 

When John Harrington says the sky is falling, it’s time to look up. So, publishers, it’s offical: We need a plan B.

Bo Sacks recently shared a dialog between Harrington and Baird Davis on the state of the newsstand that was chilling. These two industry veterans agreed that publishers have “seriously underestimated” the possibility of collapse of the newsstand channel; that such a collapse could take place within a year to 18 months; and that unless publishers begin to work together—not in a happy-happy “let’s all get together” kind of way but in a serious “we need to re-create an entire channel of distribution” kind of way—there isn’t much hope of survival.

One thing that was extremely sobering was that I couldn’t really find a way of arguing with their conclusions. What will it take to collapse this industry? At this point, not much. The loss of a single wholesaler—TNG—would do it; and TNG has already told us they have an unsustainable business model. Consider this:

• A large national distributor recently sent its publishers a list of all the wholesalers that they intend to cut off if certain financial terms aren’t met. The list included…pretty much everyone.
• A second national distributor has indicated to one of the major wholesale groups that their latest financial proposal, if implemented, will result in the termination of their business relationship.
• Two of the four major national distributors have begun to refuse to cover bad debt liability for their publishers.

None of which is a testimony to a deep and abiding faith in this business’s sustainability.

Without going into a litany of all the ills, dangers, sorrows and shortcomings of our industry—we’ve all heard lots about them—the need for deep and fundamental change is the point to key off of here. Baird and John did mention a few ways in which publishers could work together—co-marketing, embrace SBT, address the mistrust that exist among channel partners—all of which are good ideas, even important ones. But they are small fish to throw into this sea of troubles.

Baird calls the publishers out on their passivity in the face of this impending collapse. The answer, he suggests, is to look to the seven top newsstand publishers to take a leadership position in representing consumer publishers’ newsstand interests.

Will rest-of-the-line publishers do so? And, when a perception exists that the top publishers have used some of their leverage to maintain short discounts at the expense of specialty publishers; when many publishers are convinced that the top publishers would like nothing more than to see the specialty publishers clear off the racks, leaving them open for the big guys; in such an environment can that mutual trust be established?

If the scenario is to play out, it may have to.

An industry veteran shared with me the following scenario: In the event of channel collapse, the top publishers will go direct to the top five retailers in the country. They are setting up the relationships and the distribution channels now. Every other publisher will have to scramble to follow. But these top publishers aren’t throwing a ring out of the lifeboat just yet.

But we do need to look to setting up new ways of reaching these retailers. Our current channel partners are telling us explicitly, in every way they know how, that they might not be here tomorrow.

Can we live without newsstand? Of course we could survive. But newsstand remains an important, if not indispensable, part of the distribution of consumer publishers large and small. There is no question that a channel collapse would take many publishers down with it.

For most publishers, working independently at this scale, away from the umbrella of their national distributors, is not a possibility. They rely on those national distributors to find the solutions and provide leadership. But many of these publishers have ideas to contribute. For example, one industry watcher suggested, what about a partnership with one of the largest distributors of print product in the country?

Amazon.com. 

 

 

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Linda Ruth

Changes at Time Warner Retail

Linda Ruth Audience Development - 03/18/2014-14:22 PM

 

For those who are wondering, Time Warner Retail did not just lay off its field force. At least, not all of it.

With rumors flying, I called a high-ranking executive still with the company. He didn’t want to go on record, but he did answer my questions.

I had gotten a lot of snippets from a lot of people. People working in agencies who said it looked as if the Regional Managers had lost their jobs; other people in the industry who said the Order Regulation was being outsourced to India.

There’s a kernel of truth in many of the rumors, but, my source explained, the truth is very simple. The industry is changing, and Time Warner Retail is changing with it.

While it’s never easy to lose people, the changes, he explained, were inevitable.

“We followed the trail of business,” he said. With the continued consolidation of the magazine distribution channel—over the past few months wholesalers in Canada, Minnesota, Texas and elsewhere have gone out of business—a consolidation of field personnel became inevitable. As agencies closed, people at the agency level lost their jobs. Much of the business moved to agencies where Time Warner Retail already had people, who were able to accommodate the shift in retail coverage.

While it has reduced its distribution team, my source continued, Time Warner Retail has expanded its marketing team.

“Time Warner Retail is more retailer-centric than any distributor," he said. "We put more focus into calling on retailers than any other part of the distribution channel. That is the portion of our business we are building.”
 
Time Warner Retail is also, he said, using technology to manage its business to a degree no one else in the industry is doing. Its MagNet-driven AIMS process enables the company to manage distribution electronically from a centralized location to the wholesaler place of business.

Centralized in India?, I asked.
 
Time Warner has some employees in India, but the order regulation is not outsourced, was the reply. Some backroom operations might be outsourced, but the order regulation, regardless of where on the planet it is done, is done by Time Warner employees, using MagNet data, making changes in the wholesaler system from their remote location.
 
The source did not provide any details on the number of employees let go. “I won’t give you a number,” he said, “but I will say that we still have by far the largest representation of all the companies in the business. I could probably combine the other three and we'd still have more.
 
“And any time any business goes through a re-organization, rumors fly. Time Warner Retail lost a few long-timers, and that was tough. But we’re in a tough industry. We have to adjust for the changes in the field. But overall, there have been more positive twists than negative.”

 

 

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Linda Ruth

Reports of Continued Distribution to U.S. Military Were Premature

Linda Ruth Audience Development - 02/28/2014-10:20 AM

 

I don't have a complete new post today, just an update—but it's an important one.

My last post reported that PMG, distributor to the U.S. military and other locations overseas, had closed its doors for its military, South American, and Hawaii business. The important U.S. military portion of the business was said to be taken over by TNG (formerly The News Group).

Today we hear that the agreement with TNG has not, in fact, materialized. As of this morning it appears that there is no finalized agreement to ship magazines to the U.S. military overseas, not with TNG, not with anyone.

Publishers are instructed to hold all product directed to U.S. military and to await further developments.

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Linda Ruth

Distributor to U.S. Military Overseas Ceases Operation

Linda Ruth Audience Development - 02/20/2014-14:52 PM

 

Not too long ago, notifications were sent to publishers from all national distributors that PMG International, LTD was to cease operating its facilities that service Hawaii, the Caribbean, South America, and the U.S. overseas military.

The notifications indicated that all magazine product on its way to those locations was being put on hold at the printers or shippers. Publishers with issues ready to print or ship, were instructed to put those issues on hold as well.

The news was quickly overshadowed by the startling developments with HDA, the distributor of magazines and books to specialty stores including Michaels, Lowes, Dollar General, and Menards. Though many publishers did not do business with HDA at all, for the ones that did, the quantities could be significant. By contrast, for most publishers, PMG allotments were relatively small. Many might barely notice the loss, either because they didn’t send copies to the military or South America, or because they did in such small quantities that red flags won’t be raised.

See Also: Magazine Distributor Shuts Down While It Restructures Debt

But for publishers that pay attention to their international distribution and sale, PMG was important. The importance of the military to publishers comes from several factors: the audience is American; it may be appropriately targeted to a publication; and, since the bases serve an English-speaking market overseas, military distribution makes up an often-significant portion of overall overseas sales for American publishers.

Since that tough week, some solutions have emerged for publishers losing distribution from PMG. Copies bound for Hawaii were briefly diverted to Source Interlink’s California facility, then veered to settle on TNG, through their West Sacramento warehouse. TNG is also picking up the important overseas military through their Atlanta, Georgia facility.

In the midst of these changes, there are some small bits of good news. The word is that Phil Bagnall, the well-liked publisher liaison, will still be involved as magazine buyer. Also, PMG’s Mexico operation, DIMSA, which does a good bit of volume, is to remain in business.

The rest of Latin America remains to be settled.

 

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Linda Ruth

Magazine Distributor Shuts Down While It Restructures Debt

Linda Ruth Audience Development - 02/05/2014-16:38 PM

 

HDA is a  St. Louis-based distributor that has been the magazine and book supplier of specialty magazines to specialty stores since 1983. Recent events, however, have indicated the company is dealing with some major problems.

A client of mine had been blindsided by HDA’s refusal to receive 57,000 copies of their magazine. The copies were bound for Lowes, Menards, and Dollar General. A confused shipper contacted the client to find out what was up. The publisher had no idea.

Neither, it appeared, did anyone else. Calls to national distributors were received with shock and confusion. Calls to some of HDA’s retail partners were met with blank disbelief. Even now, no official announcement has been made. There is no press release, notice, explanation, or any kind of acknowledgement at all on the HDA website.

According to Bob Ketterer, HDA Inc.'s president, CEO and chairman, the company is working through a significant debt restructuring.

“We don’t intend to file for bankruptcy protection," he said in a phone call. "We are in a reorganization, but have neither declared nor been forced into bankruptcy. Our intention is to continue as a book and magazine distributor. The process had to be sped up because of our arrangement with the bank. We ship to 16,000 locations around the U.S. The locations are 100-percent SBT (scan based trading). What that means is that we own that debt load. It drove up the debt to a level the bank and the secured creditors found unacceptable, and we were forced to cut overhead dramatically. Banks are both risk-averse and unfamiliar with the way our business works. The restructuring process was hastened based on the bank demands.”

HDA employees, I am told, showed up at work Monday morning to find the doors to their company locked. Each received a letter indicating that it was the last day of work and the last day of insurance coverage.

People with whom I spoke were stunned. There had been a shared perception that things had been going well; only a few days before they had been informed by Lowes that they could count on continuing as magazine category manager for the Loews stores through 2017.

“It wasn’t ideal,” Ketterer acknowledged. “In fact, it was one of the saddest days of my life. I started this business 30 years ago. Some of those people were with us 15-20 years. It was rough. But we really had no choice.” 

What about the hundreds of magazine and book publishers with whom they work to distribute several thousand titles to the specialty market? What about the outstanding payments owed? I asked Ketterer about my client’s receivables—the publisher, whose publication is Lowe’s top-selling magazine, is looking for contractually agreed-upon payment that hasn’t been received.

“We want to continue to do so. We’re still very much in business. We are working with the bank and an investor to restructure and move forward. We are going to be leaner and meaner. We would like our publishing and retailer partners to work with us.”

According to a source, HDA hopes to re-open within eight to ten days, and hire back a team from the employees turned away on Monday. Ketterer did not immediately confirm this.

I mentioned this to my publisher client. “It’s got to be a two-way street,” the publisher replied. “We have always worked cooperatively with HDA, delivering to them Lowes' top-selling magazine. Lowes has been paying HDA every week, based on the very-healthy POS sales. I haven’t seen that money, and I haven’t had a return call from the distributor. If I’m to work with HDA, HDA needs to work with me.”

 

 

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Linda Ruth

Back to the Future in 2014: A Former Wholesaler’s Prediction

Linda Ruth Audience Development - 01/15/2014-14:10 PM

 

My first day at work in 2014, I was delighted to get a call from a very dear mentor of mine, a former wholesaler who built his business in the years when there were hundreds of them and closed it when independent wholesalers were losing their place in the changing distribution model.

This wholesaler has a few bookstores left from the old days and keeps his finger on the pulse of magazine distribution through his stores and his friends in the business. He’s always had a remarkable sense of the ebb and flow of business trends and what they indicate, so when I’m lucky enough to hear from him I always listen attentively to what he has to say. Naturally I wanted to know what he thinks about our current magazine landscape.

What he sees is opportunity.

“The business today is just the same as it was when I first got into it,” he said. “Dominated by very large distributors who couldn’t maintain profit by sending product to such far-flung locations. Magazines are disappearing from the shelves because no one could afford to distribute them to the stores. Racks are getting smaller as a result. Handling all those magazines—that’s a lot of work.”

Maybe so, but where, I wondered, was the opportunity? It looks like the opposite, doesn’t it?

Not for a trucker or a shipper or a warehouse, my friend responded. Not for someone starting out and looking for a need to fill. “If I were a young man, I’d do now what I did then,” he said. “I’d start a wholesale agency. I’d pick up local businesses, the stores that can’t make it work getting their shipments from thousands of miles away, and I’d bring them magazines and I’d do it well. We had consolidation, then we had fragmentation, and now we have consolidation again. It’s time for the pendulum to swing back.”

My old friend is quick to acknowledge the differences today—the national chains doing their buying nationally, the loss of the mom and pop businesses that once played such a key role, the growth of digital sales. But problems, in his world, equal opportunities, and a broken model demands fundamental shifts.

“Throughout this country we still have local businesses,” he said. “They’re starting up all the time. Chain stores are closing down here and there and independent retailers are moving into their old space. And some chains want local service for their stores.

“You’ll be seeing changes in the coming years, even just in this year. And one way the changes could go is to have new local agencies pop up, to do the work the big guys can’t.”

 

 

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Linda Ruth

Jim Pattison Group Consolidates Coast to Coast's Back Office

Linda Ruth Audience Development - 12/12/2013-16:32 PM

 

When the Jim Pattison Group, owners of the largest wholesaler group in North America, first became a co-owner of the Comag Marketing Group, one of America’s four major national distributors, benefits that were mentioned included “reducing redundancies.” I didn’t have a clue what that meant, unless it was a special code for triggering layoffs.

Last week I got an announcement from Glenn Morgan, President of Coast to Coast Newsstand Services. Coast to Coast isn’t on the radar of a lot of U.S. publishers, but it is a major Canadian national distributor. Also, its ownership structure has some things in common with Comag’s. Namely, the Jim Pattison Group.

Coast to Coast announced that it’s going to outsource its billing, collection, print order and galley prep, and other back office functions to Genera, the Pattison- and Hudson News-owned company that does Comag’s back office.

Coast to Coast is also contracting with Comag for their North American field work. Some Coast to Coast field reps will join the combined team.

So this is a step in the reduction of redundancies, and it makes sense to me. I’m not a fan of consolidation for consolidation’s sake—or, in fact, consolidation at all, necessarily—but believe me, I am a fervent convert to taking costs out of a wildly expensive newsstand distribution system.

How will this partnership affect the relationship between Comag and Coast to Coast? Will the two companies grow ever closer, with C2C eventually acting as Comag’s Canada arm? Will the savings implied by the reduction of redundancies find its way back to publisher clients? Will all this vertical integration give Comag/Coast to Coast an edge over the other national distributors?

I don’t really know—I just read the press release, and am passing it along to you. But as soon as I have inside knowledge—at least the kind inside knowledge that a blogger is allowed to pass on—I will share that knowledge with you.

 

 

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Linda Ruth

TNG’s New Distribution Fees: A Game-Changer or the Same Old Game?

Linda Ruth Audience Development - 11/26/2013-15:31 PM

 

Over the past week I have spoken about little else than the new fees coming in from TNG, formerly The News Group, the largest wholesaler group in North America and responsible for over half of the continent’s magazine newsstand distribution. The fees, imposed unilaterally and to be implemented right away, range from two cents a copy to eight cents a copy, with 131 publications exempt. 

TNG is imposing these fees in a move that is eerily reminiscent of the fee-for-distribution that Anderson News Company attempted to impose in 2009. The fee imposed then was opposed by publishers and resulted in ANCO going out of business. There are differences now. And whatever the outcome is, it will be very different from that of the ANCO affair.

Which is good, as no one wants another wholesaler group to go out of business. No partner in the newsstand distribution supply chain could afford that today. As an industry, we need to try to create a situation where every member of the distribution channel is healthy and profitable.

But the situation troubles me, a lot, and for many reasons. Some aspects of this TNG mandate are game changers. Some are not. But the businesses most vulnerable to the consequences of these changes are the independent publishers.

I have heard—and probably so have you—comments made by some that this industry will become stronger, healthier, and more profitable by the removal of the “clutter” of the little guys from the newsstand. The irony is that the growth and stabilization of revenues in our business over the last two decades or so has come from the rise of special interest publications. Haven’t these guys been paying attention?

I am troubled by the ironies. And I am troubled by the game-changing aspects of this, and by the aspects that are not game-changing at all.

I am troubled that the extra fees are not being negotiated—they are being applied. That’s a game-changer. Now, is there a possibility that a publisher could talk to TNG to discuss other ways of skinning this particular cat? There might be. But to do so each publisher needs to take his or her own initiative to bring a plan to TNG. The initial wave of correspondence doesn’t include an invitation to show up at TNG to discuss. But I would encourage you to do so.

The fee is expected to be updated every six months. That means that publishers cannot know what they should expect to pay for distribution of their newsstand copies throughout the coming year. They will be charged at the will of TNG. Budgeting for revenues for a year will not be possible. Planning for what might come down the pike is impossible. That’s a game-changer.

The formulas used for imposing the fees are not to be shared with the publishers that they affect. Consequently, publishers have no say in how these fees are imposed, no way of improving their financial picture in the agencies. That’s a game-changer. 

Experience tells us that once those fees are imposed, we cannot expect them to be rolled back. Wholesalers are not known to reverse fees, once imposed. This is not just me grousing about life. This is an explicit policy on the part of the wholesaler community. That would be the same old game.

However, I have been told on excellent authority that this game is changing as well, and not for the worse. The six-month re-evaluation is formula-based. If a publisher’s standing changes for the worse, per the formula, the fee gets higher. If it changes for the better, the fee gets lower. So that’s another game-changer.

Of course, once the fees are imposed, they will obviously not be restricted to TNG. They will spread to other wholesalers, of which there are mostly only two. That is the same game.

I’ve heard from some industry sources that these changes are expected to succeed because the business models of publishers don’t rely on newsstand as a source. Publishers, I am told, discount subscriptions dramatically, so they don’t need the circ cash. They make their money from advertising, so they can afford to pay higher circ fees. But the publishers for whom these outdated business models still hold true are in many cases the ones exempted from the TNG fee. Many of the publishers taking the brunt of these changes depend on each revenue-generating channel to be profitable in its own right. Creating assumptions based on business models of the very publishers that aren’t hit by the consequences? That’s both an irony, and the same old game.

Where we are now is not any one company’s fault, but the fact remains: There are deep paradoxes involved in the concurrent consolidation of the distribution channel and the fragmentation of publishing and its consumption. I take the wholesalers at their word that they can’t afford to stay in business under the current model. And we ignore this reality at our peril. With a 10 percent loss year over year on a fixed-cost business, the agencies need to find a way to bring their business models into alignment with today’s newsstand realities. The costs of maintaining their truck fleets are huge; the costs of maintaining their merchandising teams are huge. Revenues are slipping. And we as publishers need for them to stay in business.

But from the supplier side, publishers also need to stay in business as costs keep rising and revenues keep slipping. I’ve done the math. Many of the publishers affected are already getting the thinnest slice of remit for the newsstand sales of their products.

From the point of view of the wholesaler, the game is not changing as much as it needs to. The fees levied are not enough to create the profit. They are not enough to fix a system that no longer works. They are seen as a bridge. Something to keep the distribution channel alive while the game is truly, finally changed.

So here we stand, yet again, on the brink of big sweeping changes, on the brink of a whole new way of doing business, and we still don’t know what it’s going to look like. But for today the changes are going to be about who can afford to stay in the game, who is going to leave, what counts as a “little” publisher and what the medium-sized publishers who don’t make the top 131 are going to do.

Some are going to go with TNG’s plan. Some will talk about alternative plans, ones that meet the goals of the suppliers as well as their distribution partners, ones that keep the balls in play for at least a while longer. And some are already speaking to book distributors, direct distributors, and retailers directly. Companies are going to disappear from the system as we know it. Most—but not all—will be publishers.

One thing that will not change is that publishers will continue to produce quality content that people want to read. And they will continue to find a way to get it into their audiences’ hands.

The details of how that will happen are under advisement.

 

 

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Linda Ruth

TNG to Take Over Mercury’s Texas Distribution

Linda Ruth Sales and Marketing - 10/03/2013-15:07 PM

 

I’ve been updating readers of this blog about the Mercury News situation.

If you have newsstand distribution, what’s happening with Mercury News has been affecting you whether you have kept track of the details or not. Mercury has been on shaky financial footing for some time, and there has been a lot of speculation as to who will pick up the distribution.

It isn’t an inconsequential question. Mercury’s footprint was big. Back in May, I reported that Cowley (a TNG marketing partner) had negotiated to buy out Mercury’s distribution in Oklahoma, Arkansas, Tennessee and northwest Mississippi. At the time it was believed that Mercury would keep its Texas accounts and focus on them.

Today we are told that TNG (formerly The News Group) has entered into an agreement to assume responsibility for servicing Mercury’s retail accounts in Texas and the southern Arkansas markets, effective October 2013.

Mercury’s final distribution is to be October 3. After that, all remaining product will be received into the TNG system. For now, and until the transition is complete, there will be no change in the title mix or allotment levels.

We’ll be hearing more as things develop, but for now it’s a relief that we can look to some stabilization of a volatile situation.

See Also: Waiting to See How the Mercury News Situation Shakes Out

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Linda Ruth

REMAG Pilot Program to Launch in December

Linda Ruth Audience Development - 08/09/2012-13:41 PM

 

REMAG’s sprawling and multi-faceted kiosk program would not be easy to announce in two to three words on a newsstand magazine cover. In fact, it would be hard to explain in 25 words or less. It’s new, fresh, innovative and, from a blogger’s point of view, a little complicated. But the program is, in fact, all about the newsstand sales of magazines, so it deserves our attention and comprehension.

REMAG’s Blake Patterson called me to give me an update on the program. Since I blogged about this last year, REMAG has added a step. The program works like this:

1) Remag sets up a magazine recycling kiosk in participating retail stores.
2) A store customer brings a magazine back to the kiosk for recycling.
3) When the magazine is entered into the kiosk a screen comes up listing some local charities and schools from which to choose.
4) After the charity is chosen a coupon screen comes up. The customer may select four coupons from the categories of choice.
5) The coupons are printed from the kiosk with the code for the donation embedded in the coupon.
6) After each coupon is redeemed, a nickel goes to the charity that the customer has chosen.

Since a customer can redeem up to four coupons per magazine recycled, that means that a potential donation of 20 cents will go to charity for each recycled copy. That charitable donation is currently paid directly by REMAG, who believes in this model enough to subsidize it.

When I first blogged about REMAG’s idea, the response from my readers was enthusiastic. They called it a fantastic idea, bringing sustainability into the realm of print publishing, not only by recycling the product but by incentivizing the further sale of magazines.

SEE ALSO: Can Magazine Recycling Boost Retail Sales?

I liked the idea because we badly needed then, as we do now, something new in our world, something positive and forward-looking. The REMAG model seemed promising. It still looks promising, combining, as it does, magazine sales, sustainability and charitable donations—or, as Patterson puts it, three great stories to tell.

“We’ve always spoken about a magazine purchase as a value proposition extending beyond the purchase itself,” said Patterson. “This adds massive value to the transaction, value that a customer can discover directly, by walking over to the kiosk and finding the coupons and charitable donations available.”

Given how ambitious the program is, it’s no surprise that it has taken a full year to launch the pilot.  But launched it finally will be, in eight News-Group-serviced Save Mart/Lucky stores starting in December. There will be two kiosks per location, one per entrance. And the EPA itself has reached out to REMAG to start a program in Puerto Rico, where landfill space is running out. As a result, REMAG is setting up a pilot in three Super Max locations in Puerto Rico starting in February 2013.

What REMAG is looking for from the publishing community now, as they were a year ago, is visibility, participation, and support.  How can we as an industry build magazine sales through this? How much can we boost newsstand sales from the entire category by, for example, having a generic coupon for all magazines? Or for all the magazines published by a single multi-title publisher? And a final great question: What more can the rest of us do to help?

SEE ALSO: Magazine Publishers Family Literacy Project 

 

 

 

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Linda Ruth

Newsstand Innovations: How Partworks Work

Linda Ruth - 01/26/2012-16:21 PM

Every now and then, when our own newsstand landscape begins to look too homogenous and our cover formulas too tired we look overseas to shake us up a little.

Or a lot—the polybag premium craze that swept our consumer publications a decade or two ago (but who’s counting) was sparked by one UK company.

Polybag premiums to some degree have, after many years, run their course here in the U.S., but any publisher with a serious commitment to a UK distribution is aware that it is still the vernacular on the English newsstand.

Partworks are a UK newsstand innovation that take the practice of polybagging premiums to a new level. They offer expensive, high-quality premiums on every product and, as the name indicates, each premium is a part of a much greater whole.

At a meeting not too long ago Ian Bridgman of Comag UK walked me through the history of partworks, produced mostly by a handful of multi-title international publishers.

Here’s how they work: Each issue of a newsstand release will contain one part of a model or a collection. To get the complete collection, or every part needed to complete the model, it is necessary to purchase every issue. Ian tells me that many give a gift away each week, some to build large scale models which, when finished, are very impressive. A James Bond Austin Martin made of proper metal that takes four years of collecting to finish. A human skeleton (at £5.99 per week) that takes two to three years to collect and build, piece by piece.

What an investment these partworks are for their collectors! By project’s end they might have spent £600 to £1,000 pounds collecting the pieces.

And what a variety of topics to choose from! A collection of insects, or action figures, or precious rocks. A Victorian doll’s house, a Hello Kitty party, an entire season of CSI on DVD. Product tie-ins galore—Dr. Who, DC Comics, Star Wars.

The partworks series is usually launched after the first of each year, supported by TV advertising, and with a temptingly discounted price for the first issue or issues.

As you might expect, the sales drop off considerably after the first few issues. And here in the U.S., where distribution is so much broader and efficiencies commensurately lower, returns would certainly be a problem. In the UK they manage the return issue by collecting the unsolds and shipping them overseas in staggered launches. France and Italy have proven to be markets for the unsolds, as has, to some degree, Canada.

Could it work here? It’s hard to see how it could work on the newsstand—our high rate of unsolds, the necessity for a large investment in copies to cover a broad geographical area, the difficulty of processing quirky premiums in the wholesale agencies, and the difficulty of getting full-copy returns (undamaged) all combine to make it an unlikely revenue source for U.S. publishers.

But as a direct sale from the publisher? Why not?

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.

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Linda Ruth

A Sad Goodbye to Borders

Linda Ruth Consumer - 07/28/2011-10:44 AM

The Borders bankruptcy has been a long time coming. It was well over a year ago when a Borders executive walked away from a conversation in which I asked, in a less-than-diplomatic way, about the long-term chances of the chain. So we’ve had plenty of time to go through the stages of grief, and also to modify our budgets and business plans, and to think about where we would sell our copies when the giant was gone.

All the preparation hasn’t made it easy. For many of my publisher clients Borders was the second biggest source of distribution and sales for their publications: a sturdy prop in a difficult time. Along with Barnes and Noble it represented a remaining place where a special interest publication could find a home and an audience, and where the cost of returns wouldn’t cripple the possibility of some positive revenue flow.

In fact, Borders’ demise is a surprise to no one—not even to my daughter’s college-age boyfriend who said he knew, when he heard (years ago) that someone from the chain had dismissed the e-reader as inconsequential, that this company wouldn’t last. “To deny new technology because it threatens your profits never works,” he said. “The new technology always wins. Always.”
Well said, Ben, and oh, so true. But from a magazine point of view I would never dismiss the chain as lacking in vision. I remember years ago when Borders was on the cutting edge of the magazine superstore concept. Waldenbooks, once a huge powerhouse of magazine distribution, was starting to wither away in its shopping mall locations, and little upstart Borders was becoming the robust hope of magazine publishers. When Walden was moved from Stamford, Connecticut to take its place under the wing of BGI in Ann Arbor it almost seemed like a case of the tail wagging the dog; but Borders grew and thrived and sheltered magazine publishers from the dwindling sales from Waldenbooks.

As we struggled for incremental magazine space in supermarkets and drugstores there was relief to be had in the miles of mainline in the Borders chain. I remember magazine buyer Bill Jourdan looking for independent comics and “’zines” to add to the magazine racks—who would even accept those products in those days? He wanted a true mix with lots of choice for his customers; he wanted to carry everything. More recently Carla Bayha met with publishers to customize “out of the box” promotions programs that would play to the strengths of their magazine line.

Consumer magazine publishers have gotten very used to the changes brought about by bankruptcies over the past couple of decades. The first ones I remember happened back in the 1980s when a big national distributor and a smaller direct distributor went out of business.

Ironically, the direct distributor had built its business around Waldenbooks, and the removal of that pin was what sent it under. Then Unimag, ANCO, and countless more of the little guys…

But, unlike WB Yeats after the 1916 Irish uprising, I’m not going to “murmur name upon name” of the fallen heroes of newsstand distribution. Now we have a new storm to buffet our tiny boats and one less safe haven to sail into. We’ve been through many bankruptcies, yes, and more might be pending. As a business we’ve learned not to let collections get too far out; we’ve learned how to regroup and re-strategize and re-forecast and respond. We’ll move forward; we’re moving forward now. And as we do, we take a moment to say goodbye to a once great chain.

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.

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