Hereâs one way to drum up interest in an otherwise benign press release.
Discover Magazine's Web site hit 1.7 million uniques in March and its blog, Bad Astronomy,
broke the 2 million page view barrier. The unique visitor metric is
three times the site's traffic a year earlier. To celebrate, CEO Henry
Donahue and blogger Phil Plait will be getting tattoos.
Now we've all heard about brand ambassadors, especially among
editors, but having the CEO drop himself into the community interplay
by commemorating a brand milestone with something as permanent as a
tattoo is particularly cool, if not slightly weird.
But for all I know, Donahue (who blogs regularly for FOLIO:) may already have a bunch of tattoos.
I've met him several times so if he does, he keeps them well covered.
Anyway, the tattoo idea, as these things generally do, originated as a
spontaneous, "half-kidding" pactâat Comic Con,
no lessâinspired by a science themed online tattoo gallery curated by
one of Discover's bloggers. Donahue and Plait promised to get tattoos
if the site tripled its traffic.
Taking it a step further, they're engaging their audience to help
with ideas. "Now that has actually happened, we're committed to doing
it," said Donahue in a statement announcing the traffic spike. "I think
I'm getting a fish and Phil is getting a galaxy, but we're also excited
to see what the readers come up with."
Not sure how science-y a fish is, but I bet Discover's audience will
get into it with the fervor of a teachers-versus-students kickball
[Photo illustration: FOLIO:]
To the consternation of about 283 CEOs, Moody's Investor Service
published its "Bottom Rung" list on Tuesdayâa compilation of companies
the firm thinks are at the greatest risk of defaulting on their debts. FOLIO: took a look at the bottom 30
earlier, but the full list reveals a cringe-worthy portion of
publishers and media companies.
Some surprising; some, not so much:
Advanstar Communications Inc.American Media Operations Inc.Canon Communications LLCEmmis Communications CorporationEndurance Business Media Inc.Hanley Wood LLCJobson Medical Information LLCMorris Publishing Group LLCPenton Media Holdings Inc.Questex Media Group Inc.Reader's Digest Association Inc.Source Interlink Companies Inc.
Auto, retail and manufacturing also make up large segments of the
list, but in aggregate, it represents almost every sector of the
There are other high-profile names on the list, too: Blockbuster Inc.,
Chrysler, Ford, GM, JetBlue and the Krispy Kreme Doughnut Corporation.
Check outÂ the full list here ...
Mediapost has a good interview with Chuck Cordray,
GM of Hearst Magazines Digital Media. In it, he reveals paid search is a
very small part of the group's traffic-driving strategy, at least for
the women's sites-a very competitive market, by the way. "For the core
women's sites, we buy less than 1 percent of our traffic. It's really search
and syndication that drives 77 percent of our traffic," he said.
Knowing where your traffic is coming from and the tactics your
visitors are using to get to your site is an important distinction. In
Hearst's case, it has been a key driver behind optimizing the sites for
search as much as possible.
Of course, Hearst has also built its traffic via acquisition, which
Cordray points out in the interview, buying Kaboodle, RealAge and
Answerology. But these acquisitions were targeting a specific, younger
female demographic as well.
But probably most impressive is the group's online subscription
selling prowess. Cordray reveals that the group went from 600,000 to
2.2 million by 2008, simultaneously boosting per-order
profitability by 60 percent.
Hearst's Chris Wilkes has often articulated the group's ability to
draw visitors deeper into the brands-either as subscribers or more
committed visitors via email address submission. Audience Development has a quick-hit
story on how they use online sweeps to pull users in. Getting Real Demos From Your Anonymous Searchers.
Source Interlink sent a letter to its retailer partners today explaining how the distributor is reacting to the current chaos in the magazine newsstand channel.(If you haven't been following this saga, read these stories here, here, here and here.)It's pretty strong stuff. Claims of an "unprovoked assault" and competitive lockouts. It's damage control, to be sure. There are a number of reports attempting to shed light on an extremely contentious and emotional distribution market that's been tough to pin down. Indeed, trying to describe what's going on is like trying to hit a moving target. Tempers are through the roof and the finger-pointing is severe.Here's the letter in full:Source Interlink is still in the Magazine Distribution BusinessI am writing to you to explain why you may have experienced some interruptions in your magazine shipments. This has been caused by an unprecedented and unprovoked assault on this channel by certain publishers and a national distributor. They are trying to lock out competition (Source) in the magazine distribution chain to the retailerâs detriment.To accomplish this scheme, this group has spread false rumors about Source and attempted to undermine us in the community. Just to clarify, Source has ample and readily available liquidity, in excess of $200 million, and is current in its obligations to all its customers. We are part of a large and vibrant company that includes DVD and CD distribution and more than 75 magazine publications and 90 related web sites. We have solid backing and support from our investment partner, The Yucaipa Companies. Most importantly we are enjoying solid support from the retail sector and many publishers who have the best interests of the industry at heart.Over the past 5 years, Source has invested millions of dollars in distribution equipment, distribution centers, technology, logistics and software; expanded its service footprint; and worked long and hard to become the most efficient and lowest cost magazine distributor. Unfortunately, while we were in the middle of pursuing good âfaith negotiations to secure necessary financial adjustments to outdated distribution agreements those publishers colluded with two large and less efficient distributors to take over Source routes and customers. They characterized this as a dispute over â7 centsâ, but they really used that as a cover to roll out their scheme. The 7 cent increase was rescinded within days and no price increases are now proposed.What this is really about is an attempt to eliminate competition in the magazine distribution chain that is primarily directed at you. Their goals are simple. By locking up all distribution with two distributors beholden to them, they will be able to:Control your margins â they effectively dictate retail price and with this will also dictate your cost structure.Reduce service to you â they have no incentive to provide more labor to your store. If you want it, you will have to pay for it.Eliminate important programs you may want, such as scan based trading
In short they want to control the entire channel and effectively eliminate any control you have. Your margins will be reduced with higher fees.Hopefully knowing the facts will make it clear that this group is attempting to limit supply options no matter how much disruption is caused in the retail community, as evidenced by the fact they have no viable plan to make this product available in Sourceâs distribution area.You should also know that we are going to fight to keep and grow our current magazine distribution business. We will shortly be filing a major anti-trust lawsuit and seeking a restraining order so we can continue to properly service your stores.With your continued support we will have our business channel operating at normal efficiency within a short period of time.Sincerely,Greg MaysChairman & CEO
On January 14, Charlie Anderson, CEO of Anderson News, announced his company's plan to increase the per-copy price of distributing magazines by 7 cents. A week later, Source Interlink announced it would raise its prices by 7 cents, too. Both wholesalers have instituted a February 1 deadline for publishers to sign on the dotted line. Since then, news outlets, including FOLIO: and Audience Development, have lit up with stories on the subsequent pandemonium.
Patrick Bowman, Anderson's VP of category management, sent out a 1,600-word document yesterday with the rather ominous title âUS Magazine Industry Risks Circulation Meltdown,â clarifying what Anderson felt were 10 misconceptions surrounding the proposals.
Click here for a PDF of the memo, or scroll down to read it:
US Magazine Industry Risks Circulation Meltdown
Clearing up 10 misconceptions about the Anderson plan could avert severe disruption
To continue distribution of magazine copies after February 1, 2009, Anderson News has announced that it requires $.07/copy in excess of its current discount and reimbursement of its scanned based trading (SBT) customer inventory costs.
Andersonâs proposal may be viewed as a temporary or âstop gapâ measure designed to create immediate stability, ensuring distribution of magazines to a competitive marketplace. Once Anderson has eliminated its operating losses, it welcomes alternative longer-term compensation strategies and solutions.
Since Andersonâs announcement there have been several articles written on the subject. Also, Anderson News has had a number of conversations with its retail customers, national distributors and publishers and found a number of misconceptions and misstatements about our proposal and about our business in general. A discussion of ten of these misconceptions follows:
1. Andersonâs proposal will cost publishers over $1 billion. False. The application of $.07 per copy to the 2.184 billion annual copies distributed through full service wholesalers results in an aggregate gross cost to all publishers of $152 million, not $1 billion. Over the past ten years wholesaler gross profits have not kept pace with inflation as measured by the CPI. The $.07 fee will quickly restore stability to our business by eliminating our operating losses. The fee will also act as an incentive to eliminate waste represented by print order copies that exceed retail display capacities. Obviously, copies that will not fit on retail display fixtures have no hope of sale. Eliminating this waste would reduce print orders, saving publishers print, paper and distribution costs. Indeed if selling efficiency of single copy magazines increased from the current 35% to 41%, the aggregate publisher PP&D cost savings exceeds the proposed fees.
2. Anderson wants to exit the business. False. Anderson wants a viable, profitable business. It is no longer willing to absorb losses. Anderson Newsâ magazine sales in 2008 were about $760 million, and it reported a net loss of over $20 million. Its projections show that the $.07 fee after allowance for reduced print runs will reverse the Anderson losses. Going forward, Anderson projects that its net operating margin to be less than 2% of sales.
3. Publishers can use the US Postal service to deliver and sell magazines to retailers. False. The postal service can make deliveries to storefronts, but store delivery is just a part of wholesale services. Anderson aggregates and coordinates product, service and information for retailers and publishers. Imagine the chaos of multiple deliveries to retailers. Anderson gets all publications to storefronts in one delivery. Anderson creates weekly orders for each storefront from its massive data files, delivers and checks-in each order (which is needed for payment and to maintain retail âitemâ files that track retail transactions), and merchandises the copies by placing new publications on display and by removing unsold copies for processing and destruction. Anderson also monitors and updates retailer POS systems. The cost sharing routines of Anderson are effective. For little more than half the cost of one $.42 first class stamp, Anderson does much more than the post office. Anderson adds value to the single copy channel. Publishers have sold direct to retailers, and the results were a disaster for the both the retailer and publisher. Publications failed to get timely display and retail shortages, discrepancies and payment problems were common.
4. Anderson should get its fees by lowering retail discounts. False. Anderson operates in a highly competitive marketplace. If Anderson reduces its retailer discounts, it loses business. Maintaining sales is important to the density and effectiveness of its delivery routes. Anderson has met the higher discounts of its competition only when necessary to maintain its sales volume and protect its route density. Anderson has lost business when the competitive bids were too great.
5. Retail discounts are too high and should be reduced. False. The single copy magazine category is mature and has experienced sales declines over the past decade. The category competes at retail for display space with hundreds of other items. The magazine category is being deemphasized by retailers as it fails to deliver sales growth. Many examples exist where key retailers have reduced the categoryâs display space or moved displays outside of higher traffic areas. If retail margins are reduced or costs otherwise increased for retailers, display space for the magazine category will further decline.
6. National distributions have a solution to the wholesalersâ financial challenges. False. The national distributors have known of the channelâs failed economic model for over a decade. Rather than address the challenges through innovative change and leadership, national distributors did little except protect their own financial interests by rewriting their client agreements to pass financial risk and costs through to publishers. National distributors inhibited Andersonâs efforts to hold substantive discussions with their client publishers and to institute meaningful change. National distributors could have been working with their client publishers to rationalize all discounts relative to their underlying distribution costs. They could have removed the âfree riderâ title subsidies associated with certain large publication (most notably found with certain lower cover price weekly publications). National distributors could have eliminated discriminatory pricing practices of client publishers that have fueled retail demands by national retail chains. Also, they could have limited print orders to balance production with retail display capacities. National distributors are uniquely positioned to change the compensation strategies of its clientsâ distribution channel. The current compensation structure contains no cost based fee element. (Incorporation of such fees results in strong incentives for efficient behavior and discourages waste and inefficiency, eliminating substantial costs for all parties.) Anderson is compensated purely based upon a percentage of sales. Given the mature nature of the industry, this compensation model is broken. Intermediaries like wholesalers should be paid for the value added activities they perform. The current compensation model simply has not kept up with the increasing costs to pick, pack, deliver, merchandise, and return magazines. Rather than acting, national distributors have waited until the need to act has become dire and the potential consequences of inaction catastrophic. To date, national distributorsâ have responded to Andersonâs proposal with calls for âbusiness as usualâ, reflecting that that they are part of the problem and not the solution.
7. Andersonâs exit will serve the best interests of publishers and retailers alike. False. When Anderson announced its proposal, one national distributor executive reportedly commented that another wholesaler would take Anderson business. Without meaningful change, why would another wholesaler want more unprofitable business? The obvious answer is that profits can be restored when competition in a market is eliminated. Reduced competition will hurt publishers and retailers alike. When competition is eliminated without regulatory oversight all parties lose. Competition is the driving force to innovation and efficiency. Without competition, retailers and publishers risk their existing discounts and the category will lose its relevancy to retailers. Display space will be lost to competing consumer products. Even though the category needs competition, certain national distributors are recommending the implementation of distribution plans to the marketplace that are premised on the elimination of âchoiceâ and competition. Why would publishers put so much at risk when acceptance of Andersonâs proposal entails a manageable cost and flexibility for the future?
8. Anderson is more expensive than the non-service or âdirectâ wholesale model. False. The âdirectâ wholesalers are paid âreshipâ or freight allowances, given RDA through a base discount, and enjoy other favorable terms and conditions. For some publishers these allowances represent more than Andersonâs $.07 fee proposal and are currently paid to competitors that typically do not perform in-store service. Publishers pay more and get less when they sell copies to non-service distributors. These practices are nonsensical and may violate fair trade laws and regulations that prohibit discriminatory pricing. It is wrong to give better terms and conditions to some wholesalers than others. Andersonâs in-store service model costs publishers less and provides them greater value through its in-store merchandising services. Further, its proposed fee narrows the existing compensation gap with competing âdirectâ wholesalers.
9. Andersonâs competitors can absorb its business. False. Andersonâs key competitors have acknowledged operating losses. One competitor, Source Interlink, is a public company. On December 10, 2008 Source Interlink reported massive net losses for the nine months ended October 31, and its balance sheet reflected liabilities that exceeded tangible assets by nearly $1.4 billion. To absorb Andersonâs business, competitors (including Source Interlink) will have to purchase over $70 million of inventory that Anderson owns and that is located in the stores of some of Andersonâs largest retail customers. Otherwise, retail sales will suffer if Anderson is forced to reclaim its retail inventories for its secured lenders. Andersonâs competitors will incur substantial costs to replicate Andersonâs distribution network that crosses the United States. The requisite capital investment together with the expense to hire and adequately train several thousand associates is prohibitive. The aggregate costs to Andersonâs exit are staggering. How can Andersonâs competitors that have each acknowledged operating at a loss afford such costs? They cannot. Further, how much will be lost in magazine sales during a chaotic transition?
10. Anderson has made proposals like this in the past and is bluffing today. False. Anderson has proposed changes to address serious problems within the single copy distribution channel on numerous occasions. Those efforts elicited such limited action and change by publishers and national distributors that Anderson is forced to take urgent action on its own. Andersonâs contingency plans include meeting with its retail customers to discuss how retailers might directly buy certain nonparticipating titles. Anderson wants to stay in business with the same publishers and retailers that it has served for decades. Killing the messenger is not a solution. Creating stability is the prudent solution.
"If they just get the magazine, they're not as useful."âKelsey Voss, director, circulation and customer development, Ziff Davis Enterprise"As we present our audience with a variety of products, the problem that we face is that not all of our customers want to receive every product we offer, and they don't necessarily have to subscribe to our print publication to be a member of our audience."âHeidi Spangler, director of circulation and audience development, Questex Media"Circulation-based metrics are irrelevant to proving magazine effectiveness. There is too much focus on ratebase rather than distribution. Every other medium deals with audience, we deal with circulation."âJack Kliger, former CEO, Hachette Filipacchi"Until we can shift the conversation from circulation to audience, we cannot be on the same footing as the other media. Audience will become the common denominator of our media."âEd McCarrick, president and worldwide publisher, Time
These are just a few observations from some pretty heavy hitters. And what they're all referring to is audience measurement and development. It's a trend that, frankly, is in our face whether we like it or not, and one that we've written plenty about in the pages of CMâultimately leading us to the decision to rebrand Circulation Management as Audience Development. This was a difficult decision to make. CM, after all, is a decades-old brand with a fiercely loyal readership. But after months of careful deliberation, focus groups and research, we decided to pull the trigger. Starting with the November issue, CM will be Audience Development. The Web site will also undergo its own re-engineering to reflect our new content strategy. The magazine as you know it is not going away. In fact, you'll immediately recognize much of the same trend coverage. But along with a new redesign and rebranding, we're introducing new departments that will consistently address trends we've covered in the past with periodic, but increasing frequency: Online audience development and the technology that drives it; event audience development; integrated, multiplatform marketing; and database development and marketing, to name several.In any case, you'll be hearing more about this as we move forward. Here, however, I'd be interested in hearing what you have to say on the matter. What's happening in your organization? How are you measuring, tracking, marketing to your community as a whole? Are we crazy to be changing CM's formula?
CHICAGOâMaybe it's our compulsion to solve the chicken-or-the-egg riddle, or perhaps just stab a stake in the ground, but at the 2008 CM Show here this week, there was quite a bit of effort to establish just what exactly is "king."Don Pazour, CEO of b-to-b publisher Access Intelligence, proclaimed in his opening keynote "audience is king," essentially relegating content and commerce as servants to the ultimate goal-attracting a high-quality audience. Growing audience, said Pazour, means you're growing the company, and "if you're not growing, you're dying." It was a particularly apt statement, given the context and audience of the event, of course, and one that struck a chord with attendeesYet by lunchtime, where the second of the show's three keynotes was featured, content, one of the more traditional recipients of kingly status, was crowned. "What I always felt was the core of the success of the Industry Standard was it was editorially-driven, which is why I was the number-two person in the company," said Jonathon Weber, former editor-in-chief of the Internet economy bible the Industry Standard, which now exists in a Web-only format.
Weber has subsequently parlayed that content-focused approach into his two-year-old venture, NewWest.netâa media company consisting of a network of regional Web sites, a print magazine and events focused on business and life in the Rocky Mountain West.According to Weber, the site's content has been the essential driver of traffic, and subsequently, audience development.
Last week, the BPA, ABC and a number of advertising and magazine associations launched a campaign targeting client-side marketers who buy non-audited b-to-b publications. Called Buy Safe Media, the program uses direct marketing to drive buyers to a cartoonish Web site which features a video and information on the potential pitfalls of un-audited mediaâa calculated attempt to shut non-audited titles out of the buying process, or, at least, indirectly convince them to become audited. The campaign invoked the wrath of Bob Sacks, a prolific columnist and media industry observer, who opened a blog post this way: "The new pathology detailed below actually disgusts me." He calls the Buy Safe program "an attack at the heart of the entrepreneurial publishing business." Mr. Magazine himself, Samir Husni, got into the action, too: "Both Bob Sacks and myself were horrified to say the least on how low some folks in our industry are willing to sink in order to make their business flourish."BPA CEO Glenn Hansen promptly took Sacks to task for not bringing him into the loop before posting the initial rant. Sacks has since opened the dialog to his newsletter readers, and promised Hansen a soon-to-be-published interview. At the heart of the argument, according to Sacks and Samir, is auditing is a choice, not a requirement, and magazines should focus their attention on "customers that count" and other media rather than lobbing grenades into their own camp. The issue echoes what Jack Kliger, the recently decamped CEO of Hachette Filipacchi, has been vocal about for years: That magazines should focus more attention on reader engagement, less on rate base, and promote their brands as alternatives to other media and not each other. Can magazines afford to be mutually exclusive? Or should they focus instead on selling total audience and engagement? What do advertisers really want, and care about in terms of audience and circulation?
The way things are going, Susan Lyne will need to formally address her near-term plans for employment sooner than she might have plannedâperhaps even before she's polished off next week's lavender almond torte with Time Inc. CEO Ann Moore.The departing CEO of Martha Stewart Living Omnimedia has been at the crest of a swelling wave of speculation (one which FOLIO: started back in November)âand it just may break on top of a lunch she has reportedly scheduled with Moore next week.Media M&A watchers have kept the Bewkes-helmed Time Inc. spin-off front-and-center for the last eight months or so, which supplanted temporarily rumors of a Moore-Lyne swap, but it seems the planets have realigned. Lyne disembarks from MSLO, Moore calls her up for lunch, and we're repeatedly reminded that Moore's not renewing her contract in 2010. So far, no word from Lyne on what her next steps are, but if she and Moore indeed meet next week it will be one of the most closely-watched, nicoise salad-fueled power lunches in a long time.
DeveloperShed, Ziff Davis Enterpriseâs 12-site tech network of developer communities, has joined Federated Media, a blog aggregator and service provider that brings independent publishers into its network by offering to take on their ad sales.
The five-year-old DeveloperShed will become part of FMâs Technology federationâone of about 10 other verticals that include sports, automotive, media and entertainment, and video gaming. DeveloperShed merged with ZDE in August 2007 as the tech publisher completed its spin-out from Ziff Davis.
Twelve sites strong, one could argue that ZDE already has its own budding âad network,â and the company is no newcomer to integrated ad sales with a fleet of established products that span print, online and events.
But why would they hook up with Federated?
Itâs a move thatâs contrary to efforts by publishers that have started up their own vertical blog networks to boost their ad power (Forbes.com, and IDG, among others). Itâs also intriguing, as VentureBeat points out, in light of some big-name sites that have dropped out of Federatedâs network as they get scooped up by other, traditional publisher-backed companiesâArs Technica, bought by Wired, and Celebrity Baby Blog, bought by Time Inc.âs People.com, for example.
DeveloperShedâs 12 sites aggregate a large, IT-oriented audienceâ6 million unique visitors and 27 million page views per monthâso itâs a significant partnership for Federated, which gets a big audience and a presumably large chunk of real estate to sell.
ZDE, as it turns out, actually does need the sales muscle Federated provides. Plus, ZDE CEO Steve Weitzner tells me DevShedâs user-generated content fits with Federatedâs blog network profile. âDevShed is a subsidiary of Ziff Davis Enterprise,â he says. âIt has its own sales team and marketing addressing its audience of software developers. Historically, DevShed has maintained a small sales team to call on key accounts and has employed sales reps for mid-size and smaller accounts. The vast majority of DevShed's content isâand always has beenâuser generated, we believe it fits well with Federatedâs âconversational mediaâ approach so we have signed them up to replace our previous reps. DevShedâs direct sales team will continue to serve the sitesâ key customers.â
Much like Bobby McFerrin's chirpy ode to blissful ignorance, ABM recently attempted to put a happy spin on its analysis of its own BIN report.
Essentially, both print ad revenue and pages ended 2007 downânot by a lot, 2 percent for revenue and 3.35 percent for pages, but down. And this after a flat 2006 in revenue and a slight decline in pages.
Now these kinds of things can be looked at from any number of angles. And no one, especially an association representing an entire industry, wants to be the bearer of bad news, much less voluntarily even touch a doomy outlook. For example, ABM notes that 13 of the 21 categories tracked showed increases in respective revenues. Fair enough. But then their analysis of the report takes it one step too far.
The computing, software, telecom category has been a freefall for the last three years, declining almost 30 percent in revenues since 2005â17.59 percent alone in 2007, according to the BIN reports.
Yet here's what ABM had to say in its analysis of the 2007 report entitled "Business-to-Business Media Experiences a Robust 2007":
"In fact, ignoring the âComputing, Software, Telecomm' category would result in an overall 0% change over 2006."
I love that! So why not just keep going with the other two top declining categories, business, advertising & marketing (-10.7 percent) and travel, business conventions & meetings (-6.95 percent)? I bet ignoring those as well would rocket 2007 to "robust" indeed.
When you're a $5 billion publisher like Time Inc., you can afford to hire someone like David Refkin as director of sustainable development. Indeed, the company has been studying the impact of its entire production process. At the MPA's 2008 Retail Conference in Tampa, Florida today, Refkin discussed Time Inc.'s efforts in environmental sustainability, offering up figures that give some insight into the company's impact:
Refkin also said that only one out of six magazines in the home get recycled, and that Time Inc. has partnered with Verso Paper to increase consumer awareness, spending $5 million on outdoor advertising and another $6 million in magazines to push recyclable messaging. To learn more about the publisher's efforts, keep an eye out for its sustainability report due out in April.