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Michael Rondon

You Choose: Which Hillary Cover?

Michael Rondon Design and Production - 01/23/2014-12:16 PM

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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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Roy Beagley

Renewal Notices and First Impressions

Roy Beagley Audience Development - 01/15/2014-14:04 PM

 

Harlan Hogan said “you never get a second chance to make a first impression,” which is almost as annoying as “there is no ‘I’ in team,” but even more annoying is both these sayings happen to be true.

Whether you are sending a new offer, a renewal effort, an invoice or an order acknowledgement, your outer envelope speaks volumes about your publication. Therefore, before you decide on outer envelope copy, make sure you understand your audience.

“Yo Dude! Here’s a mega awesome offer!” is probably not going to work well if you are offering a new subscription and your audience is CEOs, expectant mothers or students of English literature. Keep in mind the audience you are serving. Sending a letter to chief executives in a plain envelope without any copy whatsoever almost guarantees the letter will be opened, thus proving the adage “less is more” is just as annoying as “there is no ‘I’ in team” as well as Mr. Hogan’s message noted earlier.

Keeping the message on target is important, but urging the recipient to do something is also a good technique. If I get an envelope that states: “You need do nothing”, then I do nothing and throw the unopened envelope away. If I get an envelope that says: “You need do nothing… but what about 5 extra issues?” my trash can may not fill up quite so quickly, since now I am intrigued by the offer.

I’m not sure how many people only send renewal notices by email, but if you do not put at least a couple of renewal efforts in the mail, you are missing an opportunity. I know more and more people are getting and paying their invoices on the Internet but many are still convinced it’s unsafe for personal data. Don’t let “being green” stop you from mailing some renewal efforts. And be creative. Done correctly, you will see a good response to mail efforts, probably better than your email response.

Putting an acknowledgement of an order into the mail is not a bad idea. You can use this notice to offer people an opportunity to extend their subscription term (called a renewal at birth), or offer them other products. Here’s suggested copy: “Thanks for being part of our family and as a valued member, here are some other products we thought you might like to know about.”

This approach makes you a) look as if you really care (which you do) and b) get more revenue just for being nice.

However, all of this relies on one thing, getting people to open the envelope. Ask yourself what makes you open an envelope. The promise of a benefit? Something free inside? Engagement, such as a short quiz?
Think long and hard…and prosper!

 

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Mike Kisseberth

Native Advertising and Programmatic Buying: Predictions for 2014

Mike Kisseberth Sales and Marketing - 01/10/2014-09:31 AM

 

Native advertising and programmatic buying were all the rage in 2013—and for good reason.

According to eMarketer, native ad spending will exceed $3 billion in just three years. Publishers are trying to take advantage, of course, with nearly 75 percent now offering online native ads across their sites. Any why not? BuzzFeed, the poster child for native, is both profitable and growing at a time when many media companies, new and old alike, are finding it increasingly difficult to do either of those things.

Still, native advertising only shared annual buzzword honors with programmatic buying. Programmatic is expected to account for nearly 30 percent of all display ad spending by 2017—or over $9 billion. That’s because 85 percent of advertisers use it, with 91 percent expected to do so in the next two years. And like native, publishers are going where the money is. 72 percent now have programmatic offerings in place.

Long-term growth for both native and programmatic is clear. But the two categories are still very young. Over the next year, how might the way in which we use them change? Here are a few predictions.

Native Advertising


1. Standardization Is Coming

With the recent release of the IAB's Native Ad Playbook, we’ll see continued standardization of native ads and native ad serving. Remember—while native spending will likely hit $3 billion in just a few years, the concept is, again, relatively new. Implementing structure and a consistent framework will only help both buyers and sellers maximize opportunities and take full advantage of the trend.

2. “Answering” the Scale Question

The next big hurdle in native advertising will be to close the programmatic-native gap. The pressure is on figuring out how to automate native, similar to RTB and programmatic, so that publishers can create custom content quickly and with little overhead, to drive actual scale.

3. Expect Greater Regulation

Disclosure and transparency in native advertising will continue to be top-of-mind for the industry. Expect stronger guidelines and standards to be considered by the FTC in the New Year, with the industry encouraging self-regulation, as seen with the IAB’s Native Ad Playbook.

4. Native will Be More Data-driven

Successful native campaigns will be heavily reliant on the data and insights gleaned from programmatic initiatives. This means that understanding how creative functions and drives programmatic performance will become increasingly useful in planning native campaigns.

Programmatic Buying


1. Buyers will Grow into Tech Experts

As automation and programmatic continue to take center stage, media buyers will become increasingly technology-proficient to interpret data and provide strategic insight to clients.

2. Premium Programmatic will Be Key

The industry is still confused about what programmatic, and especially premium programmatic, really means. As more and more publishers adopt programmatic strategies in 2014, the emphasis will shift from understanding the medium to progressing it. This means more emphasis on “premium programmatic,” mobile, video, etc.

3. Marrying Programmatic and Native

2014 will be the year we see native and programmatic begin to court one another. In 2013, we created a false dichotomy between the two formats, with native on one side, programmatic on the other. Rather than separate the two, we need to understand how they can work together, plugging each other’s gaps—scale and quality, for example—to improve message delivery.

4. Direct Sales will Go Programmatic

With more dollars moving towards programmatic buying channels, I expect greater pressure on the direct sales teams in the New Year. As a result, one of the things we will see is direct sales teams working hard to acquire the skills and relationships needed to drive premium programmatic deals.

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The future is obviously very bright for both native and programmatic. In 2013, they solidified themselves as key growth areas for the long-term. In 2014, however, we can expect evolutions in each category, with more synergy between the two to better deliver for advertisers, marketers, brands and publishers.

 

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Diane Schwartz

Yahoo’s Marissa Mayer Answers to ‘Me, Me, Me’

Diane Schwartz Consumer - 01/08/2014-11:46 AM

 

Marissa Mayer was the emcee of her own keynote presentation at CES on Tuesday, deflecting the spotlight from her and onto the key people leading some of the changes at Yahoo. A packed theatre at CES welcomed the hour-long advertisement from the Yahoo CEO because, well, it was interesting and entertaining. It was about the most important people: us.
 
Whether it was David Pogue, the new vp of content, unveiling the Yahoo Tech digital magazine or Katie Couric, the new global anchor for Yahoo, talking about the importance of trust-worthy journalism, Mayer made sure the key takeaway for stockholders (and us) was that Yahoo was innovating, pivoting and rejiggering for none other than us. Yahoo is a platform customizable to your habits, so much so that it just acquired a service called Aviate that predicts which apps you’ll need at any given moment and moves them to your homescreen (we don’t have time anymore to swipe to the next screen).
 
The CES audience, which comprises what Pogue called "the Geekheads" versus 85 percent of everyone else, “the Normals”, wanted to hear what Yahoo has done to become relevant again and what it will do to become more useful. As is evident in the 3,200+ exhibits at CES this year, technology is complex and the choices for how we spend our time are abundant. Yahoo and other brand leaders are answering the call to give us what we want when we want it.
 
Mayer’s goal could mirror most brands’: to turn “complexity into clarity.” For Yahoo that means focusing on four key areas: Search, Communications, Digital Magazines (mini-sites, not actual magazines) and Video. Its acquisition of Flickr and Tumblr validate what we already know to be true: that photos and storytelling are the future, and most likely on your mobile device. Its hiring of Katie Couric sent a message to its community that a quality interview requires a great interviewer. A few SNL "Weekly Update" cast members, plus a John Legend mini-concert—all during Mayer’s keynote—were crafted to showcase Yahoo’s coolness.   
 
Mayer and her cohort of presenters representing Yahoo wanted us to know that personalization and simplification are what we should expect from this media brand starting now. It should get many marketers and media companies thinking the same thing about their brands. The challenge is that being simple is not so simple.

 

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Jeffrey S. Litvack

So Your CEO Says You Need to Be A “Digital First” Publisher? Part 6

Jeffrey S. Litvack B2B - 01/02/2014-10:45 AM

 

In earlier posts, I wrote about the value of having a mobile app for your brand, and briefly touched on the associated marketing and sales challenges. In this post, I’ll dig deeper into how to successfully launch an app and build an audience.

See Also: So Your CEO Says You Need to Be a "Digital First" Publisher? Part 1 | Part 2 | Part 3 | Part 4 | Part 5

Unlike the Web, publishers cannot passively accumulate an app audience, but rather need to take a very active role in driving downloads. The adage, “If you build it they will come” doesn’t hold true for apps. The reason for this is that app stores are islands unto to themselves and the benefits of the open Web (i.e., people stumbling upon your app via search) aren’t available. Compounding this issue are App Store discoverability challenges, including:

Limited Search Identifiers. Search in app stores is based on a limited number of key words that you select when you upload the app, rather than the metadata associated with the content/articles themselves. Google just started testing the ability to index and deep link into an app with the release of KitKat but the outcome is questionable, while Apple doesn’t even offer such capabilities.
 
Too Many Apps per Category. The idea of a user browsing a category (say news) and finding your app is laughable because of the sheer number of apps in any category (i.e., 26,134 apps in the news category alone). Simply put, there are just too many apps for people to browse through. 

Ranking Is a Chicken and Egg Problem. An app’s rank in a store (both for search and by category) is generally dependent upon its rating, but without any downloads the app starts at the bottom of the list. As such, the act of putting an app in an app store doesn’t guarantee any downloads.

Given these discoverability issues, when launching an app you need to have a well-thought out marketing plan. The good news is that as media companies we have a certain advantage over others in that we have media channels available to us that we can leverage to drive app downloads. These “free” channels include running print ads, email ads, online ads and mobile Web ads in publications we control. To drive the most downloads, your media plan should include all of these free channels as well as paid placements on competitor sites/apps (if you’ve got some extra marketing dollars lying around). Three tips to keep in mind are:

Calls-to-Action on Mobile Devices Work Best. In my experience, the most effective tool in driving downloads is to pop-up a “download now ad” when the user goes to your mobile website. The messaging in these “ads” simply ask the user if she’d rather view the content via your app or via the mobile website. This is not so much a marketing exercise, but rather a product development exercise.

Print Ads Require Short-Codes. If you are going to use offline (e.g., print) ads to drive downloads be sure to use a “redirecting” short-code that’s easy to use and remember (e.g., at.law.com/apps), rather than the full appstore URL.

Make Money From the “Download Ads”. If you’re smart about leveraging the marketing channels you already own and have a good sales team you can also turn a “download ad” into revenue by packaging it with a sponsorship opportunity. This has been a tried-and-true approach for us at ALM where we’ve sold compelling sponsorship packages to advertisers that combine offline and online channels. These ads typically say something like “Download the new XZY app brought to by ABC” with the sponsor’s brand effectively incorporated into the ad.

To sum things up, driving downloads takes time and effort.  With hundreds of thousands of apps out there, building an audience is as much a function of your marketing efforts, as it is the value of the underlying app.

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Antoine Boulin

For Publishers, User-Generated Content is The New Opportunity

Antoine Boulin Consumer - 12/18/2013-14:32 PM

Years ago, user-generated content (UGC) was typically perceived as "low-quality" media, or at the very least, "lowbrow" entertainment. While the bite-sized content was often engaging, if not inspired, brands tended to shy away from it in fear that an unsavory YouTube clip or crazy cat meme wouldn't sit well--or neatly--next to their carefully crafted brand message.

That's no longer the case, though--not when 80% of online content today is user-generated. Social media and self-publishing tools have created a glut of online amateur content while also increasing the overall quality of the material. As a result, we've seen a sea change in the way publishers work with and integrate UGC onto their sites, and the way they sell it as a value-add for brands.

Smart publishers have found ways to produce professional content, while also tapping their communities to enhance that content with their own. Also, more publishers now have a reputation platform in place allowing them to surface the best UGC and gather a wealth of data on the best experts in their communities. By doing so, publishers get brand-safe material to leverage-and opportunities for new revenue in the bargain.

Still, it's a nascent, unique model that only a handful are embracing effectively. Here are, in my view, the top three.

BuzzFeed

Most everything about BuzzFeed is highly curated, user-generated content. From the imagery and videos in the actual posts, to the recently launched BuzzFeed Community, BuzzFeed has made UGC the cornerstone of what's become a very successful and now profitable business.

The potential promise in BuzzFeed Community, however, from both a branding and revenue perspective, is especially fascinating and, I think, an eye-opener for online publishers.

Launched in May, BuzzFeed Community is a platform for readers to submit their own BuzzFeed-branded or styled pieces. It's basically a user-generated content pipeline. But if you think of it from a brand advertising point of view--the best user-submitted pieces are featured on the site's homepage and down the road BuzzFeed could possibly repackage that content for "reader-first" native advertising--it's ripe with potential.

Gawker

Gawker Founder Nick Denton has been referred to as "the most disruptive force in online media right now." When you look at what Gawker is doing in the space today, with respect to both its brands and own technology, that's not an exaggeration.

Like BuzzFeed, Gawker has blurred traditional boundaries between reader and writer. The company recently developed its own proprietary commenting system, for instance, deploying it across its portfolio of sites and empowering its audience to be all things at once-"a writer, an arbiter, an editor, and a publisher." It turns publishing on its head and, similar to BuzzFeed Community, could evolve into reader-driven native ads.

Gawker is monetizing standard comments, too, turning them into native ad experiences of their own through brand-sponsored discussions within a page's comments section.

Beyond native, though, Gawker also plans on leveraging UGC as an affiliate marketing opportunity. If you look at their terms of use, Gawker says that they "will insert affiliate links into your content where it makes sense," making UGC an actual revenue source.

Forbes

On the surface, Forbes and UGC may seem like an odd pairing. When you think of Forbes, its pedigree and authority as a venerable professional publisher is what stands out. But if you look closely, Forbes is innovating the use and value of UGC online.

In 2011, Forbes debuted a "Called Out" comments feature on Forbes.com, a social layer beneath every post's headline that surfaces selected conversations between the post's author and individual readers/commenters. It's a tool that points to the "best" UGC.

At first glance, this was a fairly simple feature-add, built to generate engagement across the site. But, when paired with Forbes BrandVoice, Forbes' branded content platform for paying advertisers, it becomes much more than that. "Called Out" comments deliver a relationship-building tool for brands within native pieces, while also allowing brands to highlight on-brand comments as a form of third-party validation.

As a result, comments become another asset that Forbes can market to advertisers, making their overall offering that much more attractive to potential customers.

The Future-Role Reversal

As UGC has grown into a significant value-add for brands, UGC-first networks are also trying to evolve as publishers to take advantage. Take LinkedIn, for instance.

While it started as a social networking site, LinkedIn's success with its Influencers content submitted by power users has gained considerable attention among specialty publishers. It shows how engaging lightly edited, user-generated content can be when coupled with the right user base and tools, and how blurry the line is between "traditional" publisher and social networking community. To further blur these lines, the company's ability to cull data from its members' profiles allows it to work as an aggregator of professional content and push stories to us with better performance than a traditional publisher.

In fact, LinkedIn reports an eight-fold increase in traffic to all its news products since Influencers was launched earlier this year, with many posts recording more than 100,000 views.

And LinkedIn isn't the only UGC-driven network making headway in the publishing category. Medium and Quora are also making moves that spell greater ambitions in this area and that could pay off down the road.

Moving forward, pure community content can still be tough to trust (see: Yelp and Amazon). It takes a smart publisher that can blend together a variety of disciplines--content, technology, community moderation, audience quality, advertising, etc., to make UGC work. But, when done right, it translates into significant upside for those publishers and their advertising partners who recognize user-generated content as a real opportunity.

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Roy Beagley

Sourcing Controlled Subs From Your Website

Roy Beagley Audience Development - 12/17/2013-14:58 PM

 

One of the best ways of reaching your market is via your own website. I know this sounds obvious, but it always surprises me the number of controlled magazines that do not have a new subscription offer on their site. In some cases this is because the magazine’s rate base is very healthy, but in this day and age of reduced budgets this is the exception rather than the norm.

I visit many websites during the course of a week, and there is no real happy medium. You either get no subscription offers at all, or so many that every time you go to a site,
any good cheer gained at this time of year is well and truly lost.

If you are making multiple offers via your website, keep them under control otherwise you will scare people off. There is nothing more annoying than navigating to a page, only to get an offer for something you don’t want that is replaced by an offer for something else you don’t want when you close the page on the first offer. The record so far stands at seven offers, and by the time I was able to rid my life of all these offers, I had forgotten why I had gone to the website in the first place—and have not been back since. Actually, I lied, there is one thing more annoying. Going to the same website and getting the same “literature” every time.

Control your offers including when and how people see them. Any circulation or audience development professional that does not liaise with the IT department on at least a weekly basis is missing opportunities and more importantly probably losing orders. Being able to react to news relating to your business is key, especially if it is “hot” news. Taking quick advantage of breaking news can be handled with a 250 x 250 ad on the website that circulation or audience development can upload themselves; early birds catching worms comes to mind. You know what I mean!

Make sure your offer can be seen efficiently on mobile devices. Some advertisements I have been exposed to have rendered my mobile phone immobile. I know it sounds obvious, but there is nothing worse than an Englishman with an immobile mobile—Sting might even write a song about it. There is only so much any one person can take, so make sure you do not overplay your hand, or else you may well find your prospect is going somewhere else (and despite paywalls, there usually is somewhere else) to get the information you yourself offer.

 

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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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Meg Estevez

Building an Integrated Marketing Requal Plan

Meg Estevez Audience Development - 12/10/2013-13:55 PM

 

We’ve been focusing on fine tuning our 2014 integrated marketing campaigns here at New Bay Media. When I thought about how to start this process it occurred to me that when we think about an integrated marketing campaign we usually figure that it’s for our brands with a paid model and mostly for new business. Since I have a handful of trade (controlled only) titles as well, I thought about what I could do to create an effective integrated marketing campaign focused on requalification. Below I’ll take you through the process of how I started my integrated marketing campaign for 15 trade titles.

The answer is in the cover tip message/design.

Yes, that’s where I started. We do A LOT of requal emails throughout the year and we go from soft messages to stronger, building on the urgency as we get closer to our goal dates (May 31 for May books or November 30th for November books). But what we weren't doing with these email messages was taking them all the way across the different marketing methods within the same time that the email goes out, thus capitalizing on the roles of various marketing methods like banner ads, interstitials, etc. to provide our audience with clearer picture of what they need to do to keep their free issues coming to them.

Once I had my cover tip efforts set in place, I had to decide what other marketing channels I wanted to include and how I was going to keep the message consistent throughout the efforts. 

1. Start with when the print issue will be mailed with the cover tip.

2. If the February issue with the cover tip mails in January, then all of the other efforts related to this cover tip should go live in January.

3. This will help keep the messaging consistent. The idea is that the person who gets the print magazine with the tip should have received an email a couple of days before announcing the tip. And if they visit the website during January, they should see the interstitials and banner ads with the same messaging and design. If they get a newsletter in January, there should be a banner ad projecting the same message. And lastly, for those brands that offer free access to the iPad/iPhone apps, we’ll have banners ads in the container app and push notices.

My goal with the integrated requalification marketing campaign is to build this awareness with the reader that we want them to do something. There’s an action they need to take in order to keep getting their free issues.

We are ready to start this integrated requalification marketing campaign with 2014. Obviously these cover tip-based integrated marketing efforts are not the only efforts that we are going to be using, but I’m projecting that building on the message of the cover tip with other traditional and nontraditional marketing efforts will increase the overall requalification responses related to that messaging. We are going to have unique tracking code for each marketing channel and I promise to follow up next year in the fall to let everyone know how it did.

 

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Roy Beagley

Managing the Variables of Digital Circ

Roy Beagley Audience Development - 12/03/2013-16:26 PM

 

For good or for ill, digital is here to stay. I have no doubt it is good for many readers, I am not sure how good it is for publishers because there are still too many variables concerning digital circulation. These variables are being worked out, slowly in some cases, but as an industry we have to make sure we understand the results and interpret them correctly, and not as we would like them to be.

Just because the recently released version of the iPad sold in the millions does not mean digital circulation is going to increase as a direct result of the release. Most people I know who purchased the latest iPad did so to replace the iPad they already had. Over the next weeks people will receive some sort of reader for the holidays, but the total in sales will not see a similar increase in digital circulation.

It is important to recognize why digital circulation increases. Many controlled publishers are shifting their three-year old-circulation over from print to digital, not because the reader desires this, but because the publisher does. We have found that re-qualification response rates of digital subscriptions are lower than those on the print file. I believe this is because digital magazines are not as readily accessible as their print cousins. Therefore, you will probably have to send digital subscriptions more efforts to get the same net response as print. There is nothing wrong in this, just remember that you will have to send more efforts and this may affect your promotion budget. What you are saving in printing and mailing costs can be used to send additional efforts, although in reality these savings are almost never passed on.

Do not get hooked on the general belief that digital subscriptions will respond better to electronic methods than more traditional methods; there is no rationale to support this thinking, and until you have tested all formats and gained meaningful results—results supported by facts, not opinions—tread carefully.

The digital world is upon us, and as promoters, marketers and indeed users, we should embrace the new technology and make it work for us. Digital circulation is a small part of total circulation. It will grow over the next few years, although the growth will slow down, but for all that it would be dangerous to make assumptions based on opinion rather than test results.

Yesterday, on one of the networks, an expert said, “People feel more confident in the market than they did a few years ago.” On the same show, another expert said, “People are not confident concerning their financial futures.” Facts based on opinions have no value, but opinions based on facts are worth their weight in a ton of iPads!

 

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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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