On Eve of Retail Conference, PBAA Survey Details Publisher Concerns

On Eve of Retail Conference, PBAA Survey Details Publisher Concerns
By John Harrington
The New Single Copy
http://www.nscopy.com/

The 2008 Retail Conference, with the theme, "Unleashing the Power of Print," will begin next Sunday, March 30, in Tampa, Florida. The conference is co-sponsored by the Magazine Publishers of America (MPA) and the International Periodical Distributors Association (IPDA). According to the results of survey by another publishing related trade group, the Periodical & Book Association of America (PBAA), the conference will take place in an atmosphere of uncertainty and concern; at least among the 38% of PBAA's members who participated in the survey, which was conducted in January and February.

The following findings of the PBAA report were excerpted from the association's publicity release of March 18:
"68% of publishers decreased or kept their draws flat in 2007 (in line with wholesaler initiatives).
"More than half of the publishers had decreased or flat sales.
"69% raised their cover prices (32% by a $1.00 or more). Publishers seem to be trying to make up revenue by cover price increases, since sales are flat or down.
"86% expect flat or declining sales in 2008. Note: Publishers are unhappy in general with wholesaler attitudes; copies have been taken out of the systems, efficiency is up, but publisher cost savings (of not printing the wasted copies) are eclipsed by rising paper, printing, binding, and distribution costs . . .
"Publishers are seeing continued resistance by wholesalers in general to the concept of 'returning copies to the system' by re-investing or 'trading up' copies to new outlets . . .
"75% of publishers saw no benefit in their participation in wholesaler incentives.
"65% of publishers perceive the national distributors are trying to 'fight the fight' but are not effective at this time . . .

"Wholesalers are perceived primarily as magazine distributors, not as sales partners (and need to be more aware of this widespread perception), leading to increasing publisher efforts to find additional sales channels."

Confirmation of Increased Tensions: Although the PBAA survey results are strongly attitudinal, and probably not a statistically valid representation of the entire business, they do confirm the increased levels of tension that are clearly present today in the magazine distribution channel. Although sales have improved, albeit only by minuscule levels, in each of the last four years; and efficiencies are up by six percent during that period, the levels of distrust between wholesalers and publishers and their national distributors is at a very dangerous level. More than a decade of financial distress at the wholesale level has driven the surviving companies to institute, particularly in the last few years, policies aimed at reducing costs. Although most wholesalers say they are also engaged in aggressive marketing, suppliers generally feel the policies emphasize cost savings at the expense of expanding sales. At the same time, the already mentioned fragile economic condition of wholesalers has driven some of them to demand higher margins and/or challenge national distributor payment terms. The tensions arising from these types of confrontations have led many in the business to consider the possibility of one or perhaps more major wholesalers leaving the business entirely. For any publisher or national distributor, the challenge of suddenly having to deal with the loss of 15% to 20% or more of its retail distribution is more than a daunting task. That scenario has always been a remote contingency, but only in the last six to nine months, has it matured into an imminent possibility.

Retail Conference Topics:In this somber atmosphere, MPA and IPDA have announced the subjects of a series of panels and workshops for next week's conference. They include:

"Consumers, Retail, and the Environment." Chaired by John Griffin, National Geographic and chairman of MPA. Panelists: Michela O'Connor Abrams, Dwell; Steve French, The Natural Marketing Institute; David Refkin, Time Inc.; and Dave Sherman, Blu Skye Sustainability.

"Inside Insight: Through the Eyes of Former Retailers." Moderated by Richard Lawton, CMG. Panelists: Steve Burbridge, T/WR; Tim Humanik, CMG; and Jerry Lynch, IPDA.

"Puzzled, Perplexed & Pondering.. . . . Why Publishers do the Things They Do." Moderator: Rob Gursha, T/WR. Panelists: Linda Brennan, Business Week; Ken Godshall, Hearst Magazines; Terry Day, National Geographic; and Suzanne Roman, The Taunton Press.

"Future of Magazines at Retail." Moderated by Peter Kreisky, The Kreisky Media Consultancy. Panelists: Jaime Carey, Barnes & Noble; Glen Clark, The News Group; Rich Jacobsen, T/WR; and John Loughlin, Heart Magazines.
"A Case for Magazines at Retail." Panelists: Jay Felts, CMG: Drew Wintemberg, T/WR; and Jay Wysong, DSI.

Other speakers will include Matt Cooper, Portfolio Magazine; Cindi Leive, Glamour; Wendy Liebmann, WSL Strategic Retail; Tom Griffith, Willard Bishop Consulting; Anne Zafian, Simon & Schuster; John Santanella, Nickelodeon; and J. Walker Smith, Yankelovich Partners.

In Circulation: Timeliness, transparency help circ measurement keep pace with other media

In Circulation: Timeliness, transparency help circ measurement keep pace with other media
By Lauren Bell
Audit rules approved by the Audit Bureau of Circulations board last week seem to mark a trend in circulation measurement: faster, more precise reports that bring print audits closer to the sort of metrics used by other media. The ABC's new rules were intended to simplify current audit rules and make audit reports more useful to advertisers and publishers.

Key to this new push for usefulness was the change ABC made to its Rapid Report guidelines. Publishers using Rapid Report - an online tool for recording audience numbers issue-by-issue - are now being asked to post initial post-issue readership projections within three weeks of a weekly title's on-sale date. Monthly publishers should post within seven weeks.

"It's a much more on-demand world today," said Kammi Altig, manager of communications at ABC. "People in the Internet age do expect information more quickly, and it certainly makes the print industry more competitive and more comparable with other media industries."

By speeding up the process, ABC is making print audience reports more comparable to the more regularly-posted numbers provided by TV, Web sites and other media. Such information is expected to raise print's standing in a marketplace where ad buyers consider and compare multiple media platforms. It is important to note, however, that Rapid Report measures circulation, while other media measure audience - a difference that makes comparisons between the two an apples-to-oranges exercise.

Robin Steinberg, SVP, director, print investment and activation for MediaVest USA, added, "The simple answer is yes, it does make print more competitive, that's why we developed these reporting guidelines. As a medium we need more timely data and we need to understand the data earlier rather than later. It's really about transparency, and I think publishers will benefit by being more transparent on a timely basis."

A new MPA initiative unveiled by president/CEO Nina Link two weeks ago sought similar effects. MPA proposed new audience-based metrics that measure different audience demographics and engagement with ads.

"A key item was to become faster in our measurement and more comparable to the way other media are measured and more accountable," Link said.

A tangential, but no less important, effect of the MPA changes is that better consumer metrics may allow circ marketers to deploy more targeted campaigns. And with numbers coming in on a timelier basis, marketers will be better able to judge how audiences respond to a magazine on an issue-by-issue basis.

Like ABC, the Magazine Publisher's Association is making improved online survey techniques a major focus in its reworking of the audience reporting process.

Scan-Based Trading's Hold-Up

Scan-Based Trading's Hold-Up
Fully adopting SBT is a complicated, gut-wrenching situation.
By Baird Davis
Circulation Management Managzine

Fully adopting SBT is the most complicated, gut-wrenching situation ever faced by the magazine distribution industry.

One's perception of the value of scan-based-trading (SBT) for magazines varies widely depending on whether you are a retailer, wholesaler, national distributor or publisher. If you're a retailer, you love it, but the other channel participants are far less sanguine about it. But regardless of one's position, there is no mistaking SBT's inevitability or its critical place in determining how business will be conducted in the newsstand channel.

SBT has resided on the periphery of the newsstand industry for nearly a decade. It's been reviewed, tested, discussed and exhaustively analyzed by chain retailers, wholesalers and national distributors. But only in the last year has the process achieved sufficient scale to help demonstrate its inevitability as a trading option for magazines. Today, more than 25 percent of magazines distributed by wholesalers are done under SBT agreements. In the next few years, SBT is realistically expected to exponentially expand.

Conceptually, SBT will significantly reduce expense, improve efficiency, ease the return handling burden and generally help streamline an archaic system. It sounds like it's a pretty good thing, right? Well, not exactly.


What's Holding Back Full Adoption of SBT?

The central problem is finding a way for the newsstand channel partners to equitably share SBT's costs and benefits. This would seem to be a relatively easy task. (On the contrary, fully adopting SBT is the most complicated, gut-wrenching situation ever faced by the magazine distribution industry.)

To understand the severity of the SBT issues facing the industry, a little background information may be useful. The most important thing to know is that SBT is not currently an industry-wide initiative. It is being conducted between only retailers and wholesalers. National distributors and their publisher partners have chosen not to participate in the process. That, of course, raises the question: why haven't national distributors/publishers joined the SBT party?

The answer to that question lies deeply rooted in the history and culture of the newsstand business. The magazine distribution system, unlike most systems bringing product to sale at retailers, has two middlemen-wholesalers and national distributors. The relative complexity of the magazine product line (thousands of different products, return processing, etc) requires the services of both. But having two middlemen has greatly escalated the prospect for disagreements and conflicts of interest.

If truth be known, there has always been an uneasy truce between wholesalers and national distributors. Compounding the inherent difficulties of the wholesaler/national distributor relationship is the lack of unanimity of thought and action within either the wholesaler or national distributor communities. This has led to "intramural competition," which, from time to time, has been detrimental to the best interests of newsstand channel efficiency.

Business life in the newsstand channel has never been without tension or conflicts of interest. Now SBT has been tossed into that messy stew. SBT has heightened areas of contention among all four major channel participants. But it's the issues that divide wholesalers and national distributors that are the most critical. Wholesalers, largely out of competitive necessity, developed SBT agreements with retailers. But in doing so, they've taken on a huge financial burden.

National distributors have held back from participating mainly because they felt that the SBT financial terms are too heavily weighted in favor to the retailer; that the agreements did not meet minimum system and security guidelines (all the major national distributors have published papers outlining their SBT system requirements); and, in general, they felt that wholesalers entered into these agreements without proper due diligence. Wholesalers, for their part, believe national distributors (and by inference, publishers) have not been properly sensitive to the changing market conditions that have made adopting SBT a priority for retailers. Nor do they feel that national distributors have been empathetic to the SBT-related financial burden they have assumed.


The SBT Stalemate: A Lose-Lose Situation

The hope for industry-wide SBT program is now stuck in a stalemated situation. This poses a grave danger for the entire industry. SBT has, in effect, been endorsed by the mass merchandiser retail community and it's going to move forward with or without national distributor/publisher participation. But-and this is the critical consideration -it can never achieve its hoped-for efficiencies without national distributor participation.


The Importance of Breaking the Stalemate

Now let's be frank about SBT's benefits. Even a more equitable division of costs and benefits is still likely to heavily favor the retailer. The retailer derives immediate and substantial benefits from SBT. For wholesalers, national distributors and publishers, it's unlikely there will be any significant benefits in the short run. But it will undoubtedly provide significant long-term cost saving benefits that accrue from an improved and more efficient distribution channel.

In addition, wholesalers, national distributors and publishers must, to some extent, look beyond prospective cost savings and take the long view in considering SBT's merits. They have to carefully consider the importance of what SBT can do in simplifying, for retailers, the often-convoluted process of selling magazines. It is the single most vital action that the channel partners can take to cement relations with retailers and help insure the long-term viability of the mass merchandiser participation in the sale of magazines. SBT requires upfront sacrifice from wholesalers and national distributors, but in the long run, it's likely to be the best alternative for protecting the newsstand business.


Let's Get It Done

It's imperative that SBT become an industry-wide initiative. This means wholesalers and national distributors must settle their differences. I don't want to underestimate the difficulty of reaching agreement. The issues (shrink, inventory control, system security and transparency) dividing wholesalers and national distributors are unbelievably thorny.

But in a SBT study conducted by John Harrington and myself (copies of this report can be obtained by contacting John Harrington at jharrington@nscopy.com), it was revealed that there were no issues dividing the parties that were so intractable as to be considered as "deal breakers." What's required is for wholesalers and national distributors to immediately begin the process of negotiating, in good faith, a SBT accord. It's possible to do this. Stop wasting time -let's get it done. As the Harrington/Davis SBT report indicated, "no less than the future viability of the newsstand trade with mass merchandisers is at stake here."

After Newsstand Spike, Meredith Discontinues Dollar Store Distribution

After Newsstand Spike, Meredith Discontinues Dollar Store Distribution
Was licensing deal with Wal-Mart threatened?
By Dylan Stableford and Bill Mickey
http://www.foliomag.com/2008/after-newsstand-spike-meredith-discontinues-dollar-store-distribution

With newsstand sales still struggling to make any significant headway, Meredith, like most publishers, has been under pressure in recent years to find alternative sources for retail sales. And it appears one of those sources resulted in a spike in newsstand sales-and got them into trouble with Wal-Mart.

During the second half of 2007, Meredith's Better Homes and Gardens posted a 71.5 percent jump in single copy sales, according to ABC's FAS-FAX. That jump is thought to be largely attributed to selling issues at steep discounts at Dollar Tree stores, which attracted the ire of Wal-Mart and may have threatened a significant licensing deal Meredith recently struck with the big-box retailer.

While there's nothing inherently wrong with selling magazines through alternative and steeply discounted outlets such as the dollar stores, the strategy does have an impact on both the brand perception and the rest of the distribution chain. Indeed, Meredith has since discontinued its distribution into the dollar outlets when, according to sources, Wal-Mart threatened to turn the publisher's titles away from its newsstands.

"We had always planned to phase these programs out," a spokesperson for Meredith told FOLIO:. The spokesperson declined to comment on details of the specific distribution programs, such as the Dollar Tree Store, and the Wal-Mart deal, citing proprietary concerns.

Meredith's Better Homes and Gardens and Ladies Home Journal were both on the notorious Wal-Mart list of magazines scheduled to be cut from its stores. They have since been reinstated.

Other titles distributed into the dollar stores, according to sources, were Family Circle and Ladies Home Journal. All three titles are distributed by Time Warner Retail, which did not return phone calls for this story.

According to ABC's FAS-FAX report for second half 2007, single-copy sales rose 71.5 percent for BH&G, 12.7 percent for Family Circle, and 37.5 percent for Ladies Home Journal.

Controversial Circ Practice
"One, you're devaluing your product, and two, you're damaging your relationships with your major retail customers," says John Harrington, a noted industry consultant and publisher of the New Single Copy newsletter. "Plus, it could have damaged the branding agreement Meredith had [with Wal-Mart]. It's the newsstand version of verified."

The Wal-Mart branding deal, which included a range of home products based on the Better Homes & Gardens brand, was announced last October. The new line will be available this fall.

That licensing deal would look strange without the namesake magazine on the retailer's shelves.

According to a source familiar with the arrangement, the copies sold in the Dollar Tree stores were overrun copies still within their on-sale period. "I don't know if they were returnable or if it was a one-way sale, but they were probably one-way if they were only a dollar a copy," says the source.

Since the copies were still within their on-sale periods, the steep discount was a tough pill to swallow for other major retailers who sell the magazines at cover price.

Pulling the magazines from the dollar stores should, after all, not have a material impact on the publisher's overall newsstand strategy. They were sold for a dollar, after all. For Better Homes & Gardens, single-copy sales represented about 5 percent of total paid and verified circulation; for Family Circle, a more robust 23 percent; and Ladies Home Journal, about 10 percent.

Second-Half 2007 Newsstand Sales Delight and Confound

CIRCULATOR: Second-Half 2007 Newsstand Sales Delight and Confound
By Baird Davis
http://www.circman.com/viewmedia.asp?prmMID=3759
ABC's twice-annual FAS-FAX report detailing analyzed paid and non-paid circulation for just over 700 U.S. consumer magazines was released earlier this week, and the numbers tell an interesting story.

Newsstand revenues rose in the 2nd half of 2007 by 2.8 percent to nearly $1.7 billion. This, of course, is good news for the industry. However, the bad news is unit sales declined 1.8 percent, to slightly less than 472 million (this data is subject to revision when the final audit bureau data is provided later this month).

The spread between unit sales and revenue performance is one of the largest in recent years. It apparently reflects the beginnings of a strong cover price trend. Besides pricing there were also other factors that contributed to the mixed sales story in the second half of 2007.

Cover Price Effect
The estimated average industry price rose from $3.36 to $3.52 in the second half of last year. This is probably the largest average price increase in industry history. The price increases were led by Bauer, who last fall announced price increases on their nine audited titles of approximately 30 percent. However, their price increases only affected sales the last two months of the period. Even so, Bauer's aggregate revenue increased 11.3 percent on flat unit sales. It's much too early to proclaim their price increases a success, but it is an impressive start.

Bauer wasn't the only publisher pushing prices higher. The average price of titles sold at checkout increased from $2.96 to $3.14 (up 6.1 percent) and mainline titles (primarily male oriented) increased their average price from $4.67 to $4.79 (up 2.6%). But newsstand pricing is far from being fully elastic. The sales performance of Ok! (price $1.96 to $2.99, unit sales down 22 percent), TV Guide (price $2.16 to $2.66, unit sales down 26 percent), Newsweek (price $4.50 to $4.95, unit sales down 12.7 percent), and Time (price $4.22 to $4.95 unit sales down 16.5 percent) helps demonstrate the market resistance to price increases. On the other side of the coin In Touch increased price from $1.99 to $2.29 and unit sales increased 4 percent. The lesson here is that cover price increase decisions should always be approached with caution.

Impact of Wholesaler Distribution Reductions
Much has been written recently about wholesaler mandated distribution reductions. It's difficult to assess its impact from audit bureau data. But there are some indications they might be having a slightly adverse impact on unit sales-estimated to be about a half of one percentage point. If the industry efficiency level has been raised from 33 percent to 38 percent, as some wholesalers have indicated, a half point sales reduction would represent a big win for publishers, as well as wholesalers.

Celebrity Title Performance
In the second half of last year the celebrity titles continued to set the sales standard for the industry. These five titles-People, US, In Touch, Star, Life & Style and Ok! (which represent 27 percent of industry sales revenue)-experienced a unit sales decline of 3.6 percent, but revenue gained 6.4 percent. In Touch was the only one of the five publications to show both unit and revenue gains.

The Dollar Tree Phenomenon
Meredith reported in the second half of 2007 that the sales of their four leading newsstand titles-BH&G, Fitness, Ladies Home Journal and Family Circle-had a staggering combined 31 percent increase in sales revenue. This was a highly unusual sales lift for mature titles. As it turned out it appears that nearly all of the increase ($8.6 million) from these four Meredith publications can be accounted for by sales through Dollar Tree stores. But there was a backlash from major chain retailers about selling product at deeply discounted prices. Meredith in the last few days has indicated they have discontinued their Dollar Tree distributions. It seems as if Meridith's Dollar Tree sales lift will be a non repeating anomaly that can best serve as a cautionary tale concerning the risk of the selling leading titles at deeply discounted rates.

Newly Audited Publications
There were three major titles added to the auditing ranks in the second half of last year. Two published by Time, Inc.-People Stylewatch and All You (both monthly frequency). The other, Quick & Simple, is a weekly title published by Hearst. People Stylewatch and Quick & Simple reported revenue of nearly $11 million and All You a little less than $6 million. Of the three, perhaps, the sales of People Stylewatch is the most impressive. It reported average sales of 549,000 per issue. Its sales revenue exceeded those of Vanity Fair, Vogue and Good Housekeeping. It is believed to be the largest revenue achieved, at launch, by a monthly title since the super sized debut of O, the Oprah Magazine in 2000. Quick & Simple, with an average price of only $1.63, and All You (cover price $1.97) reported good sales, but the sales of these titles might be compromised in the future if the industry continues to shift away from super low cover priced products.


Mixed Messages
The mixed sales performance in the second half of 2007 mirror the complexity of the market conditions. Price, we're reminded, is a double-edged sword. It appears as if price increases will be accepted in certain circumstances, especially when increases involve titles previously priced below $2.99, but meet resistance in others. The wholesaler initiated distribution reductions are still a work in progress, but the initial results appear to be promising. Finally, we learned that the market can be self policing when it comes to selling magazines at deeply discounted prices. As always, the newsstand retains its mysterious aura to both delight and confound.

Weeklies Still Turning in Strong Circ Performance

Weeklies Still Turning in Strong Circ Performance
Audit Bureau Releases Latest Magazine Sales Figures

By Nat Ives Published: February 11, 2008 NEW YORK (AdAge.com) -- The new magazine circulation figures being released by the Audit Bureau of Circulations have as much complicated action as a three-ring circus. In the center ring, the celebrity tabloids prove that there's a lot of life left in at least certain kinds of weeklies. Everybody has raised their cover price since the last circulation numbers, but some kept newsstand sales rising anyway.

People magazine reported average paid and verified circulation of 3.6 million for the second half of last year, 3.5% under the second half of 2006. Us Weekly, from Wenner Media, reported average paid and verified circulation of 1.9 million, up 10.1% over the half the year before, and newsstand sales up 2.7%. OK also reported average circulation of 935,378, up 23.5% from second-half 2006, and a newsstand gain of 7.1%, partly on the strength of its exclusive cover story about the Jamie Lynn Spears pregnancy.

Others reported fall-offs in single-copy sales but pinned the blame on price hikes and other factors aside from the titles themselves. Newsstand faces more obstacles"Newsstand is still a very hotly contested space overall," said Paul Caine, president of Time Inc. Entertainment Group, which includes People. "Most magazines don't have to worry as much about newsstand as us. For those properties out there that are newsstand reliant, there are many more factors involved than the vitality of the title. There's gas prices, shopping, the economy -- typically not the same factors that apply to the subscription side of the business." "In the weekly category we all continue to compete in right now, there's been no sign of any fatigue by the consumer," Mr. Caine added.

"All signs are pointing to continued growth." People, Time Inc.'s crown jewel, reported average paid and verified circulation of 3.6 million for the second half of last year, 3.5% under the second half of 2006. Mr. Caine said the most recent figure would have been higher but for 4 million in sales from other People products, such as People Style Watch, People Books and People Country. His rivals at Bauer Publishing have just decided to cut its paid guarantees to 1 million from 1.2 million at In Touch Weekly and to 550,000 from 700,000 at Life & Style Weekly. Although the company signaled some embarrassment last week by burying that news in a press release titled "Bauer Publishing Moves to #1 Position in Magazine Retail Sales," it claims to be happy. "Overall we are pleased with our newsstand sales and solid sell-through," said Ian Scott, president of Bauer Advertising Sales, in the release, which also neglected to mention the departure that day of Life & Style's publisher to join Maxim as an associate publisher. "Fall-off in newsstand sales was anticipated and planned for -- any product or service which raises its prices by more than 50% will expect some attrition.

This brings our circulation to its natural level and allows us to cater to our core buyers who are willing to pay more for the product." BusinessWeek, Foreign Affairs American Media's Star, which already cut its rate base 10% to 1.35 million last July, reported average paid and verified circulation of 1.4 million across the second half, down 11.3% from second-half 2006. But celebrity weeklies aren't the only kind; BusinessWeek tacked on a modest 1.3% gain in the second half of last year, while newsstand jumped 9.3% on title's redesign. If you're overdosing on shallow celebrity news just reading this article, let us at least also inform you that Foreign Affairs is reporting average paid and verified circulation up 4.3% from the second half of the year earlier.

And there are other winners in the latest circulation report. Shelter books did well for the most part, either by expanding circulation or reducing their use of verified public-place copies, which advertisers don't always covet as much as the copies people sought out to buy. Conde Nast's Domino continued to grow, for example, adding 22.8% to its paid and verified average for a total of 677,852. And Home, part of Hachette, lost 9% partly because it achieved a 60.7% reduction in verified circulation. Sibling Metropolitan Home gave up 7.8% as it, too, cut its use of verified circulation and actually pulled out a gain on newsstands. Hearst's Good Housekeeping saw its paid and verified average slip 2.3%. We won't get numbers on Martha Stewart's Blueprint magazine, however; that recent launch got killed partly for want of high-end advertisers.

Mixed results for cooking magsThe still-young
Every Day with Rachael Ray, which had slowed its schedule of rate-base increases for a time, posted an impressive 67.4% gain in the half for an average paid and verified total of nearly 1.7 million. Some other cooking titles produced mixed results: Bon Appetit held steady with a 1.1% gain; Gourmet slipped 3.1%. The titles that Bonnier Corp. bought from Time Inc. began to show signs of improving under their new owners. Field & Stream posted a 10.2% increase in paid and verified circulation despite a 40.6% cut in the verified piece.

And Popular Science eked out a 4.1% increase in its paid and verified average while achieving a 71% reduction in verified. At Conde Nast, Vanity Fair turned around its ad sales problems last year, but now circulation is slipping: it fell 6.3% on a 12.8% decline at newsstand and a 2.7% decline in paid subscriptions and verified circulation. Newsstand suffered partly because Vanity Fair couldn't come up with a cover to sell as well as that Suri Cruise cover in October 2006. Disappointment for men's magazinesGQ, Conde's stalwart for men, fell 9.1% despite a 7.3% newsstand increase. Sibling Details was flat by all measures. Hearst's Esquire gained 1.7% while losing 6.4% on the newsstand after a price increase to $3.99 from $3.50. Men's Health, part of Rodale, is reporting average paid and verified circulation of 1,804,949 -- somehow just 28 copies apart from the 1,804,921 it reported a year prior. Best Life, a Rodale title for a slightly older crowd, chalked up a 16.8% gain. Maxim was flat at 1.9% over the second half of 2006. Business magazines kept fighting the good fight -- and a fight it is -- for their share of readers. As noted above, BusinessWeek gained 1.3%.

Fast Company and Inc., both part of Mansueto Ventures, showed flat overall results. Wired, a new member of Conde's business group that considers the business books its main competitors, posted a nice 7.7% increase. (Forbes and Fortune did not respond to requests for their circulation figures.) Flat or slight growth could have been a category of its own, arriving at titles from Elle to New York, Parenting to Real Simple (up 1.3%), and Glamour to Seventeen, both up 2.3%. Flat-to-barely-reduced circulation was an indiscriminate visitor as well, touching Cosmopolitan (down 1.5%), The New Yorker (down 0.5% as newsstand fell 9.3% on a cover-price increase), Skiing (down 1.7%), Architectural Digest (down 0.7%) and Vogue (down 0.7%).

Wholesalers and Retailers Draw the Line, and an Industry Lurches Toward Efficiency

Wholesalers and Retailers Draw the Line, and an Industry Lurches Toward Efficiency
Circulation expert says big magazines are the problem.
by Tony Silber
www.FolioMag.com
Wholesalers and retailers that attempt to increase efficiency by reducing the numbers of titles they carry, especially the smaller ones, are fighting the wrong battle, a leading newsstand expert said this week.

What's more, says Dennis Porti, executive vice president of the national distribution company Curtis Circulation, any attempt to bring the newsstand sell-through to 50 percent overnight would result in "a catastrophic loss of sales."

Porti was reacting to a flurry of news in recent weeks detailing moves by Wal-Mart [0] and other retailers to delist large numbers of magazines, and by several of the leading wholesalers to reduce by tens of millions of units the numbers of copies they distribute.

According to Mediaweek [1], Source Interlink is cutting distribution by 40 million copies over the next few months, while Anderson News Corp. and the News Group are making cuts of undisclosed numbers. Source is aiming for an overall efficiency-that is, number of copies distributed compared to number of copies sold-of 50 percent by the summer, up from the current efficiency of 38 percent. Last spring, Source cut 57 million copies.
The wholesalers said they thought the reductions could be made without any loss of sales, and some publishers and industry observers have agreed.

But Porti argues that the newsstand isn't inefficient because of the numbers of titles on the racks, he says it's because of the big magazines. "Here's the problem: 50 magazines generate nearly 70 percent of the industry's returns," he says. "The big magazines have the best positions and they have a very, very high draw per outlet. Hypothetically, if they go into a store with 100 copies, they sell 40. That's 60 returns per magazine."

Porti says the magazines themselves are in a tough spot, as are wholesalers, because many retailers may have upwards of 30 checkout racks. "If you go in with too few copies, all in the channel, including retailers, become concerned about empty wire," says Porti. "But when you fill the wire, you become inefficient."

Ultimately, he says, the industry improves efficiency if the larger-circulation magazines manage their draw better. Thankfully, Porti says, the industry has become much more sophisticated about managing draw.

And that's why the industry has picked up four to five points of efficiency in the last few years, he says. "There isn't a publisher in this business that doesn't want to operate more efficiently, and the aforementioned gains are an excellent start."