Much of what’s ailing the newsstand is obscured by finger-pointing and recycled “solutions” that fail to recognize current market trends. Here, in the style of a manifesto, we dispel stubborn myths, spotlight the problems most are unwilling to confront and suggest some fixes.
There is a lot going around these days about the state of the newsstand, and I follow it all with interest and attention, a bit of hope and a growing degree of concern. The interest, attention, and hope are self-explanatory. We need every great mind on possible solutions, and every contribution is welcome.
The concern stems from the fact that some of the analyses and many of the solutions are saturated with over-optimism or wishful thinking. Some indeed are based on serious misunderstandings concerning what is happening and what we can actually do. Publishers are taken to task for things outside their control. Solutions that have been around for decades, even generations, are proposed as new.
I went to my first newsstand conference in the mid 1980s. I recall wholesaler Larry Scheur reading a complaint about the state of the industry that elicited great applause. Then, Larry revealed that his indictment dated from a wholesaler complaint made in the 1950s. At that same conference, John Harrington pleaded for the industry to work together to improve its already-eroding profitability. One approach he suggested—to take the pressure off wholesalers’ slipping margins—was to work on achieving savings through draw reductions. At the time I worked for BYTE, which was in fact selling about 80 percent on the newsstand, but I took his point. There was a lot of waste being generated.
There still is.
There Is No Single Priority
Is the newsstand still important? Are consumers important? Is print important? The three questions are inextricably linked. The survival of print is tied to the survival of consumer publications; and consumer publications, almost by definition, exist on the newsstand.
Of the solutions I’ve seen proposed, too many require people to do things that are completely outside their control. A publisher creates the product but neither packs the trucks at the wholesaler warehouses, receives the product at the stores, unpacks the product to put on the shelves, nor frog marches the reader to the stands to pick it up.
Some of the solutions have in fact been in play for years. Cross-merchandising in stores and developing specialty distribution are two such ideas. These solutions are important for developing incremental and targeted sales, but cross-merchandising and specialty distribution have both been around longer than many of us have even been alive. Experienced newsstand marketers know that these solutions have their place—actually, a very important place, especially for specialty publications—but are resource-intensive, expensive, difficult to maintain and yield, at best, marginal sales.
Other important problems and solutions get so little attention they seem almost to not exist. Maybe they are too controversial. Maybe they are not sexy enough. Or maybe they are simply overlooked.
And a few are known, but no one is willing to say them in public.
Here, I’m going to say them.
This article is not going to fix our business. No one person or group is going to fix our business. Working together is not going to fix the business—at least, not in the “let’s all get together and fix this business” sense. That is starry-eyed and unrealistic. If this business is to grow, change, or launch itself anew, it will require that the outside pressures brought to bear on it be so strong, so big, so unavoidable, that the changes will be forced through the system on a deep, fundamental level.
In keeping with the concept of a Manifesto, it may require a Hegelian/Marxian dialectic—a complete collapse and restructuring. Fortunately or not, we are at that point, with or without a Manifesto.
Here’s an outline of what needs to happen. But, let me begin by clearing up a popular misperception:
1. Publishers Don’t Love Returns.
No publisher wants even a small portion, let alone the vast majority, of their lifework to be shredded. A circulator I know once defined a publisher as “someone who believes that people line up outside the stores waiting for the latest issue to be put on the shelves.” I have had far more publishers ask me to cut unsolds out of the distribution than add copies to capture incremental sales.
So, rather than setting up a straw man to knock down, let’s be clear about this from the start. For those of us who have convinced ourselves that everyone except the publisher wants to eliminate unsolds; those who believe that ad sales revenue makes a publisher immune to low efficiencies; those who believe that publishers will happily pump out endless unsold copies as long as they can sell a handful of incrementals—take note: This is simply not true. How could it be? The publishers are the ones that create the product. They do not watch in satisfaction while two-thirds of their product goes into the shredder.
2. Data Is a Tool, Not a Panacea.
We have a wealth of data available to us in a very convenient form. That data shows very specifically where returns are coming from, and in what proportions. It’s a heady tool, and by its existence seems to imply that, now that we know where our returns come from, we can eliminate those returns at the source. It seems to imply that with a bit of will on the part of the publisher, millions of dollars in savings are there for the taking, with little to no impact on sale.
Let me ask you this: If those savings were to be had so easily, don’t you think we’d all be taking them? The data comes from the wholesaler systems: Don’t you think that wholesalers would be taking them? The data is consolidated and packaged by the national distributors: Don’t you think the national distributors would be taking them?
The implication is that wholesalers and distributors would take the savings if only the publishers would let them. Please. We all want those savings as desperately as the next guy. And the one thing a publisher really wants is to print only those copies that will sell.
But here’s the thing: Every newsstand manager worth his or her salt knows where the unsolds are. It isn’t a secret. It has never been a secret. They are looking at those unsolds every issue of every publication; they are paring back where they can, moving to new places where they can. Data is not new; it is as old as the hills, and it is being used. Over the past 10 years we’ve had more data than we ever had in the past, and are more focused on taking out the unsolds than we have ever been. How’s that working?
The answer: not so well. Draws and sales have plummeted together while efficiencies have barely moved. The reason? You can’t just take out unsolds from the low-efficiency buckets and expect a savings, any kind of savings, by leaving the copies in the high-efficiency buckets. Guess what? That is what we all want to do. But copies have a way of migrating from the high buckets to the low buckets and sales are lost without efficiency gains.
This illusion that some miracle is to be had through the national-level use of big data is doing more harm than good. Look at the results in the industry, whose precipitous slide corresponds with the advent of big data and the implementation of data management systems. Remember the Unimag system? Remember Charles Levy’s LIFT? Where are those agencies now?
Gone.
The problem wasn’t the data. But uncritical use of data, and the belief that data can take the place of grassroots fieldwork, can be a problem. A fatal one.
The reason? You can’t sit in your office and crunch data. Every single change you make has to be backed up in the field. We can wave our sharp pencils around all we want, but someone has to be out there making sure that the changes are in the system, that the changes go through the system, that the changes stay in the system, and that the changes are re-evaluated regularly and appropriately revised.
The advent of big national data correlates with a loss in micro-level fieldwork. Wholesalers now manage distribution into accounts hundreds if not thousands of miles from where the distribution work is being done; national distributors are less empowered to adjust or override wholesaler formulas than in years past; and publishers are eager to embrace a legerdemain that doesn’t reveal its disastrous downside until it is too late to do anything about it.
I know many publishers that have bought into the myth of big data. They have thrilled to the prospect of saving millions of dollars from their production costs and grasped for the easy solution. How is it working for them? Look at the newsstand statistics; it will give you a good idea.
I know a few publishers that have continued the long, slow, hard process of going into the field, looking at their distributions, looking at their sales, checking their retailers, identifying problems, working with their channel partners to solve those problems, hitting their heads against those same walls issue after issue, year after year. How is that working for them? In some cases, surprisingly well. One of them reports: “After over 200 years published, we’re going to have a stronger 2013 than 2012.”
It isn’t a coincidence.
2A. Some Data Is More Valuable Than Other.
POS, a hot-button issue in our industry, provides the most specific, useful, and actionable data there is. Unfortunately, it is available on a prompt, regular, and by-issue basis from very few retailers.
2B. RDA Will Have to Go.
It isn’t as necessary for chain sales information as it once was. It doesn’t lead to better display as it once did. And it’s difficult to think of a benefit to it to anyone in the entire process at this point.
3. Our Industry Has Hit an Avalanche Point.
For every publication, there is a loss in sale for every increase in cover price. Careful publishers maintain a balance wherein they nudge up the cover prices only to the degree to which they can capture increased revenues as they lose unit sales. The point at which cover prices hit a level where revenue begins to drop along with sale is known as the “avalanche point.”
We have hit the avalanche point as an industry. Cover prices are routinely set well over $5.00—historically the avalanche point of many publications.
Go on Amazon and you can find deals for publications selling for six dollars a year, fifty cents an issue—publications that are at the same time sold on the newsstand for ten times that much. Is it any wonder that newsstand sales are plummeting faster than subscription sales?
It is now possible to buy a full year of a publication for essentially the same price as a single issue on the newsstand. Can the readers also do the math? I can. You can. I think our readers can as well.
3A. The Upward Pressure on Discounts Must Cease.
If we are going to control cover prices at all, publishers’ remits need to stop shrinking. We need to find profit in the system for everyone, and with the fixed costs we need to acknowledge that the wholesalers system has a huge set of challenges and pressures that also need to be addressed. It’s also understandable that all channel partners look to one another for relief. But the publisher well is running dry. Publishers have been pushing prices upward in a vain effort to keep their remits even, and it’s starting to avalanche. The problem is real from both sides, but a continuing shifting of revenues is not going to fix it. We need to find other solutions.
3B. Wholesaler Agreements Need to Be Renegotiable.
The discount terms from a publisher to a wholesaler, whether direct or through a national distributor, represent the only financial arrangement I have ever heard of that can only be improved from one direction. Regardless of how many times a publication’s ownership has changed from the time the original terms were set; regardless of changes in cover price, or unit sale, or sales efficiency, or publication scale; regardless of virtually any factor that might be expected to modify a situation, it is next to impossible for a publisher to reverse a discount or incentive once offered a wholesaler. This is having ripples in ways that are perhaps unexpected and are certainly unintended.
One such ripple is for the publisher whose discount terms don’t survive the due diligence of a possible sale. But it goes beyond that, in ways that are far-reaching and, in some respects, deadly.
Publishers are much less willing, today, to work with wholesalers on incentives, pass-through RDA, or other solutions that might help the industry because every inch of ground ceded is so dauntingly irrecoverable. If the experiment is a failure, if conditions change, if a better idea comes along, there is no going back.
I believe that if anything in this industry could be done on a trial basis, or for goodwill, or were re-negotiable, Anderson News might still be in business. One reason publishers were unwilling to extend a helping hand when ANCO needed it was simply this: Anything yielded in that small window of time would, inevitably, become the new norm for every copy of every issue the publisher would ever print, for all time. What publisher is going to make a financial concession when every single one accumulates in only one direction, and can never be re-examined?
4. Digital Isn’t the Culprit.
At least, not the only one. And it isn’t a panacea, either. Publishers savvy enough to have become comfortable with their digital presence do realize that a 500 percent increase on a handful of copies won’t counteract a 1 percent drop on a million.
Ten years ago I went to a conference about the state of the newsstand (yes, it was down). I was astonished that, with all the conversation about what was causing these drops, no one mentioned digital at all. It was like it didn’t exist.
Today we’ve gone the other way. Digital is blamed for everything, or seen as the solution for everything.
Some major magazine retailers have been experimenting with package promotions. Readers can buy the magazine on the newsstand and get a digital premium for free. Results have been varied, but what stands out is this: While the special newsstand display has supported increases in newsstand sales, the number of people who then redeem the digital downloads have been shockingly low. The overlap of people responding to the newsstand display and redeeming a digital offer has been virtually nil.
Nor are digital sales replacing lost print sales. For now, savvy marketers need to continue to experiment with packages, co-promotions, creative merchandising, and the like, but newsstand woes need to continue to be addressed irrespective of digital growth.
4A. But Online Resources Can Be Used Effectively for Growth.
How many publishers are polling their readers online? Using keyword research to help craft newsstand cover lines? Doing teasers for their newsstand copies online? Building relationships with their audiences by sharing progress as articles are developed? Leveraging their PR and audience relationships through social media?
The answer, actually, is many—a bright spot in a not-quite-uniformly dreary picture.
5. Greater Value Does Lead to Greater Sales.
The loss in newsstand sales correlates with several factors: the rise in digital, the consolidation of our industry, the rise in big data, the increase in cover prices. It correlates with another factor as well: the loss in book size, driven by the recessionary loss in ad pages and the shift of resources to digital. There is a clear and definite relationship between quality and sales. We can’t keep cutting back pages, reducing paper quality, and at the same time raising prices, and expect sales to stay strong. Readers are shelling out that money for value. If they don’t get it, they won’t keep paying for it.
5A. Readers Prefer Higher Value to Lower Prices.
Yes, the widening gap between subscription prices and newsstand prices is negatively impacting our business. At the same time, given a choice, a reader will choose a higher-quality product at a higher price over a lower-quality one at a lower price. Hence, the success of the bookazine—which also, by the way, has no low-priced subscription offer undercutting its newsstand sales.
6. Industry Consolidation, Along With Product Fragmentation, Creates Enormous Paradoxes.
These two opposing forces have created pressures and fractures throughout our supply chain. Specialty magazines are the present and future of publishing. They don’t thrive at checkout; they don’t offer the same happy ratio of effort to revenue; they generate a higher percentage of returns relative to the draw (though of course not more returns overall). But they are what the audience wants. Systemic changes need to take into account these opposing pressures and reconcile the need for scalability with the reality of product mix. Specialty publishing isn’t going away, and migrating it to wholly online won’t restore the revenues that once existed from the great old mass-market and checkout publications. Just as targeted search offers the long tail of traffic online, specialty magazines provide the long tail of our publishing business. We need to remember, as we evolve our systems, to do so in a direction supportive of each indispensable, incremental sale.
6A. Time Is a Commodity.
As we work to streamline and restructure our systems, we need to find more usable time in our publishing schedules. Why does it still take three weeks to get product from start of ship to on sale? How is it possible that it takes several months to confirm an order; that it takes several months to put a new price or code or date into a system? Sales are lost in the tens and hundreds of thousands because updates do not happen quickly enough in an otherwise fast-moving and digital world. Print’s creakiness, its ponderous pace, is becoming a joke in an age of instant turnaround. If we are to stay relevant we need to move faster.
6B. Route Density Is a Problem.
Wholesalers are working hard on fixing this one through depots, marketing partnerships, and planned consolidation; at the same time, the continuing migration of retailers from one wholesaler group to another is undermining the movement in the direction of route density.
6c. Vertical Integration and Role Redundancies Will Have Their Impact.
Where will this one lead? I can only speculate, and I’m sure lots of others are speculating as well. It will be interesting to see where this one takes us, but I am convinced it will have a part to play in the massive restructuring that our business is due for.
6d. Back to the Basics. (See point number 2).
Consolidation has made grassroots efforts tricky, but it is as important today as it ever was. It’s always a blow to spend tens of thousands of dollars on special placement and then walk into a store to find piles of ancillary stuff in front of your pockets, or a retailer that has no idea its main office has even committed to a display. We need to work with our channel partners to hold everyone responsible for the agreements we enter into.
In the true spirit of a Manifesto, I end with a call to action—despite the fact that I’ve predicted that it is market forces, not some unification scheme, that will, inevitably, lead to change. Even so, publishers of the world, unite! We have nothing to lose, and everything to gain.
Including, perhaps, our chains. 