Tag: magazines

The startling drop in audited circulation

According to AudienceDevelopment.com, audited circulation levels are declining at historic rates.

This actually points to two trends — one economics related, and one customer-induced.

The first is that publishers are cutting circulation in order to reduce cost. AD states that “183 publications decreased circ 5 percent or more compared to 142 a year ago and 101 the year previous. Conversely only 41 publications increased circ five percent or more compared to 76 the year previous.”

OK, so publishers are cutting circulation to reduce printing and postage costs. It happens in every recession, and it won’t  come back much, if at all, following this recession because advertisers won’t accept rate hikes in exchange for a larger rate base. There’s simply no money in sending more publications to more people.

But the second trend is bigger and more meaningful to advertisers and publishers – and it could put the auditors out of business. That is that publishers are dropping their audits altogether because the audit process provides decreasing ROI.

AD states: “Departing titles far exceed newly audited titles. A record 69 titles were discontinued or ceased being audited and only 23 titles were added to the audited ranks. The total number of audited “consumer magazines” fell from 545 a year ago to 499.”

More and more advertisers are changing their perspective from wanting to reach a verified audience to wanting to achieve a measurable response from whoever they reach – a painfully fundamental change that I’ve previously addressed, and which most publishers – especially in the glamorous consumer world – are still trying to tiptoe around.
A hundred valid responses from an unaudited audience is worth 10x more than 10 valid responses from an audited audience.
From a publisher’s perspective, if you can deliver the responses, the audit becomes irrelevant.

Based on this, the audit bureaus ought to be frightened.

And while abandoning your audit is still a bold step in the magazine business, I assume that most publishers who do so are reinvesting in products that deliver the kind of results their customers really want.

The parties I’m most concerned about are the publishers who haven’t talked about leaving the audit behind. Because if it hasn’t occurred to you, then you clearly haven’t been listening to what your customers want. And this is one of those watershed times when the only security is to be so close to your customers that you can feel them breathe.

Condé Nast shocker: A hard move, but smart

cover_modernbride_190In a move that startled almost everybody, Condé Nast is closing four magazines: Gourmet, Cookie, Modern Bride and Elegant Bride.

At some level, though, this shouldn’t be a surprise; the two bride titles are simply maids of honor to Brides magazine – also owned by Condé Nast. Elegant Bride, with 150,000 total circulation is a niche magazine for those who plan to buy luxury weddings. Modern Bride, with 335,000 total circulation, is positioned as the hip, fun and stylish magazine in the segment. Brides is simply the No. 1 with 340,000 total circulation and, notably, a network of local/regional bridal magazines.cover_brides_190

Once upon a time, this kind of segmenting made sense.  It assured the perfect fit for every possible advertiser, and many of those advertisers – given a little incentive  – could find reason to buy into multiple titles.

I don’t have any idea how many of its bridal advertisers are still buying in multiple titles; I’m sure it’s a lot – but I’m also sure it’s not as many as a few years ago. Much of that piggyback revenue will be hard to replace. That’s why company executives needed a third-party consultant to tell them what they already knew: In today’s environment, it’s no longer economical for a magazine publisher to serve a category both horizontally and vertically.

Casting away two out of three heritage brands is scary, and some observers are already beating up the company for the decision. But I’m guessing that the publishers (Modern down 21 percent this year and Elegant down 32 percent) were already getting early reports of a continued bloodbath in 2010, as more  advertisers rationalize their  purchases across a few broad-based titles per category. If Condé Nast hadn’t made this gutsy call now, then its recession would simply drag on into next year.

By consolidating all bridal business into Brides, Condé Nast undoubtedly gives up a lot of revenue, but it also reduces a lot of expense. And what it gains is the ability to focus all development efforts on the one brand that is already recognized as the industry leader and that already encompasses all bridal niches. In fact, the company has said it plans to double Brides‘ frequency to 12x.

cover_gourmet_190The recipe is pretty much the same for Gourmet – which has a rate base of 950,000, compared to Bon Appetit (also owned by Condé Nast) with 1.3 million.

The company has probably had an increasingly difficult time justifying a two-book buy to its advertisers and has been told that it needs to make their ad buys simpler and more cost-effective.

Cookie is probably a different situation altogether. It’s a lifestyle magazine for the modern mother – a category that would overlap with parenting titles, women’s titles and shopping titles (of which Condé Nast closed one, Domino, early this year). It’s a hyper-competitive cover_bonap_190category and, founded just four years ago, Cookie (total circ: 550,000) probably never had a chance to develop its own secure presence in the shrinking marketplace. Other titles in the Condé Nast portfolio include Vogue, W, Glamour, Allure, Self and Lucky.

Condé Nast CEO Charles Townsend told the New York Times that the decision was simple: The four magazines were losing money and that’s no longer going to be tolerated. He also said no more closings are planned.

Which may be the truth. Today.

If only print could be more like TV in trying to be more like the ‘Net

An interesting bit of information from the TV world:

The new Jay Leno Show is particularly successful in one area: reduction time-shifting – which is the practice of watching a show at a time other then when it airs – basically through TiVo or other recording devices.

Last year, according to a report in MediaBuyerPlanner, which cites TiVo as its source, 70 percent of viewers watched NBC’s 10 p.m. programming on a time-shifted basis; only 30 percent watched it live.

The good news is that’s improved to about 50 percent watching it live and 50 percent recording it to watch later. What’s amazing to me is that half the audience basically refuses to watch the show on the network’s terms. Given the technology, consumers are telling television insiders exactly what they want and how/when they want to watch it.

That’s not to say the networks are responding like champions. But I have to say, subjectively, that bumping even a couple reality shows in favor of a talk-entertainment show like Leno’s is a step in the right direction. And maybe that’s what the audience is responding to; perhaps the reduction in time-shifting basically means, “If you give me something worth watching it, I’m more likely to watch it when you air it.”

With a blog that’s so heavily dominated by print-to-internet trends, why do I think this is worth noting?

Because it points out a huge difference between what’s happening in print media vs. broadcast. Both are struggling to keep up with the change brought on by online technologies, they’re being impacted from opposite directions.

TV is losing its audience to other activities, and has had to fight and innovate to earn every viewer that it gets. Then it can turn around and sell its successes to advertisers. This is a healthy business model.

Print media, on the other hand, isn’t being pushed by its readers – who have largely made it clear that they prefer a print product. Otherwise, readers might pay for online content; and they would certainly ask for digital editions of their favorite magazines. And if that were the case, there wouldn’t be a problem. Readers would get the product they want, advertisers would know exactly how many people see and respond to their ads, and publishers would be able to cut the Three P’s that represent the largest cost of doing business: production, printing and postage.

The problem for print is that it’s being pushed by the other end: the advertisers, who demand better accountability for the impact of the money they spend. Because you can’t measure the impact of print media as simply or directly as online media, advertisers are draining their print spend in favor of an online spend. So magazines keep trying to come up with online products, and readers are yawning.

In the end, the trouble for print is that it’s not yet figured out how to give both the audience and advertisers what they want. And it’s responding to the advertisers first. And each time, readers yawn and the medium loses more credibility with advertisers.

That’s not a healthy business model.

Wal-Mart redesign cuts magazine aisle in half

Last week I wrote about Wal-Mart’s next-generation store design (Magazines: kick ’em when they’re down), which moves the magazine rack to the back of the store near music, electronic games, DVD’s and books.

Wal-Mart’s pretty good at figuring out how to maximize the sales of every square foot of space, so while the move is a symbolic kick in the pants to an industry that is suffering from all sorts of afflictions — not the least of which is a big drop in newsstand sales — it was hard to know if the move would really have an impact on the media business.

Well, apparently it does. According to AudienceDevelopment.com, the new store layout will also reduce the length of the magazine rack by 20 feet — approximately 50 percent. That means something on the order of half the magazines you can buy at Wal-Mart today will be unavailable there after each store is remodeled.

Wal-Mart isn’t saying which magazines will get the boot, and according to AudienceDevelopment.com, that decision hasn’t yet been addressed. But, consistent with all of its in-store activities, Wal-Mart officials (not a talkative bunch in the first place) are blunt in saying they’ll keep only the magazines that sell the fastest. Because that’s what Wal-Mart is all about.

It’s good for earnings and it’s good for the publishers that make the cut. But shoppers looking for titles with slightly narrower focus will simply have to go elsewhere.

Because that’s the downside of Wal-Mart and the Big Boxification of retail: Only the most mainstream items in any category – from lumber to breakfast cereal to music to magazines – get shelf space. Wal-Mart is bad for variety.

And in this case, it’s bad for the magazine business. The likely in-store survivors — usual suspects like Cosmo, Maxim, Better Homes & Garden and, (going out on a limb) Guns & Ammo — may see an increase in sales due to the new location, improved merchandising and reduced category competition. But I can’t imagine that the bump will be enough to offset the 20 feet of shelf-space that’s being given to some other retail category.

Face the fact: At the world’s largest store, magazines have just been put within site of the back door.

Magazines: Kick ’em when they’re down

A report at the end of August indicated that newsstand sales of magazines were down more than 12% in the first six months of 2009 compared to 2008.

I can only guess why that might be:

  • A sudden lack of spending money by the nearly 10 percent of people who are now unemployed;
  • A general feeling that, with so much news about magazines shutting down and facing financial ruin, they aren’t the attractive impulse buy they once were;
  • Have you seen the cover prices on magazines these days? With ad revenues down, many top-tier magazines now cost $7 or $8 at the newsstand.
  • I don’t have the foggiest idea what percentage of magazines are purchased at airports. It’s probably not that significant. But if air travel was down in the first half (it was) I suppose fewer people were buying magazines at airports.

With all that said, I’m not reading any more into this than it being one more bad metric for publishers in a year filled with bad metrics. I’m sure newsstand sales will rebound when the time is right.

But in the spirit of kicking them when they’re down, Wal-Mart has just announced that it’s implementing a new floor-plan that will put magazines in the back of the store, alongside music, video games and electronics.

At a level, it makes sense; consumer electronics aren’t near the back of the store because they don’t sell well. That department is usually one of the most crowded; it’s where all the wish-list shoppers loiter while the serious shoppers are boring us to tears in the throw-pillows and laundry-detergent aisles.

Further, the current newsstand location at Wal-Mart, wherever it is, can’t possibly be a great position, sandwiched in there somewhere between diet remedies and pet toys.

And finally, say what you will about the people who run Wal-Mart; they aren’t stupid when it comes to maximizing sales-per-square-foot. If they’ve done their research and they think magazines are going to sell better in the vicinity of music CDs and other entertainment goods, I can’t argue.

But I can say that, symbolically, for magazine publishers, it feels like just one more kick in the front of the pants.

What’s the economic value of a journalist?

Journalists are historically thick about the notion that they are part of a business model; that they are employed not so much for the public good but because somebody has figured out how to make more money from their work than it costs to produce. That thickness is part of what makes them good at what they do; good journalists tend to follow the trail of information regardless of how they fit into someone else’s profit motive. It’s also why the outsider complaint — “The reporter only wrote that story to sell papers” — never gets any traction.

But the business model under which  most journalists have always worked is under attack right now, and that’s changing the very basics of the job: who wants to hire them, what the job requires, and how much it pays.

In recent good times, a newspaper would bring in about $1.35 in revenue for every $1 spent to run the place. That includes such inelastic expenses as distribution and printing. If you eliminate those expenses from the equation (which an economist wouldn’t do, but this is a journalist-centric view, in which the value of a newspaper to its readers and advertisers is directly proportional to the quality of its reportage) then the economic value of a journalist is at least 1.35 times salary and benefits.

But in times like this, newspaper profits are down — which means the economic value of  journalists is down too. The work of the newsroom simply produces less profit so, therefore, the value of each person in that newsroom is less.

Media companies deal with this as any business would: When profits drop, you reduce costs. Most media start with manufacturing: production, printing and distribution. (Tips for reducing production costs; 34 tips for cutting costs; United Media cost-reduction strategy.)

But when profits continue to drop, people start to lose their jobs. And despite what journalists like to think about their value, cutting reporters and editors usually stops the bleeding pretty quickly. That’s because producing news isn’t the same as producing, say, cars or other manufactured goods.

If you cut people from the auto assembly line, you can’t make as many cars. Which means you can’t sell as many cars. In a recession, that’s OK because fewer people want to buy those cars anyway; jobs get cut because there’s an imbalance between supply and demand.

But in media, you can cut an untold number of reporters and editors without actually reducing output (Journalism jobs decrease 34% Jan 08-Jun 09). The quality of the reporting might suffer; graphics might not be as well thought-out; typos and errors may increase. But the audience still gets the same quantity of news, and the advertisers still get the same audience.

When a recession ends, a car manufacturer can’t sell more cars unless it hires back workers to increase production. But a newspaper can see advertising revenues increase at the end of a recession regardless of whether it puts more people back into the newsroom. That’s why financial and spreadsheet types like investing in media; the correlation between employment and profit is indirect enough that they can choose to ignore it.

This can go on for a long time, and it has. Eventually, people start saying things like, “That newspaper is just a shadow of its former self.” And any rational explanation about declining profitability should include the long-term effect of decreasing quality and comprehensiveness.

But that’s simply not the entire reason newspapers, magazines, radio and TV are struggling; I’d argue it’s not even a major factor — just a bad symptom.

The real reason is competition. Years ago, a major metropolitan morning newspaper’s only competition was the afternoon paper. (Remember, the competition isn’t for readers; it’s for advertising revenue). Then came radio, television, cable television, city magazines, alternative weeklies, etc. They may all serve readers differently, but their money comes from the same pot of regional advertisers. More recently, add Google Ad Words,  online magazines such as Slate and Huffington Post, bloggers like Matt Drudge,  social networking like Facebook and Twitter, and dozens of other business models I can’t even think of. The one thing all of these have in common is that they demand a piece of the same marketing budgets that are the financial foundation of newspapers.

Many of these newer organizations pay journalists — but none pay as much for as many journalists as did the old-line media. So not only do newspapers have more competition, journalists have more competition.

All of which is a roundabout way of saying I’m not patient enough to calculate the actual economic value of a journalist. But the following items seem clear:

  1. Economic value and social value are separate issues.
  2. Traditional media still seem to be experiencing declining economic value of their journalists. For example:
    Effect of mass layoffs at newspapers
    New news models
    Bloodletting in the newsroom
    Layoff tracker
  3. Meanwhile, types of businesses that didn’t previously value journalists now seem to be the places where the value of journalists is growing. For example:
    This is what you get when you pay for reporters
    The growth of brand journalism
    Best job in the world
    Attention corporations: Hire a journalist
    Winery hires lifestyle correspondent
  4. Entire business models that do away with the cost of journalists are emerging — and starting to attract big money. For example:
    Examiner.com buys NowPublic for $25 million
    www.heightsobserver.org
    www.printcasting.com
  5. Old business models are trying to revive the value of journalists by finding other revenue streams to pay for them. For example:
    How newspapers that charge for content are faring
    Murdoch charges for content
    Electronic newspaper update
    Non-profit newspapers
    AP battles with news aggregators
  6. Old-line business models that see the industry’s decline as merely a function of journalism’s decline somehow seem angry and not very realistic.
    Our Hometown News, Strongsville, OH
  7. The decline in value is related to the recession; when recovery starts in earnest, the decline will flatten out.
    Cox Enterprises hopes for positive earnings
  8. But the decline in value wasn’t caused by the recession; it was caused by huge disruption of traditional business models that involve journalists. For example:
  9. Journalists may be unwilling participants in the dizzying changes taking place. But those who are determined to make themselves valuable will succeed — whether or not it’s through a traditional channel.
    What journalism students need today
    Listen up, old-school journalists
    The future of news is scarcity
  10. I’m pretty sure the economic value of journalists isn’t declining; it’s declined among media that follow traditional business models, but that’s being offset by new models and innovations that are only now starting to emerge.

BPA Worldwide freezes rates, remains arrogant and irrelevant

BPA Worldwide, a leader in providing third-party circulation audits, has announced that it’s freezing membership dues and audit rates at their July 2008 levels — good through June 2010.

If you’re in the business, you know that BPA is especially strong among magazines with controlled circulation. If you’re not in the business, you need to know that third-party circulation audits are how publications validate their readership claims to advertisers.

BPA is facing obsolescence at an astonishing rate. If BPA is a dinosaur, then the killer meteor has already hit the Earth and the toxic cloud of extinction is on its way. Holding rates will make as much difference to the organization’s future as putting on a sweater.

Am I being a little harsh here? Perhaps. But set aside the fact that for the previous 20 years of my career BPA was one of the most sluggish, obstinate, arrogant and regressive entities I had to deal with. Set aside the fact that — even though it was owned by its customers — it always, without exception, acted as though its role was to prevent me from innovating in my job. Set aside that I don’t know anyone in publishing (though I’m sure there are a few) who doesn’t take some quiet pleasure at seeing BPA suffer.

What BPA faces aside from all that is the fact that its member magazines must find ways to radically reduce distribution costs. That’s required to offset declines in two key performance indicators: advertising pages sold, and cost-per-thousand (CPM) paid for an average page of advertising.

In other words, advertisers are reaching readers less often, and every reader they reach is worth less to them today than it used to be. The only thing advertisers care about is how many people take a measurable action as a result of seeing an ad.

And what is BPA’s ultimate value to publishers? Proof of readers reached. There is nothing that it does, or wants to do, to measure the responsiveness of those readers.

In my last year running business-to-business magazines, I withdrew two of them from membership in BPA. Not because I was so frustrated with the deplorable service BPA provided; but because my advertisers no longer cared about BPA audits. They told me they wanted to know how my audience would respond to their advertising; if I could provide better response per thousand readers than my competitors, nobody cared to see the expensive and painstakingly designed BPA audit statement. (To be fair, advertisers had been telling me that with increasing urgency for about eight years; it just reached a watershed last year — probably brought on by the recession.)

Since that time, I’ve heard of about two-dozen magazines that have terminated their BPA membership — something that used to be as acceptable in media circles as, say, passing gas in an elevator. Entire divisions of media companies have simply walked away from BPA because the organization’s work has ceased to be of value.

I suppose that freezing rates is a reasonable first response. But I don’t give BPA enough credit to understand how inadequate that step will prove to be as its irrelevance grows like a toxic cloud.

A new perspective on the media meltdown

I’ve spent a lot of time describing why advertising and traditional media are on a downward curve. To be sure, the curve has been exaggerated this year by the recession. But it was exaggerated by the last recession too and there’s no doubt that traditional sponsor-based media models are like the classic rollercoaster: in between the highs and lows, the ongoing trend is down.

seth-godin-blogIn a recent blog post, marketing guru Seth Godin puts his own take on the trend. The issue in his mind is that there is a sudden attention surplus — too many people spending so much time looking for all kinds of information that marketers don’t know what to do about it. He calls these micromarkets and says the old media models couldn’t serve them; social media marketing does — though he doesn’t use that terminology

Godin and I come at this from different ends of the business, and in the end reach the same conclusions.

I’m coming at it from the perspective of the media business, where decisions are based on the requirements of the paying customer — the advertiser.

I’m not claiming the audience is ignored; I don’t believe that for a second. But the changes that we’re seeing in old-line businesses — magazines rushing to digital-only editions, newspapers trying to figure out how to charge for online content, etc. — are not at all driven by the opinions of audience. They’re driven by the spending desires of advertisers.

Godin’s perspective is consumer based: He’s observing what the audience wants — and notes the challenge for marketers who are on their way toward getting it.

His explanation strikes me as novel, true, and worth sharing: http://sethgodin.typepad.com/seths_blog/2009/08/the-massive-attention-surplus.html.

Resistance is futile: You WILL buy an e-reader

Amazon’s got the Kindle, now in generation 2.5. Sony just announced that it’s reducing the price of its base-level e-reader to $199 — $100 less than the Kindle — though you can’t download books via wi-fi like you can with Amazon’s unit.

You can also buy e-readers from Panasonic and Samsung, with another coming soon from a startup called Plastic Logic. Microsoft had been rumored to be moving toward the e-reader market, and everyone seems to be waiting for what Apple might come up with.

The Kindle is built around a proprietary platform, as I assume Apple’s would be.

Early this year, Barnes & Noble bought Fictionwise — an e-book vendor — to compete directly with Amazon. (Here’s one article announcing the purchase.)

Do you get the sense that you’re going to be hearing a lot about e-books in the months and years ahead?

At various times, it was unimaginable that we’d all have our own computers and cell phones. So if you’re insisting right now that the book can’t be improved upon and there’s no reason for an e-book reader to enter your life, it’s just a matter of time before you change your mind.

The price will have to come down; a war will have to be fought and won over platforms and standards, and at some point, some respected company will have to take a leap and make its products available only in e-book format. None of this will take as long as it is for BlueRay to replace DVDs.

Nintendo actually put an e-reader on the market in 2004 — as did Sony and a few others. They flopped; perhaps because the technology wasn’t advanced enough yet, but more likely because the content providers didn’t have enough economic reason to support it. At the time, an e-reader was just another gadget.

That’s changed.

From magazine companies to newspapers to book publishers, nobody’s business model can continue to absorb the high cost of printing and distributing paper. So your resistance is futile; there is just too much corporate desire now to replace paper with something digital.

At some point, there will be a first New York Times bestseller that never actually came out in a printed edition. I’m putting my money on it happening by 2013.

According to the chart below from Forrester Research, more than 4 out of 5 people are familiar with the concept of an e-reader — compared to less than 2 out of 3 last year.  And while ownership of e-readers has more than doubled in the past year, market penetration is still less than 2 percent.

So do the math: Hardware providers are climbing over each other to break into this market; content providers are eager to support them; consumers have very quickly become aware and curious.

It sounds like an obvious post-recession boom to me.