Is There A Light At The End of The Tunnel (Or Is It Just An Oncoming Train)?

The musical accompanyment for this post is brought to you by Martha's Vineyard, Carly Simon, and progress. Slow progress, but progress nonetheless.

https://www.youtube.com/watch?v=4NwP3wes4M8

For the past few weeks my Facebook feed has been offering me a $5.00 for a one year subscription to a Time, Inc. magazine. This is a pretty good deal. My annual sub to EW Magazine runs over $20.00. A single copy of that magazine at the airport is $4.99. Time Magazine itself? You will pay $5.99. You want their number one magazine, People? A copy from the newsstand would cost you $6.99.

So if a major national publisher is heavily invested in selling low priced introductory subscriptions, that must mean that they have given up on that antiquated newsstand distribution system. Right?

Clearly, I can't speak for Time, Inc. But they obviously want to ramp up their circulation numbers and they're not doing it through the newsstand. For what it's worth, some of the publishers that I work with are less than enthralled with the system that we operate within.

But why don't you wander down with me into the engine room of this old steamship and see why I think there are actually a few signs that the system may be transforming. Into something good? Maybe? Into something worse than it is right now? That's possible. The free market we operate in is run by people and even well intentioned people can mess things up.

Let's just say that I am modestly optimistic.

What's been happening since the start of the fourth quarter is that we are experiencing some changes that we've known were coming for fifteen or more years. If there is an upside to these changes, it's that no one is panicking or acting like the world is about to end. Frankly the people who are grumbling about these transitions usually grumble anyway.

Here's what's happening and why I consider them mostly positive:

1. We’re moving to POS (Pay On Scan) based reporting. At the beginning of October, TNG (The wholesaler formerly known as The News Group) announced that they were moving to this system with the retailers they service who are already on Scan Based Trading (SBT).

SBT does not necessarily pick up issue codes and there is the issue of shrink. But as an industry we’re acknowledging, finally, that retailers base their sales data on what went through the cash register. They no longer care about sealed boxes of returns. They don't pay their bills with premature returns. That's not how the major national chains that account for most sales work.  SBT is how they operate.  Feel free to grouse but it’s how they want to do business and if we want to reach our ultimate customer, a reader, who is in their store,  who will pay full cover price for our content, we have to treat the retailer like a customer.  So let’s quit the bitching and do business the way they do business.

Why are we finally moving to this form of reporting? Because a national wholesaler, not a publisher or a national distributor, took the bull by the horns and said, “We’re doing this!"

2. We’re getting rid of an antiquated RDA system. That will, in the long term, save money for wholesalers and national distributors, make a little more money for retailers, force publishers to re-think cash flow for a quarter or two. In the end, things should be just fine once we re-arrange how we think about RDA.

2a. In my opinion.

2b. Until some circulation person at one of the big six sits down at a conference room table, takes a big sip of his/her afternoon latte and says, “Hey, I have this great idea! Let’s offer retailers a quarterly 10% cash bonus…….”

3. Most of the mainstream wholesalers in the system right now seem financially stable.

As to the negatives like declining sales and lost space:

Are we losing space? Yes. We have lost some space. But you can’t shed the amount of circulation we’ve shed over the past five years and not expect to lose retail space. Can we get it back? Most likely not. Will sales go up? Maybe. Maybe they will go down more.

It will depend on what actions publishers take and if they can actually impact people’s reading and leisure habits. Maybe we can. Why not try?

Why do I feel optimistic? For one, we've seen wholesalers take some proactive measures and in the end, that may be good. I also see some publishers doing things that suggest that they are also re-thinking the newsstand.

Here are some examples:

1. Hearst Magazines repeated their fashion box in September and got it into retail. Even better, they created a buzz about it through the press and in social media.

Hearst created a “mag mobile” and drove it around NYC selling the magazines. Did they sell a lot of copies? Who knows? They haven't said and frankly I don't know if I care that much. What they did do was generate publicity for their magazines, their brand.  And they may have indirectly impacted sales positively.

Of great interest to me (and it should be to everyone in this business), is that they did it without the benefit of their national distributor or their local wholesaler.

As I point out to my clients, “Why would print all these magazines and just hope that someone walks by the newsstand in the back of a national chain and decides they want it. Let people know it’s there and give them a reason to go and find you!”

2. One of the Dollar store chains sells both books, and “book-a-zine” type publications. They sell a lot of them. Like hundreds of thousands of multiple releases. This is off the grid and I admittedly don’t know much about this system. But hopefully publishers that participate are using it to generate subs, create awareness of their full priced brands and inspire visits to their web and mobile sites.

3. Many regional magazines have a small amount of “direct to retail” business. Sometimes it’s something that could be handled within the wholesale/national distribution system, but often it’s local restaurants, bars, salons, etc. This has been around for a long time and I continue to be pleasantly surprised that it has not gone away.

4. Of equal interest to me are the specialty publishers who have developed their own newsstand systems outside of the national distributor/wholesaler system. This was reported by my "blogging colleague" D. Eadward Tree this past week but here are some of the examples I gave to him.

For example: Kinfolk Magazine, can be found in B&N (my guess via Ingram), but also in Anthropologie. I don’t know if that’s direct or through a book distributor, but you don’t see that every day

Anthology Magazine: This is a distribution that appears to be a series of indie bookstores and many, many craft stores and art studios.

Cereal Magazine: Admittedly, as an international priced at $25 a copy, you wouldn’t expect to find many here but like Kinfolk, one that has some business at B&N, but also local indie shops and bookstores.

UpperCase Magazine: A Canadian indie that follows the same path.

The Great Discontent:  A $20.00 indie that can be found in B&N and Urban Outfitters. They have also built up a network of many non-traditional stores.

5. Retailers taking independent action: On Black Friday, B&N’s newsstand department is discounting all magazines at 30%. They’re going to advertise this through e-blasts and special signage in the stores. This is a one day sale. The publishers are expected to cover that 30%. So while some publishers may be grouse, from my perspective, it seems to me that if you want to move product, you have to periodically discount it. Why not do that if more people than usual are in the store. And how many do you really sell in one day in one chain?

If I were a publisher, I would  let followers know that the magazine is available in the store on that day at 30% off. Maybe you'll get a new gift sub. Maybe someone who only follows on social media and gets stuff for free will finally go and pay for something. Maybe a long time reader that was wavering, buys one more copy.

In other words, someone (in this case B&N) is doing something. That’s good.

6. Through much of this year, and last, Kroger banners were involved in intensive re-racking or PTS (Pay To Stay re-logo) programs which changed around their front end. To their credit, they were flexible and were often looking for magazines that were not previously involved in front end merchandising. PTS programs are often  less expensive due to their duration and TNG’s front end managers operate the program on a quarterly basis so the upfront monies involved are not too steep. For one of my clients it was a great opportunity to test their front end salability for a national and regional spin off.

So the question remains: Is this ship sinking? Are we all going to drown? I honestly don't know. But I do know that this year, I see more evidence of people taking action, instead of reacting. The critics who think this is a business stuck in 1978 don't know anything about how we do business in 2015.