It’s the Business Model, Stupid. The Three “Real” Reasons for Single Copy Sales Decline…
February 12, 2012Too many reasons have been attributed to the decline of the single copy sales in the last few days. Some experts said the economy, others said the technology and some said folks are not shopping out as much. However, I feel that most of the media reports may have missed the real reasons for this decline. Being a student of the newsstand and one who spend thousands of dollars every year buying magazines on the newsstands, I have boiled down the reasons for single copy sales decline to three:
1. High cover prices: The average cover price for a new magazine is almost $8.00. More new magazines are arriving at the newsstands with extreme specialization and very few pages. Take a look at the magazines on the right of this copy. This is just a few of the magazines that I purchased from the two newsstands on Saturday. I spent $125.79 at Books.A.Million and $173.88 at Barnes & Noble for a total of 33 magazines (keep in mind that my prices are discounted 10% since I have the membership saving cards at both places). The average cover price for the magazines I bought was $9.08. Some of the prices were as high as $14.00 and $17.00. It does not take a genius to figure out that shoppers on the newsstands are not going to buy five or six magazines at $8.00 an issue. At those prices, folks who used to buy two or three magazines for that price are now buying one magazine instead.
2. Too many options: Some years back choices were limited. If you were looking for a stamping or scrapbooking magazine, you were able to select between two or three titles. However now the options can be as high as 50 titles in each category. From gardening to quilting to tattooing more titles are bombarding the newsstands and making it harder and harder for folks to make a choice. They spend too much sampling those title and by the time they are done, they got their full. Combine that with the higher cover prices, and you can kiss the sales goodbye. Visiting a newsstand and observing what goes on the shelves will actually help those pundits who theorize from their ivory towers about the magazine marketplace. Sometimes I wonder if they have ever visited a newsstand and paid the full price for a single magazine!
3. Very very low subscription prices: Add to that the ridiculous subscription prices where magazine publishers are still going out of their way to serve the dying advertising business model for the magazine business. Feeding the beast called “advertising centric business model” is pushing some publishers to offer their subscriptions at extremely low prices (some yearly subscriptions are almost the price of one single issue on the newsstands). Take a look to the right at the latest subscription offer that I received yesterday. Or better yet, just visit any newsstand and take a look at all the sub-offers’ cards inside the pages of the magazines with subscription prices discounted up to 93% of the cover price. How long can we continue to take the single copy buyers for granted and how long can we continue to signal to them that they are stupid because they are paying a lot more for the same magazine on the newsstands.
So, before we blame the economy, digital, or the web, maybe we should, once more, take a good look at the magazine business model and try to do more than just pay lip service to the single copy channel of the magazine business. Also, I truly believe that the single copy buyer is getting smarter and is recognizing the game magazine publishers play. It is payback time. Stop buying from the newsstand. To paraphrase a famous presidential campaign slogan, “It is the business model, stupid.”
Mr. Magazine 
Samir. Surprised I’m the first to reply. I think there are many more than 3 things that need to be done. And, frankly, I’m a little surprised at some of your ideas. You’ve been an advocate of high cover prices, more or less. So have I. For years, cover price hikes did not impact newsstand sales, with a few caveats. If a publisher promoted a low price with starbursts or other design features, then it was hard to raise the price. Most publishers did everything they could not to call attention to the price, burying it in fine print or in the barcode box. However, the Great Recession made consumers more careful in their shopping habits and they began looking for the price. Frankly, they were probably surprised at how much most magazines cost. That is hard to change. It will require some industry wide promotion, not only about the value of magazines, but about their excitement. Couponing might work as well, and in-store promotions, better displays, etc. All hard to do is a still recovering economy. Which I also think means that, yes, the economy has been a big factor.
It’s surprising to see you, Mr. New Magazines, talking about too many titles, too much choice. This is always a contentious issue in the business. Large publishers want to see fewer titles, more full cover display, sometimes double facings. Smaller pubs and their national distributors argue the declines would be even greater if it wasn’t still relatively easy to bring new titles into the market. I can argue either case very strongly.
What you didn’t touch on, and what is one of the biggest impediments to improving marketing at newsstand, is the redundancies in the distribution channel, as well as the mis-aligned economic models of publishers, national distributors, and wholesalers. Perhaps, the sale of Comag Marketing Group (CMG) by Hearst and Conde Nast to the Jim Pattison Group will provide an opportunity to deal with these issues and improve the business’s marketing and merchandising efforts.
Anyway, that’s enough for now.
Thank you John for your “public” response. I have been receiving quite a few emails in response to this blog entry, but none of them wants to comment publicly and I have a policy not to publish any comments with complete attribution (maybe that is the journalist in me). But as always I welcome all comments, posted or emailed.
The electronic versions should be priced low. Are we not looking at all the advertisers and clicking on the links and purchasing the stuff directly…and are the publishers not being paid by the advertisers?
Isnt the paper cost the maj input cost, low? the distribution channel is also direct….so like in india the magazine(physical version) costs 10 bucks to me whereas on the ipad same costs…..wait for it! ……55 bucks!!!
The distribution and penetration would go very high in the electronic versions if the prices are correctly aligned. We must remember, if u are reading it electronically, the article or the info is almost always available through a search engine and theres endless specialist information on the same subject also accessible through blogs and all….so in this scenario wont only morons end up paying such high prices? Thus the acceptability is low….people may feel its coming up but that is not the truth…its low compared to the real potential.
The physical versions of the magazines are heading for their demise in about 3-4 years with the advent of ridiculously low priced tabs and gadgets coming in the future.
So the questions thats begs an answer today would be, till when are we going to be fed with these HIGH priced digital magazines?
I love the model. I use subscriptions as a gift to clients to thank them for their business. I just got done ordering 17 different magazines and it was under 100$. Am I concerned that eventually there will be less substance? You bet I am. For now, I can’t think of a better way to say “Thank You” each month than to send them the occasional magazine.
Even if I sent them a letter each month, I suspect postage would be more. For now, I am glad that advertising is subsidizing their business.