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It’s All About Circulation and Distribution Or Is It? The ACT 9 Experience. Linda Ruth Reporting… Part 13

May 9, 2019

The following is a panel discussion that took place on the last day of the ACT 9 Experience concerning circulation issues and challenges that face magazine media companies in the retail space and with current business models today. The central theme centered on reimagining the world of print and what it can do in the form of Special Interest Publications and partnerships. And also discussion about a much-needed revitalization of the magazine distribution system. And your ACT 9 Scribe, Linda Ruth was also a guest on the panel.

The panel featured:

Moderator, Tony Silber: President of Long Hill Media

Clayton Clabaugh: Director, Fundraising and Product Annuity, Focus on the Family
Linda Ruth: Publishing Management and Consulting, PSCS Consulting & Official ACT 9 Scribe
Drew Wintemberg: Founder, AJW Leadership & Insights and former president, Time Inc. Retail

Now, let’s revisit this interesting discussion…

Tony Silber: We are celebrating the enduring power of print in what is undeniably a media revolution. As we adapt to a changing media world, we need to acknowledge the macro trends, all of which are difficult. Most of us engage with media digitally and on mobile; print is not our first point of contact. Google, Facebook and Amazon represent 75% of advertising dollars. Advertising, which has been the foundation of magazine revenue, is less important than ever before. Reader revenue becomes more important; but the distribution system is contracting, even collapsing. If you look at the supply chain of an industry you can learn a lot about its health. We can celebrate print, but must understand the context.

Drew Wintemberg: All major companies are facing the same headwinds at retail. Checkouts are disappearing; urbanization is reducing the presence of large-format retail stores. We have been building our business in retailers that don’t exist to the same degree anymore. The magazine category must evolve. Circulation must serve a purpose. The direction of publishing is in the direction of personalization, specialization; we need to look at the publications beyond the AAM audited ones. The AAM titles are shrinking; but the non-audited titles still grow. The picture is better than what we’re looking at. Our competitors for front end space are saying magazines are dead; we need to answer this. Niche titles, special interest titles are growing. As our space at front end shrinks, we can’t afford to give seven pockets to the women’s titles.

Linda Ruth: The industry has gone in two separate directions. The success of publishers is in the direction of higher prices, higher quality, lower frequency. The industry’s infrastructure, on the other side, has been built for the old AAM/mass market titles. It’s consolidated into essentially one company, a company that is trying to streamline to scale.

At the same time retailers have been streamlining; tracking and sales have switched to scan-based-trading. SBT ensures that the only copies verified as sale are the ones going through the register. These two things—the consolidation of distribution on the wholesale side and SBT is like using a machete for fine-carving. Specialty magazines need a targeted distribution. There are successful magazines now that cost several dollars to print and ship, that cost close to $20 at retail. These publishers can’t afford the high returns that the system currently generates. Publishers need to find new ways to get their product to market. There must arise new ways of bringing product to market and also new ways of accountability for tracking and paying for sales. SBT was created and authenticated for product that is higher frequency, lower price. Today’s special interest titles are more vulnerable to shrink. We need to see more follow up, more access to the merchandisers, more accountability.

Drew Wintemberg: The thing that frightens me most about the SIPS (Special Interest Publications) is that it could vanish tomorrow, like the adult coloring book craze.

Tony Silber: The subscription economy is booming. Does it have a detrimental impact?

Clayton Clabaugh: There is potential there to partner up with somebody and add a publication into an existing subscription box.

Drew Wintemberg: For the longest time, it was a one to one relationship, publication and reader. Publishers now want so many touchpoints with the consumer, they want to be engaged in people’s lives all along the line. Engage them socially, at events, through clubs, super-subscriber packages. Everyone wants the club because it gives them access to all the names. It isn’t detrimental; we have lots of other issues.

Linda Ruth: And lots of other ways of approaching it. E-learning, for example, is way under-penetrated in media—it’s a $46 billion business globally.

Clayton Clabaugh: We’re testing micro-learning. Embedding bits of content. We are testing through email and Facebook, and the tests we’ve done have been robust. We launched an email offer to an e-learning course on a Friday afternoon, had 14,000 subscribers by Monday; it brought in some donors as well. There is a different tie between the content of a magazine and the micro-learning that can come from it.

Linda Ruth: We have the audience, the knowledge, the enthusiasts. So much of our content can be taught and needs to be taught. And John Mennell of Magazine Literacy has suggested that we create opportunities throughout the year for people to buy magazines on the newsstand and leave them in bins for at-risk kids to create waves of enthusiasm and a really good feeling about print. We need to throw out what we think we know and start again, start fresh.

Drew Wintemberg: If you’d told me ten years ago we’d be paying for radio, I’d have said you were out of your mind. We do need to re-invent ourselves. There has to be a way to leverage our content to make it richer, to make it live longer.

Linda Ruth: I’ve been discovering with my special interest publishers that one way to go is to make the content interactive. Interactive prompts in the magazine, along with making print more beautiful, more tactile.

Drew Wintemberg: If you start out beholden to the advertisers, you lose all control. The SIPs are going from a content standpoint.

Tony Silber: Then what does the revenue mix look like?

Clayton Clabaugh: From the point of view of a non-profit, it’s donors, subscribers, and the extra add-ons; this puts us in the black.

Tony Silber: Can circulation revenue take the place of advertising on a mass scale?

Drew Wintemberg: Ad revenue is still very important. It’s going to be a slow process trying to change that.

Linda Ruth: Every business model will look different. But if you’re going to be less dependent on ad revenue, you have to build efficiencies. These high-end publications can’t survive at low efficiencies. Also the gap between subscriptions and newsstands needs to shrink as well. Sub prices have to get more into alignment with newsstand. And your online model: you use your content to build your list and sell stuff to the list. E-learning is a piece to be used to use the list, to sell to the list, and to sell other products to the list through the classes.

Drew Wintemberg: What some publishers are doing with events is phenomenal. Engaging core constituent in the place they want to be.

Clayton Clabaugh: We’re raising the prices of our magazines; we’re sacrificing some response rate but it’s putting us in the black. It also becomes part of our story. We’re also using outside lists to bring new names in to our audience.

Tony Silber: What marketing techniques are working in digital subscription development?

Clayton Clabaugh: We’re advertising in Facebook, and it’s competitive with acquisition costs in direct mail. And e-learning is also promising.

Linda Ruth: It comes back to building email lists; to do so, you do need to give away free stuff, and as you build it, those are the people you sell to.

Please click below on the video link to watch the entire panel presentation:

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