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Dan Hickey, CEO, Kalmbach Media To Samir “Mr. Magazine™” Husni: “We’re Always Going To Put The Customer At The Center.” The Mr. Magazine™ Interview…

April 25, 2021

“In the case of Kalmbach, we’ve spent time over the last few years consolidating our brand portfolio. And now we feel we have a strong core business in trains and science. And across our brands in those categories, many of our customers still want the experience of a print magazine. And we’re going to continue to provide high-quality print experiences for those customers.” Dan Hickey…

Print and digital at their best, working together to serve the audience across all platforms. That’s the plan at Kalmbach Media. Kalmbach was founded in 1934 and continues today to delight and inform enthusiasts across many interests, from trains to science to beads and buttons. Through a diverse portfolio of brands that encompasses magazines, digital content, books and related products, Kalmbach has brought its legacy brands into the 21st century with a robustness that is far from shy.

Dan Hickey is CEO of the company and believes in the Kalmbach mission of always putting the customer front and center wholeheartedly. I spoke with Dan recently and we talked about these brands that are very near and dear to many readers’ hearts, and to Dan’s too. Model Railroader, Classic Trains, Garden Railways, just to name a few. And about the new Trains.com website that was launched recently. For train and railroad lovers, it’s a portal to heaven with more than 20,000 pieces of content from all of their train enthusiast brands all in one spot, a massive endeavor that offers an unlimited access membership that Dan feels will excite his audience as much as it does him. With premium content created solely for the website and live video, plus access to 85 years of archives, it’s sure to cause train enthusiasts nationwide to sign up.

In fact, they launched recently and signed up thousands of memberships. Dan said that their expectations for Trains.com is that it will become the number one trains website in the world. “And it’s going to be a recurring revenue model for Kalmbach, it’s a subscription model, it’s premium content, and we expect and plan on it to be very successful.”

Indeed. It’s print and digital at their best. A successful partnership between the ink on paper and the pixels on the screen. And now the Mr. Magazine™ interview with Dan Hickey, CEO, Kalmbach Media.

But first the sound-bites:

On how things have been operating during the pandemic: It has certainly been a challenging time for everyone, but our business is doing very well. We’re having a very good year. Most areas of our business are actually doing better than last year. There has been a bit of a lift, I would say, since the onset of COVID. Some of our customers are people who have return to the hobbies, whether it’s the train category or astronomy or science. Business has done very well.

On whether he subscribes to the theory that the pandemic has been a sort of blessing to the magazine media and publishing industry: I’ve spoken to many CEOs in our peer set and all of them have told me that their businesses have actually improved during COVID, and that has been true of our business as well. I wouldn’t go so far as to call it a blessing, just because of the context of it all, but our businesses have improved.

On the membership business model he is starting for Trains: A lot of publishers are turning to what I would call a new business model for digital, for websites, and for Internet businesses. At Kalmbach, our revenue is probably 90 percent from the customer today and has been for a long time. So the shift for us is just making sure that we are building digital membership products as part of our future strategy. And that’s what Trains.com really is, it reflects in our business the multiyear strategy to serve our audiences through compelling digital subscription products. So, it’s not so much of a new business model, it’s the same business model, but it’s just happening in the digital arena.

On the role of print in this digital migration: In the case of Kalmbach, we’ve spent time over the last few years consolidating our brand portfolio. And now we feel we have a strong core business in trains and science. And across our brands in those categories, many of our customers still want the experience of a print magazine. And we’re going to continue to provide high-quality print experiences for those customers.

On the plans for Trains moving forward: We’ve owned the Trains.com domain for a long time without putting it to good use, so to speak. We wanted to unlock the value of the domain because it’s powerful, for sure. And we knew by looking at our data that there was crossover between brands and we came to the conclusion that optimal value would be building one big site with multiple brands, versus five separate, distinct websites. And that’s what we did.

On what someone can get from Trains.com that they can’t get from the ink on paper publications: They’re going to find exclusive, premium content from all of our Trains brands. That’s Model Railroader, Classic Toy Trains, Garden Railways, then Trains and Classic Trains which serve the enthusiast audience that are interested in big trains. This is exclusive content, created just for them. They’re going to get expert Q&A’s, track databases. The one unique thing that they’ll be able to get is 85 years of archives of all five of our brands. And we know from our experience in data that the archives are very much valued by our customers.

On what he hopes to accomplish with Trains.com within a year: I think a year from now we’re going to tell a very compelling story, in terms of our success building a new digital subscription product and really paving the way for train enthusiasts to interact with digital content in the future.

On Kalmbach’s selling content to the audience mentality instead of selling the audience to advertisers and whether that still fits no matter the platform: Yes it does. We do advertising, but it’s a minor part of our business. It’s not a huge part, but we do it because it’s a service really to our customers, because they’re looking for products and they’re buying products on a continual basis, so they need to be connected to manufacturers and retailers, that’s just a fact of the business.

On whether the membership for Trains.com is digital only or print plus digital: The membership is an unlimited membership for digital, but we have some other products. We know the archives are valuable, so if somebody just wants access to the archives, they can purchase that for $2.99. So we’re allowing subsets of content and we’ll experiment too.

On how important the legacy brand was to this digital membership model: If you’re asking how important are our brands in establishing Trains.com, if you visit the site you’ll see that we took a lot of care, this was a massive effort as you might imagine, bringing more than 20,000 pieces of content from different websites all onto one.

On the role of the print product at Kalmbach: Again, we have a customer base that very much wants a print product. I can tell you that it’s not declining fast by any means, but it’s not growing necessarily either. For us it’s harder to find a print subscriber than it is to find a digital subscriber. The digital universe, as you know, is quite large and provides opportunities for publishers like Kalmbach to find new customers more efficiently than we can through traditional means for print products.  

On anything he’d like to add: It was a massive project for our cross functional teams; we had editorial involved; we had our marketing team; our technology team; our design team; third party vendor, and our digital team. It was a year-long project or more and we’re very excited and proud about the product and the results so far. We’re proud of the team that really came together and put Trains.com on the map for us. We’re just very excited at this point.

On being a CEO and handling the social changes that are taking place in the workplace and in the country today:As a CEO, I didn’t shy away from engaging employees in issues of race and social injustice; we had discussions. I actually got involved with employees in focus groups and I didn’t shy away from vulnerable questions about working from home; how is it working with their families, to really try and understand and have empathy for these employees who are facing very challenging times, especially if you’re a parent, with the schools shutting down and opening up.

On what makes him tick and click: Every day I have new questions and I’m a curious person. I always try to explore what might provide answers to those questions.

On how he unwinds in the evenings: I live in Wisconsin on a lake and I like to get a fishing rod in hand and get out on the dock. It’s something that relaxes me the most.

On what keeps him up at night: Thinking about our future, and not just as an industry, but as a company. And about how we’re going to be successful. We’ve been spending a lot of time thinking about acquisitions and what types of companies would make sense for Kalmbach to acquire. It’s a process that requires patience and a great deal of thought.

And now the lightly edited Mr. Magazine™ interview with Dan Hickey, CEO, Kalmback Media. 

Samir Husni: How have things been operating during the pandemic?

Dan Hickey: It has certainly been a challenging time for everyone, but our business is doing very well. We’re having a very good year. Most areas of our business are actually doing better than last year. There has been a bit of a lift, I would say, since the onset of COVID. Some of our customers are people who have return to the hobbies, whether it’s the train category or astronomy or science. Business has done very well.

Our employees have moved from pretty much 100 percent in the office to about 90 percent remote work. Our collaboration and communication has been excellent. And surprisingly, our productivity has actually increased, so we’re feeling pretty good about things right now. 

Samir Husni: So when people say that the pandemic was a, and I hate to use the word blessing, to the publishing and magazine media industry, do you subscribe to that theory?

Dan Hickey: I’ve spoken to many CEOs in our peer set and all of them have told me that their businesses have actually improved during COVID, and that has been true of our business as well. I wouldn’t go so far as to call it a blessing, just because of the context of it all, but our businesses have improved. 

Samir Husni: Can you tell me  a little bit more about the membership business model that you’re starting for Trains?

Dan Hickey: A lot of publishers are turning to what I would call a new business model for digital, for websites, and for Internet businesses. At Kalmbach, our revenue is probably 90 percent from the customer today and has been for a long time. So the shift for us is just making sure that we are building digital membership products as part of our future strategy. And that’s what Trains.com really is, it reflects in our business the multiyear strategy to serve our audiences through compelling digital subscription products. So, it’s not so much of a new business model, it’s the same business model, but it’s just happening in the digital arena. 

Trains.com is the answer to the question of how Kalmbach is going to serve our customers in the future. In that respect, it really represents our future path. This has been our model, but what I think is new for us is really migrating that business model to digital.

Samir Husni: What is the role of print in this migration? Will we continue to see Trains in print; continue to see the Kalmbach magazines in print as you migrate the business model to digital?

Dan Hickey: I think that will vary publisher by publisher. Larger publishers are going to have an easier time staffing both print products and digital products. Smaller media companies, smaller publishers are going to have to really balance between print and digital. 

In the case of Kalmbach, we’ve spent time over the last few years consolidating our brand portfolio. And now we feel we have a strong core business in trains and science. And across our brands in those categories, many of our customers still want the experience of a print magazine. And we’re going to continue to provide high-quality print experiences for those customers.

However, access to new premium digital products will not necessarily be included in those subscriptions. I do see publishers, the small and medium-sized publishers, looking at frequencies. Even the bigger publishers over the last five years have consolidated their portfolios, maybe have sunset some brands. But there are other levers that publishers can use to fund the investment in new digital subscription products, such as circulation and the size of the magazine, how much paper they’re using. Those are the things that Kalmbach looks at as well.

Samir Husni: What are the plans for Trains as you move forward?

Dan Hickey: We’ve owned the Trains.com domain for a long time without putting it to good use, so to speak. We wanted to unlock the value of the domain because it’s powerful, for sure. And we knew by looking at our data that there was crossover between brands and we came to the conclusion that optimal value would be building one big site with multiple brands, versus five separate, distinct websites. And that’s what we did. 

Over 86 years, we’ve developed leading brands and we’ve been serving our customers predominantly in print. Our expectations for Trains.com is that it will become the number one trains website in the world. And it’s going to be a recurring revenue model for Kalmbach, it’s a subscription model, it’s premium content, and we expect and plan on it to be very successful. 

Samir Husni: What can someone get from Trains.com that they can’t get from the ink on paper publications?

Dan Hickey: They’re going to find exclusive, premium content from all of our Trains brands. That’s Model Railroader, Classic Toy Trains, Garden Railways, then Trains and Classic Trains which serve the enthusiast audience that are interested in big trains. This is exclusive content, created just for them. They’re going to get expert Q&A’s, track databases. The one unique thing that they’ll be able to get is 85 years of archives of all five of our brands. And we know from our experience in data that the archives are very much valued by our customers. 

They’ll also get livestreaming video as well. And again, we’re going to be creating premium, new content daily that can only be found on Trains.com. Trains.com was our first digital subscription product that was all video and we had great success with that, in terms of Model Railroader fans. About 20 percent of our audience also chose to purchase the video product, so Trains.com is a continuation of that strategy, but it’s just bigger and better than what we did for Model Railroader Video Plus. 

Samir Husni: What would you hope to tell me you had accomplished a year from now with Trains.com?

Dan Hickey: We have a large ingrowing audience on a subscriber base on Trains.com, membership base. We’re creating a lot of video content and we’re reaching new customers through digital channels that we weren’t necessarily invested in previously. And that the Trains.com domain is absolutely powerful. 

Just to give you a sense of how powerful, with the launch a few weeks ago, we signed up thousands of members. It was pretty much a rolling launch, with Model Railroader Video Plus being the last to shift and redirect its customers. Our conversion from a 30-day trial membership to a full unlimited membership is around 80 percent. We consider that a very healthy conversion rate. 

So, I think a year from now we’re going to tell a very compelling story, in terms of our success building a new digital subscription product and really paving the way for train enthusiasts to interact with digital content in the future. 

Samir Husni: You have rarely been in the business of selling the audience to the advertiser, but rather selling content to the audience. As you move more into digital, are you finding that “audience first” mentality still fits, no matter the platform?

Dan Hickey: Yes it does. We do advertising, but it’s a minor part of our business. It’s not a huge part, but we do it because it’s a service really to our customers, because they’re looking for products and they’re buying products on a continual basis, so they need to be connected to manufacturers and retailers, that’s just a fact of the business. 

But in terms of Kalmbach, we’re always going to put the customer at the center. It’s been our history to provide expert premium content to those customers, they’re willing to pay a premium per subscription in many cases. The difference for us is great content allows us to charge a premium for that content and we feel that’s going to migrate over easily, based on the conversion rate that I just shared with you, so we feel that will be true for Trains.com as well.  And will we provide advertising on Trains.com? Yes, we think we can provide advertising that’s suitable and effective in the digital realm. 

Samir Husni: Did I understand you correctly when you said the membership is for digital only? No print plus digital? 

Dan Hickey: The membership is an unlimited membership for digital, but we have some other products. We know the archives are valuable, so if somebody just wants access to the archives, they can purchase that for $2.99. So we’re allowing subsets of content and we’ll experiment too. 

We’ll experiment with areas where there might be a subset of products that aren’t as expensive as the unlimited membership, but the plan for right now is that a subscriber to the magazine will get all that content, but all the new content that is created on Trains.com, they will have to buy the unlimited  membership unless they want just the archives. 

Samir Husni: But for the price you can get it all, the print and the digital?

Dan Hickey: Yes, but it’s not a combined membership at this time. You’re just going to buy a subscription for the magazine and then you go online to buy the digital product. So you would buy both products. In the future we’ll look at creating a combined membership, but today with this new product it’s separate. There is a subscription or a digital membership or you can buy both. 

Samir Husni: How important is the legacy brand to the success of this membership model?

Dan Hickey: If you’re asking how important are our brands in establishing Trains.com, if you visit the site you’ll see that we took a lot of care, this was a massive effort as you might imagine, bringing more than 20,000 pieces of content from different websites all onto one. 

One of our principles was that we wanted to still create and allow for experiences that are brand experiences within Trains.com. So we have technology, but we kept the brands alive on Trains.com. If you go to Trains.com you’ll see a section that’s Model Railroader, one that’s Classic Toy Trains, and so forth with all of our brands. 

And as you experience Trains.com, if you were only interested in Model Railroader or Live Trains, Big Trains, we have the technology really to deliver that type of brand experience. That was very important to us in building Trains.com, to make sure we didn’t diminish the brands at all. So if you want to experience three or four different brands, we have the technology and will allow for that as well. And we’ll learn how the audience is interacting with the content.

Samir Husni: And the role for the print product at Kalmbach?

Dan Hickey: Again, we have a customer base that very much wants a print product. I can tell you that it’s not declining fast by any means, but it’s not growing necessarily either. For us it’s harder to find a print subscriber than it is to find a digital subscriber. The digital universe, as you know, is quite large and provides opportunities for publishers like Kalmbach to find new customers more efficiently than we can through traditional means for print products. 

We’re going to continue to serve our customers who want print experiences for as long as they want those products and it’s economically feasible for us to do so. And because we are niche publications in these enthusiast categories, we have options that other publishers may not have. People are very accustomed to paying premium prices for our products. 

Samir Husni: Is there anything you’d like to add? 

Dan Hickey: It was a massive project for our cross functional teams; we had editorial involved; we had our marketing team; our technology team; our design team; third party vendor, and our digital team. It was a year-long project or more and we’re very excited and proud about the product and the results so far. We’re proud of the team that really came together and put Trains.com on the map for us. We’re just very excited at this point.

Samir Husni: As a CEO, what initiatives have you taken or how have you handled all of the social changes that are taking place today in the workplace and in the country?

Dan Hickey: As a CEO, I didn’t shy away from engaging employees in issues of race and social injustice; we had discussions. I actually got involved with employees in focus groups and I didn’t shy away from vulnerable questions about working from home; how is it working with their families, to really try and understand and have empathy for these employees who are facing very challenging times, especially if you’re a parent, with the schools shutting down and opening up. 

As a senior leadership team member, I really encouraged patience and empathy and really tried to listen more to our employees. And that has worked for us. We over-communicated and we were constantly surveying our employees, in terms of how things were going and did they have the tools and the resources to do their jobs. What were their views on returning to the office? What were their views on vaccinations? This was all done as a way of listening to what was happening. And we feel pretty proud of the way that we’ve engaged with our employees and that we’ve supported them and it seems to have influenced the results for the company.

Samir Husni: What makes you tick and click and motivates you to get out of bed in the mornings?

Dan Hickey: Every day I have new questions and I’m a curious person. I always try to explore what might provide answers to those questions.

Samir Husni: How do you unwind in the evenings?

Dan Hickey: I live in Wisconsin on a lake and I like to get a fishing rod in hand and get out on the dock. It’s something that relaxes me the most. 

Samir Husni: My typical last question; what keeps you up at night?

Dan Hickey: Thinking about our future, and not just as an industry, but as a company. And about how we’re going to be successful. We’ve been spending a lot of time thinking about acquisitions and what types of companies would make sense for Kalmbach to acquire. It’s a process that requires patience and a great deal of thought. During the pandemic, it’s been even more challenging to evaluate businesses — it is a time of uncertainty and there are question about what the future, or new normal, will look like post-pandemic. It’s challenging, but we’ll continue looking.

Samir Husni: Thank you. 

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