No, Bonnier’s sale of its Parenting Group is not a sign of the death of print… because the market for print isn’t dying, its shrinking (and the industry is making it worse)
Three years ago I speculated about the possible ramifications of the new tablet publishing platform and what it may mean for print publishers. Due to the weak economy I said that, as we moved forward, we may begin to see that in various market niches that only the top magazine title would survive, while the number three and four books may be forced to fold. I think, three years on, that I would not modify that prediction.
Consolidation is common, and the loss of one magazine title doesn’t mean that another won’t spring up into the same market. But most of the B2B publications covering magazine publishing have been ignorant of what has been happening inside the various digital newsstands – with new products being launched, generally by citizen publishers, but occasionally from new commercial start-ups. The trade media has been eager to pass on bad information about new magazine launches produced by firms that only look at print, while never giving any press at all to the new digital titles launching daily.
The reality is that most of the new digital-only titles will have only a microscopic level of circulation, and practically no advertising. Some citizen publisher from the heartland who launches a tablet-only digital magazine using MagCast or some other PDF based solution, is hardly taking business away from Bonnier or Meredith. Or are they?
Like the drip, drip, drip of a faucet, the new digital platforms are, in fact, taking away readers. Market fragmentation is not confined only to television and radio, after all. Newspapers and magazines, too, are effected by the ever increasing choices readers have.
But, in the end, despite the protestations of journalists, the issue here is advertising.
|Meredith’s native tab edition for Parents|
“We were not number-one in parenting,” Folio: quoted a Bonnier spokesperson, “Parents is—by a wide margin. At this point, we don’t believe that in the foreseeable future we could make these titles number-one.”
The spokesman was not talking about circulation, where the two magazines were almost equal – each had about 2.2 million in circulation. No the problem was with advertising.
In Q1 of this year, the MPA report showed that while Meredith’s Parents had 201 pages in ads, Parenting recorded only 93 pages. One newspaper, reporting on yesterday’s sale, said that Parenting was losing $4 million a year (though Bonnier would not confirm this).
It is important to note, though, that while Parents was beating Parenting in ad pages this quarter, both magazines are down significantly since 2007. Parents, for instance, is down 29 percent from the same quarter in ’07, while Parenting is down over 40 percent. In other words, it wasn’t just the positions of the two magazines that forced Bonnier’s hand, but the overall decline of the ad market.
In other categories, though, the declining print advertising market is less obvious. In many categories, the top titles are not showing declines – it is in the second and third place magazines that the decline is most apparent. Ad agencies may be shrinking their print ad budgets, but most are not inclined to decrease their schedules across the board. To do so would mean that they would produce less ads in total. (By keeping one magazine at “A schedule” levels an agency still will need to produce as much creative.)
Overall, comparing Q1 of 2013 to Q1 of 2007, magazine advertising is down over 50 percent. If this decline were across the board we would be seeing titles folding on a daily basis. Right now the impact is felt mostly at second tier titles and in categories being hit particularly hard by the economy.
If Bonnier looked at the industry the way the trade media does they would have never sold its Parenting Group. But Bonnier looked at the market like a publishers does and saw that there was no room for their title (at the level of net income they desired). With Meredith willing to pay to consolidate the market – and with their pockets still full after not buying the Time Inc, titles – the logical move was made.
Will we see more consolidation like this? Maybe. There is, after all, the option to go digital-only. Many magazines are moving in this direction, though few do it out of a conviction that they can get bigger doing so, only survive.
The fact is that the industry and the AAM are working in tandem to cut the cords of the only parachute available to many major publishers. By setting rules that encourage replica editions, the industry is basically saying that it is print or nothing. Too few major publishers are launching new digital-only titles and are instead doing everything they can salvage their legacy brands. As a result, the number of sales reps out on the streets trying to sell tablet ads is extremely small compared to the number trying to sell print and also convince their advertisers that simply porting over their print creative to digital is an acceptable choice.
As a result, new digital-only publishers are increasingly in the best position to thrive long term – their new readers do not nee to worry if the bookstore down the street will be there next year, or if their advertisers will drop them for a new medium.