Losing circulation: sometimes publishers of consumer titles are happy to let readers go
The trade off is lower marketing dollars spent and fewer discounts offered – dollars that flow right to the bottom line, but lead to less attractive publisher’s statements
The British press have been relaying the latest bad news about magazine circulation in the U.K.: consumer magazines lost nearly a million in sales in the first half of the year. That drop is pretty small by U.S, standards, but enough of a drop to get the attention of the U.K. press.
Particularly hard hit was music magazines, as New Musical Express, for example, lost 28 percent of its paid circ in the last report. (Then again, music kinda sucks right now, doesn’t it?)
But the secret many reporters are unaware of, and publishers don’t like to talk about, is that maintaining a rate base sometimes involves spending an unacceptable amount of money in marketing or discounts. In the end, letting some readers go away is a pretty smart idea.
This is not to say that major declines in circulation are necessarily good – a drop in rate base means a drop in ad rates, after all. But it means that occasionally the decision to drop ten percent may actually improve the bottom line of a title.
Due to the rather poor training of many media reporters, the impression many have is that subscriptions are a major source of revenue and profits for many magazines. In B2B, where many titles are offered for free to qualified readers, circulation is all about expense. But at many consumer magazines, it takes a lot of marketing power to maintain circulation at a desirable level. With newsstand stand sales slumping, due to distraction disruption or the loss of newsstands, sales must be made up via subscriptions to print editions, or subscriptions and single copy sales of digital editions.
But Apple’s Newsstand, and other digital newsstands, have proven disappointing in attracting new readers to replace those falling out. As a result, many publishers must bite the bullet and pull back. It hurts, but the drop in costs often flow right to the bottom line.
The Guardian’s story on U.K. magazines reinforces an important point I have been making for awhile: second tier magazines are the most vulnerable right now. Major consumer titles – the Guardian mentions Vogue as an example – continue to do well in ABC (and AAM) reports.
“There is a two-tier market in consumer magazines where there are very clear winners and losers,” Enders media industry analyst Douglas McCabe said. “There tends to be a few stable titles, like, say a Vogue, but further down each sector there are those feeling the pressure because the market is oversupplied.”
This true for two reasons: with a glut of titles to choose from, and less disposable income at hand, consumers are choosing familiar titles to buy. These titles are also the ones being relentlessly promoted by the online retailers like Apple.
But the second reason for this is that these major titles are the ones in the best position to spend the necessary marketing dollars to maintain their rate bases. Take away those promotional dollars and one might see more titles dropping.
One publisher, who is fighting to maintain their level of circulation, told TNM that keeping readers is easy when they can offer deep discounts to readers. But once the discounts end many of these readers “melt away.”