Regional Publishing International 53
operated in essentially exclusive geographies),
publisher marketing efforts were managed at
that level. As the major chains – Wal-Mart,
Safeway, Kroger, and others – became nation-
al entities, they broke down the wholesaler
framework and took control of the distribu-
tion channel. Where once, publishers and na-
tional distributors worked with wholesalers,
whose sole business was selling publications,
they now must sell to supermarkets, discount
stores, and drugstores, where reading mate-
rial is a relatively insignificant part of the total through the bookstore marketplace, and Bauer Publishing, the leader in low cover-price
product mix. For instance, in supermarkets, particularly through the dominant chains, magazines, has announced substantial increas-
where half of all magazines are sold, they rep- Barnes & Noble, Borders, and to some extent es, some as large as a dollar. Anderson News,
resent less than one percent of the retailer’s Books-A-Million. Their management has one of the four largest wholesalers, recently
total sales. Clearly, the new retailer-focused been generally willing to provide easier levels caused a stir when it ‘demanded’ that publishers
marketing atmosphere is distinctly different of access to their mainline, if crowded, display absorb the cost of the magazine inventory
and more challenging than the old wholesaler fixtures. Bookstores share of magazine sales is that they were required to take back from
system. now over 10%. Their business is selling publi- scan-based-trading (SBT) retailers. The Bauer
cations and they recognize synergies between price changes go into effect later in 2007. The
Retailers are often called master extractors books and periodicals. Anderson initiative has been delayed indefi-
of supplier’s moneys. When the channel was nitely, but active discussions and negotiations
restructured, retailers initially focused on ex- While the wholesale level of the distribu- are continuing.
tracting more from the newly competitive tion channel has lost much of its marketing Despite the general recognition of the finan-
wholesalers, which resulted in an economical- influence, as well as most of its profits, it re- cial fragility of wholesalers, publishers as a
ly weakened distributor level of the channel. tains a irreplaceable function. The remaining whole have not developed a new economic
After that, retailers became more aggressive wholesalers, large and small, provide delivery, model to support their major artery to retail
toward publishers and national distributors. merchandising, pick-up and return process- markets. When trying to manage in an en-
Retailers had always sold front-end checkout ing services. Additionally, they are the only vironment challenged at every level, the pre-
space, which included rack costs as well as centralized and complete sources of maga- vailing attitude may be that if the single-copy
display payments. Those costs have increased zine retail sales information. Their financial level has not collapsed despite a decade of fi-
at inflation-plus levels. Additionally, displays distress is nearly universally acknowledged nancial insecurity, and has even recently been
throughout the stores, for publishers and na- by publishers and national distributors. Yet, producing stable performance levels, then it
tional distributors, have become more costly. a decade-plus after the economic model sup- will, hopefully, continue to function, if not
Traditional display allowances have increased, porting the wholesaler system was rendered actually prosper.
as have the costs of managing them. unsustainable, nothing meaningful has been
Major publishers and their national distribu- developed to replace it. Even the moderate However, executives closer to newsstand busi-
tors can still manage the cost, not only of sales improvements of the past three years ness are not quite so sanguine. The admit-
maintaining their current business, but also have not benefited wholesalers. The 1.5% tedly minuscule performance improvements
of introducing new titles. Three of today’s ten increase in unit sales last year resulted in a of the past three years could turn around in
best selling magazines (ranked by annual retail less-than one percent revenue increase, be- a split second; and management of a one or
dollars) were launched in the last three years. cause many of the newly successful celeb- more major wholesalers, all of whom are parts
A dozen or so of the top 50 have entered the rity-focused weeklies have cover prices under of larger companies, could easily decide that,
market since 2000. However, the costs and $ 2.00, a price point most publishers passed after years of sustaining marginal operations,
challenges of entry for a publisher without by several years ago. The average cover price it is no longer viable and exit the business if
prior access to an established magazine mar- of a magazine sold declined for the first time, there are no buyers available. Retailers, as is
keting operation have become daunting. by two cents to $ 3.35, in 2006. retailers’ nature, would turn their attention to
Many medium-sized and smaller entries Within the last few months, there have been other products to fill the void.
are opting to enter retail almost exclusively developments in both these areas. John Harrington
AAU07_2722_Inhalt.indd 53U07_2722_Inhalt.indd 53 008.11.2007 13:51:40 Uhr8.11.2007 13:51:40 Uhr
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