PUBLICATIONS - Newsstand and Deliver
BY MARK SMITH
This year's election proved to be an all too painful reminder that making predictions can be a very risky business. Dating back to the introduction of radio and then TV, a dire future has been predicted for magazine publishing time and time again. All the while, the number of titles and total page counts has continued to rise.
So far, the same trend is shaping up for the warnings sounded about the impact of the Internet on printed publications. The Internet actually has had the opposite effect on the market, with Internet-related titles being one of the fastest-growing categories and Websites/companies spending big bucks on ad pages. The consensus forecast is for continued strength in the market, with no end to the growth in titles—at least in the near term.
|Top 10 Publication Printers|
|2||R.R. Donnelley & Sons
|6||Perry Judd's Inc.
|10||The Sheridan Group
Hunt Valley, MD
Samir "Mr. Magazine" Husni, Ph.D., is the closest thing to an official tracker of the magazine publishing market. That's in addition to his full-time job as professor and Hederman Lecturer in the Department of Journalism at the University of Mississippi in University, MS. Volume 16 of Samir Husni's Guide to New Consumer Magazines is due out in February 2001.
Husni believes people have cried "wolf" far too many times when it comes to the future of magazine publishing. There are a number of trends that he contends are the major factors behind the current strong market conditions, and he expects them to continue in 2001.
- Major publishers continue to launch new magazines.
- Internet sites are moving into print. "Travelocity.com, Etrade.com and Expedia.com are just some of the big names that have launched print magazines," Husni says.
"The impact of readers spending time on the Web is that they need more information. Internet users turn to magazines for help in getting the most out of the Internet, and the magazines point them back to the Internet in a more meaningful way."
- Advertising revenues are up.
- Readership is up. "Over the whole continuum of print, people's time spent reading increased 13 percent in 2000, as compared to 1999. More importantly, people are spending 39 percent more time reading trade publications and business magazines in the year 2000." (According to Fairfield Research Inc.)
- Bigger and better outlets for magazines. "There are more places to buy magazines than ever before. Superstand, for example, is planning to open something like 200 stores nationwide in the next five years."
- More specialty stores are becoming magazine outlets. "Healthfood stores, GNC and others are starting to carry magazines that cater to their specific market niches."
- Specialty titles are still on the rise. "We now have magazines that cover from Hats to Shoes. Those are real magazines."
According to Husni, the total number of titles actively published has increased significantly in recent years. The number of consumer titles published in the U.S. has reached almost 5,500, which compares to 2,500 titles in the mid 1980s. The trade magazine segment has experienced similar growth, bringing the total number in all categories to between 18,000 and 20,000 titles, he adds.
So far, the increased number of title launches hasn't had any apparent affect on the overall success rate, Husni says. Currently, the standard measure—number of magazines still being published after 10 years—stands at 15 percent. Traditionally, that figure has run between 15 percent and 20 percent.
Despite the dramatic rise in titles published, Husni doesn't believe there is a market glut, or any end in sight to the growth in tiles. "First, publishers divide the segment by subject," he explains. "Then, the subject can be broken down by gender. Genders, in turn, can be broken down by race. Also, 'Girl', 'Boy' or 'Teen' can be added to any title. Of course, the more you segment the market, the smaller the number of copies that will be printed for any given title."
This segmentation of the market has some obvious and not so obvious implications for printers. Responding to the increased demand for shorter runs of magazines is an obvious challenge and opportunity. This has led publication printers to expand some facilities and upgrade others with more flexible equipment.
One of the most recent examples is the mid-year announcement from Banta Corp. that it was undertaking a $15 million expansion of its Banta Publications Group plant in Greenfield, OH. Construction currently is under way, with completion scheduled for April 2001 and plant startup to follow on June 1.
As part of the announcement, Banta Corp. Chairman Donald D. Belcher noted, "Special-interest magazines remain one of our fastest growing print markets and we are committed to supporting future growth through key investments in people, technologies and equipment. This is a business we have identified for future aggressive growth."
The capability to handle shorter runs is just part of production flexibility increasingly being demand by publishers, Husni claims. It's becoming ever more common for magazines to be customized and personalized in a variety of ways, he points out. The use of multiple covers by consumer magazines is a prime example
"It's not uncommon for a newsstand magazine to have two covers, or even four or more covers. TV Guide recently had 24 different covers for an issue. Research is now being done that shows an increase in sales whenever a magazine does more than one cover," Husni says.
A not-so-obvious implication of the growth in special-interest titles is the effect it may have on the total number of pages printed. The publishing industry is attempting to maximize its marketing and distribution efforts, Husni adds. "The sell-through rate for newsstand magazines still is only about three out of 10 copies. Instead of printing lots of copies and throwing them every where, hoping someone will pick one up, publishers are studying the marketplace to laser-target distribution."
The longer run market segment is far from dead, however. Husni points out that some of the notable recent successes include Maxim selling 2.1 million copies after only three years, Teen People at 1.6 million in sales and O (Oprah) debuting at 1 million copies.
Even the very high end still has its share of opportunities. Quad/Graphics provided evidence of this by announcing an expansion program fueled, in large part, by a new contract to print National Geographic. The contract reportedly calls for the monthly production of 9 million copies of the title, primarily by Quad/ Graphics' Martinsburg, WV, facility.
While the big story may continue to be the growth in special-interest titles, there are other challenges and opportunities publication printers will likely encounter in the year 2001.
For most of 2000, the specter of a postal rate increase hung over the industry. The Postal Rate Commission had not reached a final decision by this issue's press time, but there seemed to be reason for optimism that challenges to the increase would bear a positive result.
In 2001, publication printers are expected to continue, and perhaps accelerate, their efforts to expand into services beyond traditional printing. For example, the Premedia Technologies unit of R.R. Donnelley & Sons rolled out its new AdSpring advertising page tracking and management system recently. AdSpring reportedly can integrate with a publisher's internal systems and uses a standard, Internet browser-based interface.
To cut to the bottom line, Printing Industries of America's recently released "Vision 21" study projects printing shipments of periodicals to increase by 5.6 percent (compound rate) between 2000 and 2003. That hardly sounds like a death knell.
The Beat Goes On
To check the industry's pulse, we asked key executives at several of the major publication printers to answer the same question: What is your forecast for the publication market in the year 2001, in terms of business conditions and challenges/opportunities?
John Paloian, president of the Magazine/Catalog Group at Quebecor World: Following an outstanding 2000 in terms of advertising revenue and pages, we anticipate 2001 will bring a leveling off of some of the advertising excitement of a strong economy and the very active technology and "dotcom" sector. As advertising stabilizes, we feel there will be increased consolidation among publishers, and greater interplay between "new" and "traditional" media.
Quebecor World's Targeted Publication and Catalog Group continues to experience strong growth. Of particular importance to the specialty publication market is the changing demographics of the aging baby-boomers. As a group, they are strong magazine readers, and have a growing amount of discretionary free time and money. This should enhance their interest in publications targeted to their leisure-time passions.
Francis R. Costello, president, Magazine Publishing Services, R.R. Donnelley & Sons: Our forecast for the year 2001 is optimistic, and we think it will be another solid year in the publishing industry. However, a number of publishers are not planning as many launches next year as in 2000. Advertisements have been the primary driver and are dependent on a strong economy. Next year's economy is expected to grow slowly and, with expected cost increases in postage and paper, ad rates will be raised to cover these costs.
In general, large publishers are losing circulation, and there is rapid growth in special-interest publications. Though we see a trend toward smaller, targeted publications, one of our biggest launches in 2000 was O The Oprah Magazine, which is a large, general-interest magazine. At the same time, many publishers are investing in their products. Design, photography and paper stock have improved.
William K. Traub, vice president of marketing at Brown Printing: This has been a very good year for publications. Consumer books have seen double-digit growth of 15 percent, both in pages and revenue. Business/trade titles are up about 5 to 6 percent for the year.
For 2001, most (industry trackers) cautiously agree it should be another good year—assuming the economy stays strong. Dotcom advertising, which grew more than 400 percent this year, will definitely be off. This industry is experiencing a severe shakeout as companies learn that great ideas only work with solid business plans. Most projections call for ad revenue growth of between 5 and 6 percent in 2001.