Does the magazine industry have a permanent "kick me" sign?

The newspaper industry absolutely hates it when people talk about it being in freefall and the daily newspaper being doomed. But a major Canadian paper, the Calgary Herald, part of the dominant Canadian chain, felt no compunction whatever about running a story that characterizes the whole magazine sector as a hopeless case. The headline on the story makes it appear that government funding -- which amounts to, at most, 2% or 3% of magazine revenues -- is all that stands between most magazines and oblivion.

(The hook for the story was apparently a fundraising event that The Walrus was holding in Calgary Monday night. And there were the quotes from Ken Alexander who is surely misquoted saying that Harper's Bazaar is published by the Harper's Magazine Foundation. (In fact, Harper's -- not the fashion magazine Harper's Bazaar -- is published by the foundation.))

Nick Lewis wrote the following lead:

Is there a more financially risky venture than producing a magazine in Canada?

The federal government funds 2,300 Canadian magazines with $30 million annually, yet that doesn't seem to be enough in light of the number of titles that have recently ceased publishing.

It is a bald misstatement, a conflation of the total number of magazines of all kinds in the country and the funding that some magazines receive from the Canada Magazine Fund. The facts are that less than a tenth of published titles receive any funding at all. Slightly more qualify for a subsidized postal rate -- but then, so do newspapers. And the failure rate is nowhere demonstrated in the story to be either extraordinary or increasing.

(Lewis also spells Masthead publisher Doug Bennet's name wrong and confuses Harper's magazine with the fashion title Harper's Bazaar.)

The story cites Toro, Saturday Night and the Western Standard as examples that apparently represent the parlous nature of the business. The first was summarily executed by the rich man who lost interest in his plaything, the second had more lives than a cat. The third isolated itself in a narrow, partisan niche.

"Magazines come and magazines go," says Doug Bennett [sic], publisher of Masthead magazine, which covers the industry in Canada.

"We track all the launches and closures of magazines in Canada, and in 2006, we tracked 21 closures. Of them, 18 per cent were one year of age or younger, and 31 per cent were between one and five years old.

"So half of all magazines in Canada fold in their first five years.

"An analogy with the restaurant business is one that's often used."

These kinds of statements about the iffy nature of magazine publishing is repeated so often that even knowledgeable people in the industry seem to believe it. But it's simply wrong.

The plain fact is that, according to a study by Statistics Canada*, 45% of all business startups don't survive longer than two years. While almost three quarters of small business startups survive the first year, less than one third of companies with fewer than five employees were in business after five years.

At least half of new companies in Canada go out of business before their third anniversary, and only one-fifth of them survive a decade, according to a new study investigating the factors that are related to success and failure in young enterprises.

In fact, roughly one out of every four new firms (23%) won't make it past their first birthday, according to the study which examined 1.3 million businesses that began operations during the 10 years between 1984 and 1994. The study found that new businesses have short lives, about six years on average.

So, it could just as well be said that magazines are a better bet than other kinds of businesses. Masthead's own tally shows that more than twice as many magazines were started as closed over the period 1996-2006.

Further down in the Herald story, Bennet is allowed this observation:

Despite the difficulties facing the industry, there are many Canadian magazines thriving for many different reasons.

"There are a number of small operations that are doing very well, thank you," says Bennett. "It has to do with creating a publication where there's a real reader need and there's enough advertisers in that field to support a business model."

Let's hope that Calgary readers got that far.

And, as an industry, let's resolve to correct the record the next time anyone tries to suggest that startup magazines are any more, or less, risky than any other entrepreneurial activity. A well-considered, well-run magazine with a good audience is no more likely to fail than any other well-conceived and well-run business. Bad businesses and bad magazines fail, but so what?

*Failure rates for new Canadian firms: New perspectives on entry and exit. Statistics Canada, 2000.