Wednesday, December 21, 2016

Plumping circulation with SIPs is bringing U.S. publishers to a moment of reckoning

Keeping magazine circulation up by emphasizing non-revenue circulation sources is putting publishers in a jackpot of their own making, according to a piece in Folio: magazine by consultant Baird Davis. Newsstand business is suffering and the rush into a digital future is being repaid by a slowdown in digital circulation.(All U.S. data. See illustrative charts here and here. )

The newsstand decline of sales of audited titles is being masqued by the inclusion of special interest publications or "bookazines, he says. A close analysis of MagNet data showed that, net of those products, the sales of audited publications in the first half declined 14.9 percent, with revenue off 15.4 percent, indicating that the rate of decline for audited titles, rather than slowing as is often said, is actually accelerating.  and net revenue for non-audited titles actually rose 5.8 percent, compared to the steep 15.4 percent decline for audited titles.

He says that major publishers are the biggest users of non-revenue circulation. 
"The really heavy use of non-rev circ is largely confined to the publishers with high circ level titles that are chasing national advertising. These include, shown with their percentage of non-rev circ use: Time Inc. (30.7 percent), Meredith (29.5 percent), Condé Nast (32.5 percent), Wenner (30.6 percent) and Rodale (23.3 percent). These publishers, particularly Time Inc., Meredith, and Condé Nast, have easier and more economical access to non-rev circ sources. They also appear to be using these sources, not only to support high circ levels, but also to sustain a competitive advantage over publishers who don’t have the resources to keep pace in what amounts to a high-level circulation battle of chicken"
Advertisers are not being fooled, says Davis, and are therefore negotiating discounts for these line extensions, particularly as their ballooning usage has now exceeded single copy sales for the first time. 

As for digital circulation, he says that digital may have peaked in 2015 at 4.4% of paid circulation; "a far cry from the 10 percent figure that many publishers were forecasting just a few years ago."
"The age of unfettered circulation levels for audited consumer magazines is fast coming to a close. The dramatic decline in newsstand circ, the proliferation of non–rev circ, the prospect of less than expected digital circ, along with reduced reader demand for print products have all conspired to place stringent new circulation level restraints on publishers. 
"Some publications, like Reader’s Digest and TV Guide, have responded to the market changes and reduced their circ levels. But even a casual review of single copy, digital, and non-rev circ use reveals that many publishers are still stubbornly clinging to circ levels that are no longer appropriate in today’s market."



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