As you can see from this chart,subions have dramatically grown over the years,but are now leveling off.U.S.publishers face rising circulation marketing expenses.Direct mail has become increasingly expensive for a number of reasons,including rising postal costs and the decreasing availability of large effective lists for reaching prospective magazine readers.Subion agent sources,while a valid part of the circulation mix,are by and large not as renewable as direct mail and other direct-to-publisher sources.And certainly the challenging retail environment has put additional pressure on generating more subions.
It's no secret that overall U.S.single-copy unit sales have been declining over the years.This is a result of many factors,including a troubled distribution system and intense and constantly growing competition for space within supermarkets and other key retail classes of trade.
The change in consumer shopping patterns also plays a key role in our retail picture.Magazines have been primarily in groceries and supermarkets,but over the years consumer traffic to those outlets has decreased dramatically.Supercenters like Wal-Mart and warehouse clubs like Costco are absorbing more and more of the shopping trips,so magazines are putting a lot of effort to get into those stores to be where the consumers are.
And speaking of where those consumers are,in the U.S.,they've been deeply entrenched in the cult of celebrity.
Celebrity has been the biggest growth category at retail,representing 30%of our total retail sales.Four years ago,the celebrity category was only 19%.
However,this chart shows what happens when we remove the celebrity category.Instead of the 1.7%revenue gain we posted last year compared to 2002,we would actually have an 11.5%retail revenue decrease.
One also has to question,how long can the industry absorb the costs of sell-through rates averaging 35%?At AMC we discussed an industry initiative to address this one-billion-dollar-a-year retail issue-the shredding of about 65%of all issues sent to newsstands.The initiative involves single-copy waste management.
MPA is working closely with national distributors and other retail chain partners and here are some of the things our publishers are doing:
·Eliminating retail outlets selling less than one copy.
·Increasing,decreasing and shifting draw within wholesalers and depotsbased on retail-level sales data.
·Shifting significant amounts of draw to move copies from unproductive retail outlets to those selling cost-effective volumes.Many titles need to cut significant amounts of draw.
In the end,this initiative will help magazines run healthier and more efficient operations.It will also help create stronger business relationships with retailers by streamlining processes and eliminating inefficiencies and redundancies.
On a brighter note at AMC-and related to our newsstand efforts-we celebrated the art of the magazine cover by announcing our first-ever best cover winners for the past 12 months.Magazine covers are a true reflection of our culture and our world.And a cover is totally unique to our medium.It captures a snapshot in time and freezes it forever.They are the face of our brands and we depend on them to generate retail interest.So here they are…
Best news cover of the year:The New Yorker for“Watch Your Back Mountain”.This cover was published when the movie Brokeback Mountain was just about to be released and it shows both the U.S.President and Vice President as prisoners of their fate.
Best Celebrity Covers:there was a tie between Julianne Moore in Harper's Bazaar and Busta Rhymes in Vibe.Green covers don't normally sell well but Harper's Bazaar ignored the rules with this striking Julianne Moore cover.And when Mr.Rhymes was criticized for allegedly withholding information in the murder of his bodyguard,he accepted Vibe's invitation to address it on the cover.
Best Concept Cover:Time for“The End of Cowboy Diplomacy.”This provocative cover opened a national dialogue on President Bush's foreign policy.It exemplifies the power of magazine cover to impact the national agenda.
Best Fashion Cover:Departures,for the Style issue featuring this woman veiled in an ethereal floral headpiece.This September cover captures the sophistication and glamour of the fall fashion season.
Best Service Cover:Time Out New York for the Fitness issue.This cover addresses overindulgence at the holiday season followed by the ritual need to find a gym.
Best Cover Line:The Economist for Rocket Man,featuring Kim Jong-il of North Korea.The right words,married to the right image at the right time produces an instant classic.
And Cover of the Year went to The New Yorker for Flood in the Oval Office.In the aftermath of last year's Hurricane Katrina,this cover captured a White House staff flooded by rising waters in the Oval Office.
Topic 3:Brand Extensions
At the AMC,we featured a panel of editors who discussed the fascinating ways of bringing their magazines to life beyond the page.These examples demonstrated quite clearly that the brand is clearly the center of our world.
Teen Vogue reinforced its cool image by placing one of its interns on the MTV reality show“The Hills.”It helped propel newsstand sales.
Black Enterprise hosts a golf and Tennis Challenge that has become the nation's premier networking event for African-American business owners and corporate executives.It has sold-out attendance of 1200 each year and has generated thousands of sponsorship dollars.
The editor of Playboy discussed the new Playboy Club Las Vegas.He also said that Playboy's sponsorship of a NASCAR racing team led to attracting new advertising because they were able to offer the racing team's other sponsors discounted ad rates.