Magazine Publishers of America
Nina LinkPresident & CEOMagazine Publishers of America
Looking ForwardPaperCon 2010Atlanta, GAMay 3, 2010
Thank you for inviting me to speak today. It’s always a pleasure to meet with my colleagues in the paper industry. We consider you one of our key partners. Paper is the magazine industry’s primary platform. It’s the way the majority of our readers consume our content. And we have lots and lots of readers. Last year, there were 368 million subscription and single copy sales of magazines in this country alone.
The theme of my speech is called, “Looking Forward.” And that’s only appropriate. Wherever I go these days, everyone asks me about the future of media and the future of magazines. There’s no question we in the media industry live in an era marked by great uncertainty…and I’m not just referring to those of you who tried to catch a flight to or from Europe in April. As any volcanologist can tell you….beware of the unpredictable forces of disruption. You can’t control it; you can only adapt.
My goal today is to outline the opportunities available to the magazine industry, underscore the strengths of our print products and explain the print platform’s role in our present and future. And of course, I’ll tell you how the magazine industry is adapting to change.
We inhabit a world where all things digital seems to capture the attention of the press, advertisers and consumers. If you believed everything you read, you’d think that the magazine industry is one step removed from going the way of the 8-track cassette player, the Sony Betamax and the horse and buggy. But a media transformation doesn’t necessarily lead to older forms of media being trampled into oblivion by the revolutionary upstarts. The advent and enormous popularity of radio at the beginning of the last century didn’t kill reading. Sixty years ago, the growth of television seemed to threaten the viability of Hollywood and the radio business, but that never happened. Broadcast television prospered in the age of cable and pay-TV. Cable is thriving despite the availability of video on sites like YouTube and Hulu.
In the heated rhetoric about the upheaval in the media industry, the enduring strengths of magazines have been overlooked and ignored. These strengths will enable magazines to survive and even prosper in a 24/7 world of virtually unlimited content choices.
We feel so strongly about these strengths, that last fall we created a two-minute video that spotlighted the power of our medium. We called it…. “The 20 Tweetable Truths About Magazines.”
I’m not going to rehash all twenty truths but I want to emphasize some of the most important. Let’s start by looking at readership. Simply put, consumers continue to embrace print despite the advent of digital media. Today, more than 4 out of 5 U.S. adults read magazines. In fact, we’ve actually seen a slight rise in readership since 2005.
Our readership trusts magazine advertising, which is important for the future health of our industry. And readers respond to the ads, according to third-party research, which continues to prove the effectiveness of magazine advertising.
Dynamic Logic, a company specializing in ad accountability research, recently updated their database of client-commissioned studies. The new analysis demonstrates how television, magazine and online advertising combine to impact the attitudes and intended behavior of consumers as they go through five identified stages of the buying process, i.e., the purchase funnel.
The findings showed that magazines drove consumer behavior more effectively and efficiently than TV or online. Magazines were also the most consistent performer across the purchase funnel, as well as the most cost-effective.
And here’s another surprising fact about magazines…75% of teenagers read magazines. Despite what many people may think, during the past five years, the number of young readers 18-34 has grown by more than 2 percent.
Contrary to popular belief, magazines continue to launch during challenging times—even through recessions. According to Ulriches Publications database, in 2009, there were 734 new magazines launched.
And closings? Just 67.
The soft economy has impacted the circulation frequency of those new launches. The number of new magazines published with a quarterly frequency or more has decreased. This suggests that publishers are: A.) being more careful and practical about putting out a new product in this kind of marketplace, and B.) that they’ve learned the value of special issues, where they can charge higher cover prices for lower creation costs.
We’ve also tracked an increase in magazine closings year-over-year. But you should note that while print editions may have been shuttered, magazine brands continue to live on—not just online, but through products, services, events and shows through licensing deals. For example, there’s the successful food show “Gourmet’s Adventures with Ruth Reichl” that debuted a week after the iconic magazine ceased publication, and there could very well be a Gourmet magazine line of kitchen appliances or wine trips down the line.
In addition, a number of titles that closed in 2009 were brought back to life. Often a magazine is closed not because of waning consumer interest, but because there wasn’t enough advertising to support it. It speaks to the strength of a magazine brand that a publisher has enough faith in a title to bring it back.
And let’s not forget another thing about magazines. Our audience enjoys the advertising as much as the content. We have studies that prove it. For other media, users actually pay to avoid the ads as they do with DVRs or the millions of subscribers who pay for ad-free satellite radio or services like HBO. With magazines, the advertising is considered to be part of the pleasurable reading experience. That bodes well for magazines getting more advertising revenue as the economic recovery picks up steam.
It’s also one of the characteristics that separate us from newspaper media. We share the paper-based platform but that’s where the similarities end. Most of our brands are centered on people’s interests, passions or hobbies. Our content stays fresher longer. Our bottom lines have not been dependent on classified advertisings. And our content is not impacted significantly by bloggers who publish the latest rumors lickety-split.
Nonetheless, there’s no question that print magazines were affected by the recession. We cannot talk about the health and stability of the consumer magazine industry without acknowledging the effects of the economic downturn on all businesses. In truth, the economic climate cut into all advertising-related businesses. Many magazine publishers responded by cutting expenses and focusing on those core brands that can deliver future growth. They became more efficient, yet they continued to invest and innovate.
Our year-end advertising results for 2009 showed a drop of 25% in pages and 18% in revenue. However, our 2010 first quarter numbers resulted in a 9% page decline and a 4% drop in ad revenue. While no one wants to post declines, the trend points to a recovery in our business.
Another sign of improvement is that 85 magazines posted an increase in pages compared to just 15 magazines during the first quarter of 2009. Six times as many magazines showed gains. These included titles like The New Yorker, In-Style, Scientific American and Martha Stewart Wedding. Also automotive advertisers increased their ad spend in magazines. That’s the first quarterly uptick for this important category in three years. We’re starting to hear that advertising is picking up in the second quarter and we’re hopeful that the magazine industry will see an overall increase in revenue and pages.
On the circulation front, overall circulation was down almost 6% or almost 20 million copies in 2009. But we have to remember that this drop came in the midst of the worst economic climate since the Great Depression. Another factor: publishers are managing their consumer marketing operations aggressively for efficiency. Newsstand declines were also influenced by the shift in consumer shopping behavior that began even before the recession, and most recently, disruption in the magazine distribution channel in early 2009. That’s when wholesalers Andersen News and Source Interlink shut down operations, leaving publishers unable to get their titles to newsstands for weeks, until other arrangements could be established.
What’s promising is that consumers still turn to magazines for major news developments, like the death of Michael Jackson. Magazines that showcased Jackson on their covers, including special edition commemoratives, drew an extra $55 million in retail sales.
It’s also worth noting that several health magazines posted circulation increases indicating more consumer interests in personal wellness.
And women’s magazines had a strong second half of the year indicating a continued desire for readers to spend more time around the home, feather the nest and create a secure home environment.
Despite these challenges on many fronts, publishers remained committed to the print platform. And I say this knowing that advertising revenue for the industry will probably not return to the heyday of 2007.
Print remains the most elegant expression of our content. It displays the richness of our photography, like this National Geographic Magazine image of a swimming elephant, and the creativity of our design. A magazine is the perfect mobile medium. It’s light, durable, affordable and never needs a charge. These are just some of the reasons that underscore our commitment to the print platform.
And we demonstrated that commitment exactly two months ago by launching an industry-wide “Power of Print” ad campaign in 100 magazines that promotes the strength of the print magazine. It’s one of the largest ad campaigns ever created to promote the vitality of magazines. The campaign’s goals are to reshape broader conversations about magazines, challenge misperceptions about the medium’s relevancy and longevity, and reinforce important cultural role and influence of magazines.
As part of the campaign, the industry created a two-minute video featuring the leaders of five major publishers explaining the purpose of this huge marketing effort. Here it is: [ROLL VIDEO]
A few weeks ago, full page ads began appearing in magazines and newspapers with provocative headlines like “We Surf the Internet. We Swim in Magazines” and “Will the Internet Kill Magazines? Did Instant Coffee Kill Coffee?” Altogether, the ads will run for until the end of the year in magazines and websites, and reach more than 112 million readers a month.
In June, we’ll kick off a second phase of the campaign that will embed multiple cover images from widely recognized publications into the ad’s text to convey key phrases. Let me read the first sentence here: “You might think that in these WIRED times PEOPLE don’t read magazines anymore…” And as you can see, we use the typeface for WIRED and PEOPLE magazines. The copy and execution are extremely clever, and we think it conveys strengths and excitement of our print product to the advertising community.
This campaign has the backing of the biggest publishers and brands in our business: Time, Esquire, Better Homes & Gardens, Sports Illustrated, Rolling Stone, Martha Stewart Living, and Reader’s Digest.
But there are other ways that we are working hard to secure the print future. Tech innovations enable publishers to make print magazine pages more “web friendly” and to enhance the reader experience with both magazine and advertiser content. Mobile tags published within the pages of a magazine allow consumers to snap or scan the 2-D code with a smart phone. The consumer is then directed to content like online videos.
Augmented reality, or 3D, give select advertising partners exposure that literally jumped off the page. Pop Science’s hologram cover was tied to advertiser GE.
Our partnership with Amazon is another way we’re strengthening our print future. For the second year in a row, the site’s users will determine the year’s best magazine covers. This contest a way drives positive awareness of print magazines and reinforces the elegance, creativity and iconic power of a brilliant magazine cover. And best of all, the contest also sells magazines. The promotion contributed to a significant increase in the number of subscriptions sold online at Amazon during the month of the promotion.
And just in case you’re wondering, the cover of the year was Rolling Stone’s Obama portrait, while New York Magazine’s Madoff as the comic book villain Joker took honors as best news cover. And Tina Fey’s portrayal of Sarah Palin on the cover of Vanity Fair was voted best entertainment and celebrity cover.
Another initiative MPA quarterbacked, was a promotion we undertook last summer with the magazine distributor Harrisburg News. It took place in a number of East Coast supermarkets. Consumers were offer a $2 discount on future store purchases if they bought two or more magazines. The promotion increased newsstand sales by 15% including lifts of up to 60% for nine magazines receiving special placement at the store entrance.
Another way we boost sales is through the Internet. It now plays a critical role in our consumer marketing efforts. To date, more than 20% of magazine subscriptions come from online sources. At selected magazines, the internet has become the leading source of new subscriptions.
The internet is also a source for growing new magazines. A number of consumer magazines have been spun out of web-based brands including The Knot, Baby Center and WebMD.
The magazine industry’s expanding relationship with the digital world has a profound impact on our brands and their future. Our goal with these digital extensions is to funnel the best content to our audience on any platform, any time, any place. We will reach our audience in their physical mailbox or virtual inbox. On their desktop or mountaintop. On an iPad or bachelor pad.
The point is that we’ve never had so many ways to establish more meaningful and timelier relationships with our audience. And yes…that’s what we call the folks who access our content. Audience. And the audience for consumer magazines has never been bigger. It’s what we do with this audience – these loyal communities of like-minded information seekers – that will determine our fate. On the digital side, there’s already a major push to have the audience pay to access our content, especially on devices like the iPad and Smartphones.
But as we migrate our content to new digital channels, we will not be abandoning our deep print roots. Digital platforms represent exciting ways to extend our print products, not replace them. Preliminary research already shows that the vast majority of e-reader owners are heavy readers of magazines. But these digital platforms will only be meaningful for magazine publishers when we can successfully monetize them.
I can’t predict when that will happen or what digital extensions will be the most successful. But I can predict that the print magazines will be around for a long, long time. The medium has weathered the storms of not just the past two years, but the past 200 years going back to the days before the Revolutionary War! There will be contraction and brands may falter.
But ultimately magazines will thrive on the strength of its readership, the skills of its editors to curate world-class content, and the ability of magazine publishers to adapt to the multi-platform world. A world of:
Thank you!
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