Magazine Publishers of America
Given all the Western news reports charting the run-up to the Beijing Olympics, one would think the place is awash in useful information. Well, it is and it isn't. I am pleased to know courtesy of Xinhua, the government-controlled news agency, that there are 100,000 commandos on alert in case of any Olympic dustup. That makes me feel safer. Someone at the American Chamber yesterday said this feels more like 1995 than 2008. The security is that tight and getting tighter.
One can find data quite easily in Beijing: insight and perspective are a little harder to come by. When it comes, it’s usually off the record.
Nothing is easy in China, including conducting consumer research. According to a director of consumer research at an international firm here, all research questions must first be approved by officials. If one knows the regulator well enough, you can provide questions after-the-fact. Self-censorship permeates most press and research activities in China.
Mall intersects or just asking consumers questions on the street is discouraged for privacy reasons. Asking a question such as "Are you better off now than five years ago?" (Or the other way round) is also frowned on because the question could sow or reveal discontent. Online surveys are relatively new. Telemarketing is common but the caller has to be careful about the number dialed. The director mentioned an occasion when a researcher mistakenly dialed the off-limits number of a government official. Within minutes a quantity of police were at the offender's door. This event gives an entirely new meaning to call blocking. One wonders what will for be consequences when 565 million--and counting--mobile devices are equipped with GPS in a 3G world. This has great potential for on-time, in-market research and coupon targeting.
There's a Chinese phrase that loosely translates as: "not getting into trouble success". This colors the work day for sure: where ambiguity exists, advantage is to the government.
One joke I heard about media regulators goes something like this: The officials were reviewing a lifestyle magazine category where five existed. They decided the market could bear only four magazines, for no particular reason. So one was closed down and it really didn't matter which one. End of joke which isn't really funny at all. Why Rolling Stone magazine was shut down in 2006 remains a parlor game of sorts. Was it because an official confused the magazine with Mick Jagger? Was "Brown Sugar" just too much, well, sugar? Did the content offend the state? Did the magazines lack the legal right to publish? Government officials I spoke to cite the latter, which doesn't really advance the narrative.
Some marketers have apparently decided, if you can't beat 'em, join 'em. The Beijing Olympics is quite different than most held in the last century. The Seoul and Tokyo Olympics celebrated two countries that had emerged from devastating wars with robust economies.
China has its own economic miracle. One difference between China and these other Asian cities is that China has a very large and still growing consumer economy. And for some international sponsors that is the prize. I think it was the New York Times that recently reported the patriotic tone of some of the advertising. The pitches are unmistakable. McDonald’s is cheering for China: "I'm loving it when China wins". VW offers a hoorah for China. Pepsi painted their blue cans red and offered a limited edition "Go Red" campaign.
Keep an eye on the medal winners. But also keep an eye on these campaigns as they might point to some long term winners in China.
I heard lots of harmless banter about why Americans could appropriate the national symbol of China. What I heard was in the spirit of self-conscious fun. But that was just a movie.
A patriotic Olympics is another game entirely.
Charles McCullagh
July 22, 2008
This morning I gave a speech at the American Chamber of Commerce (AMCHAM) in Beijing. In attendance were some veterans of the media wars in China, including some from Pearson, Dow Jones, BusinessWeek, Associated Press, Danwei and other publishers. The subject of my remarks was: "Magazines and Media Convergence in the United States". A central proposition was that media is currently going through a period of disruption rather than transformation. I noted that the dot com period was rather tame by comparison and the early history of the web was funded by traditional media companies that in a way co-opted the early web.
I noted that in the States we are in a kind of bridge period with portals losing traffic, the vertical content and advertising networks are on the rise: we see less emphasis on CTR and more emphasis on engagement and the brand canopy. I discussed MPA's new definition of a magazine within this context and I mentioned the focus on marrying print and online in a manner that maintains brand integrity and CPM. One question we face in the States is whether there is enough advertising to support content across the various platforms.
China is likewise going through a period of disruption rather than transformation. There is not a lot of talk in China about integrating magazines and the web component. I imagine one reason for this is that most magazines here are still struggling with the economics of print. And in truth advertisers are still getting used to the web as an appropriate medium. Another factor is that, with the exception of magazines and categories mentioned in earlier posts, magazines don't seem to hold the imagination as in the West (Newspapers here seem on the same trajectory as in the States). Obviously the digital fantasy holds sway in China as in most places. More fundamental is that print is watched very closely by authorities; perhaps far beyond its influence. This seems a central paradox of the China media scene. For this and other reasons it might be difficult for true print/web integration in the near term.
Many in China have told me--and usually not for attribution—that the Internet offers more freedom and fewer restraints. To be licensed to produce a magazine about maps would be practically impossible here due to political sensitivities. In the meantime Google maps Beijing.
I have been told on more than one occasion that the Internet changed the world but changed China more.
I'm betting on mobile. With 565 million hand-held devices in use in China it is not hard to imagine a digital revolution.
I said this at the Chamber: "Mobile will be the cornerstone of the magazine publishing cycle when 3G networks and increased public place WiFi will allow publishers to update readers immediately".
I think China Mobile already knows this.
When I was editor & publisher of Bicycling I spent a lot of time visiting Japanese companies in the bike business. This was when brands like Fuji and Nishiki ruled the roost. I recall conversations with the brothers who owned Shimano, a maker of bicycle components, about the future of their industry. They wondered how they would compete, given the shift in manufacturing to Taiwan. I have had the same conversations with bike makers in Taiwan as bike manufacturing shifted to mainland China. And today one hears a lot in China about the manufacturing of commodity goods moving to Vietnam and down the Malay Peninsula. And so it goes.
Over time competition forces companies to move up the value chain. Shimano did exactly that and in the process displaced or took market share from traditional European component makers such as France's Huret or Italy's Campagnola.
It is well-documented how fast China is moving up the product value chain. That Lenovo, the Chinese computer company is a major Olympic sponsor, has a practical and a symbolic significance here.
I recently encountered the following quote in a book about technology and innovation in India and China: "China's future is threatened by tepid performance in creating world-class innovators" (I T and the East – James M. Popkin & Partha Iyengar). I put this quote down as a marker, something to walk around. Innovation varies with sectors. Perhaps heightened by the Olympic umbrella, innovation seems everywhere at the moment, both superficial and profound.
China’s magazine industry might be seen as both a reflection and rejection of the above proposition. Government agencies responsible for regulating media seem anchored in the historical print. They tend to see the business through an industrial lens in terms of output. China produces three billion magazines a year. In other words, about two copies per capita on average .
Such an observation is not without value but is not especially useful in understanding and serving a consumer-centric world - which is what China has become. It is understandable that when market forces don't ultimately shape the business, there is bound to be some failure of imagination. The government’s historical decision to imbed the right to publish, as an expression of largesse and a means of control, in ministries throughout the provinces, would inevitably slow innovation. And the government well knows this and has taken steps to address the effects of this historical disadvantage.
That said, there is an abundance of innovation in Chinese magazines. In an earlier post I mentioned Caijing, a magazine both inside and outside the system, much to the credit of China. International brands have made possible significant improvements, especially in the lifestyle and fashion sectors. In terms of appearance and apparent successes, these magazines hold up remarkably well when compared to their sister editions.
Modern Weekly, a local publishing powerhouse in the south, has made enormous strides both financially and aesthetically. The company is betting on a kind of soft nationalism to fuel their brands.
Attendees at the FIPP Conference in May last year heard how innovative even some of the most dyed-in-the-wool, state-owned magazines were. There seems to be a particular aptitude to use mobile devices to build a relationship…dare I say engagement…with readers, through ratings, surveys, reader preference polls and the like. Given the 565 million mobile devices in China we should not be surprised if these mobile applications became ubiquitous. As it is in the West, Chinese publishers are experimenting with mobile and digital generally, trying to find the business model. For example, Business Week now send content to subscribers’ hand held devices. Chinese consumers seem very comfortable paying for content such as weather reports, sports scores, and retail locations (fee appears on phone bills). I don't really know enough about the subject but there is some evidence that the Chinese will pay for online magazine content under certain conditions. I will get to that in a minute. In an earlier blog I mentioned www.qikan.com.cn a Chinese company with Canadian roots, owned and operated by Charles Tang, Founder and President. Qikan is part of the Dragonsource Group, has 130 employees, is family-funded and has been incubating for ten years. It might be on to something.
In short Qikan might loosely be considered a blend of a 'Zinio-esque' international newsstand and Maghound, the dynamic subscription service that puts more choices in consumer's hands.
One reason the incubation period might have been so long was that it took that amount of time to build a library of 2,000 magazines. This was no small task. The first phase of Qikan was B2B with an international play. These magazines were distributed for a fee to libraries and universities in Canada, the U.S and elsewhere since interest in China is high. Domestic Chinese publishers take part in the revenue share and all copyright laws are respected. The business is apparently very transparent with revenue-share details and contracts posted on the web site.
The business also has applications for the domestic consumer who can access these 2,000 magazines on the Qikan digital platform with the first 500 characters free. Consumers can access and pay for content through mobile devices (the company has an arrangement in the works with China Unicom).
Tang is bringing advertising into the mix. Advertisers in a current magazine issue will have to pay extra--at a sharp discount--if they want to be featured after a certain period. In a way old issues can be virgin digital ground.
One virtue of the site is that you pay as you go. For example you can sign up for a minimum of 2 RMB, about thirty U.S. cents through a kind of pay-pal system, where consumers can "bundle" content and give to friends as gifts. Social networking is not too far away.
Tang imagines another dimension to this business: bringing U.S. magazines to China via the same digital platform to serve the 500,000 Chinese high schools that are very interested in English language materials. The ideal publisher candidate would be one that neither has the staff, time nor finances to find a print operation overseas. I can think of a few.
I was introduced to Qikan by a long-time Chinese friend. I have not seen any numbers for the business but it seems very sophisticated and promising.
Did I mention innovative?
July 21, 2008
In the last couple of days I have looked at a dozen newsstands around Beijing. In truth these newsstands are customarily stalls located at intersections and metro stops.
My first impression was how dominant Western brands are in terms of real estate and sheer bulk. The same seemed true of the more upscale outlets such as 7-Eleven: the big brands rule.
Obviously I don't know the P/l of the titles in question but sheer bulk can be impressive. Any advertising lament heard in the U.S market does not seem to be heard here. Vogue, late to China, is looking very comfortable with a fat double issue. Harper's Bazaar gives no advertising quarter with a double issue devoted to style and the Olympics. When I heard two years ago that Hachette would launch Psychologies in China, I wondered why. No more. The magazine looks very healthy and seems to have found an audience. After the recent devastating earthquake there has been a public call for more psychologists.
These observations are anecdotal. However, few would deny that the quality of magazines in China has improved considerably in the last five years. The government’s plan, when it opened up to lifestyle magazines fifteen years ago, was that domestic publishers would learn from the imports and better compete. According to Mr. Chen Yingming, Deputy Director-General, GAPP, this result has been achieved in large measure and the experiment should be considered a success. He notes that magazines such as Elle and Cosmopolitan have served the public and contributed to the overall magazine economy.
It should be noted that most big Western titles are already in China. To date, according to Qian Shuren, Foreign Exchange sector of GAPP, 60 licensing agreements have been signed with international partners. As mentioned earlier, IDG played an important role in this experiment.
China Periodicals Staff withMPA's McCullagh
The government still encourages international cooperation in the science and technology sectors. I mentioned to Qian Shuren that this policy was a little confusing since China already had thousands of such magazines and the category did not appear to be that prosperous. When pressed, officials acknowledged that the policy is always subject to change.
Chinese officials often use the word "culture" when defending policies that ostensibly protect domestic magazines.
GAPP officials seem generally dismayed that international brands have created an uneven playing field to the disadvantage of local titles. This is a lament hardly unique to magazines. It is not always easy for a host country to fully appreciate the power of the brand and all that it entails. International magazine brands have taken hold in China, probably to a far greater extent than the architects of openness originally intended.
Judging from newspaper accounts there is a tremendous consumer interest in China in parenting, health, fitness, sex education, child and adult psychology, home decor, and participant sports. In other words consumer interests are segmenting in somewhat predictable ways, not unlike what has happened in other parts of the globe. Needs and opportunities exist.
International publishers still have a lot to contribute to China as China does to the West. The latter will likely become more of a reality after the Beijing Olympics. When Chinese culture is being exported to the West via magazines and other vehicles, some of the sting felt in China will likely be lessened.
July 18, 2008
A few celebratory words about Caijing, one of the most important magazines in China. Launched in 1998 by SEEC (as discussed in previous posts), Caijing is celebrating its 10th anniversary this year. In China, when your editorial point-of-view dictates writing about political corruption, abuse in the equity markets, and shoddy construction that made the death toll from the recent earthquake even worse, a decade is a very long time indeed. And writing about such charged subjects in a country with a state-controlled media is an exercise in courage and perseverance.
Caijing is a robust projection of China's market economy and also its critic. According to Daphne Wu, General Manager, much of the criticism comes from state-controlled, third-party interest groups offended by the magazine's reporting.
Caijing has a long history of editorial tweaking and has received a number of warnings from GAPP, which oversees magazines and newspapers. I asked Ms. Wu whether, given the anniversary of the magazine and its general notoriety, Caijing was untouchable…beyond the censors. She laughed, as that might have been my fantasy, not hers. She said the strength of the magazine--and therefore a degree of its protection--comes from providing readers with truthful, well-researched editorial. Such a regimen is not commonplace in China.
Caijing apparently has legs. It has introduced a 2008 annual in the U.S. and in the editorial, co-editor John Thornton refers to Caijing, which by the way means finance, as China's most respected independent publication. It holds other associations for the Chinese reading public: "accuracy and fairness, good writing, and the vigorous but professionally scrupulous pursuit of a worthwhile story".
In China, or anywhere for that matter, this is no small task.
Happy birthday Caijing!
July 17, 2008
I was working in the Soviet Union during the time of “Perestroika and Glasnost". I never thought the notions of restructuring and openness meant much to the average Russian, though this symbolic language had huge implications for Eastern Europe, beneficiary of velvet revolutions. The joke at the time was that Communist Party officials one night crossed the road and became free market Democrats. But the Russian magazine market did eventually open up and now appears on solid footing thanks to oil wealth, among other things.
China, with apparently a watchful eye to the Russian experience, has gone through a somewhat similar openness and restructuring. The latter in the form of an economic revolution, has been on display for the entire world to see. At the moment I'm told 50% of the world's building cranes are in use in China, some outside my window in Beijing. That's a lot of Perestroika and on a scale the Russians couldn't imagine.
China had to necessarily be more careful with media restructuring in part due to historical decisions and imperatives. China has had a long and exalted history of printing, publishing and production. With the change in government sixty years ago the Party put its stamp on publishing by assigning licenses and responsibility among the various ministries in the 30+ provinces and autonomous zones of China, with the lion's share held in Beijing. This is a quick summary of a complicated historical shift.
The practical consequence of this shift was that publishing prerogatives were somewhat evenly spread out among major and minor ministries throughout the territories. This was not really about publishing but about politics and government control; not the best incubator for improving the magazine business, of which the government was fully aware. It still seems a little odd to an outsider that the Ministry of Dairy could hold a license for a fashion magazine.
Hugo Shong- IDG/Asia
International titles in China, including Men's Health, Esquire, and Cosmopolitan, have been successful beyond measure, by some reports carrying more than 85% of brand advertising in China.
As I understand it, in the last few years the government has restricted licenses for new magazine titles to give local companies a chance to be more competitive.
The China Periodical Association reports there are 9,500 magazines in China. Half of these are science and technology titles. Perhaps a thousand are academic-type journals. By some estimates there might be 2,000 or so titles we would consider consumer magazines. At another time I'll look at the economics of the business which is complicated by the murky world of government subsidies.
Chinese magazines depend largely on circulation revenue--perhaps on average up to 90% of total revenues. The challenge for these domestic magazines, given pressure from international titles and the rising digital wave, is how to monetize content and grow the business during a time of dwindling financial support from the government.
Qikan.com Team
The call for English language sources in the 500,000 high schools in China is huge and a digital magazine library is one solution. For both historical and psychological reasons digital magazines don't seem to receive the same scrutiny as print forms. Still this digital magazine platform will work best with magazines that don't raise the censor's ire.
July 16, 2008
There are more arduous ways to start the days in Beijing than by examining the Chinese Sports Illustrated swimsuit issue.
So many characters, so little time…
Frank Zuo - Sports Illustrated China
Sports Illustrated by SEEC, which also publishes a licensed edition of Better Homes and Gardens and the world-famous Caijing magazine (see my earlier white paper with more details about SEEC), is one of the local pedigrees.
Whether or by chance - I'll go with the former, launching the title in 2006 with the Olympics in full view, was not bad timing. The U.S. magazine will send 47 writers and photographers to the games. The Chinese edition will add 11 staff. The Chinese will devote 5 bi-weekly issues to the Games. There apparently will be some pooled coverage. Given the fact of journalistic objectivity, it will be an interesting story in itself: the viewing of sports through the cultural lens.
According to Zuo, basketball is China's killer spectator sport. Baseball is on the horizon. Soccer has lost some crowd appeal though it's worth noting that David Beckham has a Chinese fan club serious enough to order 5,000 copies of SI in a bulk purchase. Tennis is growing in popularity, underscored by the opening of a World Tennis Association office in Beijing. The National Basketball Association and Major League Baseball are here: the former opened a store in Beijing last night.
SI China works with these organizations and Zuo thinks the organized league system will help both participant and spectator sports in China.
It seems inevitable that the rising tide of the Olympics will lift all boats and SI China can only benefit. But, as Zuo notes, a launch is a launch and such a prestige brand will only get you in the agency door.
It will be interesting to see how sports develop in China. If I remember my history, Sports Illustrated was launched more than 50 years ago with a dedication to deep and rich sports journalism. That is a high bar for China and an interesting bar given the government’s oversight of media.
No one should underestimate China. There's a lot of talk here, public and private, about China taking top medal honors at the Games.
Either way it will be good for the sport and good for SI China.
July 15, 2008
American consumer magazines have been around for more than 100 years (MPA celebrates its 90th birthday in 2009). A century is more than enough time to develop the art and science of the business.
Take that century of learning through the various media disruptions (radio, TV, cable and Internet) and compress this pedagogy into 10-15 years. That is only the starting point to understand the meteoric rise of up-market consumer magazines in the PRC. Add to this construct the fact that the progress happened in a government-controlled media environment. To be sure the advances would not have happened without strong international partners including IDG, Hearst, Condé Nast, Rodale, National Geographic and others. But, given what has happened in other sectors of the Chinese economy, one must believe the entrepreneurial tick was already there.
One of the more prominent success stories in this sector is Trends Publishing, located in Beijing and coming up on its 15th anniversary. Trends represent an enlightened example of a disciplined in-market brand building through international partnerships--with Hearst in particular--and an unwavering sense of the 'Chinese-ness' of the business.
MPA's Charles McCullagh meets with Trends Media Group
This is brand choreography at its best and is apparently very successful. The building includes a facsimile office where President Wu Hong got his start in 1993. The manual typewriter and the delivery bicycle are from another world, even considering compressed media time in China.
Perhaps Wu Hong's genius was to anticipate long before the market matured the developing consumer magazine segments--the trends, as it were--and develop footprints in certain markets such as travel, fashion and health before formally entering international partnerships. And the genius of his partners was to realize this was a winning business strategy.
The Trends portfolio has taken a familiar turn as the company moves into books, credit cards and movies. The first release "Esquire Runway", a film about the fashion world, according to Mr. Wu is playing in all the provinces. But the profit will come from the sale of DVDs.
For all its success Trends has to be responsive to government directives. Two years ago magazine cover mounts were the rage and threatened to become more valuable than the magazine itself. The government stepped in and brokered a deal among the larger players.
According to Wu the Olympics has not been especially kind to his company which depends heavily on outdoor advertising, which the government has restricted for the duration.
But Food and Wine China has published a very useful map with Olympic venues. Sorry, "New Venues in Beijing" … No ambush marketing here.
July 14, 2008
Anyone hoping to have even a small appreciation of the massive upheaval--social, psychological and archetypal--associated with the Beijing Olympic Games might start by reading "In Changing Face of Beijing, a Look at the New China" by Nicolai Ouroussoff (NYT, July 13, 2008). The author's focus is architectural and on the meaning of public space--not on sports per se. Nonetheless the piece provides an interesting counterpoint and perhaps a corrective to the Olympic drum-beat that has already begun, led in China by CCTV, the multi-channel, multi-language arm of the Communist Party and also the subject of the NYT article.
Ouroussoff writes that entering the new Beijing international terminal is like passing through a portal to another world. The terminal, described as looking like two boomerangs side-by-side, is a thing of beauty from both the air and the ground. When I walked through the space I wasn't thinking so much about a portal into another world but how most of the U.S. airports seem positively medieval by comparison; the three I use in the Greater New York area not exception.
On my Sunday walk through the elbow-to-elbow crowd in Tiananmen Square, I noticed that many of the Chinese tourists were using Mao's Mausoleum as their photographic backdrop. The new Olympic stadium and Aquatics Center will surely serve photographers for generations to come. But symbolism, handled so deftly by the Chinese, can work both ways. When describing the new CCTV building Ouroussoff discusses the architect's dilemma: will the projects serve a public good or become a monument to a vast propaganda machine?
On a more pedestrian level the Beijing government has planted thousands of trees to counter what is sometimes a bleak urban environment. In some areas where trees can't be planted, they are painted on buildings that offer a silver backdrop; a sylvan forest rising out of hot concrete.
Flowers--planted and still unplanted--dot the roadways including the important expressway from the airport to town. This stretch has been cleaned up in another obvious way. The one-hundred billboards--rather tame and conventional as I remember them--have been taken down. That was only the beginning. Ad Age China reports that about 30,000 have been taken down to date. As I remember, the original reason for this winnowing was that outdoor digital displays in particular were lightly regulated, at least compared to print, and a lot of players entered the space, including a lot of freelancers. This swift action is not unusual in China. The government has closed tens-of-thousands of Internet cafes in equally short periods.
The more immediate reason for taking down billboards was the government's desire to stop Olympic ambush marketing. For example, non-Olympic sponsors are forbidden from running ads in Beijing that feature Olympic athletes. Print media does not seem to be affected so severely, for understandable reasons, though they have been issued cautions (more on this in a later blog). As with all media regulations in China there is a resultant degree of confusion. Ad Age China has reported that many Beijing advertisers are waiting out the Games or moving their money to other cities with fewer restrictions and without the price increases being experienced in Beijing.
All this is slightly paradoxical. A government-controlled media is working to the advantage of the free market system and in accordance with Olympic marketing guidelines. Visa, Coca-Cola, UPS, Adidas, Anheuser Busch and Lenovo, the Chinese computer company, must be pleased.
I have been offered more Olympic knockoffs on 42nd street in New York City than I have so far in Beijing.
There is still time.
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