Innovation often leads the news in the magazine business. We like to share stories of publishers finding new revenue models that leverage the cross-channel consumer path. That doesn’t negate the fact that some publishing brands are doing just fine, thank you, with the retail sales model.
“Scrappy isn’t necessarily a word you’d use to describe a publishing company that houses the two best-selling titles on U.S. newsstands, but at Bauer Media Group USA, the company’s mindset is exactly that,” writes Caysey Welton in Folio:.
“In an age when most publishers are pulling back copies from newsstands, focusing on subscriptions or putting their eggs in a digital basket,” Welton continues, “Kotok is taking advantage of his company’s market position by leaning into single-copy sales, including Bauer’s most recent launch: a Walmart-exclusive title. And his company is dedicating more resources into its existing portfolio, with an eye on the future of what Bauer Media USA will become over the next several years.”
It seems to be working, as Kotok reports rising margins and growing excitement from advertisers eager to partner with them, to reach customers who value the content enough to pay for it.
“We make a lot of money at the newsstand and engage a lot of readers,” Kotok said in an interview with Folio:. “That leads us to do very well, so that’s where our bread and butter is and what keeps our business healthy. But we are investing a lot in reaching our readers through subscriptions. We know we need to reach our readers on more than one channel. Also, ad revenue is up—and not only growing in share, but in volume. I know that’s not a diversification strategy, but it’s a place where we felt we could improve.”
Last spring Folio: also reported on Bauer’s initiatives to fix the one thing that could take down a newsstand-based model – the broken distribution duopoly.
In much the same way that the digital ad industry is dominated by the Facebook/Google duopoly, the newsstand distribution model is largely run by two major wholesalers who handle around 90% of retail magazine distribution. So Bauer started seeking solutions, firing a warning shot across the bow of the distribution network.
“Bauer Media USA, publisher of newsstand and supermarket checkout mainstays Woman’s World and First for Women—the number-one and number-two best-selling magazines, respectively, at retail in the U.S.—has retained advisory firm FTI Consulting to lead a formal RFP process, soliciting bids from wholesalers who distribute other products, like consumer packaged goods, to supermarkets and retail outlets, but not periodicals,” wrote Greg Dool at the time.
This makes good sense. It’s a new age of distribution, for everything from kayaks to cupcakes. Why should magazines be any different? The newsstand channel has been broken for years, and this continued consolidation does nothing to “fix” things in a truly positive way.
As for Kotok, he remains realistically focused on his audience – both readers and advertisers — to determine what they do in the future.
“There’s a misconception that the print business model is monolithic. I think that’s where people tend to get in trouble, is trying to apply a one-size-fits-all approach—top down versus bottom up,” he explains. “But you can actually create a self-reinforcing operation that serves the advertising customer or audience customer.”
With Bauer holding the top two spots in sales for U.S. magazines, I’d have to say it’s working.