Bubble, Bubble…

At first glance, US consumer magazine circulation held its own in last year’s second half. Total circulation across 700+ ABC US consumer titles rose 2.2%, to over 350 million and — mirabile dictu! — newsstand units edged up by nearly 1%, to 49.6 million.

Alas, there is an all-too-predictable "but" coming … in the form of several underlying realities that cast an unfortunate shadow on this ostensibly upbeat picture:

Buried In Stardust

With far too few exceptions, signs of life on the newsstand are limited to celebrity magazines. Five such titles — People, US Weekly, Star, In Touch and Life & Style — together logged an average increase of 3.3% in copies and 1.5% in retail revenue, according to an analysis by publishing consultant Baird Davis. When sales for the new OK! Weekly (513,000 per issue, on average) are thrown in, these celebrity titles accounted for 150 million units, or over 30% of total industry copies sold, and 26% ($428 million) of retail dollars for all audited titles.

Meanwhile, Davis estimates that the rest of the field saw unit sales dip by 4.2%, and retail revenue by 2.9%. On average, even the ten top newsstand companies saw both units and dollars decline (by 1.6%) — the exceptions being Bauer (In Touch, Life & Style, First for Women), Wenner (US Weekly) and Rodale (Men’s Health, the new Women’s Health).

At this rate, can we look forward to the Economist doing a cover expose on the battle over Anna Nicole Smith’s estate? National Geographic documenting the survival secrets of the cast of Lost? (Shudder.)

The Boys Are Restless

One particularly strong parallel to the UK was clear; to put it politely, the novelty of lad magazines seems to have worn off — and with it, these magazines’ buoying influence on industry newsstand numbers. Emap may have been sage to cut its losses by shuttering US FHM in December, what with Dennis’s US Maxim suffering a 12% newsstand drop and Stuff nose-diving by nearly 35%. (Haymarket’s apparently thriving Stuff in the UK marketplace provides an interesting contrast.) While young men are undoubtedly shifting time to naughty-ish websites, they may also be looking for "new" print approaches to the male virility theme, a la Men’s Health, versions of which are thriving in both the UK and the US (US single-copy sales rose 5% in second-half 06, making MH the 22nd largest US newsstand seller).

Low Cover Prices Present Double-Edged Sword

Retail dollar performance can no longer be counted on to be the bright spot. Even as newsstand units continued to slide year after year starting in the late 1970’s, publishers were able to raise cover prices, and overall retail dollars continued to edge up. But overall retail revenue is now flat to down in some periods, including last year’s second half (-0.2%, by Davis’s calculations).

It seems we have a conundrum here; a preponderance of the very magazines that are managing to show growth — including many of the celeb / tabloid titles and newer women’s titles, like First for Women — also have the lowest cover prices. Exactly how much these titles are drawing sales away from pricier magazines, versus creating sales that wouldn’t have happened if the cheap magazines were unavailable, is tough to quantify. But with so many titles at supermarket checkouts relentlessly thumping the same themes (celebrity gossip, quick weight loss, sexual performance tips), is it surprising that many consumers opt to save $2 or $3 by choosing the version without the glossy paper? And can the publishers of cheap newsstand titles be blamed for pointing out that they are not the ones who taught consumers to balk at paying fair prices for magazines, by selling cut-rate subscriptions for decades?

There’s another complication. A recent study by newsstand consultant John Harrington concluded that US wholesalers, already in precipitous financial straits, cannot make a profit on titles priced below $2, at least under the current discount system. Harrington argues that publishers of low-priced titles need to start giving wholesalers a per-copy handling fee, in addition to the off-cover discount. But newsstand volume is the name of the game for these magazines (little sub or ad revenue), and their publishers point out that wholesalers are certainly benefiting not only from the unit volumes, but the titles’ unusually high efficiencies. In short, this appears to be another case of stalemate between publishers and wholesalers.

Rate Base Struggle Worse Than Ever

Fully 20% of magazines that declare rate base failed to make their claims last year, according to a new Capell’s Circulation Report analysis (up from 17% in 2004 and 18% in 2005). Newsstand woes are clearly a major contributor, along with some titles feeling forced to reduce public place and other "verified" (nonpaid) subscriptions to placate media buyers. As previously noted here, verified accounts for 4% or less of total consumer magazine circulation. But that’s not stopping media buyers from focusing almost exclusively on the few titles that have significant portions of verified within their totals.