Hearst Magazines and Condé Nast made news in February with their joint venture, PubWorx, to combine their production, procurement and circulation management, and also offer such services to other publishers. As the companies pointed out, they’ve partnered before – notably, cofounding the Comag national distribution firm 40 years ago (and selling off the US division in 2012 to the parent of the country’s dominant wholesaler, TNG).
At this point, outsourcing has become do-or-die for most small and medium-size publishers. Meanwhile, the giants want to funnel as many resources as possible into investments aimed at enhancing their odds in the digital advertising arena. (One recent, high-profile example: Time Inc’s acquisition of the Viant ad-targeting company.) So it’s hardly a shocker that Hearst and Condé would find a way to meld print production operations to leverage economies of scale, eliminate redundant functions and staff, and attract clients that further offset their own print costs.
But I must admit that the circulation management part got my attention, because it seemed to reflect how far print subscription acquisition and retention – along with single-copy sales – have fallen on magazine management’s priority list. The PubWorx announcement made no mention of “audience development” (read: digital audiences) being shared or offered to third parties. But including circulation (read: print) management (along with production) in what the trade media widely referred to as “back office” functions, will “provide important, turn-key infrastructure… freeing publishers to concentrate on innovation, content creation and advertising revenue,” summed up Hearst Magazines president David Carey.
The principals are so far keeping the specifics of how PubWorx is being managed under wraps (the most revealing statement to date being one from a Condé spokesperson who said the partners “have a set of protocols to work through any issues”).
Is it naïve to wonder whether this operations merger means that in the realm of circulation, proprietary concerns between competitors – even ones that compete head-on in some magazine categories – aren’t much of an issue anymore?
Maybe with Condé Nast having been a top client of Hearst’s CDS fulfillment bureau for years now, the companies have devised foolproof ways of maintaining walls of secrecy as to their respective circulation operations, and have full confidence that the same can be maintained at the strategic level. (Beyond circulation, one also wonders whether a surprise coup like Vanity Fair’s Caitlyn Jenner issue could’ve been pulled off with shared production functions. But I digress.)
Particularly with the growth and dominance of online and agency and partnership sources for print subs – and generally less reliance on the knowledge- and investment-intensive, old-school direct mail source – a preponderance of print circulation functions apparently lend themselves to turn-key management. And perhaps even print circulation “strategies” or decisions (outside of rate base decisions) are in many or most cases now also effectively interchangeable. (Am I imagining this, or are magazine media companies also now reverting to using “circulation” in place of the hard-won term “consumer marketing”?)
Search for new revenue streams
Even traditionally circulation-driven enthusiast magazine publishers – the types of mid-sized companies PubWorx hopes to attract as clients – have been challenged to become less dependent on circulation revenue, particularly as the single-copy channel has become less and less viable for them. They too have developed innovative extensions and revenue channels, including brand-synergistic events and non-magazine and non-print paid-content offerings. (Rodale’s recent decision to stop taking advertising in Prevention is a response to the costs of maintaining a bloated circulation rate base when a title’s print advertising is declining – but also seems to signal an intention to develop a model similar to that of Consumer Reports, which charges premium prices both online and in print for its objective, non-advertising-supported content.)
Still, enthusiast magazine brands at this point continue to need direct-to-publisher circulation sources and practices that can yield profitable subscriptions – and some are also increasing their use of alternate, profitable newsstand distribution channels.
I hasten to stress that there’s no intention here to question the logic or value of PubWorx or shifting strategies. In a new world with new realities, new priorities (and methods) are inevitable.
Other recent instances of new levels of “coopetition” include MPA magazine media companies agreeing on audience metrics that incorporate digital and social media reach, and more recently, agreeing on a Print Magazine Sales Guarantee model to provide advertisers with real assurance of ROI. (Assurance that’s sorely lacking in the sexier but fraud- and ad blocking-besieged digital advertising realm, where low CPMs and monetisation struggles are no longer the only challenges keeping online publishers up at night.)
Then there’s the consortium of major publishers behind the recently-revamped (now mobile- and cross-device- friendly) all-you-can-read digital content offering from Next Issue Media – now renamed ‘Texture’. Backed by a 2015 infusion of $50 million from KKR, Texture is now being promoted with a significant ad campaign, including slick TV ads. The hope is that the improved, better-marketed service will succeed in attracting more substantial numbers, in contrast to the several hundred thousand participants garnered in NIM’s first six years.
All of those are commendable, precedent-setting efforts to row together. Still – call me crazy, nostalgia-blinded or both – I can’t help speculating about what financial and brand-supporting benefits might be realised if the leading media companies also decided to focus a fraction of their attention and resources on finding viable, legal ways to cooperate and implement genuinely innovative marketing and other solutions in the newsstand realm (the poster child for ‘disruption’ long before that word became an inescapable buzzword).
