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Industry Over All

Magazines
By the Project For Excellence In Journalism
Industry Over All

The American magazine industry overall saw its retrenchment accelerate during the recession of 2009.

Consumers bought fewer magazines and advertisers bought fewer ads. And that came on the heels of an awful 2008.

Publishers shut down hundreds of magazines, including some beloved names, cut staff and eliminated issues to save money. Some also began to jettison old assumptions about the value of selling as many magazines to as many people as possible in hopes of attracting advertisers.

Circulation

Over all, circulation, which to some degree can be controlled in the magazine industry through discounting, was down.

Of the 472 consumer magazines for which comparable data were available from the Audit Bureau of Circulations, circulation were off 2.23% in the latest audited period, final six months of 2009, compared with the same period a year earlier. In the first half of the year, magazines were down 1.19%.1

Paid subscriptions, which make up nearly 90% of magazines sold, declined 1.12%, erasing a slight gain of 0.56% in the first half. 2

But the type of circulation that cannot be controlled through promotional discounts, single copy or newsstand sales, fell 9.1% in the latest period audited from a year earlier. According to industry consultant Harrington Associates, the number of consumer magazines sold on newsstands tumbled 35% from 1998 to 2008, reaching 1.274 billion in the United States and Canada.3

The problems in newsstand sales are particularly troubling, some experts believe, because they are the more lucrative component of circulation, even with payments to the distributors and the share paid to the newsstand owners.4 Consumers plunk down the full copy price at the newsstands, often $5 or more. While newsstand sales account for about 11% of magazine circulation, for instance, as recently as 2008 that represented a third of the industry’s circulation revenue.5

Still, as more questions arise about the future of print advertising, many believe readers, through both subscriptions and newsstand purchases, will have to pay more – even if it means circulation falls.

Many publishers in 2009 pared discounted subscriptions, cutting the minimum circulation, or “rate base,” guaranteed to advertisers. This typically reduces the revenue from ads, but also cuts production costs. (read more about rate base strategies)

“We need to charge consumers more for a better product and to take costs out of inflated rate bases,” Scott Crystal, then the president of TV Guide, told Folio. “We’re all making tough decisions that should have been made a long time ago.” 6

There are no industry data outlining which categories of magazines had circulation gains and which did not. But the list of the top magazines offers some clues.

Crystal’s former magazine, TV Guide, lost 26% of its circulation from a year earlier in the latest period audited, a drop of 840,342 – one of the largest declines in absolute numbers among the 25 biggest magazines tracked by the Audit Bureau of Circulations.7 TV listings are available widely now, including on television sets themselves.

But other magazines among the top 25 that do not have such obvious competition on the Internet also continued to fall. National Geographic, for instance, was down 11% or 564,446. People fell 2%, or 77,917.

The largest gain among the top 25 occurred at a magazine devoted to video game news and reviews: Game Informer Magazine.  Its circulation rose more than 8% to 3.8 million.

Circulation Changes, 2008-2009, Top 25 Magazines
(Declines in Parentheses)

Magazine 2009 Circulation Change from 2008 % Change
AARP, The Magazine 24,371,637 (457,475) 0.1
AARP Bulletin 24,042,603 (457,475) (1.9)
Better Homes and Gardens 7,621,786 (38,037) (0.5)
Reader’s Digest 7,099,558 (1,069,109) (13.1)
Good Housekeeping 4,652,904 (31,908) (0.7)
National Geographic 4,495,931 (564,446) (11.2)
Woman’s Day 3,966,414 45,547 1.2
Ladies’ Home Journal 3,858,773 18,128 0.5
Family Circle 3,823,253 (91,674) (2.3)
Game Informer Magazine 3,805,038 287,440 8.2
People 3,613,902 (77,917) (2)
Time 3,329,429 (30,706) (0.9)
Taste of Home 3,215,228 12,735 0.4
Sports Illustrated 3,201,524 (16,609) (0.5)
Cosmopolitan 3,001,894 75,211 2.6
Prevention 2,900,193 (439,423) (13.2)
Southern Living 2,855,973 21,384 0.8
AAA Via 2,767,064 (40,766) (1.5)
Maxim 2,513,734 (7,976) (0.3)
O, the Oprah Magazine 2,479,722 114,388 4.8
AAA Living 2,462,789 (2,040) (0.8)
Glamour 2,448,119 157,667 6.9
TV Guide Magazine 2,416,620 (840,342) (25.8)
Remedy/Remedy MD 2,373,205 413,404 21.1
AAA Going Places 2,354,779 (206,422) (8.1)

Source: Audit Bureau of Circulations is average per issue for six months ending December 31, 2009.

And there were some other difficult signs. Mediamark Research & Intelligence data suggested that the percentage of Americans who are regular magazine readers is continuing to decline. In the fall of 2009 it reported that 83.9% of American adults were magazine readers, compared to 84.8% the previous fall and 87.6% in the fall of 1998.8

Economics

Divining the financial health of a magazine is challenging, in part because so many publications are owned by private companies not required to issue public financial reports. Even publicly traded media companies, which do issue reports, generally do not break out revenue figures for specific magazines.

But there are some metrics we can use, and the financial story they tell of 2009 for the magazine industry generally is rough one.

The number of advertising pages fell by more than a quarter. Market researchers project revenues to continue to decline for at least the next two years. More magazines closed during the year than were launched. And many experts believe the industry must shift to depend more on circulation to survive.

The first numbers may be the firmest. The Publishers Information Bureau, affiliated with the Magazine Publishers Association, calculates how individual publications are doing by counting the pages of ads in magazines.9 These numbers are also grouped by another firm into categories of magazines.10

The highlights for 2009 were not pretty:

  • The number of ad pages fell by 26 %, including new launches and closed publications. This is double the decline in 2008 (12%). The year before that, the loss was just 0.6%.
  • Of the 249 magazines the Information Bureau tracked, only 21, or 8%, reported an increase in the number of ad pages sold.11 (Publishers Information Bureau also calculates ad revenue by multiplying ad pages counted against the rate cards of each magazine, the published price magazines hope to charge for an ad. But due to discounting, the rate cards are not necessarily an accurate guide to what magazines are able to charge. (read more about ad pages v. ad revenue)
  • The advertisers that cut back most, not surprisingly, were those most affected by the recession. Automotive advertisers, for example, bought 40.5% fewer ad pages compared to the year earlier. Financial, insurance and real estate advertisers slashed their buys by 41%.  Retail fell 30% and home furnishings and supplies declined 27.4%.11
  • According to ad page calculations by Mediaweek’s magazine datacenter, through November the worst performing category was “wealth” magazines, which had a 38% plunge in ad pages sold. Second-worst was travel, followed by business/personal finance, both down about 32%.
  • While no categories were up, those with the smallest declines included women’s lifestyle/service (down 8%), parenting & kids (down 12%), and women’s health/fitness (down 14%).

Ad Page Sales, by Category of Magazine, 2009

Wealth -37.60%
Travel -31.79
Business/personal finance -31.51
Enthusiast/sports -28.29
Shelter -26.32
Regional -24.56
General interest -24.09
Science and technology -23.42
Teen -21.32
News weeklies -23.25
Fashion/beauty -22.71
Bridal -21.08
Men’s lifestyle/fitness -18.02
Weekend magazines -17.53
Food/epicurean -15.96
Entertainment/celebrity -14.98
Women’s health/fitness -13.96
Parenting/kids -11.69
Women’s lifestyle/service -7.63

Source: Mediaweek, magazine monitor.12

Several leading research firms projected further declines in ad revenue for consumer magazines for several more years, making them among the worst performers in media.

In its annual Communications Industry Forecast, released in August, Veronis Suhler Stevenson estimated consumer magazines ad revenue would decline 9.8% in 2010, 5.5% in 2011 and 0.6% in 2012. The firm estimated a five-year, compounded annual decline of 6.6% for consumer magazines for 2008-2013, the worst performance for any of the 11 media categories it tracks except for newspapers.13

Ad revenues — combining print and digital — aren’t expected to grow again until 2013, when they will be buoyed by expected economic improvement and gains in mobile advertising (read more about magazines on mobile devices and tablets).  Even then, with an expected increase of 0.6% in 2013, the total of $8.8 billion would still be 22% below where it stood in 2003.14

For 2009, Veronis Suhler Stevenson estimated a decline in advertising of 15.6%, also the second-worst of any media segment for the year, and this included digital ad revenue.

When circulation revenue is included, where declines will be less severe, Veronis Suhler Stevenson projects consumer magazines will see a 9.7% decline in total revenue in 2009, and a compounded annual decline of 2.8% from 2008 to 2013.15

The revenue declines were due to “a confluence of factors,” including a shift from broad-reach traditional advertising to targeted alternative ad services as well as the growth of digital businesses, said Jim Rutherfurd, executive vice president and managing director of Veronis Suhler Stevenson.16

Veronis Suhler Stevenson’s predictions were echoed by others.

eMarketer, for instance, predicted print magazine ad revenue – without digital — to fall 6.5% in 2010 and 1% in 2011, followed by a 4% increase in 2012. For 2009, it had projected a fall of 16.2% to $10.9 billion, after falling 7.1% in 2008. But that projection, issued in March 2009, may prove an underestimate.17

The toll of shuttered magazines continued in 2009 with such well-known publications as Gourmet, Modern Bride, Metropolitan Home, Condé Nast Portfolio and Country Home closing. The hardest-hit categories for closings: regional interest, business and lifestyle.18

“There are too many magazines, too many Web sites and too many conferences — and not enough advertising or marketing spending to support them,” says Frank Anton, CEO of Hanley Wood, publisher of magazines for the construction and remodeling industries.”19

Total Magazine Revenues of the Top Publishers
2007, 2008
Design Your Own Chart

.

Source: Estimates by Advertising Age, Data Center, Decemberr 2009

The closures were accompanied by job cuts, both at the closed operations and other magazines. Condé Nast, for example, eliminated hundreds of jobs – one estimate said a total of 500 could be cut — as editors and publishers reportedly sought to cut their budgets by 25% for 2010.20

Time Warner said it would incur a $100 million charge during the fourth quarter of 2009 as it restructures its magazine division, Time Inc. Company executives said they expected targeted job cuts not as severe as the 600 that were implemented in 2008.21A filing with the New York State Department of Labor, required under plant closing laws, said 280 layoffs were expected at Time Inc., which news reports said employed about 9,000 people, from November 2009 to February 2010.22

The cuts are part of a long-term trend. National employment in periodical publishing peaked in 2000 and has fallen since, according to a report by the comptroller of New York City, where the industry is concentrated.23

Even with these strategic and tactical shifts, many professionals predicted the industry would never recover to the levels it enjoyed in prior years.

“The magazine business, particularly if you’re dominated by print advertising, is going to continue to be a no-growth to a declining business — probably forever,” David Nussbaum, CEO of Enthusiast magazine, said during a panel discussion organized by Folio magazine in October.24

“A lot of folks in the industry don’t think the magazines will ever recover to the level of profit we had in 2008,” said Bill Mickey, group managing editor of the trade journals Folio and Audience Development.25

Magazine Web Economics

It is difficult to ascertain how much money magazines are making from their digital operations. Few publishing companies report revenue figures, fewer still by revenue source or single publication. But estimates suggest that digital revenues are a small, though fast-growing, part of their business.

In 2009, digital revenues continued to grow, although the rate slowed considerably and seemed unlikely to make up for declines in traditional revenues anytime soon.
Veronis Suhler Stevenson projected digital revenue for the consumer magazine industry would grow 6.5% to $650 million in 2009, less than half the 12.5% growth rate for 2008.

This compared to annual growth rates in excess of 30% for the preceding four years. 26
Still, it was a drop in the bucket. Online and mobile revenue was expected to account for only 3.1% of revenue for the consumer magazine industry in 2009.27 In comparison, print advertising accounted for 51% of revenues for the consumer magazine industry, and circulation 46%, according to Veronis Suhler Stevenson. 28 (read more about magazines online and on mobile devices)

Even increasing digital income would not amount to much. By 2013, Veronis Suhler projected just 6.9% of magazine revenues would come from digital, or $1.3 billion. 29


Footnotes

1. Audit Bureau of Circulations, FAS-FAX report for consumer magazines, June 30, 2008 and 2009. The 472 magazines represent those that were audited by ABC in both 2008 and 2009. Not included are magazines that commenced audits in 2009, or those that use other audit services.

2. Audit Bureau of Circulations, FAS-FAX report for consumer magazines, June 30, 2008 and 2009; December 31, 2008 and 2009.

3. Harrington Associates LLC, via e-mail from John Harrington, February 8, 2010. The figures include the United States and Canada.

4. Audit Bureau of Circulations, FAS-FAX report for consumer magazines, June 30, 2008 and 2009.

5. “Magazines, the medium of action,” MPA Handbook, 2009-2010. The handbook estimates subscription revenue at $6.7 billion and single-copy revenue at $3.1 billion for 2008.

6. Jason Fell, “Whey Are Successful Magazines Folding?” Foliomag.com, March 31, 2009.

7. Audit Bureau of Circulations, FAS-FAX report for consumer magazines, June 30, 2008 and 2009; December 31, 2008 and 2009.

8. Mediamark Research & Intelligence’s Survey of the American Consumer. MRI’s data show that the total number of magazine readers has grown, but not as much as the growth in the population of adults. MRI estimates that there were 170.9 million adults who read magazines in 1998. In 2009, that figure was 189.5 million adults. That is a gain of 18.6 million readers.

9. The ad page count is limited to about 250 participating PIB member publications each year and is considered a representative sample.

10. Publishers Information Bureau, Magazine Titles Data, January 12, 2010.

11. Publishers Information Bureau, Ad Category Data, January 12, 2010.

12. MediaWeek, accessed November 11, 2009. Figures are year-to-date totals.

13. The advertising-based segments isolated by VSS are broadcast television, subscription TV, broadcast & satellite radio, out-of-home media, newspapers, yellow pages, consumer magazines, business-to-business media, pure-play Internet, pure-play mobile and entertainment media.

14. Veronis Suhler Stevenson Communications Industry Forecast 2009-2013, August 3, 2009.

15. Veronis Suhler Stevenson Communications Industry Forecast 2009-2013, August 3, 2009.

16. VSS press release accompanying the release of the forecast, August 3, 2009.

17. eMarketer, “Consumer Magazines: Rethinking Paper and Pixels.” March, 2009.

18. “275 New Magazines Launch And 428 Fold In 2009 According To Mediafinder.Com,” Mediafinder.com press release, December 14, 2009.

19. Jason Fell, “Why Are Successful Magazines Folding?” Foliomag.com, March 31, 2009.

20. Keith J. Kelly, “Glamour, Wired take latest hits,” New York Post, October 20, 2009.

21. Jason Fell, “Buyout Window Closes, Layoffs Loom at Time Inc.,” FolioMag.com, November 18, 2009.

22. New York State Department of Labor online records. Accessed December 4, 2009.

23. Economic Notes, Office of the New York City Comptroller, November 2009.

24. Jason Fell, “FOLIO: Show Panel: Magazines No Longer ‘Center of the Universe,’ ” Foliomag.com, October 27, 2009.

25. Bill Mickey, interview with PEJ, December 9, 2009.

26. Veronis Suhler Stevenson, Communications Industry Forecast, 2008-2013. 27. Veronis Suhler Stevenson, Communications Industry Forecast, 2008-2013.

28. Veronis Suhler Stevenson, Communications Industry Forecast, 2008-2013.

29. Veronis Suhler Stevenson, Communications Industry Forecast, 2008-2013.