THE OVERSEAS CONNECTION
Byline: James Fallon
LONDON — American publishers keep looking to distant lands.
As the U.S. market becomes ever-more saturated and overseas economies continue to develop, publishers are looking abroad for growth. Increasingly, they are exporting tried-and-true domestic titles to new markets, either through their own subsidiaries, joint ventures or licenses.
While the phenomenon isn’t a new one, there are signs the trend is picking up speed. Next spring alone will see the launch of three U.S. titles in Europe — a British edition of InStyle from Time Inc., which already publishes a German version; a British and German Glamour from Conde Nast International, and a British edition of Cosmogirl from Hearst, which already publishes Cosmogirl in Turkey and expects to roll out the title to six or eight other markets over the next year.
All three publishers have years of expertise in overseas markets. But they recognize that launching established U.S. titles in distant shores is a tricky business with no guarantee of success.
“I think our notion about international launches has changed dramatically in the last 10 years,” said Michael Pepe, president and chief executive officer of Time Inc. International. “We’ve learned quickly that you take a plan and build a magazine from the market up and understand what the consumers in that market want. You don’t try to impose an existing magazine on them.”
Hearst has been publishing overseas editions of its American titles since the Twenties and currently covers 41 countries with magazines such as Cosmopolitan, House Beautiful and Good Housekeeping, said George Green, president and ceo of Hearst Magazines International. Every magazine it launches in the U.S., it expects to launch overseas — and can do so in as little as 30 days.
“We’ve been doing this for a long time,” Green said. “A lot of the success comes down to branding.”
In the age of the megabrand, publishers are realizing that they have some of the most recognizable names around. Vogue, Cosmopolitan, Elle and Marie Claire are now known worldwide, thanks to the globalization of media and the fashion and beauty advertisers that fill the pages. Most of the recent moves abroad are about building a new wave of brands to back up those names. Time wants to do that with InStyle, while Conde Nast is moving to expand its international presence via its titles Glamour and GQ.
“If both versions of Glamour are a success, then Glamour becomes a real international brand and we’ll have a fast expansion,” Bernd Runge, president of New Markets, Europe and Asia, at Conde Nast International, said. “Then, Conde Nast International gains a big brand for the middle of the women’s market, which is the most attractive target group.”
But international launches don’t come cheap, unless companies decide simply to license the name and collect the royalties. Conde Nast plans to invest $7.3 million in the first year in both Germany and the U.K. to launch Glamour in those markets, with a projected spend of $21.7 million in each country over the next four years. The introduction of Glamour in Germany and the U.K. follows its launch in Italy in 1993.
The Italian version is in a different format from its U.S. sister, being about the size of a large paperback book. It has helped propel Glamour to the number-two title in the segment in Italy, and Conde Nast plans to publish both the German and British editions in the same format, said Jonathan Newhouse, chairman of Conde Nast International, which publishes 51 magazines in 13 countries. Conde Nast is a division of Advance Publications, the parent company of Fairchild Publications, which publishes WWD.
“The cost of entry is really geared to the size of the market and its development,” Newhouse said. “It’s more expensive to enter very competitive markets like Germany, the U.K. or Japan than it is to enter, say, South Korea or Portugal.”
It also depends on the circulation targets. Conde Nast is projecting Glamour’s circulation at more than 250,000 each in Germany and the U.K. But, it also next year will launch Wired in Italy, the title’s first overseas launch in several years, and GQ in Portugal and South Korea. These will require more modest investments, Newhouse pointed out. But no publisher can expect to spend less than $5 million to $10 million and have its magazine succeed internationally, he added.
Cost isn’t the only hurdle confronting the U.S. publisher abroad. There are the obvious cultural differences, which means it’s almost impossible to simply translate a U.S. magazine into a foreign language and expect it to do well. Newhouse said a title like House & Garden would never work in the urban society of Taiwan, but Architectural Digest might. Pepe said Time had expected its Australian edition of People to be about 65 percent American stories and the remainder local ones. In the end, the ratio was reversed.
“To be perceived as too American is not a good thing in a lot of these markets,” Pepe said.
But even content has no hard-and-fast rule. While Cosmopolitan is published worldwide, there is a varying degree of how much editorial is shared between the editions. The French edition has never taken a single story from the American one, Green said, while the edition in Thailand is virtually a total translation of the U.S. version.
“For some reason the Thais want the American Cosmopolitan; they aspire to what is in America,” Green said.
The differences also extend to how the publishing business operates in each country. For example, there are few rate bases in international markets, since advertisers simply expect to pay the same amount for a page of advertising no matter what the circulation. Runge said there is no position called “publisher” in Germany because of the regional nature of the ad sales. As a result, companies must be prepared to staff and fund at least four to six sales offices in Germany, each headed by a senior executive for that region.
Then there’s the distribution issue, which is much more expensive in international markets than it is in the U.S. The European market is completely driven by single-copy newsstand sales, with subscriptions representing only about 5 percent of circulation. The reverse is the case in the U.S., executives said.
All of these potential pitfalls are in place even before publishers begin to consider the local competition. While the issue is less worrisome in developing markets in the Far East or central Europe, it is multidimensional enough in developed markets to provide major headaches. In Germany, for example, Glamour faces competition not only from the German Elle and Cosmopolitan but also from two biweekly titles with distribution of almost one million copies.
In launching InStyle in the U.K., Time faces well-entrenched competition from the weekly titles OK! and Hello as well as the raft of daily British newspapers that cover celebrity gossip. Time also encounters a society where paying celebrities for the rights to their story is the norm — Michael Douglas and Catherine Zeta-Jones reportedly received about $1 million from Hello for the exclusive rights to photograph the couple and their new baby. Time doesn’t pay celebrities to appear in InStyle and has no plans to do so when the magazine launches in the U.K. in February, Pepe said.
“It’s clear the game that is played and what you have to do is differentiate yourself in the quality of your product,” he said.
Competitors also can now come in every media — even the Internet. A mistake many American publishing companies make is to forget to register their titles worldwide, Green said. Time made that mistake with People in Australia, and as a result, it is called Who? there.
“I’ve already registered O in 78 countries and it’s only five issues old,” said Green, referring to O, the Oprah Magazine. “But I already know where we’ll do the first international edition of O next year — and I’m not going to say where.”
In the end, industry executives said, there are three simple keys to launching internationally: research the market heavily beforehand, have a strong brand and expect it to be a long haul.
“Research is vital in whatever country you plan to enter,” Newhouse said. “Each and every country in Europe and the Far East is different and you have to know what those differences are and adapt to them.”
Green said such a long-term strategy is vital. He recalled giving a speech at Stanford University, where a venture capitalist asked what Hearst’s exit strategy was once a title was successfully established.
“I told him we never expect to build up a title and then sell it,” Green recalls. “As publishers we have to go into a market to be there forever. We have no exit strategy.”