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<B>NEWSSTAND</B><br><br>On the face of it, 2004 has been a good year for magazine single-copy sales. After being on a downward trend for years, unit sales were up by as much as 4 percent in the first half of 2004 versus 2003, according to John...

NEWSSTAND

This story first appeared in the October 15, 2004 issue of WWD. Subscribe Today.

On the face of it, 2004 has been a good year for magazine single-copy sales. After being on a downward trend for years, unit sales were up by as much as 4 percent in the first half of 2004 versus 2003, according to John Harrington, publisher of The New Single Copy newsletter. That’s according to reports by wholesalers. A more conservative measure that factors in only audited titles (about 65 percent of all magazines) shows a decrease of 0.5 percent in unit sales — but even that would qualify as the industry’s best performance in eight years, noted Harrington.

Some perspective is in order here: 2003 was one of the worst years ever for newsstand sales, so a rebound was all but inevitable. The long-term trends have been more sobering. Perhaps the biggest concern is the disappearance of retail space for magazines as supermarkets convert to self-serve checkouts, which feature fewer or no pockets. Despite efforts by distributors to offset this with specially designed display units, “there is nothing to indicate the lost space is being recovered in any significant fashion,” noted Harrington.

The proliferation of “superstores” such as Wal-Mart, Target, Sam’s Club and Costco is also worrying, as customers of such stores make fewer trips per week. The damage has been the worst at the top of the size scale: Newsstand sales for the 50 biggest titles fell by 3.4 percent in the first half of 2004 — and that was on top of a 9.7 percent drop in 2003.

Still, there are bright spots. One positive development is the growth of the celebrity weekly segment — People, Us Weekly, Star and In Touch. Publishers also are experimenting with new low-priced magazines, with some success: All You, a women’s service magazine that Time Inc. created to be distributed exclusively in Wal-Mart, was the retailer’s best-selling title in September, selling 425,000 copies at $1.47 apiece, according to Steve Sachs, vice president of consumer marketing for the People group. American Media, Bauer Publishing and Hachette Filipacchi Media all have their own sub-$2 offerings in development.

SUBSCRIPTIONS

For years, publishers have been able to compensate for their single-copy losses by selling more subscriptions. That’s becoming more difficult. New rules adopted over the last several years by the Audit Bureau of Circulations require publishers to disclose more about the terms of their subscriptions, discouraging heavy reliance on “public place” copies sold to airports, hotels and the like. As this trend continues, “you will see less and less bulk,” predicted Susan Plagemann, publisher of Marie Claire.

Meanwhile, another source of easy and relatively cheap subscriptions, telemarketing, is drying up as a result of the Federal Trade Commission’s new do-not-call registry. Dan Capell, editor of the newsletter Capell’s Circulation Report, estimated that subscription sales via telemarketing have fallen 25 percent since the list’s inception. “It will probably get worse,” he added.

What are publishers doing to make up those losses? Many of them see an answer in partnership marketing. Sachs said it’s been a “breakout year” for Time Inc.’s partnership efforts, which include deals between Real Simple and the Container Store, and Entertainment Weekly and Best Buy. Eva Dillon, publisher of Jane (which, like WWD, is owned by Fairchild Publications, a division of Advance Magazine Group), said her magazine has found new readers through music stores. The downside to such sales, said Self publisher Kimberly Kelleher, is “some advertisers discount the value of those subscriptions. We need to impress on the media community the value of the targeted partnership.”

It’s doubtful whether such efforts can reverse what has been one of the biggest trends in circulation: shrinking rate bases. In the first half of this year, some 110 out of 609 audited titles reduced their guaranteed circulation by at least 5 percent, according to Circulation Management magazine. That’s something you can expect to see more of in 2005.

Another thing you can expect is continued scrutiny of circulation practices in the wake of the scandal at Gruner + Jahr U.S.A., which erupted after the company was caught inflating newsstand sales figures for YM. With advertisers already expressing concern, the last thing publishers want is for the Securities and Exchange Commission, which is said to be probing newspapers after a similar circulation scandal at Newsday, to turn its attention to magazines. “There’s a white-hot spotlight on everybody’s ABC statement now,” said Maxim publisher Rob Gregory. “If your circulation doesn’t hold up under very harsh light, you’re going to be in trouble.”