Two of the most pernicious barriers to entry in the magazine publishing market are distribution to retailers and a lack of merchandising expertise. Publishers say these seriously hamper aspiring entrepreneurs and are slowly concentrating power among the two media owners that control print and distribution in South Africa.
Caxton’s RNA and Media 24’s NND dominate local distribution. “They can make or break you,” says Gisele Wertheim-Aymes, head of Johnnic’s magazine division. “They’re dictatorial monopolies that don’t take distribution and merchandising seriously.”
The counter-argument is that distribution is a difficult business with highly perishable goods like magazines. Attempts by smaller distributors to break in have failed, and the recent liquidation of DNA, which handled smaller titles and imported magazines, has not helped.
In Europe, big publishing houses have also integrated backwards into distribution and print. A major difference is the European “commuter” market, which free sheet publishers are milking.
Barrie Terblanche, director of local free sheet BigNews, commented: “South African knock and drops are home delivery-based; European free sheets are pedestrian-based. You get them on the trains, buses, street corners.”
It’s still a dogfight. Metro, a free sheet launched in Stockholm in 1995 has 25 editions in 16 countries and in 14 languages. It attracts stiff competition. Says Terblanche: “The manager of Urban, a daily free sheet started by the established daily newspaper to swamp the Copenhagen Metro, describes his operation like a war.
“Distribution coordinators communicate via cellphone with direct distributors on the street. A Metro distributor is standing quietly handing out newspapers. The next moment two Urban distributors are around him trying to reach commuters first.”
In Europe, however, magazine publishers can raise their subscriber bases. Not so here, where postal deliveries remain unreliable and slow.
Doyen of South African women’s magazines Jane Raphaely says: “Newcomers lose their passion for the business when they see the difficulties.”
CNA’s near collapse last year devastated some publishers. It also opened other retailers’ eyes to the importance of magazines in their product mix. An example is Spar, which has prominent displays.
Raphaely says we should follow the United States. “US airports are full of outlets with magazines displayed as preciously as perfumes. Here, the titles are falling on their faces.”
Magazines are sold on a sale or return basis, preventing retailers from taking the segment seriously. But Raphaely is pleased with the attitude of Steve Ross, Edgars CEO, who acquired CNA stores last year.
News-stand management is another issue. Woolworths, for example, is sticky about what it lists and is prone to delisting without warning. Management displays little appreciation of the difference between toothpaste and a lavish glossy.
Wertheim-Aymes remembers when Elle Decoration was removed, despite the fact that Woolworths accounted for 55% of sales and it was aimed squarely at the chain’s market.
But the real issue may be cover price. Research conducted by IPC, a leading United Kingdom-based publisher, indicates that magazine readers are highly price-sensitive — a 5p (about 60c) increase cuts sales by between 10% and 15%.
Media 24 and Caxton have played the price game for some time. Perhaps it’s time for a new formula.
Sandra Gordon is publisher of The Media magazine, which produces Media Weekly for the Mail & Guardian. Regular contributor Kevin Bloom is on leave.