What the Closure of COMAG Means for Publishers
One of the biggest shake-ups in newsstand publishing is happening right now. The last time a change like this happened was when Surridge Dawson closed, three wholesalers became two and although it was a major change for the industry, it had little effect on publishers.
Of course, I am talking about the sad demise of COMAG, whose shareholders Condé Nast and Hearst removed their support 3 months ago leaving newsstand publishers with the choice of Marketforce or Frontline/Seymour. The industry had seen something like this before. When MMC went into administration in 2010, publishers were in a similar situation. However, MMC were a smaller operation with around 2% market share and 400 titles. COMAG has an 18% market share (circa. 1,400 titles) to manage exits for before the end of October.
Having started my career with COMAG my initial thoughts were with the staff, many of whom are friends of mine. Sure, if you are a good publisher account manager, Seymour and Marketforce will have roles available to service their new business, but if you are in retail, wholesale or operational departments the chances of getting a similar position in magazine publishing is less likely. There are many good people at COMAG and I sincerely hope they find new roles quickly.
Why did COMAG fail? I suspect there were many factors. A high cost base and an unstable economy wouldn’t have helped. Increasing publisher remits would also have been an influence. During contract renewals, publishers negotiate for a higher remit irrespective of sales performance. Decreasing newsstand revenue would also have been an issue with total magazine revenue down 7% in the 12 months to May 2017. All these factors would have added up to a situation the shareholders thought was impossible to carry on with.
There are options for publishers other than the big two distributors. Companies such as Logical Connections, Inter-media, Pineapple and Select, who use Marketforce or Seymour for retail and wholesale functions but manage the day to day relationship themselves, should benefit significantly from this situation. Smaller publishers may well appreciate the increased attention these types of distributors can offer.
Larger COMAG clients were snapped up quickly but smaller clients have been left with a short period of time to secure a new distributor and many will still not have decided what to do. Publishers may be faced with the prospect of per-issue distribution fees and having to accept a reduced remit which more accurately reflects their newsstand performance. These reduced circulation revenues, the ever-increasing print and paper prices and the high costs to the newsstand market may be too much for some publishers to absorb.
Targeted media placement, dynamic distribution, monitored frees, brand activation, call it what you will, but getting a magazine directly in front of your target market is more relevant than ever. Since the news broke we have certainly seen an increase in the number of newsstand publishers contacting us to enhance their circulation.
The next 12 months, following the fall out of COMAG, will have a huge effect on the landscape of the industry. I predict a reduction in newsstand consumer titles, perhaps a large publisher taking the space left by Sport and Coach with a big free title launch, the growth of smaller boutique distributors and fingers crossed an increase in targeted media placement.