Euro approach scores on U.S. newsstands

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When Time Inc. set out last year to build a new women's service magazine that was fast, cheap and better than anything currently at the checkout counter, top executives were determined to quarantine it from the publishing industry's worst habits.

The editor was imported from Time Inc.'s IPC Media subsidiary in the U.K., where the majority of magazines live or die each week on the newsstands. She was given carte blanche to hire a small staff of young editors ready to conceive and collaborate in a way that isn't done here. And to simplify distribution, Time Inc. arranged for the title-which launched last fall as All You-to be stocked exclusively at Wal-Mart Stores.

"Working with Wal-Mart is exactly like working with Tesco," says All You's editor, Isobel McKenzie-Price. "Around 40% of the magazines sold in the U.K. are done so through supermarkets, so I've brought a lot of supermarket rules with me.

"The newsstand focus is all about having a very busy cover, and instead of taking pains to make every cover different, you make them similar. You package yourself the way a consumer good packages itself in a retail setting-with a service magazine like All You, you're really buying a brand. If you buy Coca-Cola, it should taste like Coca-Cola. And if you buy All You or the Bauer titles, you should know what you're getting. That's very different from a subscription environment, where you can afford to be ... risky."

But perhaps not as risky as magazine publishers' latest vogue for a little foreign language instruction. Publishers have begun scrambling to sell at the newsstand again. And the easiest way to do that, the thinking goes, is to sign up for a refresher course in Euro Publishing 101.

Besides Time Inc.'s All You, next month Hachette Filipacchi will launch the similarly positioned For Me on newsstands coast-to-coast, alongside the test issue of an American adaptation of its more upscale U.K. women's title Red. And Hearst Magazines has announced plans for its own women's weekly, Quick & Simple, to debut this summer with a price tag estimated at up to $70 million.

The inspiration for this sudden frenzy is the recent out-of-nowhere success of formerly sleepy Bauer Publishing USA, the German magazine house that has been entrenched in the checkout aisle with Woman's World and First for Women, and that is now building a celebrity-centric franchise around the 1 million single-copy sales of In Touch Weekly.

"We're the flavor of the month," Bauer President-Chief Operating Officer Hubert Boehle notes dryly.

SINGLE-COPY SOARS

Just to recap the through-the-looking-glass qualities of the European model: Magazines are overwhelmingly consumed via single copies rather than subscriptions, meaning advertisers' needs take a backseat to whatever it takes to move copies off the rack. This is the cumulative effect of history, geography, smaller readerships, high postal rates and a distribution system that can return sales results in no time at all.

Single copies typically comprise 80% or more of a magazine's total circulation (while the reverse is true here), and anything less than a 60% sell-through rate is practically a firing offense (as opposed to a U.S. industry average of 35%).

From these economic realities, an entirely different magazine culture has evolved, one that U.S. executives-in particular Hearst Magazines President Cathleen Black-have looked to time and time again for best practices to import.

Stop to consider: The absence of reliably large readerships (and rate bases in general) means new magazines aren't dependent on advertising for long-term viability or profitability. Free from the costs of direct mail campaigns and other forms of consumer marketing, a new magazine that's a hit on newsstands can achieve break-even more quickly than its U.S. counterpart, or at least fail more quickly, before huge sums are invested. But the smaller circulations (only a third to half of similar U.S. titles) demand smaller cost structures, leading to smaller staffs, great efficiencies and an entirely different way of working.

All You and For Me will soon go head-to-head on newsstands with Bauer's stable (All You will move out of Wal-Mart exclusively next year), and other publishers are still looking for individual lessons to teach their respective corporate cultures.

"They have very little middle management," says Ms. Black, "and what that leads to is a greater responsibility along the [editorial] food chain. They are not just shoving product up the food chain-they are taking responsibility for it."

Ms. Black has tried for years to instill that mentality at Hearst, with some results: "If you look at Hearst staffs, we're probably 10%-15% smaller on average. We want to work much smaller still. How can a weekly in the U.K. [through Hearst's National Magazines subsidiary] we launched four months ago only have 35 people? As we go forward, we're trying to emulate what they can do," including moving prepress operations in-house and other cost-saving measures taken for granted in the U.K.

At Hachette Filipacchi Media U.S., President-CEO Jack Kliger says the company intends to keep the costs of the Red test issue down by reusing content that has appeared in the regular, U.K. edition-nearly half the issue will have been recycled. "Many of the ideas are transportable," he says, "and we think that's true more and more. That didn't exist 25 years ago."

In the case of For Me, however, "we're taking our inspiration from the European business model," Mr. Kliger says. "We're going with a high-volume price of $1.45 an issue; we're not doing direct mail; we're not trying to attract subscriptions. And the subscription price is the same as the cover. We are looking to make our money on circulation.

"The fact is advertising budgets are not growing now, so magazines have to look into getting over their overdependence on advertising."

What remains to be seen is whether any of these ideas, tactics and imports will impart anything more than a whiff of an accent to publishers' cultures and underlying businesses over the long run.

KEY EXPERIMENTS

All You and For Me are consciously experiments, their staffs and business models diverging widely from other portfolios.

All You's Ms. McKenzie-Price, who stresses a holistic approach to magazine editing (she demands her editors suggest coverlines, headlines, visuals and initial layouts at a story's conception), says she searched high and low for young, unspoiled editors willing to conform to her British way of work.

At Bauer, Mr. Boehle says his American counterparts are learning the wrong lesson if they believe the European model is about slashing costs. "I am much more revenue-oriented than cost-oriented," he says. "If there are publishers that make more and spend more, what's wrong with that?"

Mr. Boehle believes the back-to-the-newsstand movement will bump into the realities of limited shelf space. "You have to sell from a top position on the racks," he says. "Maybe there are 20 to 25 of those positions, so you see how limited that approach ultimately is."

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