Magazine Circulation Illustrates Risks of Niche Strategies for Printers
By Dr. Joe Webb on February 20th, 2013
We’ve all heard the phrase “print will always survive” or “print will always be there,” but I always wonder exactly what is meant by that. I have no doubt that print as a medium will always be available in some form or some format. I think that is irrefutable. Some in the industry take these phrases as comforting thoughts. I believe that they are at best benign and at worst meaningless. The real question is what volume and nature will the demand for that medium take. Print volume is a function of size, sides, page count, run length, and frequency. Those are all determined by the nature of the content and the audience size. The prime mover of all of these aspects is the original idea.
In 1970, 244.7 million subscriptions and newsstand purchases represented 1.19 per person. By 1990, the combinations of data base technologies, decreased costs of image creation and process color printing, and more efficient presses and logistics, led to the increase in circulation to 366.1 million, or 1.47 per person. These factors led to very successful specialty magazines with smaller circulations. Then the decline set in from media competition. In the 1990s, cable television became more magazine-like with more specialized channels. By the end of the decade, the Internet garnered more communications dollars. By 2000, the per person circulation dropped to 1.34. In 2011, it was down to 1. Newsweeklies had shriveled. Specialty publications started to disappear. The venerable TV Guide gave up the ghost. (Click image to enlarge)
These magazine data show that print media will survive. Circulation is almost 70 million higher (+28%) than it was 40 years ago even though population is up +52%. Should we take comfort in that? No, I don’t think so.
Promoting the vitality of print, as the Magazine Publishers Association is prone to do, as are others, misses the mark. Print is not vital; print is one of many choices. Increasingly the marketplace shows that it is choosing something else.
So what does this mean for the statement “print will always survive,” It’s still meaningless.
The printers that specialized in the niche of magazine printing did well for a very long period of time, with enviable profitability, and the admiration of the industry. Their specialized equipment and their unique knowledge of their industry led the way. Were they prepared for this? No they were not, not for this kind of downdraft.
This is the bottom line message: Niche strategies can be dangerous. One of the reasons those printers were so profitable was that they were being rewarded for the risk of specializing. Any printer engaged in niche strategies should take this as a warning. Niches are time-sensitive. They can disappear. After identifying a niche to exploit, a printer should start looking for niches to replace it. Nearly every printing niche required specialized capital investment that prevented exploitation of other niches. Stay flexible with your capital. Today, I believe that rather than equipment specialization, the market is changing to skills specialization. Equipment investments need to be robust and flexible. Skills and software, and knowledge of applications, are the new tools to exploit short-lived niches.
4 Responses to “Magazine Circulation Illustrates Risks of Niche Strategies for Printers”
By Evan Facinger on Feb 21, 2013 | Reply
Are you purposing that all printers attempt to become all things to all people? You mention the magazine industry for your example on why niche strategies are dangerous, but niche magazines are the ones that are surviving. The publications who attempted to be everything for everyone have failed, or are failing. While it would be great to excel at every aspect of print, that is unrealistic for the majority of commercial printers. I agree that skills are something that can carry over for many different kinds of jobs, but the equipment being used leads to production efficiencies, which in turn, lowers cost.
By Dr. Joe Webb on Feb 21, 2013 | Reply
Printers can’t be all things to all people because no print business owner has the skills to do so nor do they have the capital to do so. The post was about printers who specialized in magazine printing, not niche publications. As we know, many have disappeared or merged then downsized away. The point is that all niche specialties have risks that are often unacknowledged. Every time you choose a niche, you are choosing not to do something else for a good and considered reason. When pursuing that niche involves long term capital equipment purchases, the risks of business are raised. These were perceived as low because “everyone likes magazines and will always want them.”We are in an information revolution that shortens the life of content formats and content delivery mechanisms as they are replaced by new ones more quickly than before. As stressed in “Disrupting the Future,” many print owners have not come to the grips with the fact that the marketing life of equipment is much less than its mechanical life. Buying a press that you will keep for 20 years is unwise when the output configuration of that press may only fit the market demand for six years. So while they are enjoying the higher profits of niche specialization, they should always be looking over their shoulder for new competition, and they always should be on the hunt for new niches, while being careful at managing their risk. Entrepreneurial life is not easy; the print businesses that are doing well now are far better managers than the ones that did well in the 1980s, even though the 1980s printers probably had more bottom line to show from riding an upside wave. When times are good, everyone thinks they’re a genius. When times are tough, you have to be one.
By David Pilcher Jr. on Feb 22, 2013 | Reply
I agree that not focusing on a “market” (or niche) is the right choice. Being able to offer a variety of sizes, substrates and finishing options is critical to whatever the content is of the product you are producing – albeit catalogs, magazines, coupons, free publications, direct mail or otherwise. Offer anyone of those customers great service, a modern way to upload/view proofs online, give them superior quality plus efficiencies due to the latest technology coupled with good distribution models (don’t get me started on the USPS btw, that isn’t helping) – backed by people who know how to use the technology – you can not only survive and continue to serve the today’s print market but thrive. Those who still choose print as one of their ways to communicate will thank you for it.
By Evan Facinger on Feb 22, 2013 | Reply
Yes, I agree that market demand is extremely volatile, and that too many printers focus on the past and present, instead of the future. Even a good niche has the potential to eventually disappear, but forward thinkers should always be looking out for the next opportunity and not simply become satisfied with the present. You also make a great point about the market demand of a press being much shorter than the mechanical life.