Invasion of the Bookazines, Featuring the Return of the Living Dead

Blame it on the mooks and their zombie buddies.

Because of all the doom and gloom about the U.S. newsstand system (you know it’s bad when an industry consultant’s blog is called From the Foredeck of the Titanic), Dead Tree Edition decided to launch an in-depth investigation. Which means I ventured out to the magazine sections of three stores.

I was trying to figure out why, as MediaPost reported recently, the combined retail sales of 68 major magazines are barely half of what they were a decade ago. It wasn’t hard to spot one of the culprits.

At first, all seemed OK when I eyed the prominently placed magazine section in a big discount store. There were lots of familiar titles – National Geographic, TIME, Us, Readers Digest, and Better Homes & Gardens. But a closer look showed they were impostors.

The well-known magazine logos weren’t on magazines at all but on mooks – AKA bookazines, SIPs (single interest publications), one-shots, or specials. By whatever name you call them, they are sold in the magazine section of stores but have no specific issue date, can’t be obtained as part of a subscription, and tend to hone in on a single topic that’s in keeping with the magazine’s brand --like Christmas Cooking from Better Homes & Gardens, Us: Stars of 2011, or TIME’s Beyond 9/11: Portraits of Resilience.

Mook sales are usually excluded from the industry statistics reported by the trade press.

The intruders mostly have the same characteristics – little or no advertising, glossy high-quality paper, perfect binding, relatively high cover prices, and on-sale periods of about three months instead of the one month or less typical of real magazines.

The Zombies
Much of the retail space once dedicated to prominent weekly and monthly magazines has been given over instead to these magazine spinoffs. Also taking oxygen away from the sales of real magazines are SIPs published by such non-magazine brands as Pillsbury, the Mayo Clinic, USA Today -- and Life.

Three times Time Inc. has killed Life magazine, only to resurrect it for such bookazines as 100 Photographs That Changed the World and El Papa de Juan Pablo. No wonder they call it Life: This zombie just won’t stay dead!

Also enjoying living-dead status is U.S. News & World Report, which closed down its only print magazine late last year but in one bookstore had four different mooks – Best Colleges, Best Graduate Schools, Best Hospitals, and Amazing Animals. (Wait, shouldn’t that last one be Best Animals? Or maybe Best Veterinary Hospitals? How about Best Obedience Schools?)

The "Best" books all deviate from the usual bookazine model by running ads -- lots of ads in the case of Best Hospitals, way more than the real magazine used to have. My contact at U.S. News says the new 344-page Best Colleges book is the company’s largest “issue” in at least two decades, and maybe ever. It sounds as if the magazine business is looking pretty good for U.S. News now that it’s out of the magazine business.

One-shots used to be the province of enthusiast magazines testing out ideas for a new title: Sportscar Convertible is doing well, so let’s try a SIP called Corvette Convertible. If the response is good enough, we’ll solicit subscriptions and start publishing bimonthly.

But that door is closed. The beleaguered newsstand distribution system no longer has the patience to give untested niche titles a shot.

Favorable Economics
Bookazines from well-respected brands are another matter, and the big publishers are happy to play along even if that diverts attention from their periodical issues. Consider the economics, as exemplified by Better Homes & Gardens: The 232-page October issue is priced at $3.99, but its 144-page SIP siblings – I saw three in one store – sell for $9.99 each.

Here’s my analysis: As consumers have gained greater ability to find exactly the information they want or need, the traditional mass-market magazine with its mishmash of loosely related articles is looking increasingly irrelevant to them. (The October issue of National Geographic has articles on the teen brain, surviving cancer, whale sharks, and Ansel Adams. Who's the target audience?)

But in an age of link-baiting and belly-fat ads, consumers still trust respected magazine brands. When those brands offer content -- whether a mook or an app -- that’s laser-targeted to their needs or interests, suddenly the wallets come out. (A National Geo mook called Wildlife: The Greatest Photographs? Let me see that.)

I was one of those who snickered last year when the Magazine Publishers of America changed its name to The Association of Magazine Media. Now the name is actually starting to make sense.

Just don’t ask me to define “magazine media.”

If you actually made it to the end of this article, you might enjoy suffering through these other Dead Tree Edition analyses of the U.S. magazine industry:

• Is Apple's 30-Percent Solution Really So Bad?
• Stuck at the Borders: Magazine Publishers Have Failed to Explore the Amazon 
• App-oplexy: Magazines on the iPad
• The Yellowing of National Geographic: Will Today's Copies Age Faster Than That Stack in Your Gramma's Attic?
• Viagra to the Rescue? Postal Regulations Are Taking the Life Out of Tabloid Magazines

Bad Customer Service Is Built into the Design of U.S. Post Offices, Report Says

Have you ever stood in a long, slow-moving line at a post office and wondered why only one employee was helping customers?

The problem is the way the traditional U.S. post office is structured, with delivery and retail operations in the same building, according to an Inspector General’s report released today. It’s high time to separate those functions in many urban and suburban areas, says the report, entitled “Retail and Delivery: Decoupling Could Improve Service and Lower Costs.”

“Unlike most retail stores in the private sector where employees are called up from the back office when lines are long to serve the customer, the focus in Postal Service shared facilities is the exact opposite. A clerk’s first priority is often back room operational support activities — even if that means a retail customer waits longer in line.”

Managers of a typical post office “primarily focus on delivery performance and cost control over providing retail service or promoting revenue generation. In fact, their performance evaluations often guide them to focus on meeting delivery cost and service goals to the exclusion of retail service or revenue generation goals. “

“There is no inherent business need to have retail co-located with delivery. If reasonably increased workforce flexibility is allowed (by allowing some retail clerks to work a half day, for example), the business need for coupling could effectively disappear. The recently approved contract with the American Postal Workers Union (APWU) introduced new scheduling flexibility for career employees that might support this change.”

Twice as many U.S. postal facilities have both delivery and retail operations than have only retail operations, the report says. By contrast, private delivery companies and the best foreign postal services put delivery operations in commercial areas near major transportation hubs and retail operations close to where customers live and work.

Retail and delivery have been coupled in U.S. post offices for 150 years, the report says, but that model no longer makes sense in densely populated areas, according to the report.

“Carriers once spent more than half of their day manually sorting mail at the local carrier office before delivering it, but now devote slightly more than two hours per day to this function.”

“With carriers spending less time in the office, more mail can be delivered by each carrier and there is less need for letter carriers in each facility. With fewer carriers and the removal of local sorting equipment, there is idle floor space in facilities and less need for carrier vehicle parking.”

“The Postal Service could consolidate two nearby postal facilities into a single carrier-only facility and relocate it to a lower-cost facility with better connections to transportation links. This would produce savings by reducing both facility and transportation costs and by designing a space geared specifically toward efficient delivery operations.”

Seven Losers and Four Winners in the NewPage Bankruptcy

The recent bankruptcy court filings by NewPage have been blessings for some and curses for others. Here's a look at the scorecard two weeks after the big U.S. paper company went Chapter 11:

LOSERS
Loser #1) Port Hawkesbury employees: NewPage has basically deep-sixed its money-losing Canadian mill, walking away from severance obligations and an underfunded pension plan, not using any of its debtor-in-possession funds to keep the mill running, and leaving many suppliers holding the bag. NewPage has put the mill up for sale but also revealed that it loses $4 million per month on the operation. Unless the muscle-bound Canadian dollar suddenly goes into the tank, a new owner won’t be able to make a go of the mill unless it can avoid NewPage’s pension obligations, reduce labor costs, and perhaps keep part of the operation (two paper machines and a pulp mill) idle.

Loser #2) Nova Scotia: It’s not just the mill’s employees who are suffering; the whole province seems to be getting sucked into the Port Hawkesbury vortex. The provincial government is shelling out $15 million to prop up logging operations that are getting stiffed by NewPage, the power company (owed nearly $10 million) says the loss of such a big customer will force it to raise rates for everyone else, and rail service to part of the province may no longer be viable.

Loser #3) Paper buyers: Spot deals for supercalendered paper disappeared almost overnight when the Port Hawkesbury closure was announced. Contract prices for SCA and the closely linked lightweight coated (LWC) papers are also rising despite declining demand.

Loser #4) Bondholders: Owners of the junkiest of NewPage bonds will probably receive nothing, and even owners of more senior bonds who expected to come out OK might have to accept some equity in a restructured NewPage in lieu of cash.

Loser #5) Suppliers: At least 25 suppliers of such items as chemicals, energy, and timber to the American arm of NewPage got stuck holding more than $1 million each in accounts receivable when the company went Chapter 11. Their prospects are better than those that supplied Port Hawkesbury, but most are unlikely to receive full compensation.

Loser #6) Cerberus: The folks who brought us the Chrysler and GMAC bankruptcies can now add another turkey to their resumes. The Chapter 11 filing wipes out the big hedge fund's stake in NewPage.Cerberus now seems to be moving more toward simply investing in companies rather than trying to buy and run them.

Loser #7) StoraEnso: With NewPage defaulting on the lease of one of its Port Hawkesbury paper machines, StoraEnso is taking a $180 million hit because it is the guarantor of the lease. Stora had already written off its 19.9% equity stake in NewPage, which was a holdover from the sale of Stora's North American assets to NewPage.

WINNERS 
Winner #1) Duluth employees: All of NewPage’s U.S. mills will probably continue running as long as the company is in bankruptcy court. (After three years of writing about ink-on-paper industries, I've seen this movie before. Can you say Tribune, Source Interlink, Quebecor World, AbitibiBowater, White Birch, etc.?) But the future looks especially bright for Duluth, the only NewPage mill besides Port Hawkesbury that can make supercalendered paper.

Winner #2) UPM: The Port Hawkesbury shutdown makes UPM’s recent purchase of the Madison, Maine mill look like a winner because of higher prices and a tight market for SCA paper. Although NewPage’s travails may cause investors to get jittery about other highly leveraged paper companies (which may be why Verso's stock price is down a bit), Finnish giant UPM seems to have the size, strength, and diversification to ride out the storm and to profit from NewPage's weakness.

Winner #3) The Katahdin region of Maine: Ever since the one-machine Millinocket, Maine supercalendered mill closed three years ago, there have been various attempts to reopen it that eventually petered out. But the latest investment plan already seemed to have legs before getting a shot in the arm from Port Hawkesbury's demise. Like Port Hawkesbury, Millinocket has one of the few machines capable of making an SCA for offset printing that rivals the quality and printability of more expensive coated groundwood papers.

Winner #4) Lawyers: Because NewPage filed for Chapter 11 without a “prepackaged” restructuring plan, a passel of lawyers will be kept busy for months sorting through the claims and interests of various creditors. Remember, the first rule of bankruptcy law is that, regardless of who else gets stiffed, the lawyers always get paid.

Related articles:

• NewPage Files Chapter 11, Seeks Buyer for Canadian Mill   
• NewPage Inc. 5000 Ranking Seems Like a Cruel Joke
• A 'Salmon Week' For North American Papermakers: Note the reference to Chapter 11 in this nearly two-year-old article
• List of NewPage Port Hawkesbury’s creditors: The latest NewPage article at ForestTalk, a Canadian site that is thoroughly documenting the Port Hawkesbury saga.

Obama Supports Postage Increase: Is He Dissing the Print Industry?

The Obama Administration proposed above-inflation increases in postage rates Monday, just a week after the Postal Service indicated it had backed off of just such a rate hike for fear of hurting the printing industry.

The President released a deficit-reduction plan that would "permit USPS to seek the modest one-time increase in postage rates it proposed a year ago."

A week earlier, Deputy Postmaster General Ron Stroman explained in an interview why the Postal Service had decided not to pursue such an "exigent" rate increase: "One of the things we have seen in ongoing discussions with the print industry is that the industry itself is functioning with very close profit margins. We have been very concerned that we not raise prices too high because you just drive people out of the business."

The USPS proposal a year ago, which was rejected by the Postal Regulatory Commission, had average rate hikes of 5.8% for the market-dominant classes of mail. But for Periodicals mailers the increases would have been in the 8% to 9% range.

The president's plan would also "give USPS the ability to better align the costs of postage with the costs of mail delivery while still operating within the current price cap." That may refer to postal executives' desire to impose the highest rate hikes on products on which USPS allegedly loses money, such as Standard flats (catalogs) and Periodicals mail.

The president's plan would also "reduce USPS operating costs by giving USPS authority, which it has said it will exercise, to reduce mail delivery from six days to five days." That's an about face on Saturday delivery: Just seven months earlier, Obama released a budget proposal that included the usual language about requiring six days of delivery and banning the closing of small post offices.

Related articles:

• So Much For Encouraging Publishers To Mail Efficiently . . .
• USPS Seeks Special January Rate Increases 
• USPS Will Not Seek Exigent Rate Increase