Periodicals: Publishing, or Publishing and Printing

SIC 2721

Companies in this industry

Industry report:

This category covers establishments primarily engaged in publishing periodicals or in publishing and printing periodicals. These establishments carry on the various operations necessary for issuing periodicals but may or may not perform their own printing. Establishments not engaged in publishing periodicals but which print periodicals for publishers are classified in commercial printing industries.

Industry Snapshot

The first American magazines appeared in 1741 but, like many of their successors, were doomed to swift failure. This inauspicious start notwithstanding, the periodicals industry burgeoned steadily over the following 250 years. By 2008 the number of business and consumer magazines had grown to 20,290, according to the consumer magazine industry association Magazine Publishers of America.

Increasingly, magazines are stretching beyond the boundaries of the print format. The Internet is a medium that is used in conjunction with, or in some cases, as an alternate for, the print publication. Other magazines are attaching their title to products and services across industries, including television, radio, and restaurants.

Organization and Structure

Periodical publishers earn money either by selling advertising space in their pages to companies wanting display areas for their products or by charging readers for subscriptions or individual issues. Thus, the periodical's content is essentially a tool that can be fine-tuned in order to boost sales and ad revenues. Many publishers also generate income through database marketing techniques, such as selling subscriber lists or marketing "back-end" products and services to their customers.

Markets.
In the early twenty-first century, publishers sought innovative ways to attract more advertising dollars. Some, like top-ranked TV Guide, cut their rate bases to advertisers, making up the difference in revenues by boosting the newsstand price of the magazine. Others started custom-publishing magazines tailored to the needs of specific clients. Business Week noted two interesting examples in the mid-1990s. One, a richly illustrated Conde Nast publication, advertised only the expensive watches specified in its title, Patek Phillipe; the other, from Hachette Filipacci Magazines, was Mercedes Momentum, launched in 1995 specifically to attract more female purchasers to the Mercedes Benz automobile.

A second way publishers multiplied advertising dollars was by paying close attention to previously skirted markets and introducing new magazines targeted to them. For example, Essence Communications, publisher of the highly successful Essence, a magazine for African-American women, introduced Latina, a bilingual Spanish-English magazine in May 1996. From 1994 to 1997, an average of 800 new magazines were launched each year to reach new audiences.

The leading magazine advertisers include automobile manufacturers, consumer goods companies, entertainment conglomerates, and tobacco firms. The top 10 magazine advertisers in 2002 included four automotive firms (General Motors, DaimlerChrysler, Ford, and Toyota), four consumer goods firms (Procter & Gamble, Johnson & Johnson, Loreal SA, and Unilever), one tobacco company (Philip Morris), and one entertainment and media company (AOL Time Warner). Procter & Gamble led all magazine advertisers with $496 million in expenditures, followed by General Motors with $396 million, Philip Morris with $382 million, and AOL Time Warner with $273 million. Together, the top 50 magazine advertisers spent $6.4 billion on magazine advertising in 2002.

Competition.
More than 20,000 U.S. magazines are published each year, yet the industry is dominated by large companies that tend to be diversified media conglomerates with interests in other media as well as magazine publishing. While figures representing total industry revenues are not available, the industry magazine Folio has estimated that the top 500 magazines account for roughly three-fourths of the industry's total revenues. The top-grossing magazine in the early 2000s was TV Guide, which reported circulation revenues of more than $579 million in 2001. Notably, TV Guide was acquired in 1999 by Gemstar for $9.2 billion.

Because competition for ad and circulation dollars is intense, the turnover rate of publications is enormous, particularly for start-up periodicals. Hundreds of magazines debut each year, but according to statistics, 50 percent are doomed to fail. Low barriers to entry in comparison to most other industries contribute to the high failure rate, because anyone with several thousand dollars and an idea can start a new periodical. Poor business planning and inadequate market research, however, usually accompany such endeavors.

Background and Development

Periodicals evolved from book notices that were inserted in European newsbooks published during the early 1600s. By the 1640s publishers began to include critical commentary, and by the 1650s the notices began appearing as regular features of newsbooks and papers. About the same time that book notices were developing, digests and abstract journals began appearing. These periodicals provided summaries of published books, biographies, and reports on important philosophical, literary, and scientific matters of the time. The Journal des scavans, first issued in Paris on January 5, 1665, is recognized as the parent of the modern periodical industry.

Throughout the remainder of the seventeenth century, several publishers, mostly in Great Britain, began to produce periodicals offering opinion, news, and entertainment. Early in the 1700s, journals of political opinion became especially popular. Great Britain's Spectator, for example, achieved a circulation of 4,000. Other well-received British journals during the eighteenth century were Farmer's Magazine, Gentlemen's Magazine, and London Review. As the European industry evolved during the nineteenth century, journals appealing to a broad range of interests emerged. Great Britain's Westminster Review, Italy's Scena Illustrata, and Russia's Russky Vestnik were popular, as were magazines that were introduced targeting special interest groups such as children, physicians, and women.

The first U.S. periodicals were Andrew Bradford's American Magazine and Benjamin Franklin's General Magazine, both of which started and failed in 1741. Other early efforts included The Columbian and Thomas Paine's Pennsylvania Magazine. In all, about 100 magazines were eventually started in the colonies, and most of them failed within a few years. After numerous failures and over 500 new periodical start-ups during the early 1800s, by 1825 about 100 magazines and journals were circulating on U.S. soil. Spurred by a demand for weekly literary journals, as well as children's, women's, religious, and political periodicals, the total number of magazines in circulation rose to 600 by 1850. Two famous titles of that time were North American Review and Southern Literary Messenger.

With the 1850s came a new era for the periodicals industry. It began with Harper's New Monthly Magazine, a richly illustrated periodical that spurred a horde of highly successful imitators. The Nation, Outlook, Scribner's Magazine, and Christian Union were a few of the titles that rocketed the number of U.S. periodicals to 1,200 in 1870; 2,400 in 1880; and nearly 3,000 by 1890. In the 1890s, moreover, low-priced illustrated monthlies were introduced that cost only 15 cents per copy, compared to the 35 cents charged by their predecessors. Many of these magazines were "muckrakers" that exposed government corruption.

The number and circulation of periodicals continued to proliferate rapidly during the early twentieth century. Among the most popular publications were Good Housekeeping and Ladies' Home Journal, which were joined by Life in 1923 and Newsweek 10 years later. Reader's Digest, founded in 1922, became a classic U.S. success story, with circulation that soared to a stunning 21 million during the 1950s. Life and a similar publication called Look achieved success in the 1960s, reaching combined sales of $7 million.

The periodical publishing industry found itself facing new challenges during the 1950s and 1960s. Most visible was the popularity of television. In company with radio, television altered American reading habits and allowed periodical publishers an ever-decreasing proportion of overall advertising expenditures. Augmenting this trend were diminished profit margins caused by growing production expenses and higher postal rates, although media competition and rising costs could not suppress strong circulation growth throughout the middle years of the century. Publications like Playboy and Seventeen opened up massive new market segments. Similarly, a plethora of trade and business journals boosted industry breadth and earnings. In addition, entire sub-industries sprang up during the 1970s to serve automotive enthusiasts, fashion fans, and other niche readers. New marketing channels, such as the Publisher's Clearinghouse Sweepstakes, also spurred growth. By the end of the 1970s, the periodicals industry was grossing more than $10 billion in sales and employing a workforce of more than 90,000.

The periodicals industry continued to expand steadily during the 1980s. Escalating advertising expenditures and a general increase in the demand for all types of current information helped to boost circulation. Other stimulants came from burgeoning electronics technology, spurring a $275 million market niche for computer and office equipment magazines that had not existed at the beginning of the decade. Other industries that significantly increased their magazine ad expenditures were apparel and travel.

As periodical demand rose and ad revenues climbed, the number of titles increased from 10,700 in 1982 to about 11,000 by 1990. During the same period, total industry sales jumped from $11.5 billion to $23.1 billion, representing an average annual growth rate of more than 7 percent. Some of the readership niches that offered the best opportunities were newsweeklies, women's, men's sports, and travel.

Periodical prosperity waned in 1989 and the early 1990s. A U.S. and global economic recession blasted ad revenues, stalled subscription growth, and slashed newsstand sales. In addition, some analysts believed that the market was becoming saturated and mature and thus offered fewer profit opportunities. Finally, periodical producers slowly lost their share of U.S. ad dollars to other media, such as direct mail and catalogs.

Cost control became an important factor in maintaining magazine profitability. Besides subtly reducing the number of issues per year, publishers tried to reduce costs through other strategies. For instance, by pre-sorting mail and including four-digit zip code suffixes to address labels, some producers were able to cut second-class postage costs as much as 5 percent. Other publishers switched to lightweight paper and trucked magazines to regional distribution centers. Many producers increased their database marketing efforts and strove to garner follow-up retail sales from their subscribers. The largest gains, though, were accomplished through layoffs, salary freezes, and benefit cutbacks.

Winners and Losers.
As the economic recovery took hold in the early and mid-1900s, the magazine publishing industry enjoyed steady increases in advertising revenues. Circulation figures, which declined from 1990 to 1992, began to rise again in 1993. The industry's optimism was reflected in the number of new magazine launches, with an average of 800 new magazines being introduced annually from 1994 through 1997.

The most popular magazine category in terms of new titles introduced between 1988 and 1998 was business and industry, which grew from 358 titles to 694. The number of health magazines nearly tripled during that period, increasing from 169 to 494 titles. Education magazines more than doubled, from 227 titles to 519 titles. Other categories rounding out the top 10 in growth were computers and automation, travel, regional interest, automotive, entertainment, lifestyle, and women's interest.

Major transactions in 1999 included the sale of TV Guide by co-owners Liberty Media and News Corp. for $9.2 billion to Gemstar, a company traditionally involved in technologies related to electronic program guides. Advance Publications, a privately held company run by the Newhouse family, purchased Fairchild Publications from Walt Disney Co. Fairchild published Women's Wear Daily (WWD), Footwear News, Supermarket News, and other retail trade magazines. Also in 1999, technology publisher Ziff-Davis was put up for sale by its Tokyo-based parent company, Softbank Corporation.

In the late 1990s, magazines increasingly turned to online services, which provided benefits such as decreased dependence on advertisers. Many well-known magazines offered electronic versions on consumer online services such as America Online and Compuserve. With the popularity of the World Wide Web, publishers also began hosting their own sites that often included back issues and other special features. There also were numerous Internet-only publications, sometimes called e-zines, which offered similar content and format as their print-based competitors. In an effort to pursue ever-greater advertising revenues, magazines began offering different ads and editorial sections for the same publication, so that different customer segments received issues tailored to their demographic profile.

The number of new magazine launches declined in 1998 to 476 new magazines. The top categories, each with more than 30 new launches, were media personalities, sex, crafts/games/hobbies, sports, computers, and metro/regional/state. In addition, there were 27 new business and finance magazines launched in 1998.

Magazine publishers enjoyed strong growth in advertising revenues in 1999. The more than 200 magazines audited by the Publishers Information Bureau (PIB), an affiliate of the trade association Magazine Publishers of America, showed an 11 percent increase in year-to-year advertising revenues through August 1999. The growth was attributed both to increases in advertising rates and in the number of advertising pages. For the 227 consumer magazines tracked by PIB in 1998, there were 242.4 million ad pages, compared to 231.4 million pages for 216 magazines tracked in 1997.

The magazine industry experienced heightened merger and acquisition activity in 1998. According to Folio, some 100 mergers and acquisitions took place that year with an estimated value of more than $6.8 billion, comparable to the number of mergers and acquisitions in 1997. Major deals included the $1.2 billion acquisition of Petersen Cos. by EMAP; the sale of 10 magazines, including Country, by Reiman Publications Inc. to the private equity firm Madison Dearborn Capital Partners for $640 million; and the acquisition of Mecklermedia by business-to-business publisher Penton Media.

By the early 2000s, the magazine industry suffered because of poor economic conditions that resulted in reduced spending in both the consumer and corporate sectors. Consequently, advertising levels decreased remarkably. According to Universal McCann, total advertising volume for U.S. magazines fell from $12.4 billion in 2000 to $11.1 billion in 2001. In what it dubbed the industry's "worst-ever ad recession," Folio revealed that advertising revenue declined for 15 consecutive months until conditions finally began to improve in May 2002. For the 234 consumer magazines tracked by PIB in 2002, there were about 226 million ad pages, compared to approximately 238 million pages for 250 magazines tracked in 2001. Magazine advertising page levels decreased each year since 2000, when they peaked at 287 million pages for the 248 publications measured. Prior to 2000, magazine advertising page levels had increased each year since 1991, when they totaled 157 million pages for 170 publications measured.

Total magazine circulation levels dropped in 2001 for the first time in decades. Two years later, the total circulation was down to 352.6 million, with 301.8 million subscriptions. To make up for losses in circulation, magazine publishers considered increasing subscription rates, which had plummeted during the healthy economic climate of the late 1990s when advertising revenues were high. However, there was reluctance among subscribers to pay more, as they had acclimated to the lower prices. The New York Times cited figures from Capell's Circulation Report that showed subscription prices fell some 17 percent during the late 1990s and early 2000s.

Postal rates intensified the pinch. For an industry so dependent on the postal service, escalating rates hit publishers hard. In the mid-2000s, some of the largest publishers filed formal complaints against the periodical pricing structure. Because rates were based on weight, periodical rates from the mid-1980s to 2004 climbed more quickly than any other class.

Current Conditions

Rising postal rates continued to threaten small periodicals in the mid- to late 2000s. However, the periodical publishing industry as a whole was thriving. Magazine Publishers of America (MPA) reported that some 20,290 magazine titles were published in 2008. That year 195 new magazines were launched. Of the new launches, the metropolitan/regional/state category and sports category accounted for the most (18 each), while 14 were in the crafts/games/hobbies/models category. In terms of subscribed readers, AARP The Magazine and the AARP Bulletin had the largest circulations in 2008, with 24.5 million and 24.3 million subscribers, respectively. Reader's Digest was third with 7.8 million subscriptions, followed by Better Homes and Gardens (7.4 million) and National Geographic (4.5 million). People Weekly was the largest magazine in 2008 in terms of circulation revenue, with sales of $559.0 million. Sports Illustrated was number two, with $284.3 million, followed by U.S. Weekly with $269.3 million. Rounding out the top five were Reader's Digest ($204.9 million) and TV Guide ($192.5 million).

Magazine advertising revenue reached a record $25.5 billion in 2007, then fell slightly to $23.6 billion in 2008. This figure still represented a significant increase from the $15.5 billion earned less than a decade earlier in 1999. Procter & Gamble Co. was the top spender in magazine advertising in 2008, with an investment of $899.6 million. General Motors and Kraft Foods were a distant second and third, spending $432.9 million and $388.5 million, respectively.

Periodical publishing is no longer restricted to the realm of glossy paper. Publishers are increasing regarding their magazines not just as titles but also as brands to be parlayed across platforms. The Internet is the first choice for this multiplatforming. The number of consumer magazines with web sites increased 67 percent in five years, from 8,166 in 2003 to 11,623 in 2007, according to MPA. By 2008 15,204--or 75 percent of magazines--had web sites. Most periodicals offer online content in addition to their print edition, while others, such as Premiere, Teen People, and InfoWorld, ceased print operations in favor of publishing exclusively online.

Other forms of alternative media continued to come online in the late 2000s. In 2009 Hearst announced plans to launch a new e-reader for magazines. E-readers, as defined by Forbes Magazine, are "hand-held gadgets that use electronic 'ink' displayed on a crisp, low-power screen to deliver an experience that approximates reading on paper--without the cost of paper, printing and delivery, which can account for as much as 50% of the cost of putting out a periodical." Other publishers began to offer applications for the such devices as the iPhone.

Some magazines stretched beyond the borders of alternative media. The Maxim magazine brand, for example, ventured into music (a channel on Sirius Satellite Radio), home furnishings (furniture and bedding), and hospitality (Maxim Hotel & Casino and the Maxim Prime steakhouse chain). Similarly, InStyle had a presence in television, books, and mobile phones. Even such well-established titles as Better Homes & Gardens, first published in 1922, were multiplatforming in the late 2000s.

Other publications, in an effort to trim expenses, are tightening their scope to focus on a core group of loyal readers, thereby increasing their appeal to advertisers. Time and Woman's Day both announced in 2007 that they were slashing their rate bases by cutting the number of readers guaranteed to advertisers. This move is intended to provide the magazine with freedom to reposition itself for a select group of readers, rather than trying to please the public at large, ultimately providing a more defined readership profile for advertisers.

Industry Leaders

The industry leaders in magazine publishing tend to be diversified media companies with interests in other media as well as in magazines.

New York-based Time Inc. was the top consumer magazine publisher in the United States in the late 2000s. It published more than 150 magazines, including such heavyweights as People Weekly, Sports Illustrated, Time, Entertainment Weekly, and Southern Living. The company, a subsidiary of the media conglomerate Time Warner Inc., had annual revenues of more than $5.8 billion in the mid-2000s.

Advance Publications Inc. of Staten Island, New York, is a private company controlled by the Newhouse family. It is the parent of Conde Nast Publications Inc., which publishes such titles as Vogue, Glamour, GQ, Modern Bride, House & Garden, Vanity Fair, Wired, The New Yorker, Bon Appetit, and Golf Digest. Fairchild Publications is a unit of Conde Nast, and publishes such consumer titles as Jane and W, as well as such trade publications as Women's Wear Daily (WWD) and Supermarket News. Advance reported sales of $7.9 billion in 2007.

The Hearst Corporation, based in New York City, is a diversified communications company with interests in newspaper, book, magazine, and business publishing. It is a partner in the cable networks A & E, Lifetime, and ESPN, and also owns radio and television stations. Its subsidiary, Hearst Magazines, is one of the world's largest publishers of monthly magazines, with 15 U.S. titles and nearly 200 international editions distributed in more than 100 countries. Among the well-known titles it publishes are Cosmopolitan, Esquire, Country Living, Good Housekeeping, Harper's Bazaar, House Beautiful, Popular Mechanics, Redbook, Town & Country and O, The Oprah Magazine. Hearst Corp.'s sales were estimated at $4.3 billion in 2008.

Meredith Corporation, founded in 1902 with the launch of Successful Farming, publishes 25 magazines and more than 200 special interest publications. Its consumer titles include American Baby, Better Homes & Gardens, Family Circle, Ladies' Home Journal, Fitness, and More. The company also owns 14 television stations, runs 32 web sites, and has approximately 400 books in print. Based in Des Moines, Iowa, Meredith's revenue reached $1.4 billion in 2008.

Workforce

There were 158,843 employees in the magazine publishing industry in 2005, up from 148,779 in 2002. The magazine industry is a major employer of writers, editors, and technical writers. Many employees begin as copywriters, copyeditors, or production editors, and work their way up to various editorial management positions. Senior editors, for example, traditionally write copy and may also manage other editorial employees or freelancers. Managing editors coordinate the editorial, art, and production departments of a publication and oversee proofreading and copywriting functions. Editors are responsible for directing the content of a publication, while editorial managers, who may be called publishers, are responsible for setting editorial policy and managing operations. The U.S. Bureau of Labor predicted an average annual increase of 5.3 percent in employment in the overall publishing industry between 2006 and 2016.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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