BHM being forced off the newsstands By Dave Duffy
December 10, 1999

If you're having trouble finding Backwoods Home Magazine on the newsstand lately, you're going to have even more trouble beginning with the current issue, the January/February issue, and it has nothing to do with Y2K.

The nation's largest magazine wholesaler, Anderson News Company , which controls about 45% of the total magazine distribution volume in the country, has decided to levy prohibitive "handling fees" on magazines they have decided are not profitable enough for them to distribute.

BHM is among hundreds of smaller magazines that will have no choice but to withdraw their titles from these newsstands because we cannot afford the added costs.

But that's not the whole story. Beginning with the next issue, the March/April issue, another big magazine wholesaler, The News Group , which controls another 20% of the distribution volume, will do the same thing, forcing 1600 of the some 3000 magazine titles they distribute to either pay up or get off the newsstands. We have not yet been named to their group of "inefficient titles," but we expect to be.

Here is the partial text of a November 23 industry memo The News Group's president, Gil Brechtel, has sent out:

"The goal of our extensive title analysis was to identify the group of titles that contribute to retail sales most significantly. We found that roughly 1400 titles represent 94% of our sales. These core titles are in every magazine category and sub-category we distribute, but have a disappointing average sales efficiency of 39%, which is too low. However, the remaining 1600 regular frequency titles that we distribute have a unit sales efficiency of 19% and represent only 6% of our sales. These non-core titles have added waste, inefficiency and additional costs to the system and in our opinion, have impeded overall sales growth."

The kicker is that BHM is an efficient title. In the past year we have had an average sales efficiency of 62.3% on the newsstand, which makes us one of the most efficient newsstand titles in the country. However, as a relatively small magazine, the total number of copies we put on the newsstands—about 40,000 copies—is small so our impact on the overall sales of these big wholesalers is small.

Anderson and The News Group have a near monopoly on newsstand distribution in the following states: California, Oregon, Alaska, Washington, Mississippi, Alabama, Tennessee, Virginia, Arkansas, Kentucky, Maryland, Arizona, Colorado, Iowa, Kansas, Ohio, and New Mexico. If you are from these states and want to buy us from the newsstand, you will have to hunt for an independent newsstand that carries us or go to the following Ingram outlets that carry us: B. Dalton, Little Professor, Barnes & Noble, Borders, Walden, Bookstops, Crowne, Hastings , and Books a Million . We'll also remain on several hundred independent newsstands, but I don't know all the names. We will be forced out of 60-70% of all Wal-Marts , most drugstores, and most supermarkets.

So what!

My response to these big wholesalers is to tell them to go stick it in their ear. I never liked doing business on the newsstands anyway because it has always been a money-losing proposition for small publishers like BHM with its 50% cut to the wholesalers and retailers, and its huge trucking costs to get the magazines to market. Publishers like us have always borne the total cost, with the middlemen—the very wholesalers who are now trying to gouge us for even more money—the only ones making any money. But I sold BHM on the newsstands anyway because many of our readers requested I do so.

Now the choice has been taken away from me. So what! The net effect of these moves by these big wholesalers will be to make it very difficult for newer, smaller magazines to market themselves via the newsstands, which has been the traditional way new magazines break into the publishing marketplace. But that may not matter in light of the emergence of the Internet, which looks to be the future of all magazines. This attempted money-grab by these big wholesalers will be their death rattle; they are fast becoming the dinosaurs in this emerging age of Internet Web pages, and they will soon end up on the dusty shelves of history.

We will continue to sell BHM the way we always have—largely by word of mouth. Although the newsstands have brought us new subscribers, direct mail and the Internet have done the same. And the future for most publications will be with their own Internet Web pages where the public can access them without going through a middleman.

Our Internet Web page (www.backwoodshome.com) has experienced explosive growth during the last year. And the Internet is where we can cut prices for our readers. We have been seriously considering selling an on-line version of the magazine for under $10; this move by Anderson and The News Group puts that option on the front burner. The online version will look identical to the print version with text, photos, ads, three-column format, etc.

The future of publishing does not belong to wholesaler middlemen like Anderson and The News Group . It belongs to publishers like BHM who actually produce the useful information people want. The Internet will make it possible for BHM and other small publishers to not only get their products to readers, but at a cheaper price because we'll no longer have to pay these old world dinosaurs their exorbitant "handling fees."

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