SIC 2721
PERIODICALS: PUBLISHING, OR PUBLISHING AND PRINTING



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.

NAICS Code(s)

511120 (Periodical Publishers)

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, employing an estimated 131,000 Americans by the mid-1990s, distributing upward of 11,000 publications and generating annual revenues of more than $24.77 billion. By 2002 the number of business and consumer magazines had grown to 17,321, according to the consumer magazine industry association, Magazine Publishers of America (MPA). The Audit Bureau of Circulations (ABC) reported that, for the roughly 560 magazines it audited in 2001, total circulation revenues amounted to about $10 billion.

Indispensable to Americans as a source of entertainment and information, magazine publishing also provides an essential advertising medium for other industries. However, in the early 2000s advertising levels were significantly reduced amid weak economic conditions. Overall, total U.S. magazine advertising volume declined more than 11 percent between 2000 and 2001, according to data from Universal McCann. However, conditions were beginning to improve by 2002. For example, the MPA revealed that advertising revenue in the industry's 12 leading categories increased from $13.7 billion in 2001 to $14.4 billion in 2002.

In the first half of the twentieth century the magazine publishing industry progressed steadily, without meteoric rises until the early 1980s, when new production technology, positive demographic trends, and an accelerated need for information all came together to spur a doubling in revenues over the span of the decade. Unfortunately, this growth spurt did not last. A widespread recession started in the late 1980s, just when periodical markets were starting on a tendency toward maturity and saturation. In response, major advertisers hastened to slash their budgets, bringing diminished revenues and dwindling profits to the publishing industry generally.

The beginning of the 1990s found magazine publishers scrambling both to reduce costs and retain their share of U.S. advertising expenditures. To keep advertisers interested, many companies introduced niche periodicals that catered to smaller audiences but offered their advertisers useful, tightly focused audiences. Doing so eased the advertising situation somewhat but also split the magazine market into highly fragmented target areas. According to the MPA, between 1991 and 2001 the following 10 categories added the most new titles: comics, regional interest, lifestyle, management, environment & ecology, computers & automation, travel, women's, music & music trades, and family.

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.

Periodicals sales and ad revenues each account for about 50 percent of the average publisher's receipts. Although more than 80 percent of all periodicals are purchased through mail-order subscriptions, 30 percent of sales dollar volume is garnered through newsstand sales. As is the case with most items, the prices of magazines rose during the 1990s and early 2000s.

Markets. In recent years, publishers have 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 to multiply advertising dollars is 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 through 1997 alone, 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 Motor, 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. Taken together, the top 50 magazine advertisers spent $6.4 billion on magazine advertising in 2002.

Competition. More than 17,000 American 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, in recent years 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 for several years has been 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. On average, hundreds of magazines debut each year, but statistically speaking, 50 percent are doomed to failure. 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 were beginning 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. Next, early in the 1700s, journals of political opinion became particularly 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. During the nineteenth century as the European industry evolved, 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 new magazines targeting special interest groups such as children, physicians, and women.

The first American 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; 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 ten years later. Reader's Digest, founded in 1922, became a classic American success story, its circulation soaring 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 dollars.

The periodical publishing industry found itself facing new challenges during the 1950s and 1960s. Most visible was the immediate popularity of television. In company with radio, television altered American reading habits and allowed periodical publishers an everdecreasing proportion of overall advertising expenditures. Augmenting this trend were diminished profit margins caused by growing production expenses and higher postal rates, though 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 entirely new, and massive, market segments. Likewise, 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 over 90,000.

The periodicals industry continued to expand steadily during the 1980s. A general increase in the demand for all types of current information and escalating advertising expenditures 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 periodical 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 were slowly losing 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 were also trying to reduce costs through other strategies. For instance, by presorting mail and including four-digit zip code suffixes to address labels, some producers were able to cut second-class postage costs by as much as 5 percent. Other publishers were switching to lightweight paper and trucking magazines to regional distribution centers. Many producers were also increasing their database marketing efforts and striving to garner follow-up retail sales from their subscribers. The largest gains, though, were being 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 had 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 in 1988 to 694 in 1998. The number of health magazines nearly tripled during the period, increasing from 169 in 1988 to 494 in 1998. Education magazines more than doubled, from 227 titles in 1988 to 519 titles in 1998. 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 with $1.4 billion in magazine revenues in 1998, 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. Analysts estimated Ziff-Davis could fetch $3 billion, despite its 1998 losses of $78 million.

In the late 1990s, magazines increasingly turned to online services, which offered 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 printbased 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 in 1998, were media personalities, sex, crafts/games/hobbies, sports, computers, and metro/regional/state. 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, and the trend was likely to continue in 1999 and 2000. According to Folio, some 100 mergers and acquisitions took place in 1998 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.

Current Conditions

By the early 2000s, the magazine industry was suffering 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 for the 248 publications measured. Prior to 2000, magazine advertising page levels had increased each year since 1991, when they totaled 157 million for 170 publications measured.

Through 2002, automotive advertisers increased their magazine advertising expenditures by 7.6 percent for the year, from $1.67 billion to $1.80 billion. Growth also was reported in toiletries and cosmetics (up 9.3 percent to $1.5 billion); drugs and remedies (up 16.6 percent to $1.4 billion); home furnishings and supplies (up 15.5 percent to $1.4 billion); food and food products (up 11.2 percent to $1.3 billion); direct response companies (up 6.4 percent to $1.1 billion); media and advertising (up 8.2 percent to $1.0 billion); and financial, insurance, and real estate (up 1.4 percent to $939 million). Declines were seen in the apparel and accessories category, as well as in technology; retail; and public transportation, hotels, and resorts.

By late 2002, magazine publishers were struggling with the concept of 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. Although some leading magazines were anticipating circulation increases in 2003, publishers were weighing this decision carefully, as total magazine circulation levels had dropped in 2001 for the first time in decades, falling from 319 million subscribers in 2000 to 305 million in 2001.

Industry Leaders

The industry leaders in magazine publishing tend to be diversified media companies with interests in other media as well as in magazines. Among the magazine industry's leaders are AOL Time Warner Inc., Advance Publications Inc., the Hearst Corp., and Primedia, Inc.

AOL Time Warner, which resulted from the 2001 merger of Internet service provider America Online with Time Warner, is a diversified media and entertainment conglomerate with interests in movies, television, music, and book publishing, among other areas. In addition to its flagship weekly news magazine Time, the company also publishes People Weekly, Sports Illustrated, Life, Entertainment Weekly, and Vibe . In 2001, AOL Time Warner had sales of $38.2 billion.

Advance Publications, Inc. is a private company controlled by the Newhouse family. It is the parent of Conde Nast Publications, Inc., which publishes fashion titles including Vogue, Glamour, GQ, Mademoiselle, Allure, and Brides. In 1999, Advance acquired Fairchild Publications, which published Women's Wear Daily ( WWD ) and Footwear News , as well as other retail trade periodicals. In 2002 Conde Nast acquired Ideas Publishing Group, a developer of publications for Spanish-speaking individuals. Advance reported sales of $22.8 billion in 2001.

The Hearst Corporation is a diversified communications company with interests in newspaper, book, magazine, and business publishing. It is a partner in cable network A & E Network and owns radio and television stations. Its subsidiary, Hearst Magazines, is among the world's largest publishers of monthly magazines, with 15 U.S. titles and 107 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, and Town & Country . Hearst's sales were estimated at $3.3 billion in 2001.

Primedia, with sales of $1.7 million in 2001, is a media company that publishes more than 250 magazine titles, business and consumer information products, and a variety of education titles. It owns a variety of trade shows and offers more than 1,000 Web sites. Founded in 1989 as K-III Communications Corporation, it publishes consumer, special interest, and technical and trade magazines. Its best-known consumer titles include American Baby, Modern Bride, New York, Seventeen, Soap Opera Digest, and Soap Opera Weekly. It also publishes consumer magazines for teenagers, including 16 Magazine, Teen Beat, and Tiger Beat, among others.

Workforce

The magazine industry is a major employer of writers, editors, and technical writers, which together constitute roughly 13 percent of its workforce. 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. Periodical producers also employ a large number of ad salespeople, who make up approximately 12 percent of industry employment.

Further Reading

Block, Valerie. "Magazines Rely on Readers to Give Rates Needed Boost; Only the Strongest Able to Make Gains." Crain's New York Business, 9 December 2002.

Callahan, Sean. "Ziff-Davis Faces Uncertain Future." Business Marketing, 1 August 1999.

Carr, David. "Magazines; With Advertising in Deep Distress, Publishers Consider an End to the Era of Cheap Subscriptions." New York Times, 28 October 2002.

Chang, Suna. "Out of Print: Webzines with Names Like Word, Nerve, and Salon Have Pulled in Mainstream Respect and Devoted Followers." Entertainment Weekly, 5 February 1999.

"CondeNet." Adweek Eastern Edition, 20 September 1999.

"Folio: M&A Scorecard." Folio, August 1999.

"Forecast '03: STILL Afloat." Folio, 1 January 2003.

"Gemstar Buys TV Guide. " Television Digest, 11 October 1999.

Hearst Corporation. "About Hearst Magazines." Available from http://www.hearstcorp.com . Accessed March 2003.

Lockwood, Lisa. "Advance's Fashion Crown Adds Another Jewel." Footwear News, 30 August 1999.

——. "Mags Online: Different Strokes." WWD, 9 April 1999.

Magazine Publishers of America. "Industry Information." 6 February 2003. Available from http://www.magazine.org .

Newspaper Association of America. "Total U.S. Advertising Volume." Vienna, VA: Newspaper Association of America, 2003. Available from http://www.naa.org .

Oder, Norman. "Freelancers Win Copyright Suit." Library Journal, 15 October 1999.

Primedia, Inc. "Company Overview," 8 December 1999. Available from http://www.primediainc.com/html2/company.html .

——. "Specialty Consumer Magazine Group," 8 February 2003. Available from http://www.k-iii.com .

Rogers, Michael. "National Online Meeting Tackles E-Journals and More." Library Journal, 15 June 1999.

Sarbin, Hershel. "The Multimedia Imperative." Folio, 15 April 1999.

Standard & Poor's Industry Surveys: Publishing. New York: Standard & Poor's Corporation, 14 October 1999.

U.S. Census Bureau. 1997 Economic Census. Washington: GPO 1999.



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