Thursday, February 23, 2006

Circulation Management : Costco Update

Circulation Management : Costco Update

This may look like another deal. But it is really another nail in the coffin of printed magazines in the United States. Cosco, one of the largest retailers in the US will be selling magazines at a 20% discount in stores, with a full return policy. This is equal or more than the deal many retailers buy printed magazines for. Additionaly, publishers will be paying at least $24.50 per placement at each Cosco, when the already exagerated price for celebrity titles at supermarkets has recently reached $20 a pocket (placement).

What does this mean? Major chains are going to demand the same deal (discount and placement costs) that Cosco is getting. This is desastrous for national distributors and publishers. Also, retailers will be incentivised to go buy from Cosco rather than their traditional source: the wholesalers. The newsstand business in the US was built on these small suppliers, but now they will take a major hit.

In the end, the customer wins, and I see nothing wrong with that. But, it's hard not to shed a tear for a dying industry that has supported the press, including at times the independent press. These wholesalers and national distributors are slowly dying, this is only one of the recent examples of this downward spiral, and with them mass market printed periodicals are gasping for air.
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