David Carr and Lorne Manly write in the NY Times about the tremendous consolidation in the magazine industry:
Some 320 wholesalers served the magazine industry in 1995, but just four companies now control 90 percent of the marketplace. And those seemingly powerful players are being pushed around by Wal-Mart and an increasingly consolidated retail industry. The fallout has meant magazines that do not sell enough copies or are not part of a bigger company can lose access to consumers.
The subscriber side is bleaker, if that is possible. A surfeit of direct mail from all sorts of marketers had already depressed consumer response to magazine solicitations before the threat of anthrax came along. Sweepstakes providers like Publishers Clearing House had been a cheap source for subscriptions that accounted for more than a quarter of the industry's total. But misleading language, which fooled some consumers into thinking they had won millions of dollars, provoked the wrath of attorneys general across the country, and resulted in legal costs that nearly bankrupted the sweepstakes industry.
This circulation mayhem has "just decimated margins on the circulation side," said Lindsay Valk, director for consumer marketing at Hearst. "The biggest hit is going to be the smaller titles. They're going to get squeezed — squeezed a lot harder on the margins."
Scale also expresses itself in the advertising equation. As advertisers grow through consolidation, the advertising agencies are turning into a virtual oligopoly, with the Publicis Group's acquisition of the Bcom3 Group last week just the latest move. Both marketers and their agencies are using that size to demand better deals.
That should only accelerate the bifurcation of publishing into the top tier and the also-rans. Three companies now control almost 40 percent of total advertising in the consumer magazine category, a percentage that is growing every year. Scores of other companies are left to fight over the rest.