The Sports Illustrated Swimsuit Issue Is Now Out – But Can You Get Your Hands On It?

Philip M. Stone February 11, 2009

The story of this year’s Sports Illustrated swimsuit edition is the story of the plight faced by the magazine industry these days, those that have survived, that is. A distribution dispute has stopped sales at many outlets, including Wal- Mart, the top US magazine newsstand outlet. And then there’s the edition itself, all the usual features you expect but a lot thinner – not the models, the magazine – it has about one-third less advertising pages than last year.

And since the swimsuit issue is the year’s biggest earner for Time, Inc., the end financial result when final sales are tallied probably won’t bode well for the parent company that has been culling staff for the past few years as it tries to reinvent itself.

As if US magazines don’t have enough problems these days with dropping circulation and fewer advertisers, along come the distributors with problems of their own – such as one of them closing down after not getting an additional seven cents a copy for each magazine distributed. The publishers said no and as these things usually go in America, the lawsuits have started to fly with another major distributor accusing the publishers of being in cohesion with other distributors and withholding product.

The bottom line in all this is just when magazines need every newsstand sale they can garner their magazines are not getting distributed, and Sports Illustrated really makes big money off its swimsuit newsstand sales (with this year’s cover featuring Israeli model Bar Rafaeli it will take a lot of men a lot of will power not to make the casual spend!). So, yet again, another example of how the best laid plans can go awry. 

To a retailer like Wal-Mart, losing magazine sales is not the end of life as we know it -- magazine sales are such a tiny proportion of what it does – but newsstand sales do provide retailers with hefty margins and in this day’s economy literally every penny counts.

Fortunately, Sports Illustrated does not have all its eggs in one basket. It started on a road a few years ago of not just relying on newsstand sales to fill the piggy bank and now some 40% of the issue’s revenues comes from such promotions as a Pepsi brand drink sponsoring You Tube videos of the models on various beaches. And then there is Southwest Airlines that is dressing “SI One”, a Boeing 737, in SI Swimsuit imagery from nose to tail and it is flying the models and others to a big Las Vegas party. Southwest plans to keep the plane in service for a limited time afterwards so you can already see all those camera phones flashing at the airport when the guys see the plane they are about to board. How many of those pictures do you think will make the Internet? Great viral advertising.

Back to reality, only about 15% of US magazine sales come from the newsstand, but that figure is dropping. Newsstand sales are at full cover price rate as compared to subscriptions where instead of paying, say, $4.95 an issue the cost could be as low as 50 cents. So that 15% in terms of the total financial pie, even after the distribution costs and retailer gets his cut, is far more than it may look at first glance and to have the number of those sales decline by 11% in the second half of last year is bad news, a drop said to have been at the fastest rate for decades.  

According to the Audit Bureau of Circulations subscriptions grew by less than one per cent last year, but with even larger discounts than usual being offered just how much profit is there in much of that new and renewed business except to keep the circulation numbers up for the advertisers. Overall 2008 total circulation was 345,176,148, a 0.9 percent drop.

Not helping  magazines is that their digital revenues are still slim, at about 10% of their total.

According to the MediaFinder web site, 525 magazines disappeared in the US last year. The only good news in that figure, if you can call it good news, is that in 2007 the number was higher at 591. Already this year 40 titles are gone.

One group that did fairly well at the newsstand last year was news magazines full of Presidential election coverage. There’s good reason why Time Magazine, who named Obama as their Person of the Year, had him on its cover no less than 14 times last year. At Newsweek it was around a quarter of their covers. Put bluntly, the man sold news magazines!

But for all that, Newsweek, at 2.7 million, saw its circulation drop significantly by 13.1% and now the news weekly says it is going to undertake a new strategy – no more stories about what happened last week but rather stories about what is going to happen this week.

The Economist continued its North American success with circulation rising 9.2% to 787,000. That’s still a long way from Time’s 3.3 million but at least its numbers are still showing growth whereas Time remained basically static.

And as usual the big circulation winners by far were the AARP Bulletin and AARP The Magazine each with more than 24 million subscribers. Third, at a third of those circulations, came Readers Digest at 8.2 million – a significant 12% decline and the publisher has already announced a major global cull!

AARP used to be known as the American Association of Retired Persons and it lobbies on behalf of, and provides various services for the over-50s. While older readers are not appreciated so much by newspapers because they keep dying off before new readers take their place and besides they are not the demographics the advertisers really want, it is good to see there is at least one traditional media in which they still reign supreme – magazines.