While visiting Carmel-by-the-Sea with my family recently, I
didn’t see one camera, digital or SLR. My
son and I walked past a group of 70-something men talking about the pros and
cons of taking photographs with their iPads and lesser tablets, commenting on
the virtues of storage, thumb drives and ease of posting to FB and Twitter. No, we did not mutter, “What is this world
coming to;” rather, we vowed on the spot to move aggressively up to the next
preppy plateau on the technical food chain. Before leaving, we did our part by taking
hundreds of photos with our smartphones.
Labor Day is not usually the time for predictions about what
brands will likely disappear in 2014, but here we go with Douglas McIntyre at
24/7 Wall St. getting early into the game with the ten mostly likely failures. He uses standard metrics such as declining sales,
rising costs, bankruptcy or sales of entity, significant loss of market share,
etc.
I didn’t have to visit my local and deserted J.C. Penney,
which I have admired of late from a distance, to learn that the company tops
the list of brands most likely to disappear next year. The executive idea to abandon sales and
related promotions to keep the riff-raff out has worked stunningly well.
As my experience in Carmel confirmed, I should not be
surprised that the Olympus digital camera is also high on the list. The company simply can’t compete with smartphones
that “now offer lenses and chips that capture high quality images.” Whether the company’s shift to high-end SLR
cameras will make a difference, remains to be seen. But you never know. I fondly remember the editor of American
Photography, now owned by Bonnier and still beautiful, telling me that digital
cameras were decidedly not the future.
I have been a fan of Barnes & Nobles’ the Nook since its
launch in 2009, primarily because I thought that publishers would benefit from
another robust platform for content as well as a channel for magazine
subscriptions. The Nook’s battle has
been uphill from the start and made worse as device prices dropped and they
essentially became generic. Content
would become the differentiator and where the money is. Even
the $300 million Microsoft invested in the Nook in 2012 didn’t seem to make a
difference. At the end of the day, it’s
always about scale. Amazon has 130
million visitors per month; B&N has 6 million. I have published four print books with Amazon
and one Kindle Select. I have also published books with Dell, Warner and Rodale
and, in terms of file conversion and ease of use, Amazon goes to the head of
the class. (Please see www.:jamescmcculagh.com.
http://ow.ly/mJkGP)
None of the above predictions will serve as much of a brain
teaser. Nor should the presence of
Volvo, Living Social or the WNBA on the list. I see the occasional 1960 Volvo parked at an
abandoned ski lodge in Maine, but not much more. The $175 million that Amazon invested in
Living Social in 2010 hasn’t seemed to help and might have been better used in
buying a newspaper or magazine. Ask any
Millennial; the daily deal sector lost most of its shine years ago. So did
the WNBA which, despite being a showcase for women’s talent and an important
statement about equality in sports, never caught on with the arena or
television crowds.
I was surprised to see Road & Track and Martha Stewart
Living on this list of predictions, perhaps because I have been involved
peripherally with both titles and knew some of the players. When I worked at Hachette, then owner of Road
& Track, I would marvel at all the buzz around Elle magazine when the
financials said that Car and Driver and Road & Track were the big money
contributors to the bottom line. But
that was then and fashion still rules. Advertising pages in Road & Track are
about half what they were in 2008, down from 1,092 to 699 in 2012. The decline continues.
At that time, Road & Track was generating about 80% of
its revenue from advertising; circulation revenue was not much of a factor. I’m not sure how much this ratio has changed
since the purchase of Road & Track by Hearst. Certainly, the automotive sector is crowded
with Road & Track, Car and Driver, Motor Trend and Automobile magazines
fighting for precious ad dollars. While
I would be very surprised if Road & Track did actually make the dead brand
list, this is no longer a simple case of special-interest magazines duking it
out for print dollars. Hearst owns the
Jumpstart Automotive Group that serves the full purchasing cycle of the
consumer. The company has significant
digital and strategic options.
I’m less sanguine about Martha Stewart Living, though having
worked with her years ago on repositioning Rodale’s Organic Gardening, moving
it from digest size to full-size, I would never bet against her. But the advertising numbers paint a bleak
picture; in 2012, the publishing division lost $62 million and trend continues
in 2013. McIntyre concludes that Martha Stewart
Omnimedia Inc. (M.S.L.O.) might be better off restructuring around its
merchandizing and broadcast businesses because the magazine lost is ability to
standalone years ago.
It might be considered faintly ironic that the media company
and J.C. Penney are tied at the hip, with a ten-year $200 million licensing
deal for merchandize design. At the time
of this deal, signed in 2011, J.C. Penney had already purchased 17% of M.S.L.O.
for $38.5 million dollars. As The New
Yorker magazine notes in an August 12, 2013, piece, “J.C. Penney’s Martha
Stewart Mistake,” that the Penney deal “infuriated Macy’s which thought its own
deal with M.S.L.O. gave the company exclusive rights in the bed, bath, and
kitchen categories.” Macy sued both companies for breach of contract. A
ruling is pending.
Whatever the legal outcome, the Penney/Stewart doesn’t seem
to be working for either party. As The New Yorker article notes, “Since the
deal with Penney was announced, M.S.L.O. shares have dropped nearly forty
percent.” J.C. Penney’s woes have been
widely documented, including the fact that it has burned through a billion
dollars in cash in the last two years.
Mr. McIntyre, with his list of brand casualties, might be
right after all about the Martha Stewart enterprise but for the wrong
reasons. It is difficult to believe that
the next Penney management team, especially with the public concern of Pershing
Capital Management, its largest investor, will see the M.S.L.O. marriage as in
their best corporate interest.
The real money is in the merchandising and not in the
magazine.
No comments:
Post a Comment