Distripress '84 - single-copy sales

The atmosphere and setting for this year's Distripress was indeed counterpoint to last year in West Berlin. San Francisco sparkled on the Bay as publishers, editors, distributors and suppliers from all over the free world again gathered to discuss and debate their business relationships for the next year.

This year I sensed that most international publishers and distributors had a far more positive attitude about their economies than they did last year. The orders for new magazines were somewhat higher, and the adjustments in allotments on current titles were more optimistic--whether the adjustments were upward or downward.

Of course, the continued strength of the U.S. dollar vis a vis all other international currencies remained the most dominant factor for U.S. publishers and their customers. Since the last Distripress, the already overvalued dollar has gained additional strength against every major trading currency in the world. This means that if an American publisher had maintained his existing cover price for the past 12 months in U.S. dollars, and had not adjusted his billing price to his international distributors, the price of his magazine to the consumer in every major (and most minor) trading areas would have increased--in some some countries to the point that substantial numbers of potential buyers could no longer afford to buy.

Negotiated price reductions

Fortunately, American publishers seem to be increasingly aware of the need to negotiate reduced selling prices in U.S. dollars when international distributors agree to pass on their lower costs by lowering the selling price in their own currency.

For example, a U.S. magazine selling for US$2.95 would be sold to an international distributor at US$1.77, with the distributor paying the freight cost FOB the U.S. port of embarkation. If the U.S. dollar equals 200 Japanese yen or seven French francs, the selling price to consumers in Japan or France would be X yen or X French francs.

When the yen falls to 240 or the French franc falls to eight, the selling price to the consumer in Japan rises to X plus 20 percent and in France to X plus 16 percent--leaving fewer and fewer Japanese and French consumers who can afford to buy the magazine.

By negotiating a reduction in the US$1.77 selling price to the international distributor, with a commensurate reduction in the selling price to the consumer, American publishers can hold or increase market share--or at least retain the copy sale they had before the rise in the U.S. dollar.

Several points of explanation are necessary regarding the example above:

1) It is not possible to be more explicit than X plus 20 percent for a magazine denominated in yen or X plus 16 percent for a magazine denominated in French francs because the individual negotiations and their results are proprietary information between the publisher and his distributor.

2) The yen or French franc is said to fall vis a vis the U.S. dollar when it takes more yen or French francs to equal one U.S. dollar; hence the yen is falling when it moves from 200 yen equals one U.S. dollar to 240 equals one U.S. dollar.

A point of contention

This decision to negotiate lower selling prices in foreign currencies by lower U.S. selling prices is one of the more controversial points of discussion among U.S. publishers. Many U.S. publishers take the not unreasonable postion that a reduction in selling price means a reduction in profit margin simply to retain existing copy sale; they seem to believe that when the U.S. dollar does weaken again (and it will), they will recapture the sales they have lost as the prices of their magazines have risen.

Those who advocate reducing selling prices seem to believe that by so doing they will not only hold existing copy sale, but also acquire readers from those competitive titles that allow their selling prices to rise with the strength of the dollar.

Those publishers with whom I am familiar who have been reducing selling prices have been increasing copy sale. Only time and a lower dollar will determine if this increase in copy sale will be retained. I believe it will.

The outlook

While the general tone and basic attitude among the distributors and publishers were more optimistic than a year ago, as always some areas of the world evinced more optimism than others. Again leading the field in positive outlook were the Pacific Basin countries, ranging from Australia and New Zealand to Japan. When these countries were more aggressive in their ordering a year ago, they were running against the trend. But a year later they look pretty good as forecasters because they had increased supplies of product on hand when the economic upturn began.

The European economies are feeling the economic upturn more gradually, but on average they are more optimistic about the near future than they were a year ago.

Somehow the Latin American countries continue to function and to sell product under the most appalling conditions of inflation anywhere.

One last comment seems appropriate to this annual discussion of worldwide magazine and book sales. The variety of types of governments represented at Distripress is staggering: democracies, oligarchies, military dictatorships, parlimentary governments, and so on. It is quite a mix. Yet for all their diversity, they all allow a substantive amount of press freedom--based on the orders for magazines and books.

Only one form of government, conspicuously, does not participate in the free flow of ideas, information and entertainment.

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