The problem with publishing

However, the demeanour of the company’s editor-in-chief and co-founder, Bill Frain-Bell, was the first sign that things were amiss. Ashen-faced and pale, he did not look his normal easy-going self.

Within half-an-hour of arriving at the office he was to tell his staff that Firm Publications was to cease trading with immediate effect.

Ultimately, the straw that broke Firm’s back was the decision by one of its key backers and 25 per cent shareholder, Phillip Healey, to demand repayment of a £50,000 loan he had given the company, which had been personally guaranteed by publisher Steven McColl and Bill Frain-Bell.

The directors were shocked. As he had already invested £250,000 into the company, they had assumed he would be prepared to help the company through another crucial cash injection, especially as the company was projected to make a profit this year.

“We had no option but to cease trading,” said McColl, who had just returned from holiday to deal with the developing catastrophe. “However, we have built valuable brands and are confident of a sale, so the magazines should continue, safeguarding a number of jobs.”

Meanwhile, another Healey investment is already up for sale. But rumours are sweeping the Scottish publishing scene that Caledonia magazine may also be on the brink of closure.

“Phillip Healey wants to cut his losses in Scotland and forget the place ever existed,” said one commentator.

But if that is Healey’s view, is he right? Is Scotland really a publishing graveyard?

“The problem is the low cost of entry to the market and the high cost to maintain and grow the business,” says McColl. “When we first started out, we ran the magazine on a shoe-string. But when you move on from publishing a single title from a bedroom and begin to expand you have to think about administration costs, IT, holiday pays, government red tape, and the rest. What was a profitable business, making money hand over fist, began to slip.

“There is a very thin divide between success and failure,” continues McColl. “It is tiny. Ironically, we were about to move into profit at the end of this year.

“But the market simply wasn’t spending. Everyone is after free publicity. Advertising money is now being invested more into PR. Plenty of companies were pleased to get the coverage but many were not prepared to put anything back in.

“Look at Business am. Everyone loved it. But still no-one would back it with advertising. When push comes to shove, cash is king.”

Although no-one will blame a marketing shift in emphasis from advertising to PR, it is an issue that many are debating. However, Robin Hodge, publisher of The List and Chair of the Periodical Publishers Association in Scotland, feels that it is now down to magazines to adapt to the shift and use it to better advantage: “Although through PR, companies are disrupting the traditional advertising models, I would not say that PR was a bad thing for magazine publishers.

“What was traditional advertising activity has moved. Brands are now trying to be more innovative. It is not a case of just cost-cutting.

“Magazines now have to be more inventive to meet the demands of the advertisers and potential advertisers. It is now down to publishers to change, to show that they can meet the needs of the market.”

Hodge and the PPA have been active in introducing a number of initiatives to boost the magazine industry in Scotland, often drawing on the experiences of the association’s Irish counterpart for inspiration.

Says Hodge: “Ireland’s publishing industry is a great market to look for inspiration from. It is a very successful industry and it is continuing to grow. The PPA in Scotland has been working closely with its Irish counterpart, looking at initiatives that have helped to revitalise the market. These actions have been followed up in Scotland with schemes such as the Christmas Subscriptions Initiative, which encouraged the public to take out a magazine subscription for a Christmas present. The initial quarter million door-drop was very successful last year and the same is planned for this year.”

Such initiatives are coupled with awards schemes, the first of which is to be run at the end of the year, showcasing the very best in Scottish publishing.

Furthermore, the National Federation of Retail Newsagents in Scotland is set to launch a Home News and Magazine Delivery Week in October.

The nationwide campaign will see newsagents, publishers and wholesalers joining forces to persuade thousands of Scottish magazine buyers to have their titles delivered. The week will be launched with the publication of a special 36-page tabloid by the federation, which will be delivered to 500,000 Scottish homes by an army of paperboys and girls pooled from 300 participating newsagents.

But with the need for such strategies to boost circulation and interest, the publishing industry in Scotland is almost admitting that there are problems to be overcome.

“There are no more problems in Scotland than there are in other areas of the UK,” says David McMurray, publisher of CA magazine. “It just presents different challenges.

“Physical distance from London-based media buyers or clients can be one problem, but this is the same for others outwith London, even clients using London media buyers. On the plus side, if a title’s advertisers and reader base are locally based, being in Scotland is a definite advantage, as the quality of life and stability of key personnel leads to longer term relationships being formed.

“Analysts tell us we are in the worst advertising recession since the 1930s. A depressed economy, stock market uncertainty and the war in Iraq has led to further pressure on ad spends. In this climate, buyers are under more pressure than ever to get maximum value from an expanding choice of media. Publishers need to help educate and convince buyers of the benefits of magazines as well as the need to target Scottish readers, if they are to stand a chance of being successful.”

But is the advertising market solely to blame for the problems being faced by Scottish magazines?

Definitely not, says McMurray: “Poorly researched, under-funded and badly conceived magazines will struggle in any market and advertisers and their agencies do not owe publishers a living.

“The controlled free circulation model – basing a magazine’s income on advertising alone, whilst sending the magazine to readers for free – used by many publishers also creates problems. When incomes drop, circulation is cut to offset rising costs, thus reducing the title’s desirability to future advertisers and so the downward spiral develops.

“Learning from these closures is key for the industry going forward; good people with the experience of working in a tough climate and the courage to have a go should not be lost to the industry.”

David Riddell, director at International Magazines, agrees: “It is a tragedy to see the industry lose another high-quality player. It is a tragedy when companies fail. Especially good companies. Competition breeds lean, well maintained and well managed companies, and that is vital to this industry’s survival. We need competition to encourage quality.”

The marketplace is saturated. When the budgets controlled in, and for, Scotland are so low, the market just cannot afford to support the number of magazines that an entrepreneurial-minded country enjoys.

“Low barriers to entry, mean that new entrants’ titles can be brought to market quickly and cheaply. And, despite the odd failure, many will go on to be successful,” says McMurray. “New magazine launches bring new people and ideas into the market, which is a good thing for any creative industry. But ultimately the market will decide on who will succeed and who will fail.

“Two years ago, roughly the same amount of Scottish B2B titles existed as do now. As titles withdraw from the market, others, believing they have spotted a gap in the market, replace them. This will continue until the barriers to entry become higher.”

As McColl ends his four-year journey into the turbulent publishing market, he is reflective: “A situation like this will make you or break you. But you have to keep your chin up. The overall marketplace dictates the conditions. And, at the moment, there is a reluctance to put hands in pockets.

“The talent is here - designers, editorial and sales - but if there is no money, the business is doomed. And, currently, I think anyone who is doing well in this climate must either have big pockets, a friendly bank manager or fresh investment.”