As you can see from this chart,subions have dramatically grown over the years,but are now leveling off.U.S.publishers face rising circulation marketing expenses.Direct mail has become increasingly expensive for a number of reasons,including rising postal costs and the decreasing availability of large effective lists for reaching prospective magazine readers.Subion agent sources,while a valid part of the circulation mix,are by and large not as renewable as direct mail and other direct-to-publisher sources.And certainly the challenging retail environment has put additional pressure on generating more subions.
It's no secret that overall U.S.single-copy unit sales have been declining over the years.This is a result of many factors,including a troubled distribution system and intense and constantly growing competition for space within supermarkets and other key retail classes of trade.
The change in consumer shopping patterns also plays a key role in our retail picture.Magazines have been primarily in groceries and supermarkets,but over the years consumer traffic to those outlets has decreased dramatically.Supercenters like Wal-Mart and warehouse clubs like Costco are absorbing more and more of the shopping trips,so magazines are putting a lot of effort to get into those stores to be where the consumers are.
And speaking of where those consumers are,in the U.S.,they've been deeply entrenched in the cult of celebrity.
Celebrity has been the biggest growth category at retail,representing 30%of our total retail sales.Four years ago,the celebrity category was only 19%.
However,this chart shows what happens when we remove the celebrity category.Instead of the 1.7%revenue gain we posted last year compared to 2002,we would actually have an 11.5%retail revenue decrease.
One also has to question,how long can the industry absorb the costs of sell-through rates averaging 35%?At AMC we discussed an industry initiative to address this one-billion-dollar-a-year retail issue-the shredding of about 65%of all issues sent to newsstands.The initiative involves single-copy waste management.