Correlation, not causality

Magellan Media belongs to the Magazine Publishers of America (MPA), which recently published a brief (two-page) analysis, “Clearing up Misperceptions about Magazine Closings” (the paper is available as a download there).

To create its analysis, the MPA plotted data on the number of consumer magazine closings (from Ulrich’s Periodical Directory) and the total number of magazines (from the National Directory of Magazines) to illustrate that magazine closings “are part of a normal lifecycle more closely aligned to the economy and advertiser demand than consumer demand.”

The association then compared PIB advertising revenue to ABC average circulation of all magazines. Their claim: “Advertising is the biggest single factor in magazine closings. Circulation plays a far less important role.”

Unfortunately, the MPA analysis obscures the root cause of the problem: under-priced circulation and extended rate bases have created an over-reliance on advertising revenue. That’s why a downturn in advertising kills magazines.

Plotting ad revenue (especially PIB ad revenue) against average advertising circulation makes for an apples-to-oranges comparison. The average circulation of magazines is not a proxy for revenue, particularly when publishers are struggling to make the rate bases they promised advertisers.

Circulation is not a proxy for demand, especially given the wide variation in price among magazines. Even more concerning: when a publication like AutoWeek shifts its frequency from weekly to biweekly, its “average circulation” is unchanged, even though any reasonable observer would not see a publication that cuts its frequency in half as “healthy”.

One could spend a lot of time picking apart the huge differences in the Ulrich and National Directory data sets, but suffice it to say: in 2001, the last time we were in a recession, Ulrich said 166 magazines closed, while the National Directory reported that there were 1,802 fewer magazines than in 2000. The differences are not explained.

Analyzing publishing trends is a good thing, but correlation is not causality. Yes, ads went away, and yes, so did magazines, but it takes more work to understand why they closed. Post hoc, ergo propter hoc.

About Brian O'Leary

Founder and principal of Magellan Media Consulting, Brian O’Leary helps enterprises with media and publishing components capitalize on the power of content. A veteran of more than 30 years in the publishing industry and a prolific content producer himself, Brian leverages the breadth and depth of his experience to deliver innovative content solutions.

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