Understanding the Canadian Small-Magazine Landscape: Mapping a Route to Viability for Spacing

 

By Holland Elizabeth Gidney

ABSTRACT: Based on the author’s work as the volunteer business manager of the Canadian small magazine Spacing between September 2005 and September 2007, this report begins with an overview of the magazine-publishing industry in Canada and the challenges this country’s publishers face—with a focus on the additional difficulties particular to producing small-circulation titles. It then describes the author’s experience applying strategic-planning principles at Spacing to help its publishing team address the aforementioned challenges and make a successful transition to producing the magazine as a financially viable small business. The report closes with an evaluation of Spacing’s potential for long-term success and the author’s thoughts on the continued viability of small-magazine publishing in Canada. It makes reference to industry, government, and academic documents, and to the author’s two years working at Spacing. In doing so, this report offers insight into the realities of publishing a small magazine in Canada today.

 

 


Dedication

To my mom, Barbara Joan Gidney (1948–2001)

 

 


Acknowledgements

This project report would not have been written were it not for the following people, to whom I owe a great deal of thanks: my fellow Master of Publishing students (Class of 2004-05) and our instructors, Rowland Lorimer, Ron Woodward, Nancy Flight, John Maxwell, Craig Riggs, and Jillian Shoichet; the founders and current staff of Spacing, especially Matthew Blackett and Dale Duncan; and the founders and former co-editors of Shameless, Melinda Mattos and Nicole Cohen. In addition, thank you to Kate Bergen, Bonnie Bowman, Nicholas Bradley, Alice Byers, Christine Davidson, Corina Eberle, Duncan Gidney, Norman Gidney, Mary Gidney, Ineke Goedhart, Megan Griffith-Greene, Briana Illingworth, Dory Kornfeld, Andrew MacDonald, Bruce Martin, Peter McCamus, Kathleen Piovesan, Andrea Sproule, Trena White, and everyone at the Gibraltar Point Centre for the Arts for being supportive and encouraging during the writing process.

 

 


CONTENTS

Dedication

Acknowledgements

List of Tables

Introduction

PART 1 – MAGAZINE PUBLISHING IN CANADA
Industry snapshot
Characteristics of small magazines
Key challenges to Canadian magazine publishers
+++Competition from American titles
+++Newsstand distribution difficulties
+++High costs associated with circulation
+++Heavy reliance on advertising revenue
+++Dependence on subsidies
+++Additional challenges for small magazines

PART 2 – PLANNING FOR THE FUTURE OF SPACING
Preface
Background
+++Brief history
+++Magazine overview
+++Ancillary projects
+++Adding a business manager to the masthead
Strategic planning
+++Strategic planning and small magazines
+++Conducting a situational analysis
+++Starting out
+++Addressing problem areas
+++Making Spacing legal
+++Crafting the mission statement
+++Setting goals and objectives
+++Writing the business plan
+++Professional advice
+++Failing to put the plan into action
+++Deciding to move on
Evaluating the progress made

PART 3 – THE FUTURE OF SMALL MAGAZINES IN CANADA
Spacing’s potential for long-term success
Proof of the continued viability of magazine publishing in Canada
+++Marginal increase in magazine-reading and -buying among Canadians
+++Increase in readership of Canadian-produced titles
+++Continual launching of new Canadian magazines
+++Revenues are up and the majority of Canadian magazines are +++profitable
+++Subscription sales are still strong in Canada
The small-magazine advantage
Principles for successful small-magazine publishing

Notes

Bibliography

APPENDICES
+++Appendix A: Situational Analysis of Spacing #1
+++Appendix B: Situational Analysis of Spacing #2
+++Appendix C: Steps to Incorporating a Small Business in Ontario
+++Appendix D: Spacing Media Kit
+++Appendix E: Spacing Rate Card
+++Appendix F: Spacing Media Inc. Business Plan

 

 


List of Tables

WHERE SINGLE COPIES OF MAGAZINES ARE SOLD IN CANADA

 

 


Introduction

Last January, I agreed to be photographed for a Toronto alt-weekly running a cover story on the challenges of small-magazine publishing in Canada, written not coincidentally by Dale Duncan. The managing editor of Spacing had not had time to interview me for the article but she still thought that it made sense for me to participate in the photo shoot, since at the time as I was working for two Toronto-based small magazines, Spacing and Shameless, and had also been a THIS Magazine editor.

When I turned up at the photographer’s Parkdale studio, he told Duncan, me, and the four other small-magazine editors assembled, that he wanted to create a tableau showing some of our respective magazines “winning” the battle to survive, while others were struggling; one had already died. Makeup gave us bruises and fake blood was splattered liberally on our white shirts, and then we did our best to act out the scene he had described as Wagner blasted from the stereo and the camera clicked away.

The dramatic-looking image that ran on the cover of the January 25, 2007, issue of Eye Weekly had a large red flag fluttering in the background so that it looked like a Cultural Revolution poster crossed with one of those historic war paintings commissioned to capture a pivotal moment in an important battle. In this case, though, the “casualties” were not soldiers but women from Broken Pencil, Kiss Machine, Shameless, and Spacing. The landscape was littered with pages torn from our publications. Superimposed on this image was the slogan “Indie Mag Revolution: Start-up publishers fight for your rights,” while the headline inside for Duncan’s behind-the-scenes exposé (illustrated with more photos of bloodied and bruised magazine editors) was “Fight Club: For independent magazine publishers, love is a battlefield.”

Such provocative photos and controversial words called out for comment and industry insiders and members of the general public alike responded. On his blog, Canadian magazine expert D.B. Scott lauded Duncan for using the article to present “some home truths, among them being how hard it is [for Canadian small-magazine editors] to make a living doing what they do,” but he also noted that “the quotes and information she elicited paint a somewhat gloomy picture.”[1] Spacing’s own blog posting alerting readers to the article’s publication garnered many comments, including one from Steve Keys, who wrote that he fell into “the category of readers who thought these independent magazines, including Spacing, were in better positions.”[2] These responses hint at the crux of Duncan’s piece, which was that while Canadians seem to acknowledge and value the cultural importance of their homegrown small magazines, producing these periodicals is, unfortunately, unsustainable for those publishers who might like to make the “activity” into a career. This conclusion stems from the reality that—to extend the revolutionary war metaphor—those on the front lines must make a financial sacrifice to do battle, which can (and often does) take its toll. As Duncan wrote of her small-magazine compatriots, “if you don’t eventually receive a paycheque for your work, burnout sets in, and when that happens, magazines that fill those gaping holes left by mainstream media run the risk of extinction.”[3]

After I had participated in the photo shoot to illustrate Duncan’s piece, and noted the reactions to the “truths” that the article revealed, my decision to write an academic report on the viability of Canadian small-magazine publishing seemed even more vital. Not only was small-magazine publishing not considered a legitimate career aspiration by those involved but, confounding matters, it also seemed that it was commonly understood that to publish a small-circulation periodical in Canada was to engage in a battle that could be “won” only rarely. I disagreed.

So, with the goal of refuting these preconceptions in mind, I decided that I would use this report to take a critical look at the current state of small-magazine publishing in Canada and to describe the strategic-planning work that I had carried out as Spacing’s business manager (a volunteer position I held from September 2005 to September 2007) and its impact on that publication’s viability. My intent is to show that making the transition from producing a small magazine as a labour of love to publishing it as a sustainable small business (and, thus, creating career potential for its staff), while neither a quick process nor an easy one, is possible—and that other Canadian periodicals can make the same move if publishers are willing to treat their magazines as businesses and make operational decisions accordingly. To that end, by drawing upon on an array of statistics, studies, reports, and other published materials, and personal experience, this report:

  • depicts the current state of Canadian magazine publishing and its inherent challenges; and acknowledges the particular difficulties facing small magazines;
  • describes the strategic-planning project I took on at the invitation of the founders of Spacing, who wanted assistance with turning their small magazine into a small business that would eventually pay them salaries;
  • evaluates the results of my work at Spacing and comments on that publication’s potential for long-term survival and success based on the challenges that Canadian magazine publishers of all sizes face;
  • draws conclusions about the continued viability of small-magazine publishing in Canada; and,
  • provides some advice for small-magazine publishers hoping to make the publication of their periodicals more sustainable.

In presenting an overview of the realities of magazine publishing in Canada alongside a description of my two years serving as Spacing’s business manager, I hope to demonstrate to current and aspiring Canadian small-magazine publishers the benefits of proper business organization and strategic planning so that they will be inspired to work towards greater financial stability (and, thus, increased longevity) for their publications, and to show them, and other readers, that the future of small-magazine publishing in Canada is brighter than it may seem, and for that reason, among others, it should be considered a legitimate career option.

 

 

PART 1 – MAGAZINE PUBLISHING IN CANADA

Industry snapshot

“Canadian magazines” can be defined as magazines published, printed, and sold primarily in Canada. One of the first such periodicals was Nova Scotia Magazine and Comprehensive Review of Literature, Politics and News, first published by John Howe in Halifax, Nova Scotia, in 1790. Over 200 years later, there are nearly 2,400 Canadian magazines, including 1,085 general and specialty-interest “consumer” titles,[4] published in all parts of the country—ranging from tiny literary magazines that only publish several hundred copies once or twice a year to a monthly general-interest women’s magazine that sells 1.5 million copies annually on the newsstand alone.[5]

Canadian-controlled firms produce more than 90% of Canadian magazines, with 61% published in English exclusively, 19% published in French only, 14% published as bilingual English/French editions, and 6% published in other languages.[6] In total, some 778 million copies of Canadian magazines circulate annually, 74% of those copies represented by the general- and specialty-interest consumer magazines that most people read for pleasure.[7] The estimated value of the Canadian magazine sector is $1.56 billion, with the industry employing approximately 17,500 people in part-time and full-time work.

Canadian magazines also have significant cultural importance, which may be of greater value than their economic impact: they overcome the vastness of the world’s second-largest country to provide Canadians with a means of sharing and discussing their news, ideas, opinions, literature, and art. The Canadian titles surveyed by the Print Measurement Bureau—which has 115 member magazines, each with a circulation of over 30,000—reach 82% of the Canadian population, and, the average Canadian consumes 6.4 magazine issues a month.[8] With their ability to disseminate ideas, their wide distribution, and their market penetration, Canadian magazines play a crucial role in the collective creation and development of Canadian cultural identity. The federal government recognizes this importance and the Department of Canadian Heritage’s mandate, as published on its website, includes protecting periodicals devoted to reflecting “Canada’s unique and dynamic culture,” which it aims to do through policies, regulations, and direct-assistance programs so that Canadians have access to “Canadian voices and Canadian stories.”[9]

 

Characteristics of small magazines

Magazines Canada, an organization that claims to represent 90% of all Canadian paid-circulation magazines, defines small magazines as magazines with a paid circulation of fewer than 10,000 copies. Based on such a definition, it seems that Canadian small magazines would have few common characteristics. For example, a quick survey of the 300 titles included in the directory of magazines published by Magazines Canada members (two-thirds of which are small magazines), shows that small-circulation titles are published from Victoria to St. John’s to Yellowknife and, while many are arts and literary publications, there are also magazines devoted to topics as diverse as horse-racing, antiques, and religion. Geographic location and subject matter aside, some commonalities among Canadian small magazines exist at the operational level. For instance, a survey of 21 periodicals prior to their participation in the Reaching Readers: Circulation Roundtable for Small Magazines held in May 2003 (and reprinted in the Department of Canadian Heritage report Reaching Readers a few months later) found:

  • the majority considered themselves national publications (57%) while a significant number (38%) considered their audience to be even broader: North American or international;
  • half were established as for-profit enterprises while the other half were not-for-profit (of the 11 not-for-profit magazines, 45% had charitable status;[10]
  • all participating magazines received federal funding in some form, 67% received provincial funding, and 24% received other types of external funding; with the majority receiving financing from three or more funders (67%); and,
  • the majority published quarterly (57%)—or even less frequently (33%).[11]

The following year, the Ahnsu Consulting Group’s survey of B.C.’s cultural magazines (the majority of which are also small magazines) found that they typically employ “approximately one or two people full-time, or a combination of people part-time,” and that they all rely on volunteers. In fact, of the 11 magazines that submitted surveys, just three had any paid full-time staff.[12]

Yet despite their likelihood of being produced by small non-profit organizations that are reliant on multiple external funders (and volunteer labour) to subsidize their publishing of several thousand copies on a quarterly basis, small magazines in Canada still play a vital role in the development and promotion of new talent. They do so by providing a “venue” where up-and-coming writers, photographers, and illustrators can début their work, and young editors and designers can hone their skills and gain experience. Since some of these people will inevitably move on to larger publications, small magazines thus serve as a sort of “farm-team” system for “major-league” national and international periodicals.

In addition, since the focus of smaller publications is generally more cultural than commercial, they have more freedom in deciding what to publish. As Anne Ahmad notes in writing about Geist, small magazines promote “non-traditional and experimental writing that is often overlooked by larger publications.”[13] They are also free to cover subjects that larger, mass-market-oriented publications avoid or exclude (usually for fear of losing advertisers and/or readers) and it is in doing so that they “fill those gaping holes left by mainstream media.”[14] In Canada, new small publications help infuse new thought and creative ideas into a magazine industry that might otherwise stagnate—or, worse, become reduced to just a way to deliver advertising messages rather than its current incarnation as a means of representing and discussing Canadian culture.

The mandates of small magazines may also be political, as is suggested by the editorial in the premiere issue of the Ontario politics and current events quarterly Blackfly Magazine, in which the editors announced that launching the magazine was “an attempt to change the media by actively taking part in it.”[15] Similarly, Canadians who feel underrepresented by existing publications can create magazines that speak to them: niche magazines can help build and link communities of interest (such as coin collectors, poets, or horse owners), which in Canada are likely to be quite geographically dispersed, in ways that large, general-interest magazines can only dream of doing. In her essay on the Toronto independent magazine scene, Lisa Whittington-Hill demonstrates how Broken Pencil, a magazine devoted to ’zines and other forms of “indie” culture, has nurtured and connected Canadian ’zinesters and outsider artists—in part by going “beyond the boundaries of the traditional magazine” through events like Canzine, an annual event that brings together the people whose ’zines and art are covered by the magazine with the very people who read about them in the magazine.[16] The same thing happens at the launch parties that small magazines often throw, when editors, contributors, and readers get together to celebrate a newly published issue.

 

Key challenges to Canadian magazine publishers

Regardless of their size, magazine publishers have never had an easy time of it in Canada. Despite amassing some 200 subscribers at a time when the population of Nova Scotia was 30,000 and the population of Canada was just 161,300, John Howe’s Nova Scotia Magazine lasted only three years before succumbing to high production costs, a small domestic market, and the prevailing preference for better-marketed magazines from abroad. Not much has changed: the same challenges that Howe faced in the 1790s affect magazine publishers in Canada today—in addition to contemporary problems that the Canadian publishing pioneer could not have predicted. Because of Canada’s large size, this country’s relatively small, dispersed population, and our proximity to the world’s largest English-language cultural industry, even the largest domestic multi-title publishing companies struggle to stay profitable; it is even more challenging for the publishers of small-circulation periodicals.


Competition from American titles

“Until we have a [Canadian] magazine with tons of U.S. readers, there won’t be a level playing field.”[17]

— Derek Webster, publisher and editor, Maisonneuve

Every year, the American magazine industry produces several billion copies of 19,400 different magazines—which included approximately 8,100 consumer titles in 2002.[18] Although U.S. magazines sell 1.5 billion copies domestically each year, several hundred with mainstream appeal are also exported for sale in Canada.[19] The top 14 newsstand titles in Canada, based on gross annual sales are all American, with People magazine grossing over $32 million from 6.4 million copies sold in 2006 versus the top-selling Canadian title, Canadian Living (#15 overall), which only grossed $4.8 million from 1.4 million copies sold.[20] One reason why American magazines outsell Canadian titles in Canada is that they monopolize Canadian newsstands. As Rowland Lorimer notes in his book Vibrant But Threatened, “newsstand distribution favours magazines with high production values, long print runs, high circulations, general appeal, and low cover prices,”[21] which gives the advantage to American publishers. Because their per-unit production costs are much lower than those of Canadian magazine publishers—thanks to the large economies of scale that result from having a home market that is ten times the size of Canada’s, and their consequent ability to amortize higher-budget art and editorial costs—American publishing companies can produce high-quality glossy editions and charge less for them, no matter what the exchange rate.[22] As a result, adding several thousand copies to a magazine’s print run to supply Canadian newsstands (and subscribers) can be very cost-effective, not to mention profitable.

And American magazines do not just earn money in Canada from single-copy and subscription sales. The Foreign Publishers Advertising Services Act (2002) allows them to cheaply produce so-called “Canadian editions” (as Time Warner has done with Sports Illustrated and Time) that contain just a few token pages of “Canadian content” but up to 20% new ads.[23] The low cost of producing a Canadian edition means that advertising space can be sold to Canadian companies at rates considerably lower than those offered by domestic magazines—and the advertisers get the added benefit of promoting their products or services in a magazine with high production values and excellent newsstand availability. As a result, many Canadian magazine publishers have decried this practice as unfair, with good reason. As Rowland Lorimer and Mike Gasher point out in their textbook Mass Communication in Canada, “Canadian magazines have to pay the whole cost of producing and editing an original magazine, the full cost of selling the ads, and the full cost of printing a short run.”[24]

The omnipresence of “American-grown” magazines in the Canadian marketplace has had a considerable impact on this country’s domestic magazine publishers. For instance, the wholesalers belonging to the Periodical Marketers of Canada (PMC) distribute 2,591 different magazines to some 30,000 retail outlets in Canada yet only 167 titles (or 6.4%) are Canadian (which is just a tiny percentage of the total number of magazines produced in Canada)—so that just 6.7% of the $666 million in annual sales revenue from PMC-distributed titles is derived from Canadian magazines. This is significant because revenue from PMC-distributed titles accounts for 89% of the estimated total $750 million generated in Canad each year through single-copy sales.[25]

While the federal government, primarily through the Department of Canadian Heritage, has implemented and refined over the years a series of measures to support the continued existence of Canadian magazines, its power as a “protector” of Canadian culture is limited not only by its financial resources but by Canada’s trade agreements with other countries—in particular those involving the United States. At various times, the federal government’s “direct-assistance programs” have been the target of American trade lobbyists who do not believe in “cultural protectionism” and thus oppose any sort of support to cultural industries because, they claim, that any government financial contributions to cultural producers like magazine publishers (distributed through grants or subsidies) contravene various trade treaties (such as the General Agreement on Tariffs and Trade). While direct-assistance programs are not greatly threatened at the moment, because of the current worldwide acceptance of the legitimacy of national cultural subsidies, there is still the chance that they could be targeted for possible deregulation again in the future,[26] which would give American publications distributed in Canada even more of an advantage over their Canadian competitors.

 

Newsstand distribution difficulties

Despite American omnipresence on the magazine racks, Canadian magazine publishers need a newsstand presence to increase awareness of their titles and to develop a loyal readership (both through single-copy sales and subscriptions). Companies also like to see the magazines in which they have purchased ads available for sale, and newsstand sales can help to increase a magazine’s readers-per-copy (which, in turn, helps sell more ads). But in Canada most single-copy magazine sales take place in supermarkets, drugstores, and convenience stores (71% of total sales, as shown in the following table), but these “high-traffic outlets” are primarily the domain of mass-market American titles since, as Rowland Lorimer points out in a report on the B.C. magazine industry, “Magazine rack presence and sales are fraught with systemic bias against other-than-mainstream product…The primary interest of [the] distributors and wholesalers that now dominate the magazine market is in simplicity and quick-selling titles.”[27]

 

WHERE SINGLE COPIES OF MAGAZINES ARE SOLD IN CANADA
Retail sales by class of trade (2005)[28]

Supermarkets

34.2%

Convenience stores

22.5%

Drugstores

14.3%

Newsstands

6.4%

Bookstores

6.3%

Terminals

3.8%

All other retailers

1.5%

 

The key players controlling access to Canadian newsstands, primarily members of the Periodical Marketers of Canada (PMC), are interested in maximizing their profits, which means distributing the optimum number of copies of the highest-selling magazines—regardless of genre or country of origin. The wholesalers and distributors that provide stores with magazines earn profits based on the volume of magazines sold, not on the number of copies distributed. Therefore, they prefer to carry top-selling titles, usually those with larger circulations and budgets for advertising, promotion, and premium rack placement. Their preference for only handling the most profitable periodicals may make good business sense but it means that non-Canadian titles make up 93.6% of magazines provided to newsstands by PMC members, and subsequently generate 93.3% of the sales revenue.[29] Furthermore, the detrimental effect of this practice on Canadian magazines is exacerbated by several additional factors, as unearthed by Abacus Circulation in 2003.

In studying the magazine supply chain in Canada on behalf of the Department of Canadian Heritage, Abacus found serious problems. As summarized in Taking Back the Rack, a large number of copies of magazines are distributed to newsstands but most copies are never sold, and there are no incentives to reward efficiency (i.e., bonuses for increased sell-through). Profit margins are so slim that, rather than return unsold copies to publishers (which in 2003 made up approximately 65% of all copies distributed), distributors and wholesalers will either pulp unsold magazines or ask retailers to destroy them. Abacus also found that, because of the way the supply chain is organized, it often takes a long time for issue sales data (and, correspondingly, payments for copies sold) to trickle down to magazine publishers. This delay is significant because timely sales figures are a form of “audience feedback” that could help Canadian publishers increase their sell-through—and, consequently, their competitiveness with U.S. titles and their profits. In addition, in the mid-1990s there was considerable consolidation among magazine distributors and wholesalers across North America—which Abacus found left far fewer distribution choices for Canadian magazine publishers.[30] A more recent development is retailers minimizing the number of suppliers servicing their stores, in the name of “streamlining” operations. A corollary of the newsstand-distribution oligopoly that has resulted is national distributor Disticor demanding that Magazines Canada pay a $0.10 supplementary “handling charge” for each copy of its distributed titles that it wishes Disticor to place in the stores of Canada’s largest bookstore chain. The association is forced to pay this fee because Disticor is one of only two distributors that still have access to Chapters/Indigo stores, which represent an important sales venue for niche publications.

Finally, retailers are exerting more influence on the distribution of magazines to newsstands in Canada (again in the interests of “streamlining”) by reducing the number of titles carried in their stores—and by showing preference to magazines that have proven to sell well in the past. Representative of this trend, Chapters/Indigo has been requesting a minimum average sell-through rate of 50% for all magazines and is apparently adjusting (i.e., reducing) the number of copies it will accept of certain titles in order to achieve it. Also, while retailers used to be satisfied to receive 20–30% of the cover price of each copy sold, some big-box and chain stores are now asking publishers to pay additional fees for “premium” display space and display-related promotions on a regular basis. Known as “Retail Display Allowance” (RDA), these fees are deducted from payments due to publishers and can be calculated as an additional 10–20% of the cover price or as a fixed amount, depending on the type of promotion or placement purchased (for example, it may cost a publisher $2,000 to have a particular title placed on a rack next to the cash register for six months).

Since single copies of magazines are usually spontaneous purchases and the average “mainline” rack in a supermarket, bookstore, or newsstand will have several hundred titles on display, a title’s presence, position, and visibility on that rack will affect how many copies are sold, which is why retailers can get publishers to pay RDA. In today’s increasingly competitive retail market, RDA is quickly becoming a fee for doing business for Canadian magazine publishers, especially when it is construed as the only way to get into certain stores. For example, just to get a magazine “authorized” for sale in the Canadian airport newsstands operated by HDS Retail reportedly requires a minimum payment of $7,000 in RDA. And even if a magazine publisher can afford to pay for placement and/or promotion for a particular title, it does not guarantee the magazine a permanent spot on the newsstand: continued placement is determined by sales. But staying on the newsstand is not a concern for small publishers: most would be happy just to get on the rack in the first place.

Whereas Canada’s large-circulation titles sometimes have to settle for poor newsstand placement (for example, the lower shelves or the back of the rack), periodicals publishing fewer than 10,000 copies per issue may be kept off magazine racks altogether. Since most of them cannot afford to pay the RDA and associated fees that many stores now demand, and since most wholesalers will not accept new clients without a sizeable budget for newsstand marketing, the distribution options for small magazines are limited, as are, consequently, the number and type of stores where they are sold. Most small magazines rely on national and/or regional distributors (and may sometimes handle a portion of their own distribution) but, for the reasons given, they are effectively shut out of the outlets where 71% of magazine sales take place in Canada.[31] Because they often serve niche audiences, it is often argued that small magazines are better suited to the bookstores, newsstands, and specialty outlets that represent 14% of magazine sales in Canada;[32] however, there are fewer independent bookstores than there once were due to increased domination of the Canadian book-selling market by Chapters/Indigo. National distributors, too, do not always have relationships with the specialty stores in which a niche title may sell best and are hesitant to take on new accounts that only want to carry a small number of copies. Finally, small magazines run a risk associated with any sales outlet: when a store re-stocks its shelves with a new selection of magazines on a monthly basis, publications published less frequently may be pulled off the newsstand prematurely, decreasing visibility and killing sales.

The aforementioned factors limit the number of Canadian magazines found on domestic newsstands and the measurable effect of this newsstand “invisibility” is that this sales channels accounts for just 7.6% of the total revenue for the average Canadian magazine[33] and this figure may be lower for the small-circulation titles that are not found in the places where most magazines are sold. Negligible newsstand sales revenue should not be of major concern for Canadian magazines since Canadians are overwhelmingly more likely to buy their magazines by subscription (90% versus 10%, according to one circulation expert[34]), except that it is expensive to obtain revenue from subscriptions, for reasons that I will now describe.

 

High costs associated with circulation

It is well known in the magazine industry that Canadians prefer to buy their magazines by subscription but convincing them to actually commit to one or two years’ worth of a particular magazine is expensive—and, once they do, there is the added cost of mailing them the publication (a cost that is, obviously, multiplied by the number of issues published each year).

Newsstand sales contribute to subscription sales in that they help to raise awareness of a particular title (and allow potential subscribers to “try” before they buy). But, since all but the largest Canadian titles have trouble getting on newsstands in the first place, most domestic magazine publishers find they must invest in various promotions to “buy” their subscribers (and then pay to keep them around when it comes time to renew). For example, a direct-mail campaign can be an effective means of increasing a magazine’s subscriber base, but typically “costs” $15–$20 per subscription gained (or, according to Rowland Lorimer, as much as $100 if you are Reader’s Digest). If a magazine’s subscription price is in the same range, the publication will not see any increase in its total operating budget until it convinces the new subscriber to renew. Renewals may be the most profitable form of subscriptions (typically accounting for 83% of a magazine’s subscriptions revenue[35]) but because a good renewals campaign requires “precise tracking systems, production of materials such as renewal letters, incentives and unrelenting efforts to keep the subscriber interested,”[36] securing them this way is labour-intensive and costly—and usually beyond the everyday resources of most small magazines.

And not only must Canadian publishers invest a considerable amount in circulation marketing, but the costs associated with sending magazines to subscribers also keep rising. Canada Post has discounted Publications Mail rates that apply to virtually all magazines published domestically and there is also a “postage subsidy” available to qualifying publishers through the Department of Canadian Heritage’s Publications Assistance Program (PAP). But, according to Magazines Canada, the Publications Mail rates seem to rise each year while PAP subsidy remains the same or declines a few percentage points.[37] (At present, it can be cheaper to distribute a magazine as an insert in a national newspaper than by mail, which may be why 73% of Canadian consumer magazines launched in 2006 chose controlled (i.e., unpaid) or combination controlled/paid-circulation models.)[38] Readers are also known to be extremely sensitive to price increases when it comes to subscriptions, so Canadian publishers often find themselves swallowing increases in fulfillment costs caused by rising postage prices and shrinking subsidies rather than raising their prices.

For small magazines, postage costs are disproportionately high because Canada Post’s cost structure does not favour small-time users of its services. Instead, the cheapest rates are available to the biggest users of the crown corporation’s services. For example, 1,000 pieces (for example, copies of a new issue) is the minimum required to qualify for the best bulk mailing rate, which is of no help to a quarterly magazine with fewer than 2,000 subscriptions that simply want to save a few dollars when mailing out renewal notices to a third of its subscribers. As already mentioned, when sending issues to Canadian subscribers even the smallest Canadian magazine qualifies for a discounted Publications Mail rate and most paid-circulation periodicals have their postage costs subsidized further through PAP. However, despite qualifying for higher-percentage postage subsidies, if small magazines publish 4,999 copies or fewer, their Publications Mail rates are actually higher because 5,000 is the minimum number of copies needed to qualify for the most economical Letter Carrier Presort (LCP) rate. (For example, the same 300-gram magazine currently costs $1.08 per copy to mail at the National Distribution Guide [NDG] presort rate versus $0.70 per copy at the LCP rate.)

The result is that the average Canadian magazine derives just 18.8% of its revenue from subscriptions while 9% of its expenses go towards circulation (namely fulfillment and invoicing),[39] even though most Canadian magazines have a good portion of their mailing costs subsidized through PAP. When not enough revenue can be derived from single-copy and subscription sales, Canadian magazines must find supplemental means to fund their publishing activities.

 

Heavy reliance on advertising revenue

Advertising is the sine qua non for most magazines, revenue that is absolutely necessary to offset the high production values and high-quality editorial content that readers expect. Without the $993.5 million that Canadian magazine publishers receive annually from advertisement sales[40] it would be nearly impossible for magazines to be sold at market-friendly prices because of the expenses associated with producing the magazine in the first place. As a result, the average Canadian magazine receives 64% of its revenue from ad sales[41]—and that percentage seems to be increasing as revenue from other sources declines. Between 1993 and 2003, the percentage of total revenue that the average Canadian magazine received from advertising grew from 61% to 64% while revenue derived from subscriptions over the same time period declined from 25% to 19%,[42] suggesting the shortfall has at least partially been made up by an increased dependence on ad dollars. The fact that most Canadian magazines rely on advertising as their primary revenue source is worrying for a number of reasons.

First, whenever a publication includes advertisements, there is a potential for conflict between the advertising and the magazine’s editorial content. Put simply, this means that an automobile manufacturer may not enjoy seeing an ad for its new SUV in the same issue as an article encouraging people to take public transit more often (and may not advertise again). But more worrisome is the possibility that magazines would compromise their editorial visions or even tailor their contents to attract advertisers. Such “tailoring” could be as innocuous as a magazine adding a book reviews section to try to solicit ads from book publishers but it can also take the form of advertorials (advertisements written and designed in such a way that they blend in with the rest of the magazine’s editorial content) or “sponsored” content, such as the 2005 series of profiles of distinguished Canadians in Maclean’s was written by Peter Newman but “brought to you by Cadillac.” Many magazines see no problem with “pseudo-advertising” but, as Toronto Life contributor David Hayes explained in writing about the need for magazine publishers to keep “church and state” separate, there is an “unspoken understanding that the editorial content and business operations must be kept separate to maintain credibility with readers.”[43] But advertisers are pushy, and most magazine publishers can use the revenue from advertorials (which generally carry a higher price tag than regular ads) so ads masquerading as articles will no doubt continue to be included in Canadian periodicals. Reader’s Digest publisher Larry Thomas claims that the line-blurring advertorials encourage stems from pressure from advertisers who are increasingly allowed, and even encouraged, to influence other forms of media (for example, paid-for product placements in television shows).[44]

Second, because of the relatively small circulation of most Canadian magazines, it is a significant challenge for them to attract any advertisers in the first place—let alone the sort of companies that can afford full-page ads—especially when they can reach a larger audience through other channels for less and so many different places to advertise exist. Marketer and business strategist (and Master of Publishing program instructor) Craig Riggs describes Canada’s media industry in Canada as “a cluttered, complicated marketplace all vying for the same ad dollar”—because there are some 102 daily newspapers, over 1,000 community newspapers, 130 TV stations, 814 radio stations, 20 television networks, and 65 specialty TV stations in addition to the 2,400 Canadian magazines.[45] Most nationally distributed magazines have circulations too small to attract national advertisers, which can more cost-effectively reach a larger audience through newspapers, radio, or television. And the smaller a magazine’s circulation, the harder it is to get any: D.B. Scott suggests that even being a nationally distributed magazine with a circulation of 50,000 is “barely enough to get you paid attention to by advertisers.”[46] For titles that are regional in focus and/or distribution, it can be even more challenging to attract the kinds of companies that can afford full-page ads, let alone repeat insertion orders. Also, local/regional advertisers that seek a geographically specific audience have the option of advertising in weekly newspapers if they want to stretch their ad budgets, or in daily newspapers if they are seeking a venue with greater frequency and reach than most Canadian magazines. Further complicating matters, for reasons already mentioned, the “Canadian editions” of American magazines can usually offer much cheaper advertising rates and larger circulations than most domestically produced publications.

Third, when so much of their revenue comes from advertising, magazine publishers are very vulnerable to market fluctuations and unpredictable advertisers. For instance, if the economy takes a downturn, companies are less likely to spend money on advertising in general and advertising in magazines is rarely viewed as anything but a secondary component of any major promotional campaign. Advertisers are also fickle. According to NUVO Magazine’s Director of Sales and Marketing, Alessandra Bordon, it can be harder to get a reinsertion order from an advertiser than to secure a new advertiser altogether because companies are willing to take chances but, once they have, they expect to see certain results from the advertising they have purchased. Or, a magazine may have trouble rebooking an advertiser because the company wants to test out new advertising venues or because it has switched to a media buyer or agency that prefers to buy ad space in other publications.[47]

So while it is hard for a national magazine with a circulation of 50,000 to attract national advertisers in Canada, for a magazine one-tenth the size (which or may not have only regional distribution) it is near impossible. Small magazines are generally niche (and/or sometimes regionally focused) publications and even if they view themselves as serving national or international audiences, they still have limited readerships, which means they are not a prime venue for advertising because their low reach means a poor return-on-investment for advertisers (unless the magazine has a high number of readers per copy or if its audience is known to have a large disposable income, such as the readership of Canadian Horse Journal, which is primarily horse owners). Also, small magazines publish less frequently, which means their ads cannot be as timely as those placed in larger magazines. Stability is also a concern for advertisers, who like to know that magazines containing their ads can be found on newsstands reliably and will not be pulled off newsstands prematurely. Not only do larger magazines deliver such benefits but they also have the means to deliver advertisers a consistent audience of a known size and demographics because they can afford both circulation auditing and Print Measurement Bureau (PMB) membership. By comparison, smaller magazines typically rely on educated guesses, or on in-house subscriber surveys, to provide advertisers with any sort of information about their readers. Audited circulation figures and PMB statistics, though costly, do offer to advertisers a guarantee that they are reaching the audience they have “purchased.”[48]

Even if potential advertisers are not scared off by the lack of audience information, small magazines may find that their contents and editorial voice can limit their ability to secure advertising. Companies want to promote products and services to people who are likely to use them in an environment that encourages them to buy them. But with their frequent focus on culture, ideas, politics, issues, and the arts, small magazines can seem like the wrong fit for advertisements promoting, for instance, a new kind of shaving cream or the latest type of cellphone, which may seem out of place alongside stories about radical political activism and the detrimental effects of asbestos mining. Also, advertisers may not accept a magazine’s edgy content as readily as its readership so there may be a resistance to supporting a publication whose raison-d’être is to publish radical or controversial ideas.

When attracting national advertising is nearly impossible, small magazines are reduced to selling local (retail) advertising, or to filling their advertising pages with many small ads, instead of just a few full-page or half-page ads, which means more time and resources spent selling and managing accounts. But that avenue is not necessarily any easier since local businesses are not always interested in a magazine with national distribution and, unlike their larger counterparts, smaller magazines do not have the resources or readers to warrant the regional editions that can make it easier to sell local/regional advertising. So instead they may resort to discounts and incentives to attract local companies to buy ads in their national publications, despite knowing that these advertisers might prefer to spend their small ad budgets placing ads in a weekly community newspaper read only by people who could potentially patronize their business. (And even small businesses can be wary of advertising without any market research or readership demographics to suggest the potential return on their investment.)

When not enough revenue can be generated from advertising, Canadian magazine publishers must either find other sources of income or close their doors. While a lack of sufficient advertising dollars is blamed for the demise of Canadian men’s magazine Toro just shy of its fourth birthday in 2007, other Canadian magazines find themselves beholden to government and/or private foundation largesse.

 

Dependence on subsidies

“No quality magazine with limited circulation can survive without subsidies and it’s always been that way. Whether it’s borrowing money from family or operating out of a basement, you need subsidies over and above advertising.”[49]

— Stephen Osborne, editor-in-chief, Geist

One of the biggest financial supporters of magazine publishing in Canada is the federal government. Dating back to 1849, when the Post Office Act awarded lower postal rates to printed materials circulated by mail, Canadian publishers have had access to federal government funds to subsidize their work. Today, the annual contribution to the domestic magazine-publishing industry through the through the Department of Canadian Heritage-administered Publications Assistance Program (PAP) and Canadian Magazine Fund (CMF), and the Canada Council for the Arts’ Grants to Literary and Art Magazines and Flying Squad program, totals $68.6 million.[50] As already explained, PAP subsidizes a portion of postage costs so that Canadian magazines can be distributed affordably to subscribers across the country while the CMF provides financial incentives to magazines to include original Canadian editorial content, supplies arts and literary magazines with operating grants, and funds initiatives that aim improve the viability of small magazine publishers or support general industry development. Canada Council is an arm’s-length government agency that funds programs that enable small magazines to access industry consultants and provides operational funding to arts and literary magazines directly. In addition, various grant and subsidy programs (and tax credits) exist at the municipal and provincial level—not to mention the public and private foundation funding that is also available. The result is that the majority of publishers (particularly publishers of cultural, literary, and scholarly titles) tap into some sort of largesse—with government grants alone amounting to 2.3% of the average Canadian magazine’s total revenue, and as high as 45% for smaller circulation titles.[51] With all the funding programs they can access, most Canadian magazine publishers have no need to rely exclusively on advertising and circulation revenue; however, they can easily become overly dependent on the contribution of such subsidies to their bottom lines, which is problematic.

First, accepting largesse year after year creates dependence on a revenue source that may not be entirely reliable—particularly when grants and project funds are distributed in large lump sums. The very existence of government funding, particularly that which is provided to cultural industries, is vulnerable to changes in political power. At the time of writing, for instance, the Department of Canadian Heritage was holding consultations on changes to the Publications Assistance Program and the Canada Magazine Fund that may affect program eligibility, the amount of funding awarded to a publication, and how that funding can be spent.[52] The amount of money accorded to and thus distributed through various public and private granting programs also fluctuates so magazines cannot expect to receive a set dollar amount each year. In addition, changing eligibility criteria can mean that magazines that once qualified for funding from a certain granting body and/or under a particular program may suddenly no longer qualify. When I was an intern at Maisonneuve, the magazine learning it would not receive an expected grant from the Conseil des Arts et des Lettres du Québec created a $40,000 shortfall in the annual budget—equivalent to a staff member’s salary.

Second, to receive any kind of external funding, magazines must jump through certain hoops—and any government funding usually comes with strings attached. For example, the CMF’s “Support for Editorial Content” program requires that recipient magazines publish 80% content produced by Canadian contributors. Such funding is also usually provided for one to two years, so magazine publishers find themselves having to constantly reapply—a very labour-intensive process to begin with (and even more so when a magazine is seeking funding from more than one granting body on a regular basis). Private foundation funding is no different. When Geist received $120,000 from the Tula Foundation in January 2003, it was originally only for a two-year period (which was extended) and the foundation had earmarked the use of this money.[53]

Finally, if grant money is the only reason (or a main reason) for a magazine’s viability, it can create a false sense of security based on what is, in fact, a temporary “subsidized” existence. As Elisabeth Gontard points out in discussing the funding arrangement between Geist and the Tula Foundation, “whatever changes the magazine has made or makes to its operations because of the increased revenue—i.e., the increase in contributor fees—once the Tula money runs out, revenue will have to be in place for the changes to be permanent.”[54]

And small magazines are in a further compromised position, in part because so many have to apply for grants and accept subsidies and donations to just to cover their day-to-day operating costs. In fact, all participants in the 2003 Circulation Roundtable for Small Magazines, regardless of size or business structure, reported receiving some kind of “funding.” First, because of their smaller size, these grants and subsidies can end up comprising a large percentage of their total revenue, which makes them even more vulnerable to program cuts and changing eligibility criteria. For example, when THIS Magazine was ruled ineligible for Ontario Arts Council funding in 1998, it represented a loss of 15% of the magazine’s total annual operating budget.[55] Second, applying for grants requires navigating a certain amount of bureaucracy and dealing with administration. Simply figuring out if a magazine qualifies for a particular grant or subsidy, completing the usually lengthy application form (which typically requires detailed financial and circulation numbers), and then reporting back on how the funding was used and the project’s results can tax the limited human resources of even the most organized small magazines—particularly when few grants provide multi-year funding and different grant and program deadlines are scattered throughout the year. But “subsidy management” is not the only challenge facing small-magazine publishers.

 

Additional challenges for small magazines

“The impression that small magazines are bigger than they actually are is quite common.”[56]

— Dale Duncan, executive editor, Spacing

As I have already discussed, Canadian small magazines operate in the same challenging marketplace as this country’s largest domestic titles but they must also overcome difficulties unique to their size that affect their day-to-day operations and put them at a disadvantage when it comes to viability.

By virtue of their size, and since most are printed by companies with multiple titles, Canada’s large-circulation magazines can take advantage of the efficiencies that come with doing everything on a large scale and with high frequency. “Vertically integrated” organizations that publish more than one magazine can increase each title’s individual profitability by combining routine operations and having centralized departments manage tasks for all their publications, such as advertising sales and graphic design. To see how doing so is more efficient and cost-effective, one needs only look at the difference in how large magazines and small magazines handle the processing of subscriptions. While multi-title publishers have well-staffed circulation departments, or outsource their subscription management altogether, that is not the case for magazine with only a handful of staff and just a few thousand subscribers. As described in Keeping Readers: Fulfillment for Small Canadian Magazines:

At small circulation levels, publishers may still handle incoming subscription orders on an individual basis — opening one envelope, entering the customer’s subscription, personalizing an invoice in a word-processing program, writing up an envelope, pulling the most recent issue off the shelf and sending it out with the invoice and a ‘welcome’ letter, writing the customer’s name and cheque amount into the bank deposit book, and perhaps entering a record of the transaction in a separate accounting systems.[57]

The report’s authors go on to point out that “some inefficiency is unavoidable” due to the fact that when a magazine is only getting one or two new subscriptions a week, it does not make sense to wait until 100 orders have been placed to process them all at once (because that may be a year after the first order was received). In terms of costs, though, this means time lost to the time-consuming task of processing subscriptions in small batches and also increased postage costs because a magazine often will not have the minimum needed to qualify for “bulk” mailing rates unless they are lucky or limit the number of between-issue mailings they will do (though the latter is risky because fulfillment delays can irritate impatient new subscribers).

However, greater challenges are related, not surprisingly, to economies of scale and the apportioning of costs associated with the physical and “intellectual” production of an issue. It is well known that per-copy printing costs are reduced rather dramatically with the number of copies printed, but the same applies to all fixed and variable costs associated with producing an issue. For example, when it comes to distribution, it can cost the same to ship two copies to a newsstand as it does to ship a dozen—and a magazine must still pay the same fees to freelance writers and photographers—and, hopefully, salaries to staff—regardless of fluctuations in its circulation numbers. The reality is that even if the total per-issue costs are higher at large publications, the per-copy production costs (and distribution costs, to a certain extent) are much, much lower—particularly if it is just one of a stable of periodicals produced by a publishing company.

As a result, shoestring budgets are the norm for small-magazine publishers. For example, Vancouver quarterly Geist may be the largest literary magazine in Canada at the moment, but its circulation is still under 10,000 and its annual revenues are less than one percent of what a typical large paid-circulation consumer magazine grosses each year. Working with a small budget can be challenging, particularly when a few hundred dollars in lost revenue (for example, a last-minute cancelled full-page ad) can mean that a magazine is suddenly unable to print its forthcoming issue. The annual profit of a typical small magazine is usually under $5,000 and when a magazine’s financial “cushion” is that small, its year-to-year survival is precarious. The editorial and production costs associated with publishing a magazine are expensive but, obviously, unavoidable and they will always take priority over the other ways money could be invested to help “grow” a magazine, such as professional development for staff or circulation and marketing projects.

Another downside to having a small budget is small magazines’ inability to offer industry-standard compensation to their contributors and/or salaries for their paid employees (if they are lucky enough to have any). As Maisonneuve publisher and editor Derek Webster once observed, “The cultural publishing economic model runs on volunteerism, token payments, stipends, and eternally underpaid staff. (The pizza-party-in-lieu-of-wage is standard operating practice.)”[58] As a result, most small magazines have just one or two salaried employees, complemented by an average of two to four volunteers,[59] which means that most are produced by just a handful of people who may not even possess much magazine experience. Having a small staff typically means doubling up on responsibilities (such as the art director selling ads and the managing editor coordinating subscriptions) and people having to manage tasks that they may not be qualified to be handling, which can lead to burnout among paid employees and volunteers alike. Another downside is that, even when they have more than one job, most magazines staff will end up working primarily on the production side of the magazine (which affects growth and expansion) or primarily on the business side of things (which affects editorial quality and reader satisfaction). As the Ahnsu Consulting Group noted in The Culture of Cultural Magazines: “The difficulty with admin work is twofold: it either overwhelms and overtakes cultural magazine staff and prevents them from working on bigger-picture issues, or it gets neglected because bigger picture issues are more critical.”[60] Typically, the latter is not the case as most small magazines are staffed by people whose preference is for editorial and design work (which is viewed, especially by volunteers, as more enjoyable and meaningful), but that means the “necessary evils” of selling advertising, bookkeeping, fulfilling subscriptions, and other business-related tasks, are the ones that most often end up neglected, ignored altogether, or handled incompetently by underpaid people who may be untrained in those areas;[61] which, as I will explain in detail in the pages to come, accurately describes the situation at Spacing magazine in September 2005.

 

 

PART 2 – PLANNING FOR THE FUTURE OF SPACING

Preface

Having illuminated the challenges facing Canadian magazines of all sizes, and those specific to smaller publications, I will now describe my experience working for one Canadian small magazine, Spacing. I first provide some background on Spacing’s history, offer an overview of the magazine and its ancillary projects, and describe how I came to become the Toronto-based periodical’s first (volunteer) business manager in September 2005. I then discuss the strategic-planning principles that I applied in mapping out Spacing’s transition from labour of love to small business—and which informed the writing of a business plan for the magazine. Finally, I will describe Spacing’s situation two years later and evaluate the progress I made towards increasing the magazine’s viability.

 

Background

Brief history

Spacing was conceived in the Fall of 2002 by a group of young activists, then-members of the Toronto Public Space Committee (TPSC), who felt that Toronto needed a publication that would address urban issues like cycling, transit, pedestrianism, public art, and city-planning, which they felt local media were overlooking or addressing inadequately. Over the following year, Matthew Blackett, Dale Duncan, Lindsay Gibb, Todd Harrison, Todd Irvine, Micheline Lewis, and Dylan Reid developed the magazine’s editorial concept, defined roles for themselves, recruited contributors, and organized fundraising events. Their efforts culminated in the publication of the first issue of Spacing in December 2003, which sold out its entire 1,500-copy print run within a month of being published.

Following the release of that initial issue, certain individuals chose to discontinue or limit their editorial involvement with Spacing and new editors came onboard. Therefore, for historical purposes, the magazine’s “founding editors” are considered to be Blackett (publisher and creative director), Duncan (initially managing editor but now executive editor), Gibb, Reid, Anna Bowness, and Shawn Micallef (associate editors). These six own the company Spacing Media Inc. that serves as the current publisher of Spacing—now produced independently of the TPSC—and, with Todd Harrison and Leah Sandals, make up the magazine’s editorial collective. At the time of writing, Spacing was on the verge of publishing its eleventh issue, scheduled for release in March 2008.

 

Magazine overview

Through compelling journalism and thought-provoking essays, complemented by original illustration and striking photography, Spacing explores Toronto’s architectural, cultural, social, and political past, present, and future, and covers all of the associated issues that concern life in the city’s public realm. Written for and by those who are passionate about Toronto’s public spaces, Spacing contains an eclectic mix of well-researched history, ruminations on the present, and visions of what the future could be.

Each issue of Spacing has a theme, a specific topic of particular relevance to Toronto chosen by the magazine’s editors, to which the majority of the issue is devoted. Previous themes have included public art, the transit system, pedestrianism, and the environment. A large portion of Spacing’s content is dedicated to personal journalism and essays through which writers address the unique components of the social and cultural landscape of Toronto, which in 2007 included: the soundtrack of city life; the industrial design of 1970s subway platforms; an architectural graveyard in a Scarborough park where ornamental pieces from buildings are given a second life; a group of formerly homeless people using photography to tell their stories of hope and desperation; and the use of social-networking websites to enable events like massive pillow fights to flourish in Toronto. The magazine also has regular columns, like “The Toronto Flaneur,” in which Shawn Micallef writes about a part of the city he has wandered through on foot; “Green Space,” which focuses on environmental topics and green organizations; “Outer Space,” which highlights public-space issues in other cities; and “Space Invaders,” which profiles the people behind various Toronto public-art initiatives and creative interventions.

Spacing’s editors generate many of the story ideas for each issue but there is also always an open call for submissions, which helps generate thematic content that might otherwise be overlooked. This editorial process results in engaging, creative, genre-bending content of a notably high quality, which has not gone unnoticed in the industry. In June 2007, the Canadian Society of Magazine Editors named Spacing its “Small Magazine of the Year” and awarded “Magazine Editor of the Year” to Matthew Blackett and Dale Duncan. Spacing also won a 2005 National Magazine Award for “Best Editorial Package” for its “History of the Future” issue (and was nominated again in the same category for 2006), and the magazine has been short-listed twice in the “Best local/regional coverage” category of the Utne Independent Press Awards (2005 and 2006), in addition to being nominated for “Best New Title” in 2004.

Spacing’s reputation has attracted established journalists and published authors as contributors but, like many small magazines, it has also been a career “launching pad” for a number of up-and-coming writers. Most of the magazine’s editors had published little writing before Spacing was launched but Shawn Micallef now has a column in Eye Weekly and contributes regularly to the Globe & Mail; Dale Duncan’s writing helped her secure a staff reporter contract at Eye Weekly, for whom she now writes a municipal affairs column; Lindsay Gibb and Anna Bowness are the current and former editor, respectively, of Broken Pencil magazine; and Dylan Reid and Leah Sandals freelance for a variety of publications.

Spacing has also been recognized for the overall excellence and attractiveness of its photography, which is a credit to Toronto’s talented and award-winning photobloggers. Under the art direction of creative director Matthew Blackett, Spacing was a pioneer in introducing local photobloggers—whose work is primarily published on personal websites—to the general public by publishing their work in the magazine and online, and also using their images in art-gallery exhibits and for Spacing promotional materials. But striking digital photography is just one component of the magazine’s design: Blackett also commissions original art and illustration from up-and-coming illustrators and Spacing’s atypical 10-inch by 8-inch landscape format means it stands out on newsstands. In fact, its innovative design has garnered Spacing a number of awards, including an Applied Arts award for “Best Single Issue Design” in January 2005, and a nomination in the “Best Design” category of the 2006 Utne Independent Press Awards.

 

Ancillary projects

In addition to producing three issues of Spacing a year, the magazine’s publishing team also maintains a website, sells Spacing-branded products, and organizes and sponsors special events.

The Spacing.ca website was launched in November 2003 to serve as the online companion to Spacing and act as a promotional tool for the magazine right from the beginning, but, over time, it has become an important entity in its own right. The website features select articles and photos from the magazine, lists retailers carrying Spacing, provides information to potential advertisers, and has an online store where people can buy Spacing subscriptions, back issues, and other products. But Spacing.ca’s most popular feature, by far, is a blog written by the magazine’s editors and contributors. Updated daily, Spacing Toronto (www.spacing.ca/wire), has developed into a hub for information about and discussion of public-space issues. It has been such a success thatSpacing-sanctioned blogs have been set up in other cities: in July 2007, Spacing editors travelled to Montreal to launch the bilingual Spacing Montreal blog (www.spacingmontreal.ca) and a Vancouver blog called “re:place” (http://regardingplace.com) began publishing in January 2008 as the precursor to a print magazine; and it is possible others could soon spring up in San Francisco, Windsor, and Halifax. Blogging allows Spacing to cover public-space issues, news, and events in Toronto, and around the world, in the months between issues of the magazine—an obviously welcome service as the readers of Eye Weekly voted it “Toronto’s Best Local Blog” (2005) in January 2006 and Toronto’s other alt-weekly, NOW Magazine, named it “Best Local Blog” of 2007.

As mentioned, the website’s store sells various Spacing products, among them Spacing’s iconic one-inch subway buttons. Since being launched in December 2004, over 80,000 of the buttons capturing the iconic and distinctive tiles of each of Toronto’s subway stations and Scarborough RT stops (73 in all) have been sold just through Spacing.ca and several Toronto stores—plus thousands more at special events. Holiday “gift packs” of back issues and a 2006 calendar have also helped to generate revenue for Spacing at various times but special events, like the launch parties for each new issue, remain a bigger moneymaker and, because they usually attract several hundred people, are a good way to increase awareness of the magazine and the important public-space issues it covers.

Since 2005, Spacing has co-hosted an annual “Toronto the Good” party with partners ERA Architects and [murmur] during the Toronto Festival of Architecture and Design, a social event whose goal is to bring different communities together to celebrate innovation in the city. Spacing has also organized the “MyToronto” video contest, hosted film nights, curated art shows, and co-organized the best-attended mayoral debate of the 2006 Toronto municipal election. Finally, Spacing is also a regular media sponsor of cultural events tied to topics explored by the magazine.

 

Adding a business manager to the masthead

In September 2005, Spacing had published four issues and a fifth was in production. The magazine was covering its production costs with the revenues from advertising, single-copy sales, its 400 subscriptions, launch parties, and subway buttons. However, Spacing’s founders felt they were neglecting the business side of their publishing venture, which was hampering the magazine’s growth. In an e-mail, publisher Matthew Blackett expressed their collective desire to hire someone to take charge of the magazine’s finances and business development:

We need a biz manager badly to help us move forward, cuz my skills are best used creating and not doing balance sheets. The hope is that the biz manager would help us with a long term biz plan, which would include paying the editors, our writers, and the biz manager… This biz manager position has more to do with freeing me of the biz burdens, so I can concentrate on promotions, partnerships, media outreach, and the editorial/design stuff.[62]

Because I thought highly of Spacing and believed I might be able to assist the magazine in a business-development capacity, I met with Blackett and managing editor Dale Duncan. They seemed confident in my abilities so I agreed to write a business plan for Spacing, and soon became the magazine’s part-time, volunteer business manager.

How I came to work for Spacing in the fall of 2005 is not unusual: many people become involved with small magazines not because there is necessarily a job posting or a formal application process but often just because they happen to be in the right place at the right time[63] and they express a certain enthusiasm for the magazine in question and exhibit a willingness to do the work that no one else wants to do (or is qualified to do)—and, occasionally, as in my case, happen to have some specialized education and/or applicable work experience.

 

 

Strategic planning

Strategic planning and small magazines

“Planning isn’t rocket science; in fact it is a fairly straightforward process.”[64]

— B.C. Association of Magazine Publishers

 

Companies of all types and sizes use strategic planning to take a critical look at the factors affecting their success and/or limiting their growth—or, as is relevant for small magazines, the factors influencing their very viability—so that they can then develop a “plan” that will help them increase their profits, expand, or achieve other major organizational goals. Examining how things are being done, and the internal and external influences that are having a positive or negative impact on the business, is a process that is often beneficial in its own right, particularly for new businesses. As Craig Riggs has pointed out, “when organizations focus on how work is done and measured and improved, things usually start to get better.”[65] However, a strategic-planning process is generally initiated when there is a need or a desire for change, like when there is dissatisfaction with the status quo and it is felt that “charting a new course” could benefit an organization—as was the case at Spacing when I came onboard as the magazine’s business manager.

 

Conducting a situational analysis

“You have to understand before you can innovate”[66]

— Craig Riggs

In August 2005, Spacing’s founders had set two long-term goals for the magazine—to pay people to work on the magazine (staff and contributors), and to sell 5,000 subscriptions[67]—and the unwritten expectation was that I would figure out how to achieve them and, concurrently, turn the magazine into a viable small business.

When I began this rather daunting project in September 2005, I was almost completely in the dark with regards to the business side of Spacing and how things had been run up to that point. A standard tool for gaining insight into a business’ “situation” and evaluating an organization’s state of affairs is the S.W.O.T.[68] chart. However, following some research, I decided that a Situational Analysis would be a more holistic way to obtain a detailed overview of not just the magazine’s strengths, weaknesses, opportunities, and threats but also of Spacing’s accomplishments to date and the internal and external factors affecting its ability to be a profitable business. (I also recognized that this framework would create a good benchmark against which progress could be measured later.[69])

I loosely based my situational analysis (see Appendix A) on the framework of what is called a 5C Analysis, and it entailed reviewing Spacing’s records, interviewing staff, and conducting additional research to produce a complete “full-colour” snapshot of the magazine’s operations and a description of the market and climate in which it was doing business.[70]

 

Starting out

As its name suggests, the situational analysis gave me a good idea of Spacing’s state of affairs in September 2005. At the time, the magazine’s biggest assets were the quality of its products, its reputation, and its dedicated staff. Spacing’s blog was attracting lots of visitors to the website, and the magazine and subway buttons had caught the attention of the media and those who were most passionate about public-space issues (including the Mayor). As a result, organized special events were well attended and the magazine was having no trouble attracting contributors. In addition, the hard work of staff and contributors had resulted in many awards and an operating grant from the Ontario Arts Council. Despite not having an office, Spacing’s editors seemed to be collaborating well and communicating effectively to produce three issues a year and post daily updates to the blog. In addition, Spacing had established good supplier and distributor relationships for the magazine and buttons, both of which were selling very well in stores and at events. The magazine also appeared to be self-sufficient financially through revenue from newsstand, subscription, and event sales, and the sales of subway buttons were bringing in significant additional revenue—enough that contributors to each issue were being paid something and there were also small per-issue honorariums for staff.

However, there was a large disconnect between Spacing’s reputation, its apparent financial stability, and the behind-the-scenes operations. While it was a professional-looking magazine, and appeared to be highly successful based on the turnout for its events, Spacing not only did not have an office[71] but the magazine was disorganized organizationally and financially. The biggest problems were related to Spacing not having been set up as a business when it was first launched: in September 2005, the magazine was not incorporated, nor even registered as a business, meaning that the founding editors of Spacing would have been legally responsible for it, and thus personally liable, had someone decided to take the magazine to court. In addition, Spacing was not paying any business income taxes, nor collecting sales tax (PST or GST). At the time, Spacing was able to cover all of its bills, though no one had any idea of the amount of revenue generated, or expenses incurred, on an annual, monthly, or even per-issue basis. At it was, the only person “taking care of business” was Matthew Blackett, who was simultaneously contributing to the magazine editorially, designing the entire magazine, selling ads, developing partnerships and promotions, and taking a lead role in organizing Spacing events—not to mention managing Spacing’s side business in subway buttons essentially as a one-man show. Despite his high energy levels, burnout seemed inevitable and I had a similar concern for Lindsay Gibb, who, on top of her own editorial duties and a full-time job at another magazine, was managing all subscription orders and fulfillment plus newsstand distribution to Spacing’s dozen house accounts. The magazine was also only publishing three issues a year, on no fixed schedule, which might have been one reason that Spacing had not had much success attracting advertisers. And the same could be said of subscribers, who only numbered 400 in September 2005. Related to subscriptions, I realized that Spacing was paying too much for postage and that the database used to keep track of subscriptions was disorganized, which was likely one of the reasons that Gibb was having to deal regularly with complaints about missing issues and there were frequent delays in new subscribers getting their first issues. Finally, it seemed unlikely that, despite their high levels of enthusiasm for the magazine, Spacing’s staff could continue working as many hours as they were without salaries, or that the magazine’s contributors would continue to accept rates well below the industry standard.

 

Addressing problem areas

The situational analysis made it obvious what Spacing’s strengths were and where opportunities for growth existed, however, it also revealed the magazine’s weaknesses and problem areas, which called out urgently for addressing prior to any attempt to capitalize on the magazine’s positive aspects.

The biggest problem I identified was Spacing’s severe neglect of basic business organization and financial recordkeeping.[72] This finding was not surprising to me as two of the five items included in D.B. Scott’s list of “Common mistakes of small magazine publishers” are “Forgetting about Revenue Canada” and “Avoiding the icky stuff”—both referring to decisions regarding financial matters, particularly the necessity that publishers “not put off to tomorrow that which they should deal with today.” [73]

The people working on Spacing were skilled writers, editors, and designers but they had been avoiding dealing with (or did not have time to address) anything “icky,” a bad habit enabled by the magazine’s continual ability to pay its bills. However, the magazine’s increasing revenues (primarily from button sales, which by September 2005 totaled nearly $22,000) were worrying Matthew Blackett because of the retroactive GST he thought could be owing. It also concerned me that should anyone decide to sue the magazine, the publishing team could be held personally liable because Spacing was not incorporated nor even registered as a business. And then there were the problems related to subscriptions already mentioned.

While the founders of Spacing were eager to have a large number of subscribers, and to begin paying themselves salaries, I knew there were a number of basic things for me to address first, so I drew up a “laundry list” in October 2005:

  1. Incorporate Spacing(“Spacing Media Inc.”)
  2. Register Spacing Media Inc. as an Ontario-based business
  3. Open Spacing Media Inc. accounts with appropriate government agencies (Canadian Revenue Agency, etc.)
  4. Open a Canada Post corporate account and apply for Publications Mail number to qualify for discounted postage rates
  5. Better organize Spacing’s subscriptions database
  6. Set up financial recordkeeping and bookkeeping

 

Making Spacing legal

Incorporating Spacing under the name “Spacing Media” and registering it as an Ontario business, and with the appropriate federal and provincial agencies for tax purposes, was a relatively straightforward process and one that was eventually completed mostly online[74]—once I learned the steps were involved (see Appendix C). At the time, I could find no resources detailing the process of setting up a magazine as a legal business, however, Magazines Canada’s online handbook How to Start a Magazine[75] led me to the website of the Canada-Ontario Business Service Centre, where I was able to figure out the steps involved and carry out what was required (see Appendix A).

Opening a corporate account with Canada Post and receiving a Publications Mail number was a simple matter of completing some paperwork[76] and to better organize Spacing’s subscription records, I simply spent some time reorganizing and “cleaning up” the existing 400-record Excel database (for instance, moving the names and addresses of expired subscribers to a separate worksheet from current subscribers).

Thus, all of the items on the checklist were completed by the end of July 2006 with the exception of the final item. Without a background in accounting and only a cursory knowledge of business banking, setting up financial recordkeeping and bookkeeping for Spacing was beyond my abilities so I unwisely postponed that task because I wanted to move on to writing Spacing’s business plan—a project that would be postponed itself for six months when I became preoccupied with a number of other things. The busyness that prevented me from working on the business plan immediately stemmed from my handling day-to-day business tasks (such as banking and), completing various small business-development projects (such as helping to develop an ad kit and writing grant applications), lending a hand where needed (namely proofreading and helping out at launch parties and other events), and taking over as Spacing’s circulation manager when Lindsay Gibb became Broken Pencil’s new editor—all work that I took on in addition to my three-day-a-week job working for a book publisher and a volunteer commitment at another small magazine. However, despite all this work, I did find time to start the business plan in January 2007, beginning with writing a mission statement for the newly incorporated Spacing Media.

 

Crafting the mission statement

A mission statement should articulate a magazine’s raison d’être and give its publishers a sense of direction that complements their goals and objectives for the publication. As Craig Riggs suggests, “defining the purpose of the organization or publishing program is the first step in creating a framework than can guide decision making.”[77]

Having made note of all Spacing’s activities, I felt that Spacing was potentially more than just a magazine, a hunch confirmed by marketing blogger Sean Moffitt observing that “although it describes itself as a magazine, Spacing is really a mash up of public activism, cool urban ideas and events, a community of like-minded people and a multimedia platform…[that has] invested just as much resources in ‘live urban experiences’ and ‘the web’ than merely the printed guide.”[78] He called Spacing a “category jumper” because not only was there a periodical, there was also “an engaging online forum” (alluding to Spacing’s website, particularly the blog where readers can post comments), and events that brought readers together—all of which were helping to unite a community around the issues at the core of the magazine. Thus, the mission statement I developed for Spacing Media Inc. in January 2007 expressed a broader mandate than just publishing a magazine:

To draw attention to the importance of public space in urban environments and to instill in city-dwellers worldwide—and in Toronto in particular—an appreciation of the endless possibilities that cities offer so that they will be compelled to take ownership of the urban landscape that surrounds them and be inspired to participate in city life.

The next challenge was figuring out the goals and objectives that would help Spacing Media Inc. live up to its mission statement.

 

Setting goals and objectives

“[A]rticulating clear goals and objectives allows management and staff to have a common idea of where the company needs to go, and how it aims to get there.”[79]

— Craig Riggs

After articulating a “mission” for Spacing, the next step prior to writing the business plan, was figuring out what the magazine’s goals should be, since I did not think that staff salaries and 5,000 subscriptions were going to be immediately attainable based on its current situation. In this regard, I found the advice of the British Columbia Association of Magazine Publishers (BCAMP) to be useful. In one of the helpful booklets published by BCAMP to explain and offer advice on the various aspects of the business of magazine publishing, the organization suggests that, to “ensure a magazine’s existence,” publishers should aim to:

  • create and maintain a targeted editorial environment to attract and maintain loyal readers;
  • develop and maintain the capacity to produce and publish the magazine;
  • develop effective circulation and distribution systems;
  • develop revenues to support and justify continued publishing.[80]

I knew that Spacing was strong editorially: over the course of the seven issues released to January 2007, members of the editorial collective had established a system for producing a high-quality, award-winning magazine and continual readership growth confirmed that they had created that desired “targeted editorial environment.” Since September 2005, newsstand sales had almost doubled and subscriptions had more than doubled. Overall, paid circulation had risen from 2,800 copies for Issue #4 (June 2005) to 4,029 for Issue #7 (September 2006); and the magazine’s print run had been increased accordingly from 3,000 copies to 5,000 copies. Spacing’s special events and sales of promotional products were also generating revenue and, along with the website, drawing attention to the magazine and public-space issues—which was noticeably bringing together a community of likeminded individuals.

However, all was (still) not well on the business side of Spacing. While Issue #7 had been the work of seven editors and three proofreaders, the only dedicated business staff were me and Spacing’s ad director, Alex McKenna, who had been hired in June 2006 to take over ad sales from Matthew Blackett. The addition of McKenna to the masthead was a good move for Spacing since the revenue from his ad sales for Issue #7 had more than doubled the $1,950 sold for Issue #6 (and he was on track to triple that for the forthcoming issue). But McKenna was only responsible for selling ads; I was taking care of pretty much all other business matters.

In the 16 months I had been working for Spacing, my contributions to developing and maintaining capacity, and the revenue levels that required, were taking care of the aforementioned “laundry list,” managing the magazine’s banking and payroll, and handling subscriptions (Blackett was now handling newsstand distribution). I had also written the grant application that secured Spacing another year of funding from the Ontario Arts Council (OAC) and coordinated the magazine’s participation in several newsstand-marketing and group direct-mail campaigns organized by Magazines Canada. In addition, I had helped to secure Spacing affordable office space in the Centre for Social Innovation (CSI), and arranged through Magazines Canada for a magazine-industry expert to meet with us to talk about business development.

In addition, while I still had not yet set up proper financial recordkeeping, I had begun to put some numbers related to Spacing’s finances down on paper. For instance, while preparing Spacing’s 2006–07 OAC grant application in May 2006, I produced rough financial statements for Spacing for 2006 and 2007, which proved useful for goal-setting and determining priorities for the magazine at the beginning of 2007. I had calculated that Spacing’s revenue for 2006 would be $63,675 (with expenses of $61,095) and I was projecting that 2007’s revenue to be $106,646 (with projected expenses of $86,522). I felt this $43,000 increase in revenue and rise in profits from $2,580 to $20,124 would come from primarily from advertising (since McKenna thought he could sell $7,000 in ads per issue ($21,000 annually)—and bring in more revenue potentially if we took his advice and increased the price of ads in Spacing, which he was hearing were low compared to other magazines), but I was also predicting a significant number of new subscriptions and the renewal of existing subscriptions; I was also confident that Spacing could successfully request $20,000 from the OAC for 2007–08 (double the $10,000 received in 2005–06 and again in 2006–07). The increase in Spacing’s budget for 2007 meant that Spacing Media Inc. could not only continue its magazine-publishing activities but there was a large-enough surplus income for a full-time salary in the $20,000 range for one staff member. However, the magazine’s editors felt that having a dedicated workspace would be of greater benefit to the magazine and decided to sign a lease with the Centre for Social Innovation. As a result, the anticipated “surplus” would go towards the office Spacing would begin occupying in February 2007.

While having an office took priority for the editors, they were still interested in eventually being paid salaries so the goals and objectives I developed for Spacing in January 2007 were mostly related to increasing the magazine’s overall revenues to guarantee that would be possible the following year—and also to better balance the workload of the magazine and related projects to prevent burnout:

• Build revenue from magazine sales:
Hire a circulation manager; Promote new subscriptions; Encourage renewals

• Build revenue from promotional products:
Hire a subway buttons coordinator; Increase the number of stores where subway buttons are sold

• Increase advertising revenue
Sell more ads in magazine; Charge more for ads (adjust rates); Sell ads on website

• Cut costs where possible:
Use interns to write articles, take photos; Apply for the Publications Assistance Program (PAP) to reduce postage costs; Solicit sponsorships, in-kind donations for special events

• Leverage grants and funding
Request larger grant from Ontario Arts Council for 2007–08; Apply to Canada Council for the Arts to see if Spacing qualifies for funding; Apply to Canadian Magazine Fund’s Support for Editorial Content program; Apply for funding from the Canadian Magazine Fund or Ontario Media Development Corporation to conduct a direct-mail subscriptions drive

 

Writing the business plan

“A magazine’s business plan is the really the company résumé… You will not know how useful such a plan can be…until you find you don’t have one.”[81]

— D.B. Scott

With a mission statement and a clear set of goals and objectives in hand, I felt ready to move on to completing the rest of the business plan for Spacing. Informed by my past participation in the writing of a real business plan for a fictional magazine, I decided to include the following sections to document Spacing’s history, current situation, and future plans:

  • Executive Summary
  • Business Overview: History, Company Profile, Mission, Products and Business Activities, Goals and Objectives
  • Magazine Overview: Mandate, Editorial Concept, Sections, Themes, Past Issues, Art Direction and Production
  • Market Analysis: Market, Audience, Competition
  • Advertising: Philosophy, Advertisers, Sales Projections, Opportunities and Challenges
  • Distribution and Circulation: Overview, Publishing History, Circulation History, Subscriptions, Single-Copy Sales, Circulation Promotions
  • Marketing and Promotions: Overview, Spacing.ca, Special Events, Media Attention, Awards, Subway Buttons, Holiday Gift Packs, Calendars
  • Management and Operations: Staffing, Compensation
  • Financial Statements

In my opinion, the point of a business plan is to capture a particular moment in a magazine’s “life”—in part so it can later be used to track progress towards stated goals and objectives. In any case, writing one forces the close and careful consideration of all of the aspects of the publishing company and, similar to a situational analysis, doing so inevitably draws attention to its strengths and weaknesses but in greater detail because many more facts and figures have to be included. As D.B. Scott points out, “It takes quite a paragon to avoid the trap of glossing over harsh truths. But such glossing is more difficult when the numbers and the market data is down there in black and white.”[82] There is room in a business plan for assumptions and projections but any forecasts need to be supported by research, experience, and/or statistics, or they will stick out as unrealistic, which means that readers can rely on the document rather confidently to gauge a magazine’s growth potential, future profits, and room for expansion, as well as its current situation. Since a business plan includes financial statements, it is a very important document to have for potential investors, partners, and granting bodies seeking to quickly gain insight into a magazine’s operations—even if they have no specialized magazine-publishing knowledge.

In any case, the business plan I wrote over five weeks (see Appendix F) was a detailed “snapshot” of Spacing at the beginning of 2007, the magazine’s fourth full year of publishing. This portrait proved especially useful when Spacing participated in Magazines Canada’s “Travelling Consultants” program, which uses funding from the Department of Canadian Heritage to subsidize one-on-one consultations with magazine-industry professionals for small magazines.

 

Professional advice

On February 16, 2007, publisher Matthew Blackett, managing editor Dale Duncan, and I met with Canadian magazine expert D.B. Scott to talk about the future of Spacing. Our pre-stated goals for the day-long session were to figure out how to afford salaries for staff members and to receive advice on which revenue-generating activities to concentrate our efforts—in effect, we were hoping to learn how to implement the brand-new business plan to achieve the magazine’s goals and objectives.

The session, which cost Spacing $250, was helpful in many ways. Even though day-to-day operations were still somewhat disorganized, Scott thought highly of Spacing and was impressed by what had been achieved so far. He liked that we had a business plan and a media kit (see Appendix D), thought our ad sales looked good, and observed that we seemed to have a good handle on circulation and distribution. Remarking on the attention the magazine was getting from readers, advertisers, and the media, Scott pointed out that Spacing was “playing a hot hand” at the moment and suggested that we should try to capitalize on it before interest in the magazine, blog, buttons, and events waned. “It’s a new magazine-publishing world,” he told us. “You build a brand and then exploit it.” However, in order to be in a position to do so, Scott said we needed to make a few changes to the way we were doing business; fortunately, he also had some advice.

Because Spacing had a relatively small budget, and its staff was mostly made up of volunteers, Scott said it was essential that we make the best use of our time and resources. As an example, he pointed out that it only made sense to take on interns if doing so would result in greater productivity for the magazine (i.e., we did not have to spend the same amount of time managing them as it would take us to do the work they were doing ourselves). Since we wanted to increase the Spacing’s revenues, with an eye towards paying staff salaries the following year, he said that we should be looking at areas that were already generating money for the magazine, specifically circulation and advertising.

To boost Spacing’s circulation, Scott recommended that we “pick the low-hanging fruit” first; for example, by putting subscription cards in every issue, by e-mailing lapsed subscribers to ask them to renew, and by promoting subscriptions to anyone who had bought subway buttons or back issues of Spacing. After that, he said that we should prioritize a direct-mail campaign, specifically one where we promoted two-year subscriptions because they were already the most popular (and, at $25 each, would bring in a larger amount of revenue than if we sold the same number of one-year subscriptions). We also talked about expanding the number of retail outlets selling Spacing, possibly by reversing a decision made early on not to distribute the magazine in Chapters/Indigo stores.

As for advertising, Scott thought it was a good sign that Spacing had attracted a number of advertisers (many small magazines cannot get any) but he agreed with ad director Alex McKenna that Spacing had been too generous with the (low) rates we were offering to advertisers and told us that the magazine’s rate card should be adjusted as soon as possible. He also suggested that we should think about selling ads on Spacing.ca because the blog it hosted received so much traffic.

Since each issue of Spacing published could be counted upon to generate a certain amount of revenue, Scott advised adopting a quarterly publishing schedule as soon as possible, and then developing a “fifth-issue strategy” (the repackaging of existing content as a special issue or anthology and selling it at a premium price), or adding branded free-standing publications (for example, a “City Builders” yearbook). However, as with any project requiring a certain outlay of cash, he said we should only do special issues if they would earn Spacing additional revenue. From this point forward, he told us, no Spacing project should be a money-loser. Finally, Scott thought we should start soliciting donations from our supporters and—now that Spacing had a business plan—we should explore private investment as a source of operating capital.

 

Failing to put the plan into action

Following the consultation with D.B. Scott, optimism reigned at Spacing: the industry expert had predicted great things for the magazine and the ability to pay staff salaries seemed just around the corner if only we followed his advice. But, given the realities of publishing a small magazine, what happened over the following six months was not unexpected: the business plan was all but forgotten and only a few of the suggestions Scott had made were actually implemented.

We increased the price of ads listed on the magazine’s rate card (see Appendix E) and Alex McKenna began selling website ads, but Spacing’s editors did not feel capable of producing another issue a year so that idea was shelved—even if Matthew Blackett was taken with the idea of doing some sort of special issue. I had intended to look into applying for funding from the Canadian Magazine Fund to subsidize the cost of a direct-mail subscription campaign for Spacing but a Canada Council grant application with a March deadline postponed that plan—and all other business-development work. But I was not the only person whose attention was distracted away from figuring out how to achieve Spacing’s goals and objectives.

Almost immediately following our consultation with D.B. Scott, Matthew Blackett and Dale Duncan put on their editorial hats and began soliciting articles for the next issue of Spacing. It was easy to understand why they would be eager to get started because, even though the water-themed magazine would not be released for another five months, it was not just the day-to-day work of publishing Spacing that was keeping them busy. It seemed that in trying be more than just a magazine, Spacing was agreeing to organize or sponsor more and more special events, and getting involved in new projects all the time. In fact, the months leading up to the publication of the Water issue were packed. There was the “Public Space Invaders” film night in March, the Toronto the Good party in May, and the summer-long MyToronto video contest co-organized with the City of Toronto. Plus, there were trips out of town for meetings related to the brand-new Spacing Montreal blog and the development of a Spacing-inspired Vancouver blog and magazine. And all of these activities were taking place at a time when a lot was happening in Toronto, with projects to make the city more livable being announced every few weeks (from cutting-edge streetcars and new street furniture to plans for a new neighbourhood in the Lower Don Lands and a major revitalization of the Waterfront)—all of which cried out for comment from Spacing editors on the blog.

However, in the midst of the madness, one of D.B. Scott’s recommendations did get acted on. In mid-summer, I learned that the Ontario Media Development Corporation (OMDC) would be awarding grants to Ontario magazines for projects that would drive sales and increase revenues. I saw that subscription campaigns were eligible so I prepared and submitted an application in June proposing a direct-mail campaign. While our funding application to Canada Council back in March had not been successful, we had more luck with the OMDC and Spacing was awarded $15,000 (75% of the project’s total cost) in August for a late-fall addressed-admail project targeting non-subscribers with a $25 two-year subscription deal.

For the most part, though, the Spacing staff members who could have moved ahead with implementing Scott’s recommendations, and achieving the goals and objectives articulated in the business plan—namely Matthew Blackett, Dale Duncan, and me, who were the ones working out of Spacing’s new office the most frequently—became busy with the things just mentioned, and the momentum to move forward with Spacing’s business development ground to a halt As I explained in Part 1 of this report, that is not an unusual occurrence at small magazines, where even just the quotidian administration work can become overwhelming, but Spacing Media Inc. was also involved in many interesting projects besides just publishing a magazine so I should have expected that these projects and initiatives would “overtake” the plans for growth and expansion and the far-less-sexy, behind-the-scenes work they entailed. In retrospect, though, I believe the real reason why nothing came of all the effort put into figuring how to make Spacing into a successful small business was that, following the consultation, we never sat down to decide who would be responsible for making sure the work happened, nor when such work would take place, nor even what resources would be required. The key to successful strategic-planning, I now realize, is not just determining what needs to be done in a particular situation (as I did when I wrote the business plan, and which was re-articulated during the consultation with D.B. Scott), but also figuring out the carry-through: who will do it, what resources will be required, and by what date things will be completed. And then ensuring the work actually happens. But, unfortunately, that epiphany came to me too late.

 

Deciding to move on

By the end of June 2007, I was exhausted, frustrated, and tired of being broke all the time: burnout had set in and I did not have the drive to continue as Spacing’s business manager, which was becoming a more challenging and less rewarding job for me with each passing day. I was undecided about leaving the magazine but when my other employer offered to make my part-time job into a full-time position at the beginning of September, I decided that I should quit Spacing. So, on July 12, I announced my resignation to Matthew Blackett and Dale Duncan via e-mail and we met to discuss it the following day. We decided I would wrap up the work I had underway and the resignation would be effective September 1.

In the end, it is amusing—but not surprising—that I fell victim to one of the very challenges of small-magazine publishing articulated in Part 1 of this report. I had already seen it happen to my friends at Shameless (who had started their magazine for teenage girls around the same time as Spacing was launched) and, soon after I announced my decision to leave Spacing, the magazine’s ad director, Alex McKenna, also resigned. As Melinda Mattos, co-founder and ex-editor of Shameless, put it “There’s something romantic about being up in your pyjamas until two in the morning working [for free] on a magazine—for the first few years.”[83] After two years of hard work on behalf of Spacing, I realized it was not my dream that we were staying up late to achieve and I was tired from the lack of sleep. I also felt I had reached the limit of my ability to help with the business side of Spacing, a feeling best described in my resignation letter:

I never expected just how complicated, time-consuming, and ultimately overwhelming actually being the magazine’s business manager would be for me. I committed myself to helping out Spacing initially because I believed I could make a difference significantly and quickly, in part based on what I had learned about magazine publishing in school. But, in retrospect, I didn’t really I know what I was getting into by agreeing to be Spacing’s business manager and I overestimated my own skills, knowledge, and ability with regards to business matters…. Despite my best efforts to convince myself otherwise, I don’t seem to be cut out for the business side of magazine publishing: the stress and anxiety I’ve experienced trying to figure out everything from draconian Canada Post regulations to confusing Magazines Canada remittance reports to what to submit as financials to various grant applications has simply become too much for me.[84]

And even though it had all become “too much” for me, I still wanted to conduct another situational analysis to evaluate the progress made towards my long-term goal of turning Spacing into a viable small business.

 

Evaluating the progress made

When compared with the first situational analysis I had conducted two years prior, the situational analysis I completed in September 2007 (see Appendix B) showed that my time acting as Spacing’s business manager—and my attempts to apply strategic-planning principles to improve the magazine’s business organization and operating efficiences during that period—had, in fact, had a measurable positive impact.

Spacing was now published by an incorporated business, Spacing Media Inc., which was registered in the province of Ontario, and had an office in downtown Toronto. While financial recordkeeping was still a work in progress,[85] there was at least now a sense of annual and per-issue revenues and expenditures—and, at some point, the accounting software I had purchased would be used to set up proper accounting systems, which would be useful for tracking profits from ancillary products like Spacing’s ever-popular subway buttons and for calculating taxes owing.

Spacing was still riding a wave of popularity, which continued to help attract contributors, advertisers, event partners, and people simply wanting to support the magazine (such as the Centre for Social Innovation, which had found a way to subsidize the magazine’s rent to make it more affordable). Having published eight issues, and with a ninth on the way, the magazine’s editors seemed comfortable with the routine of producing a new magazine every four months. The production schedule Matthew Blackett had set up as the magazine’s publisher and creative director was keeping things on track so that readers, subscribers, advertisers, and retailers now knew when to expect a new issue. It was also helpful that the editorial collective had an office in which to work and hold meetings. In addition, despite the low rates Spacing continued to pay, there were still a large number of loyal writers, illustrators, and photographers wanting to contribute to the magazine and the Spacing Toronto blog, and well-known Toronto journalists like John Lorinc and Christopher Hume had become regular contributors. In general, the overall quality of of the magazine and the blogs had increased since the editors were now more experienced writers and editors. Their efforts had been recognized with more awards, including the Canadian Society of Magazine Editors naming Spacing “2007 Small Magazine of the Year” and Matthew Blackett and Dale Duncan as “2007 Editor of the Year.”

Public-space issues had begun to interest other local media outlets and editors and producers had begun relying on Spacing for story ideas for their mainstream audiences. Because of the magazine’s reputation as “the public face of public space,” journalists were also now calling the Spacing office routinely to obtain comments on cuts to transit service, the redevelopment of the waterfront, the creation of new parks, and the like, and Spacing editors were contributing to other publications on a regular basis (usually writing about public-space topics). Still, despite local media interest and increased coverage of public-space issues, no direct competitor for Spacing had emerged, which was fortunate because the magazine was still building its readership.

Subscriptions and newsstand sales were growing, albeit slowly: Spacing had 900 subscribers and approximately 2,500 copies of each issue were being sold on the newsstand (in addition to sales at launch parties and other special events). To meet demand for the magazine, the regular print run for each issue was now 5,000, and Magazines Canada was distributing more copies of Spacing in Toronto and nationwide. In general, though, not a great deal of revenue was being generated through circulation, even though newsstand sales were now generating slightly more income since Spacing’s cover price had been increased from $6 to $7.

Fortunately, advertising and button sales were still profitable for the magazine. Revenue from the former increased dramatically during the time that Spacing had had a dedicated ad director, and even though Alex McKenna had resigned recently, the relationships he had developed with certain companies were continuing to benefit the magazine through the rebooking of ads. The Toronto Transit Commission was now producing its own subway buttons, but Spacing’s versions continued to sell well at events and through the website. Additional revenue was derived from grants: Spacing had received funding from the Ontario Arts Council for three years in a row and, as already mentioned, had also been recently awarded project funding from the Ontario Media Development Corporation to conduct a subscription drive. Since per-copy mailing costs were much less now that Spacing had a Publications Mail number and qualified for the Publications Assistance Program, the cost of fulfilling new subscription orders was considerably lower.

Unfortunately, with the departure of both Spacing’s ad director and business manager, the magazine was back at square one what it came to who was “taking care of business.” Matthew Blackett had taken on ad sales and newsstand distribution again, and Dale Duncan was handling subscriptions—in addition to their respective editorial duties and Blackett’s design work. But, human resources issues aside, Spacing appeared better organized and better run than it was back in September 2005. While there were still some problems to resolve, there were more positive aspects to Spacing’s situation in September 2007 than negative ones. In general, the situational analysis suggested that if the magazine remained on the same path, its viability as a small business seemed good and it would eventually achieve its goals and objectives, as will be discussed in more detail in the next section of this report.

 

 

PART 3 – THE FUTURE OF SMALL MAGAZINES IN CANADA

“Unfortunately, magazines do come and go with some regularity—but the strong do survive. And by strong, I don’t mean the biggest… I mean those stalwart independents who carefully carve out their niches, develop strong editorial voices and consequently readerships, and continue to produce creative and pertinent content for their readers, month after month, year after year.”[86]

— Donald G. House, president, Alberta Magazine Publishers Association

 

Spacing’s potential for long-term success

According to the Print Measurement Bureau, one in every three new magazines fails within the first year, and more than 40% of the Canadian magazines that folded in 2005 were less than five years old.[87] Such statistics mean that, with each issue published, Spacing is beating the odds and I am confident that the magazine will be around to publish its planned fifth-anniversary issue this fall.

Since its launch in December 2003, Spacing has gone from being the part-time labour of love of half a dozen public-space enthusiasts, who were not sure whether they would ever publish a second issue, to a nationally distributed magazine with a passionate readership and a growing subscriber base, which is published by an incorporated small business. Through special events, sponsorships and partnerships, frequent media appearances, a line of award-winning subway buttons, and a hugely popular blog, the publishing team behind Spacing has turned its “baby” into much more than just a magazine—and, in doing so, has brought together such seemingly disparate groups as cycling activists, transit geeks, architects, pedestrians, urban planners, municipal politicians, and heritage preservationists to create a community that is unified in its concern for public-space issues in Toronto.

I believe the concern of Spacing’s own staff for these same issues—and their belief in the magazine’s ability to be an agent for social change—is at least partially responsible for its continued success, despite the odds stacked against small magazines in Canada. Which may mean that the founder and publisher of Cottage Life, Al Zikovitz, was right when he said, “I think so much of it is that [small-magazine publishers] just work on passion. Not numbers but passion—a firm belief in what we do, and goddammit, no one’s going to stop us, no one’s going to say no to us. And if anyone says you can’t do it, all the more reason why you want to prove them wrong.”[88] The Toronto-lovers who created Spacing, and who continue to volunteer their time to prove the naysayers wrong and keep the magazine going, possess the same drive and determination that helped Zikovitz expand Cottage Life—now 20 years old and with a much larger circulation—from a small magazine into a multi-title publishing company that through the magazine, website, television program, and biannual tradeshows strives to be “the first source for cottage-related information, products, and services.”[89] Another reason why I feel Spacing will succeed in the long run is the award-winning quality of the magazine, and the niche audience that it has developed and retained. To refer back to the advice offered to magazine publishers by the British Columbia Association of Magazine Publishers (BCAMP), it is clear that Spacing’s editors have succeeded in creating the right “targeted editorial environment.”

But passion and quality can only take a periodical so far. For reasons I have already presented, a small magazine is a business and, as such, should the people behind Spacing wish it to be successful in the long run, they will have to pay attention to BCAMP’s second piece of advice and “develop revenues to support and justify continued publishing.”[90] Given the scope of Spacing’s ancillary projects and “extracurricular” activities, and the very real threat of staff burnout, the magazine’s continued existence will always be somewhat precarious until staff members can be paid to work on the magazine full-time. To afford salaries means increasing revenues and the staff of Spacing needs to become more aggressive about making money and commit to putting more time, effort, and resources into revenue-generating activities. Fortunately, the means for Spacing to generate additional revenue is already in place (and, since I stepped down as the magazine’s business manager, people are taking that aspect of the magazine more seriously).

The success of the recent subscriptions drive and the dramatic increase in ad sales revenue that resulted when the magazine had a dedicated ad director confirm that D.B. Scott was right to recommend that Spacing focus on these areas—and I feel that the potential for even greater revenue generation exists. Attracting more readers and converting newsstand buyers to subscribers would provide Spacing with a renewable source of increased income, one which would be especially welcome since the magazine receives a greater amount per-copy sold as part of a subscription than for a copy sold in a store. At present, Spacing’s single-copy sales per issue outnumber its subscription copies, when newsstand sales typically make up only 17% of a Canadian magazine’s sales, versus 83% from subscriptions. While having a high sell-through rate on the newsstand is desirable (and Spacing’s sell-through rate of over 85% is well above the industry standard of 50%), it is a variable and vulnerable source of income for any magazine because periodicals are typically impulse purchases and their sales can be affected by something as big as a downturn in the economy or something as small as choosing the wrong colour for use on the cover. In addition, Spacing is not immune to the newsstand-access issues already discussed, including the competition posed by American titles and the shrinking number of retail outlets carrying magazines.

Fortunately, Spacing’s online presence also has potential. The readership of the Spacing Toronto blog is large and its popularity keeps growing as word spreads that it is essential reading for those interested in urban issues. At present, efforts to sell online advertising have been mixed but that avenue could, no doubt, be pursued more aggressively now that Spacing.ca regularly attracts 5,500 daily visitors. Cross-promotional opportunities also exist with Spacing Montreal, which has seen its audience grow from 400 daily visitors to over 1,400 since its official launch in September 2007.[91] In addition, Spacing has an e-newsletter mailing list with 3,500 subscribers and Spacing’s Facebook group has 2,100 members.[92] These numbers suggest that more people are encountering and interacting with Spacing via the Internet than are buying the magazine on the newsstand or via subscription. Even if there is some overlap, there is still a sizeable community of interested readers inclined to also enjoy the print version of Spacing, and who could be convinced to subscribe or buy the magazine on newsstands (to that end, sidebar ads on the blog “recommend” subscriptions and subway buttons and link directly to the online store where these items can be purchased immediately).

There is also the possibility of deriving more revenue from the magazine itself. The cover price was increased with the most recent issue but adding another issue each year (as is planned for 2009) will have even more of an impact on Spacing’s bottom line—both by directly increasing income from newsstand sales, subscriptions, advertising, and an additional launch party, and indirectly via the benefits that accompany the adoption of a more standard (for small magazines) quarterly publishing schedule. And beginning to accept donations from supporters and inviting private investment are other avenues to explore—ones that would not necessarily increase its staff’s workload, which is important to take into consideration.

So while there is the possibility of Spacing being financially successful, I feel the human resources needed for the magazine to achieve that potential are lacking. To pursue the majority of the revenue-generation options already mentioned will require staff to work additional hours. One solution to the staff shortage on the business side of the magazine would be to streamline editorial activities to free up staff members to sell ads and promote subscriptions. But most of the people who currently work on the editorial side of the magazine are not skilled in theses areas, nor are they keen to take on additional responsibilities (or they would have already volunteered to help out in this capacity), and rather than risk a drop in the quality of the magazine, especially once Spacing begins publishing four issues a year, it makes more sense to add dedicated business staff. Already needed are a business manager and ad director, whose hiring should be followed by a circulation manager (to manage subscriptions and newsstand distribution) and an individual to coordinate the sales, marketing, and distribution of Spacing’s subway buttons. Right now, Matthew Blackett and Dale Duncan are handling all of these jobs but once the frequency of the magazine increases, their working hours should be focused exclusively on the production of new issues of Spacing given that their true talents lie in graphic design and editing, respectively.

Even with additional employees, though, the threat of staff burnout is still very real and should not be overlooked. I quit because of it and I worry that it could afflict other key Spacing staff members—particularly those who have been working on the magazine for almost five years without taking home a salary. Also, should efforts to raise Spacing’s revenues succeed to the point where salaries can be paid, publishing a magazine three (and soon four) times a year and coordinating all of Spacing’s ancillary projects is still be an overwhelming and potentially exhausting amount of work for a tiny staff to carry out. To ensure its continued survival, Spacing must figure out how a small number of people can continue to accomplish great things on a shoestring budget and not get burnt out, which is perhaps the biggest challenge facing today’s small magazines. Because no matter how passionate and energetic the individual, most people can only stay up late for so many nights in a row. I lasted two years; how long the rest of the staff at Spacing will last is to be determined. However, as long as passion fuels the publishing of the magazine and staff burnout is avoided, I believe that Spacing will last at least as long as Cottage Life has and continue to represent a Canadian small-magazine success story—in part, because it has already come so far and exceeded many people’s expectations, including my own.

In any case, the staff of Spacing continues to push onwards. According to Blackett, Spacing’s fifth-anniversary issue, titled “ThinkToronto” and scheduled for a fall 2008 publication, will see a re-design and a re-focus of the magazine’s editorial sections, with a strong emphasis on increasing the percentage of advertising in the issue to at least 25%. Because the issue will feature the results of a design competition, editorial costs will be less than usual and an opportunity to solicit congratulatory advertising (“a possible cash cow”) has been created—while simultaneously reaching out to Toronto’s professional city-building community of architects, urban planners, landscape designers, and the like. It is a smart move for Spacing and one that suggests the magazine’s staff have recognized and are embracing, at least subliminally, the goals and objectives I articulated last year for inclusion in Spacing’s business plan. Supportive of the goal of building revenue from magazine sales, this issue will no doubt attract new readers (and hopefully promote subscription purchases at the same time), and revenue from advertising will also increase—at the same time as costs are cut because of the reduced amount of original editorial content needed. Taken as a whole, this issue is a smart way for Spacing to increase sustainability by expanding the magazine’s audience and bringing onboard new funders (in this case, advertisers). It also suggests recognition of the magazine as a business and acknowledgement of the necessity of capitalizing on its growth potential to guarantee its continued ability to publish. Or, as Blackett observed in a recent e-mail, “The issue is meant to signal the next stage of Spacing, entering adulthood, so to speak.”[93] In the same way that young people who have moved out of their parents’ home come to realize that they have to start paying their own way if they want to do anything thing, Spacing is growing up and figuring out how to do exactly that.

 

Proof of the continued viability of magazine publishing in Canada

Despite the challenges outlined in Part 1 of this report and the difficulties I encountered at Spacing (and those that the magazine still must counter), I believe there is hope for Canadian magazines—particularly for small publications. As Rowland Lorimer noted in his 2005 report on the B.C. magazine industry, magazine publishing in Canada is a “stable cultural industry” and one that seems to be “expanding with economic and population growth.”[94] There are a number of factors behind this stability and expansion, which suggest that the forecast for magazine publishing in Canada is not as gloomy as some critics have suggested.

 

Marginal increase in magazine-reading and -buying among Canadians

Between 2002 and 2006, the Print Measurement Bureau found that the average readers per copy (“the most reliable standard of magazine readership”) for magazines in Canada rose from 5.1 to 5.5[95] while the number of magazine issues read by Canadians rose from 6.3 to 6.4[96]. Also worth noting is that between 1997 and 2005, consumer spending on magazines and periodicals in Canada rose by 7% (while spending on newspapers decreased by 7% over the same period).[97]

 

Increase in readership of Canadian-produced titles

Between 1998 and 2003, single-copy sales of Canadian magazines increased by 28% and their total circulation rose by 30%.[98] Currently, Magazines Canada estimates the market share of Canadian titles to be 41% of all magazines sold in Canada[99]—however, the organization feels it should and could be higher since it has been proven that Canadians have a preference for homegrown periodicals: 92% of the population feels that they “play a significant role in informing Canadians about each other,” 88% believe that it is important that editorial content be created specifically for them, and 90% feel that U.S. titles do not effectively cover Canadian issues.[100] These three findings highlight the cultural importance of the domestic periodical industry and which suggest that Canadians would buy more Canadian magazines, provided they could identify them. Therefore, it is not surprising that Magazines Canada’s 2002 “Genuine Article” national circulation and promotion program, which aimed to raise awareness about which magazines were in fact Canadian, caused sales of participating titles to increase, on average, by 6%[101]—proof that Canadians will buy more homegrown magazines if they can pick them out. This campaign continues today, with Canadian publishers encouraged to display the redesigned “Genuine Canadian Magazine” logo prominently on the covers of their publications.

 

Continual launching of new Canadian magazines

In 1956, Canada had just 661 periodicals to call its own (which accounted for, by some estimates, fewer than 25% of all magazine titles circulating in the country) but ever since the 1965 O’Leary Royal Commission led to the introduction of measures to protect and promote the Canadian periodical-publishing industry, the number of magazines in Canada has increased every year—as has their market share (which was just 20% in 1965).[102] More recently, a 2005 Department of Canadian Heritage internal evaluation of the Publications Assistance Program discovered a 7% rise between 2002-03 and 2004-05 in the number of consumer magazines available in Canada, which is significant when compared to the change in the number of titles available in the U.S. (down 1.6%) and the United Kingdom (down 3.4%) during the same time period.[103] Canadian Heritage only examined change over a short time period but when one analyzes the data over 10 years, as Statistics Canada did, it becomes apparent that between 1993 and 2003, Canada registered a 62% increase in the number of consumer magazines.[104] Trend analysis for more recent years is not available, however, similar information can be gleaned from Masthead, which tracks magazine “starts and stops” in Canada and publishes its findings on an annual basis in its March/April issue. In 2004, the magazine-industry trade magazine reported that 139 new magazines launched, while in 2005 and 2006, the number of launches they counted was 85 and 71, respectively. And Masthead also found that the number of annual closures seems to be declining as well (from 50 closures registered in 2002 to 34 in 2004 to just 21 in 2006).[105]

 

Revenues are up and the majority of Canadian magazines are profitable

Between 1998 and 2003, there was an increase in industry revenues by 23%.[106] While it is not known how exactly periodical publishers are faring in more recent years, in its 2003-04 examination of the industry, Statistics Canada found that 62.5% of all Canadian magazines were profitable.[107] The profit margin for these magazines is just 10% on average, however, as Globe & Mail journalist James Adams pointed out in his 2005 article about charitable status for magazines, the success of magazines like Chatelaine and Reader’s Digest proves that it is possible for homegrown titles to earn millions of dollars in profit annually and to attain circulation levels of over one million.[108]

Profitability of magazines is tied to ad sales and magazine advertising revenue growth has been outpacing TV and other media in Canada in recent years. Magazines Canada has been investing in campaigns to convince advertisers and media buyers of the value of advertising in magazines—as least as a secondary market. And it may be paying off: between 1998 and 2003, Canadian magazines experienced a 23% increase in revenue derived from advertising.[109]

 

Subscription sales are still strong in Canada

Canadian magazines also continue to overcome the economic odds stacked against them on the newsstand by successfully taking advantage of Canadians’ increased likelihood of buying magazines by subscription. In Canada, 83% of consumer magazine sales are by subscription versus just 17% at the newsstand (the opposite of Australia and the United Kingdom, where at least 89% of all magazines sold are newsstand sales).[110]

 

The small-magazine advantage

Despite all of the difficulties they will face, Canadians start new magazines every year and the majority of them are small magazines, which can likely be attributed to the fact that it is easier and requires a smaller initial financial investment to launch one. Masthead’s most recent annual survey of “stops and starts” found that of the 71 magazines launched in 2006, 13% had circulations of 5,000 or less, and 60% fell into the circulation category of 5,001-25,000 (up from 41% in 2005).[111] In fact, as Masthead observed, “small- and medium-sized publishers have always been responsible for more than 90% of all magazine starts,”[112] demonstrating that small magazines are the ones driving industry growth in Canada.

As discussed earlier, because they are not as beholden to advertisers or other commercial interests as larger-circulation publications, small magazines are able to present cutting-edge work that might not otherwise be published. Also, as small businesses, there are fewer layers separating small-magazine publishers from their audiences, which means that publications of this size are able to establish a closer connection to their readership: at events, readers can mingle with the staff that produce the publication; at street fairs, they can buy the magazine directly from one of its editors; and, they can call the magazine’s office directly to have subscription problems resolved. As noted in the Keeping Readers report, “personalized service is, for [small magazines], not merely a buzzword about customer management, but a daily operational reality”[113]—but one that works to their advantage in that it helps develop loyalty and a community of supportive readers.

Finally, while most magazine-industry infrastructure (postal rates, distribution channels, etc.) supports the needs of larger magazines, small magazines have some flexibility when it comes things like swapping advertising in exchange for the use of a venue for a launch party or negotiating direct-to-retail distribution arrangements. (For example, Spacing gets 90% of the cover price for copies sold at one Toronto music store to which it supplies magazines directly.) This flexibility also means they can employ creative revenue-generating strategies (such as selling one-inch buttons) and are thus not as reliant on advertising as bigger-budgeted magazines produced by multi-title publishing corporations.

Yet, even though the future of the magazine industry in Canada overall seems secure, and small magazines possess the survival skills needed, the production of individual titles year after year remains a challenge. To thrive, small-magazine publishers need passion and dedication but also common sense.

 

Principles for successful small-magazine publishing

Having looked closely at the challenges all Canadian magazines face, and witnessed the difficulties they can present to small magazines firsthand at Spacing, it would be misleading for me to suggest that publishing a small magazine in Canada is easy, however, for the reasons presented previously, I feel confident saying that the future of small-magazine publishing in Canada is bright. For instance, THIS Magazine may still be the work of just a handful of (paid) staff but the bimonthly magazine just celebrated its 40th anniversary—and Spacing could be similar success-story-in-the-making. For that reason and because I feel there are lessons to be learned from the magazine, I have distilled the knowledge and insight I gained at Spacing into 10 principles for successful small-magazine publishing, which I present here as “food for thought” for current (and future) Canadian small-magazine publishers hoping to beat the odds themselves:

  1. Pay attention to history: know why magazines commonly fail and what pitfalls to avoid.
  2. Find your niche and speak to it: produce a high-quality editorial product, don’t attempt to reach too many markets, and focus on your strongest subjects.
  3. Avoid financial fumbles: hire an accountant, balance your chequebook, and pay taxes.
  4. Exercise smart growth: don’t have unrealistic expectations and don’t expand too quickly, but do expand and take the time to plan out how to make it happen.
  5. Be competitive: look at what other magazines are doing and figure out who your competitors are (and recognize that they may not always be other magazines).
  6. Use grants and private funding to your advantage: don’t rely on this source of income but, when the opportunity arises, take advantage of what is available to grow your business.
  7. Get the word out: marketing, self-promotion, and advertising are all important and investing in these areas will pay off.
  8. Recruit allies and supporters: figure out whom you can ask for financial support, who will buy subscriptions, and take on volunteers and interns.
  9. Play by the rules: respect privacy regulations and advertising/editorial guidelines, don’t abuse copyright, and understand the benefits of contracts.
  10. Be grateful: thank everyone who is contributing to your continued ability to publish—whether or not you’re able to pay them (but do that when you can).

If small-magazine publishers keep these principles at heart, and acknowledge the challenges of their industry, I believe it is possible for them to successfully (and viably) produce small-circulation periodicals in Canada today—and, for it to be a legitimate and rewarding career. To quote Colleen Seto, executive director of the Alberta Magazine Publishers Association,While it may not be the glamorous life you envisioned, producing a glossy little number can be a pretty satisfying way to make a living.”[114]

 

 


Notes

1 Scott, “Some truths about indie mags.” RETURN

2 Keys, response to “Indie Mag Revolution in Eye Weekly.” RETURN

3 Duncan, “Fight Club,” 8. RETURN

4 Statistics Canada, Periodical Publishing Survey: 2003/04. (Note: Magazines Canada 2005 estimate was 1,160 consumer magazines) RETURN

5 Canadian Living, according to “Canadian Newsstand BoxScore,” 2007. RETURN

6 Ibid. RETURN

7 Ibid. RETURN

8 Lorimer and Gasher, Mass Communication in Canada, 140; Sutherland, “Words to the Wise,” 19. RETURN

9 http://www.pch.gc.ca/progs/ac-ca/pol/magazines/index_e.cfm?nav=2 RETURN

10 For a not-for-profit magazine to be awarded charitable status, there must be a foundation in place to oversee its publishing activities and Revenue Canada must rule that the title has, in its opinion, a strong-enough educational mandate (rather than being published for purely “commercial” or “informational” reasons). RETURN

11 Parker, Reaching Readers, 42–43. RETURN

12 Ahnsu Consulting, Culture of Cultural Magazines, 10, 32–69. RETURN

13 Ahmad, Geist in the Machine, 16. RETURN

14 Duncan, “Fight Club,” 8. RETURN

15 Whittington-Hill, “Magnetic North,”194. (Note: at the time of writing, the print version of Blackfly was on hiatus) RETURN

16 Ibid., 197. RETURN

17 Hodgkinson, “The mourning after,” November 27, 2005. RETURN

18 American Society of Magazine Editors, “Number of Magazines”; Abacus Circulation, Taking Back the Rack, 18. RETURN

19 Abacus Circulation, Taking Back the Rack, 21; “U.S. Magazine Spill,” 2005. RETURN

20 “Canadian Newsstand BoxScore,” 2007. RETURN

21 Lorimer, Vibrant But Threatened, 244. RETURN

22 A March 2002 Magazines Canada-funded study of 80 U.S. titles found that these magazines discounted their single-copy price in Canada by an average of 15.5% (or roughly $1 a copy), compared to the price that they would have been charged using the US price multiplied by the prevailing exchange rate. (Taking Back the Rack, 59) RETURN

23 Since July 1, 2002, the Foreign Publishers Advertising Services Act allows foreign publishers “to sell up to 18% of the space dedicated to advertisements in their publications to Canadian advertisers.” RETURN

24 Lorimer and Gasher, Mass Communication in Canada, 183. RETURN

25 Periodical Marketers of Canada, “The Newsstand Channel, 2005/06.” RETURN

26 Utne, “Maple Leaf Rags.” RETURN

27 Lorimer, Heterogeneous World, 40, 34. RETURN

28 Periodical Marketers of Canada, 2005 PMC Periodical Database Report. RETURN

29 Periodical Marketers of Canada, “The Newsstand Channel, 2005/06.” RETURN

30 Abacus Circulation, Taking Back the Rack, 5. RETURN

31 Periodical Marketers of Canada, 2005 PMC Periodical Database Report (see chart on page 13). RETURN

32 Ibid. RETURN

33 Statistics Canada, Periodical Publishers Survey: 2003–04. RETURN

34 McCreadie, presentation, January 24, 2005. RETURN

35 Abacus Circulation, Taking Back the Rack, 22. RETURN

36 Ahnsu Consulting, Culture of Cultural Magazines, 16. RETURN

37 Magazines Canada’s analysis of Publications Mail rate increases from 2001 to 2007 found that magazine publishers mailing at the Publications Mail National Distribution Guide (NDG) presort rate have endured—depending on their magazine’s per-copy weight—1% to 8% increases every single year to the point where, for example, the per-copy cost of mailing a 300g magazine under this system has increased by 27% overall during this time. RETURN

38 Shields, “Tally ’06,” 14. RETURN

39 Statistics Canada, Periodical Publishing Survey: 2003/04. RETURN

40 Statistics Canada, “Periodical Publishing.” RETURN

41 Statistics Canada, Periodical Publishing Survey: 2003/04. RETURN

42 Statistics Canada, “Periodical Publishing.” RETURN

43 Hayes, “Who’s the Boss?,” 36. RETURN

44 Mah, “Worlds Are Colliding!,” 22. RETURN

45 Riggs, lecture, February 1, 2005. RETURN

46 Scott, reference to The Walrus, in Adams’ “We want your tax dollars,” R6. RETURN

47 Bordon, presentation, February 1, 2005. RETURN

48 When determining how to spend a client’s advertising budget, media buyers rely extensively on audited circulation figures in combination with PMB demographics and psychographics. This information allows them to target very specialized audiences (for example, men aged 30-35 who drive SUVs and live in Calgary) in the most efficient way. RETURN

49 Hodgkinson, “The mourning after,” November 27, 2005. RETURN

50 Own addition based on available data. Figures for PAP and CMF taken from Numbers and Issues — Periodical Publishing Policy and Programs Annual Report 2005-2006; figures for Canada Council from its online database of grant recipients. RETURN

51 Statistics Canada, Periodical Publishing Survey: 2003/04; Stephen Osborne’s “Subsidy Management Model” suggests that the typical small-circulation quarterly receives 1% of its revenue from PAP, 13% from the CMF, and 31% from non-specified grants; for a total of 45%. RETURN

52 Department of Canadian Heritage, “Important Notice: Public Consultations.” RETURN

53 Gontard, Raising the Revenue at a Small-Circulation Magazine, 11–13. RETURN

54 Ibid., 13. RETURN

55 Whittington-Hill, “Magnetic North,” 198–99. (Note: The situation has changed and THIS Magazine currently receives funds from the Ontario Arts Council.) RETURN

56 Duncan, “Fight Club,” 8. RETURN

57 Abacus Circulation, Keeping Readers, 12. RETURN

58 Webster, “Exciting developments are afoot.” RETURN

59 Statistics Canada, Periodical Publishing Survey: 2003/04. RETURN

60 Ahnsu Consulting, Culture of Cultural Magazines, 19. RETURN

61 Abacus Circulation, Keeping Readers, 13. RETURN

62 Blackett, e-mail, September 17, 2005. RETURN

63 In my case, it was a party hosted by Coach House Books, held shortly after I had moved back to Toronto. RETURN

64 B.C. Association of Magazine Publishers, Business Strategies, 7. RETURN

65 Riggs, lecture, January 26, 2005. RETURN

66 Ibid. RETURN

67 Blackett, e-mail, September 17, 2005. RETURN

68 Generally referred to by the acronym for Strengths, Weakness, Opportunities, and Threats. RETURN

69 Which I did when I conducted a second situational analysis in September 2007 (see Appendix B). RETURN

70 The framework is itself an extension of the 3 C Analysis, which examines only company, customers, and competitors. (For more information, see http://www.netmba.com/marketing/situation.) RETURN

71 Without an office, publisher Matthew Blackett’s living room served regularly as the venue for meetings and copy-editing “parties.” RETURN

72 Matthew Blackett would later explain that this was due in part to the founding editors’ incredulity about the magazine’s ability to last beyond one or two issues. RETURN

73 Scott, “Common mistakes of small magazine publishers.” RETURN

74 I filed the application to incorporate Spacing Media on July 14, 2006, through CorporationCentre.ca. RETURN

75 Magazines Canada, How to Start a Magazine. RETURN

76 Magazines Canada publishes a very useful handbook, The Small Publisher’s Guide to Mailing Your Publication (2004), produced in collaboration with Canada Post, the Canadian Business Press, and the Department of Canadian Heritage, which is available online at http://magazinescanada.ca/files/Small%20Publishers%20Mailing%20Guide.pdf. RETURN

77 Riggs, “Organizational Management,” 30. RETURN

78 Moffitt, “Word of Mouth Discovery #8.” RETURN

79 Riggs, “Organizational Management,” 33. RETURN

80 B.C. Association of Magazine Publishers, Business Strategies, 5. RETURN

81 Scott, “Importance of a Business Plan,” 88. RETURN

82 Ibid., 89. RETURN

83 Duncan, “Fight Club,” 8. RETURN

84 Author e-mail, July 12, 2007. RETURN

85 At the time of writing, Spacing had just hired a bookkeeper. RETURN

86 House, “President’s Message,” 4. RETURN

87 Sankey, “Flash in the Pan?,” 9. RETURN

88 Wightman, “Al’s Excellent Adventure.” RETURN

89 Cottage Life website, “Our Story.” RETURN

90 B.C. Association of Magazine Publishers, Business Strategies, 5. RETURN

91 Blackett, Spacing website statistics spreadsheet, February 24, 2008. RETURN

92 Blackett, E-mail message to author, February 24, 2008. RETURN

93 Blackett. E-mail message to author, February 24, 2008. RETURN

94 Lorimer, Heterogeneous World, 6. RETURN

95 Print Measurement Bureau, PMB 2007 Survey. RETURN

96 Sutherland, “Words to the Wise,” 19. RETURN

97 Hill Strategies Research, “Consumer Spending on Culture in Canada…”: 5. RETURN

98 Own analysis of Statistics Canada Periodical Publishing Survey, 1998 and 2003/04 editions. RETURN

99 Magazines Canada press release, January 8, 2007. RETURN

100 Referenced without detailed attribution several times in various Magazines Canada publications. RETURN

101 The average was 6%: larger circulation magazines gained 3%, mid-sized magazines 12%, and small magazines gaining 39% (Taking Back the Rack, 115). RETURN

102 Gray, Production & Management of Small Magazines, 4. RETURN

103 Canadian Heritage, Summative Evaluation of the Publications Assistance Program, iv. RETURN

104 Statistics Canada, “Periodical Publishing.” RETURN

105 Shields, “Tally ’06,” 11. RETURN

106 Own analysis of Statistics Canada Periodical Publishing Survey, 1998 and 2003/04 editions. RETURN

107 Statistics Canada, Periodical Publishing Survey: 2003/04. RETURN

108 Of course, the two magazines he mentions are very mainstream, general-interest periodicals; he points out that “the tricky part appears to be sustaining something with a circulation between 6,000 and 60,000.” (Adams, “We want your tax dollars,” R6.) RETURN

109 Own analysis of Statistics Canada Periodical Publishing Survey, 1998 and 2003/04 editions. RETURN

110 Abacus Circulation, Taking Back the Rack, 22. RETURN

111 Just 23% of all magazines launched last year started with circulations above 25,000. (Shields, “Tally ’06,” 14.) RETURN

112 Shields, “Tally ’06,” 15. RETURN

113 Abacus Circulation, Keeping Readers, 14. RETURN

114 Seto, “Editor’s Letter,” 5. RETURN

*This information was collected in July 2006 and should be used for reference purposes only as it may be out of date. RETURN

 

 


Bibliography

Abacus Circulation. Keeping Readers: Fulfillment for Small Canadian Magazines. Department of Canadian Heritage, March 2001.

————. Taking Back the Rack: Amid New Challenges, Canadian Magazines Compete for Visibility on our Newsstands. Department of Canadian Heritage, February 2003.

Adams, James. “We want your tax dollars.” Globe and Mail, October 29, 2005.

Ahmad, Anne. Geist in the Machine: A Case Study of a Literary Magazine. Master of Publishing project report, Simon Fraser University, 2000.

Ahnsu Consulting Group. The Culture of Cultural Magazines: A Report on the Critical Issues Faced by British Columbia’s Cultural Magazines. British Columbia Association of Magazine Publishers, May 2004.

American Society of Magazine Editors. “Number of Magazines, 1988–2006.” www.magazine.org/editorial/editorial_trends_and_magazine_handbook/1093.cfm.

Blackett, Matthew. E-mail message to author, September 17, 2005.

————. E-mail message to author, February 24, 2008.

————. Spacing website statistics spreadsheet, February 24, 2008.

Bordon, Alessandra. Presentation to Master of Publishing class, Simon Fraser University, February 1, 2005.

British Columbia Association of Magazine Publishers. Business Strategies. In print: Working Strategies for Magazine Publishers. (Vancouver: British Columbia Association of Magazine Publishers, n.d.).

Canada Council for the Arts. Searchable database of grant recipients. www.canadacouncil.ca/grants/recipients/ (Accessed February 11, 2008)

Coast to Coast Newsstand Services Partnership. Canadian Newsstand BoxScore, 2007. http://ctcmagazines.com/client/ctc/BoxScoreList.htm (Accessed September 6, 2007)

Cottage Life. “Our Story,” Cottage Life website. www.cottagelife.com/index.cfm/ci_id/1294.htm.

Department of Canadian Heritage, Corporate Review Branch, Evaluation Services. “Executive Summary,” Summative Evaluation of the Publications Assistance Program, June 22, 2005.

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APPENDICES

 

Appendix A: Situational Analysis of Spacing #1

app 1.1 app 1.2 app 1.3 app 1.4 app 1.5 app 1.6 app 1.7 app 1.8 app 1.9

 

 

Appendix B: Situational Analysis of Spacing #2

app 2.1 app 2.2 app 2.3 app 2.4 app 2.5 app 2.6 app 2.7 app 2.8 app 2.9 app 2.10 app 2.11 app 2.12

 

 

Appendix C: Steps to Incorporating a Small Business in Ontario[*]

Preliminary decision-making

  1. Choose a name that complies with corporation-naming conventions. If concerned about uniqueness of name, can do a preliminary name search of NUANS database and/or check Canadian and/or US Trademark database(s):
    • Canada:
    +http://strategis.ic.gc.ca/app/cipo/trademarks/search/tmSearch.dolanguage=eng.
    • USA:
    +http://tess2.uspto.gov/bin/gate.exef=tess&state=mnu4c4.1.1
  2. Choose a registered office, which should be your actual office or someone’s residence (can’t be a PO box or RR address)
  3. Pick shareholders and decide on share allocation/allotment (one easy way is to have 100 shares, where the number of shares reflects percentage ownership)
  4. Decide on number of directors and choose directors
  5. Decide on number of officers and choose officers
  6. Choose a fiscal year-end (December 31 is typical)

 

Making things legal

1. Use an online incorporation service like www.corporationcentre.ca to do a corporate name search (NUANS Report type) and prepare and submit on your behalf the forms required to incorporate your business federally or provincially:
+++++a. NUANS name search
+++++b. Articles of Incorporation
+++++c. Initiation Notice of Directors
+++++d. Initial Notice of Registered Office

2. Use the Canadian Revenue Agency’s “Business Registration Online” system located at http://www.cra-arc.gc.ca/tax/business/topics/bn/bro/menu-e.html to register for the following:
+++++a. Federal Business Number (BN)
+++++b. CRA programs
+++++c. GST (if your annual revenue is $30,000+)
+++++d. payroll deductions (for Employment Insurance and Canada Pension +++++++Plan, if have employees on contract)
+++++e. corporate income tax account (automatically created when you +++++++incorporate)

3. Also use the BRO system to register your business name with the Ministry of Consumer and Business Services in order to get a Master Business License and Business Identification Number.

4. Once you have a Master Business License and Business Identification Number, apply for these accounts:
+++++a. Ontario Retail Sales Tax
+++++b. Ontario Employer Health Tax
+++++c. Ontario Workplace Safety and Insurance Board

Follow-up paperwork
1. Draw up shareholder’s agreement (if one is desired)

2. Purchase or produce appropriate number of share certificates

3. Call a meeting of the shareholders and directors at which:
+++a. The shareholders:
+++++i. Adopt a general bylaw (or series of bylaws) to regulate the affairs of the +++++++corporation
+++++ii. Elect the directors
+++++iii. Adopt a shareholders’ agreement (if one is desired)
+++++iv. The directors then pass resolutions to:
+++++v. Appoint officers to manage the corporation’s day-to-day affairs
+++++vi. Approve the share certificates
+++++vii. Authorize the issuance of shares
+++++viii. Set the fiscal year
(NOTE: the above can be accomplished by the written consent of the shareholders: to do so, all the shareholders and directors need to sign and date the last page of the bylaw(s)/resolution(s) document)

+++b. Each share certificate is signed by two officers and is either distributed to ++++the shareowner or stored in the minutes book for safekeeping.

+++c. The appropriate registers are completed:
+++++i. Securities register (alphabetically indexed list of share holders and their +++++++addresses and the number of shares held by each)
+++++ii. Shareholder’s ledger (chronological breakdown of share +++++++issuance/transfer/sale by each shareholder)
+++++iii. Stock transfer register
+++++iv. Directors’ register (Register of all current and former directors, +++++++including names and residence addresses with date(s) of election)
+++++v. Officers’ register (Register of all current and former officers, including +++++++names and residence addresses with date(s) of appointment)

4. Set up banking or make adjustments to existing banking arrangements (according to resolutions, particularly with regards to signing authority and borrowing money on behalf of the corporation)

5. Set up or make adjustments to financial accounts and record-keeping

6. Purchase a minute book (a binder with loose-leaf works just fine) and insert:
+++a. Articles of Incorporation
+++b. Bylaws
+++c. Shareholders’ Agreement (if one exists)
+++d. All minutes of meetings and resolutions of directors, shareholders, and any +++++committee(s)
+++e. Securities register
+++f. Directors’ register
+++g. Officers’ register
+++h. Accounting records
++++i. Share certificates (or if certificates have been distributed, then a sample ++++share)
+++j. Register of share transfers (if applicable)

 

Appendix D: Spacing Media Kit

 

Appendix E: Spacing Rate Card

 

Appendix F: Spacing Media Inc. Business Plan

 

 

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