8-11-04 12:10
The International Publishing Toolkit: What to Include

Launching a new title domestically is a risky proposition, but extending a brand internationally comes with its own set of challenges. Is it right for you?

By Mark J. Miller

Why Bother Going International?

Producing an international edition of your magazine does two things effectively. It opens up a consistent, if not overly large, revenue stream. And it’s a pretty good bet. Consensus from the publishers interviewed in this story is that most succeed. It can also extend your brand beyond U.S. borders. “If your advertisers have their products in various other countries, they’ll want a place to advertise,” says Ralph Monti, president of full-service magazine consultancy Special Interest Media.

Monti and Allen Furst, president of international-edition consultants Asian Projects Inc., say publishers should expect to receive between 5 percent and 15 percent of total revenue generated from an international publishing deal, with the foreign partner collecting the rest.

Mt. Morris, Illinois-based Watt Publishing has several international editions, some of which began publishing more than 50 years ago. CEO Jim Watt says that the extensions are often developed at the suggestion of advertisers who are looking to get into certain markets. “They often make the suggestion and then we follow through,” says Watt, citing five international editions, including Poultry International, with most ads coming from existing U.S. advertisers. Poultry International, now a pan-hemisphere tiotle, started in Europe in the mid-1960s when American poultry breeders came to the company and asked for an advertising outlet overseas. In order to launch to a quality audience, Watt received the names of people and companies the breeders were already selling to, thus guaranteeing a quality list at launch. 

The First Thing to Do

Ask yourself if your brand will play in other markets, says Charles McCullagh, MPA’s vice president of international. “What didn’t play in Krakow five years ago may play now, he says, “so keep up on how the world’s changes may be more accepting to your brand.” Glenn Hansen, president and CEO of BPA Worldwide and the chair of American Business Media’s international committee, suggests visiting FIPP’s Worldwide Magazine Marketplace, held in London every November. “It’s easy to sit down with a variety of people there and get a feel for it,” he says.

McCullagh says there’s no substitute for talking to fellow publishers. “This is still an area where publishers work together and share information,” he says. “It’s not cold-blooded competition just yet.”

Consider the Terms

There are three types of business relationships that dominate international publishing: licensing, joint ventures, and sole ownership. The latter is the smallest of the three because it costs publishers boatloads of cash to set up offices elsewhere. Joint ventures are more common but licensing dwarfs the first two because it puts the burden of responsibility on another party and lets the publisher enter a market without having to learn all the ins and outs of a market by itself. “The beauty of licensing is how easy it is,” says George Green, president and CEO of Hearst Magazines International. “Once you find a partner.”

Finding the right partner can be extremely difficult. Green says that Hearst had been considering publishing in China for a few years. “We had all sorts of important people visit us who had one thing in common,” he says. “They knew absolutely nothing about publishing.” After years of this, Green was in Tokyo and bumped into a colleague from IDG, who he told his own tale of woe. “IDG said, ‘Why don’t we do something?’ Six months later we were publishing.”

What should you look for? A company with financial stability, publishing experience, and is open to Western-style marketing, says Furst. “The most important thing is to find someone who appreciates the value of your brand,” he says. “A strong brand based on strong editorial content is a very valuable commodity.”

Due diligence should include talking to advertisers and vendors who deal with the publishing house as well as a review of all of the company’s records. David Ashe, president of international publisher B2B Portales, says he was in Mexico researching a publisher for a potential partnership. The circulation numbers from the would-be partner didn’t look right to him, so he asked to see the company’s print bill. It was one third of what the company claimed as circulation. So he confronted the publisher. “I asked him if he was okay with this, and he said yes,” says Ashe. “He told me that one third of the subscribers received the magazine in January, the next third in February, and so on. He had no problem with it.”

Emmaus, Pennsylvania-based Rodale Inc.—which derives nearly 20 percent of its total revenue from international editions—evaluates potential partners for financial stability, market leadership, editorial expertise, proven marketing capabilities and a strategic portfolio of brands and businesses that can support its titles.  “We do a great deal of homework and tap into our network of connections,” says Letizia Mazzi, international marketing director at Rodale. “The number of people in this business becomes surprisingly small—and we spend a lot of time getting to know one another.”

Watt says the fastest way to figure out if you want to partner with someone is to “get on a plane and wander through their facilities. You can ascertain all sorts of things.”

Vetting the Contract

Two things need to be very clear in the contract at the outset, says Ashe. First, who is responsible for what, and second, how an exit strategy will unfold. “Too many publishers go into these things with an ‘I love you, you love me’ feeling,” he says. “And that gets you nowhere in the end. One rule about partnerships is that they always eventually dissolve.”

The amount of financial advance should be in the contract, says Monti, along with clear definition of how the revenues will be distributed. “It’s often a certain part of the circulation and a certain part of the advertising,” he says. Circulation revenues generally carry the larger burden because international publishers generally bring in more of their money that way. “It can be a flat fee every month or an escalating fee, in which the percentage of revenue you get grows each year for the first five years or so,” Monti says.

Ashe notes that publishers shouldn’t expect advertising to bring in big bucks. A $17,000 ad in one of his U.S. publications can go for $2,000 or $3,000 in Latin America. “It certainly makes the margins tighter,” he says, “but we’re still making money.”

Quality Control and Translating

The issue of quality control should also be addressed in the contract. “I’ve seen some ads in Spanish go out in pretty ridiculous ways because the American company buying it relied on someone in the office to make the translation,” says Ashe. He says it is crucial to have a translator in the local market reading the issues. Many people claim to be bilingual, he says, but they might only be able to speak Spanish and not read it effectively.

Poor quality control can lead to disaster. John Cabell, founder and CEO of international-edition consultancy Cue Ball Media, says some advertisers buy into all of the foreign editions of a brand that they trust. If one of those markets does something wrong, some advertisers have pulled dollars from all of the editions.

At Hearst, each international edition is checked out after printing. “We look at the headlines and coverlines and the way they’re using photos, all sorts of things,” says Green. “If they make a mistake, we’re right on them. They’re not allowed two mistakes.”

Adds Monti, “Unless you want to hire translators to check everything, you need to trust your partner. ”

Where to Print: Here or There?

Printing technology has improved so much that it is safe to print titles across the globe. “Europe is still expensive,” says Watt, whose company once shipped its European titles from Singapore. Overall, most publishers depend on local printers to handle the work. “It’s all done with PDFs now,” says Ashe, “so you don’t have to ship them anything.”

The problems can arise with international post offices, which can make domestic issues seem tame. “Publishers who think the U.S. Postal Service is inefficient are in for a rude awakening,” says Ashe. “Magazines can just sit in warehouses for 10 days.”

What’s Hot and What’s Not

China is promising. “The massive population makes it very attractive,” says Watt, whose company is considering returning to China with some of its titles. The Chinese government has recently stopped subsidizing domestic media companies and as a result, “there is a frenzy of activity there,” says Cabell. He says it’s still a “minefield” though, to find quality partners. Monti warns that smaller publishers should probably sit tight while China gets sorted out. India is also drawing some interest, though Cabell notes it is still a fairly low-revenue opportunity. Eastern Europe remains popular, particularly for smaller niche magazines.

Stay Flexible

The key is flexibility. “Move quickly,” says Furst. “There’s a little bit of a gold-rush mentality to setting up in an emerging market. The first one in has an incredible advantage over the competition.”

And the first in doesn’t have to be the U.S. market leader. Furst recently met with a Ukrainian publisher who said that he wasn’t worried about brand strength, just good content. He felt confident that he could turn a second- or third-tier title into the Ukraine’s top magazine in that category. “Licensing levels the playing field,” says Furst, “and can make for interesting players coming to the table.”