According to Mike Soutar, Founder and Chief Executive of ShortList Media, there are only two positions in any business market. You’re either an ‘incumbent’ or an ‘insurgent’. Incumbents are the established brands: big, powerful and capable of smashing smaller rivals into even smaller pieces. Insurgents are the small and medium-sized enterprises waiting in the wings. The insurgents lack the industrial power of the incumbants, but are more agile and capable of adapting quickly to changes in any given market, like birds darting around a lumbering elephant. And when it comes to the ever-changing world of magazine publishing, dexterity in the early days is a particular advantage.
“Launches are like land-grabs and they are all about momentum,” says Mike.
“You have to capture market share quickly and really make a difference straight away. While you have momentum you absolutely have to capitalise on it.”
Mike Soutar, Founder and Chief Executive of ShortList Media
Despite growing from zero to £15.5 million turnover in just four years, Mike places ShortList Media squarely in the ‘insurgent’ camp, since the company has capitalised upon the advantages of being relatively small.
With popular magazines including ShortList and Stylist, Mike’s business produces a basket of on-and-offline publications aimed at young, affluent consumers. The enterprise sprang out of nowhere to become a market leader and a beacon of profitability amid a gloomy economy. “We hand out 524,000 copies of ShortList and 426,000 copies of Stylist every week,” he says. “We have a unique nationwide distribution network, which we own and our suppliers are signed to exclusive deals. It’s very difficult to replicate. I can’t tell you how hard that was to set up.”
Free yet profitable
Magazines traditionally enjoyed two sources of income: the cover price and advertising. Mike’s game-changing proposition was that a magazine could reasonably make do with just one. ShortList’s first edition was handed out free to young men at strategic points on their way to and from work.
From a conventional perspective this was counter-intuitive for several reasons. Not only were men’s magazines crashing as new titles flooded the market, but also the wider economy was suffering one of the biggest recessions in recent history. “At the time everybody told us we were mad,” says Mike. “‘Why would you launch something in print? Isn’t there a recession? You’ll never keep up the momentum.’ But they didn’t understand the business and that we didn’t have to scrimp and save in terms of content.”
“We’d taken a bundle of cost out of the model in print, distribution and marketing, which was a fraction of the cost of a normal print title. If you launch a magazine on the newsstand it will cost you £8-to-£12 million net in the first year. You need to get people into the newsagent and pick it up.” He adds, “If you don’t have to market above the line to people, if you can take cost out of producing the paper, which is 65-70% of the cost anyway, all of a sudden you can produce really high quality on a grand scale.”
ShortList recently celebrated its 200th edition and has launched several sister publications, including women’s culture magazine Stylist, biannual fashion journal ShortList MODE and Emerald Street, a daily style newsletter for women. Each contributes to ShortList Media’s turnover and each is growing at a healthy rate. The publishing process itself is lean enough to give ShortList an edge. A tiny fraction of copies (4% maximum) are pulped compared to an industry standard of about 35%. Out of the £3.50 you pay for a magazine, up to £2 goes direct into the supply chain. “We’re a much purer play,” says Mike.
Launching during a recession
The decision to launch ShortList during a recession was considered proof that its publishers were clueless. Rival magazine brands did nothing to squash it, believing it would squash itself. However, this gave ShortList a toehold from which it established a foothold. As Mike has proved, a recession isn’t necessarily a bad time in which to launch a business. If your enterprise is to survive, your products need to be in demand regardless of prevailing economic conditions.
ShortList Media achieved its seven-digit turnover by finding a niche within a bloated industry, converting industry nous into efficient publishing and by targeting profitable sections of the advertising market. At this rate, ShortList will soon become a heavyweight incumbent, the envy of all those circling insurgents. “For the first time we’re bringing in consultants,” says Mike. “Having been a consultant myself, I thought we’d never use them, but they’re looking at the management and making sure we’re properly aligned.”
“There are lots of embedded practices in our company that we either need to validate or change to make sure we continue to grow at the rate we’re growing. You have to remember that there isn’t necessarily a finish line, so you have to work hard and enjoy the journey on the way.
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