I’ve been ruminating on this since the thread on the Parker board appeared attacking a retailer for a lack of real-time inventory integration with their web site. One of my first thoughts was, I bet that’s a really expensive proposition; some people’s (not ITB) seemed to be: how in this day and age can they not have this, forget about what it may cost?
I know I probably think about these types of things more often than most, but it never ceases to amaze me how little people understand about operating any business that isn’t their own and, more importantly, don’t understand how little they know. Usually this revolves around fixed costs that people don’t ever think about, but there are always a bunch of other little things that can be unique to a particular type of business.
So I thought it might be interesting to pull back the curtain a bit, for those who are willing, to try to increase everyone’s (including me) knowledge a bit about various wine businesses.
Since I’m asking others to talk about their business, I’ll start with our business, which is publishing. I don’t think most people have a good grasp of how expensive it can be to generate the content–whether you’re doing it yourself or contracting it out. It seems obvious of course, that really is our product, but some people seem to have an idea that the subscription rate is covering it.
These truly are fixed costs because they are not dependent on the number of subscribers you have, although they will vary depending on the number of issues you do of course. We’re monthly, so it’s probably easiest to understand in those terms. About 1/2 of our monthly costs are simply paying our writers as we mostly use non-staff writers. If we have internal articles, there can be significant travel costs as well.
Thus I’m always amused by the calls from some for all publications to A)accept no advertising and B)accept no assistance from anyone else in traveling around the world and acquiring sometimes extremely expensive wines. I suppose I ought to be clear about this to prevent this from devolving. I am not talking about people who criticize The Wine Advocate for not disclosing or having uneven standards. I’m talking about the people that when that mess exploded, cried a pox on any publication that wasn’t “pure” and accepted anything from anyone in the industry (ads, trips, samples, etc.).
If you’re going to do A, you better either have a ton of subscribers who are all willing to pay above regular market price for your product (even if one issue costs only about $2 per subscriber to print, process and mail, which would be really low for a glossy, you’re still talking about $24 for 12 issues worth just to cover those costs, which by the way are about 1/4 of our monthly costs) or almost no editorial costs (not really pay your writers so you just need to cover the physical costs). If you’re going to do B, you better not be doing A and you might also need to not really be doing any writing or traveling or tasting yourself, or again you’re really going to need to charge quite a bit per issue. We would probably need to charge at least twice as much for a subscription if we wanted to go the “pure” route.
So that’s us, I’d love to hear from retailers, restaurateurs (I could have taken a stab at this one, but would rather leave it to someone working in a restaurant), importers, distributors, and winemakers. When someone is either complaining about your prices or bemoaning some service you don’t offer or just running you down in general, what do you wish they knew?