Wheels of fortune

Folio: The Magazine for Magazine Management, March 15, 1996 by Cris Beam

David Walls an investment banker on Wall Street. John Wilcockson worked as a cycling journalist in Brussels. And Felix Magowan was barely out of college. They were from disparate parts of the world, in different professions, but shared a passion for professional cycling. Together, they created Inside Communications, a Boulder, Colorado-based company that has emerged as one of the most successful publishers of sports-enthusiast titles. Its titles target only serious cyclists and triathletes, but dominate the race for ad dollars and category recognition.

IC, which currently publishes VeloNews and Inside Triathlon, began in 1987 when Magowan and Wilcockson invested $238,000 in Inside Cycling, a bike-racing magazine; it ran out of money after two issues. The search for more capital them to Walls, who provided it. With the additional funds, the team in 1988 acquired VeloNews, a tiny cycling magazine based in Brattleboro, Vermont, and folded in their first title.

VeloNews was making only a small profit, but had a readership devoted to its unique, news-oriented editorial and international race coverage. Under its new management, and with an infusion of $500,000, the title grew from 12,000 to 48,000 readers, increased its frequency last year to 20 times a year, and now generates revenues of $6 million. It pulls in more ad pages per year (1,315 in 1995) than any other bicycling title in the world.

Its 10-year-old sister publication, Inside Triathlon (formerly Triathlon Today), acquired in 1993 from Ann Arbor, Michigan-based KAZ Publications, generates $1.5 million. It carried 415 ad pages last year.

Factoring in all its operations, Inside Communications has transformed itself from a start-up that produced $87,580 in audited revenues its first year to an $8 million business today. Its merchandising division has tripled, to upwards of $1 million, and it is the only magazine publisher to be recognized two years in a row on Inc.'s list of the 500 fastest-growing companies.

To some extent, the growth mirrors that of the bicycling industry itself. Although the number of cyclists--as measured by the number of bicycles sold--has been steady (about 12 million to 13 million units sold each year since the late eighties), sale of quality bicycles has increased. Also, the number of licensed racers has grown from 20,000 in 1987 to 60,000 last year, indicating a nationwide surge of interest in professional racing and cycling.

With their titles competing against eight other bicycling magazines, IC executives are confident that their formula and execution will endure. The need for immediate racing news will keep die-hard cyclists subscribing--and allow VeloNews to continue charging the highest subscription price in the field: $37.97 for 20 issues.

The secret to such remarkable growth? Simple, say the three partners: Invest in technology and distribution in order to get the news out fast; never cut deals on your rate card; treat the staff well; and always, always put the reader first. "We put our readers first, advertisers be damned," says Magowan, the company's president.

VeloNews and the 22,000-circulation Inside Triathlon carry more ads than any competitor, yet neither offers discounts or deals. VeloNews also has the highest CPM in the market--$70 per 1,000, compared to Rodale Press' 330,000-circulation Bicycling, which has a CPM of $65.06. (Because of the difference in circulation, VeloNews' ad rates are lower: A full-page, black-and-white ad costs $2,485, versus $14,815 in Bicycling.) "Advertisers don't trust books that knuckle under," Magowan says. "If you're not beholden to your advertisers, you'll lose short term, but win long term.

Some competitors seem impressed. Paul Snyder, associate publisher of Rodale's Mountain Bike, says that it is VeloNews' 20-times-per-year frequency and fast turnaround that set it apart from the others.

But Richard Carlson, editor in chief of 40,000-circulation Winning Bicycling Illustrated, published by W. Publishing Group Inc. in San Francisco, is more circumspect. His magazine targets basically the same audience, but is less news-oriented. W. Publishing also publishes Triathlete, with a circulation of 55,000; it averaged 30 ad pages in each of its 12 issues last year. Winning, which comes out 11 times, averaged 15 ad pages. Even though both trail IC's titles, Carlson isn't worried. "I feel less threatened because I target the ardent fans who will maintain their interest," he says. "But the more mainstream cycling magazines may be worried because the baby boomers could start to turn to things like Money."

Snyder agrees that Bicycling and Mountain Bike target a more mainstream, less race-conscious audience. Bicycling carried 672 ad pages in 1995; the 140,000-circulation Mountain Bike carried 787 ad pages. But VeloNews editor Wilcockson says that even though 80 percent of advertising in his magazine is mountain-bike related, he won't skew beyond the present even editorial split between mountain biking and racing because road-racing coverage would suffer.