Preserving Student Memories A $500 Million Industry
There is a rare lull these days for the staff of the Odyssey, the yearbook of Chantilly High School here in the Washington suburbs.
The 2001 yearbook went to press in late March. The staff has begun work on next year's book while planning for the day late this month when this year's finished product will be handed out to the school's 2,800 students.
"People want to push the doors down" on distribution day, said Elizabeth Rome, a junior and the yearbook's business manager.
Similar frenzies will shake the corridors of high schools across the country by next month. Although a small percentage of yearbooks are distributed in the fall to include graduation photos, most arrive by the end of the school year.
This is also the busy season for the companies that publish school yearbooks. Where there were once more than a dozen major yearbook publishers, only four major national players remain in this highly specialized publishing niche.
Yearbooks, from elementary school through college, are an estimated $500 million-a-year industry in the United States. Besides yearbooks, the three largest publishers are also involved in the business of class rings, graduation announcements, and related products.
While it may not be apparent to yearbook advisers and their staffs, the past year or so has been a time of upheaval in the industry, with corporate buyouts and the resolution of a major legal battle between two publishers.
The leader in the field is Jostens Inc., a Minneapolis-based company that had overall sales last year of $805 million. While Jostens' school products division saw an increase in revenues for yearbooks, jewelry, and graduation announcements, Jostens posted an $18.7 million net loss for the year. It blamed the loss on weakness in its division selling corporate- recognition products such as watches and service awards. Jostens officials say that their yearbook business is strong, while their class-ring business is flat, and graduation products have experienced weakness.
"The yearbook industry is alive and well," said Michael L. Bailey, the senior vice president and general manager for Jostens' school products division. The division's $716 million in sales last year was roughly one-third each from yearbooks, jewelry, and graduation products.
Mysterious Brown Bag
Yearbooks are as popular as ever, publishers say, with sales-penetration rates averaging 60 percent and reaching as high as 80 percent at many schools. But revenues are affected by student demographics. With American elementary and middle schools bulging with students, that will be good news for yearbook publishers in a few years when high school enrollments will swell.
High school class rings have declined in popularity somewhat over the years. As many as half of students bought a ring 20 to 25 years ago, Mr. Bailey said, but now just a third do. But of those who do, more are choosing more expensive gold rings, which has helped Jostens and its competitors keep revenues up in that sector.
Jostens is believed to have as as much as a 50 percent share of the market in yearbooks. Behind Jostens are two companies that each have an estimated 20 percent share: Herff Jones Inc. of Indianapolis and Taylor Publishing Co. of Dallas. Finally, Walsworth Publishing Co., a family-owned company based in Marceline, Mo., has an estimated 10 percent market share.
The three smaller companies do not publicly report their financial results, although their executives say they are profitable and that yearbooks are doing well.
While the yearbook evokes warm memories about high school life, competition among the publishers can be ruthless.
Four years ago, Taylor Publishing sued Jostens, alleging that the market leader was trying to drive its competitors out of business in violation of federal antitrust laws. Evidence in a trial showed that Jostens sometimes hired away Taylor's sales representatives to get inside information on the competitor's plans, and that Jostens once got hold of some Taylor internal documents through the clandestine drop of a brown paper bag in a hotel lobby.
A federal jury in Sherman, Texas, ruled for Taylor in 1998 and awarded damages amounting to more than $24 million. But the trial judge threw out the verdict, ruling that Jostens' actions did not violate antitrust law. A federal appeals court upheld the judge last year.
Mike Taylor, marketing director of Taylor Publishing, said his company has put the lawsuit behind it.
"They take [contracts] from us, we take from them, and it goes round and round," he said.
Taylor was sold last year by its parent company, Insilco Holding Co., to Castle Harlan Inc., a New York City merchant bank, for $93 million. Castle Harlan has begun integrating the yearbook publisher with Commemorative Brands Inc., a company that owns several well-known lines of class rings.
Jostens also changed hands last year. With its public-stock price languishing, the company's management agreed to a $950 million buyout by Investcorp, a holding company based in the Persian Gulf nation of Bahrain that has bought other well-known but undervalued companies, such as Gucci and Tiffany & Co.
At Chantilly High, in the 161,000-student Fairfax County school district, Odyssey photo editor Shannon McCarty said broad coverage is the key to the modern yearbook.
"We want to get everyone in the book twice," she said. This year's book will be 448 pages. Last year's Odyssey won a first-place award for large yearbooks from the National Scholastic Press Association.
Mary Kay Downes has worked with numerous publishers while serving as a yearbook adviser off and on since 1965.
"Any of the big four can publish good books," Ms. Downes said. "It is the quality of the service that makes a difference."
She said Herff Jones has published the book the past several years, mainly because of a good working relationship with sales representative Vicky Wolfe.
"Yearbook is an unusual endeavor," Ms. Wolfe said. "There's no real cookbook for doing it the right way."
Ms. Wolfe said that despite experiments such as the video yearbook, the traditional published book should be around a while.
"After all," she said, "you can't sign a videotape."
Vol. 20, Issue 36, Page 8Published in Print: May 16, 2001, as Preserving Student Memories A $500 Million Industry