New survey shows the publishing business fighting back
Troubled, but not terminal!
Troubled, but not terminal. That is the topline view of the publishing industry from PUBLISHING FUTURES, a major new research project assessing the state of publishing in the UK. It charts an industry which is facing difficult times with remarkable optimism and resilience. It is also an industry which is reviewing a business model which is undoubtedly changing, but not necessarily as quickly or as radically as many media pundits suggest - print is being challenged by digital, but is not being destroyed by it.
What is PUBLISHING FUTURES?
PUBLISHING FUTURES represents the industry’s view of itself. Web developer Wide Area commissioned media consultancy Wessenden Marketing to poll the views of publishers as to how they were coping with the downturn and what their forecast of the future was. The result is the largest survey of its kind involving 187 publishing companies - newspapers and magazines as well as consumer and b2b operators, from the major international groups down to small independent publishers.
The detailed information can be viewed at a dedicated microsite
What the industry looks like now
Despite the testing economic climate, the industry’s underlying financials are looking remarkably robust. Total industry turnover is sliding rather than plunging and profit margins as a percentage of sales are holding steady, but this is at the price of headcount reduction and ruthless cost control, where marketing budgets in particular have suffered.
Beneath the topline sales figures, the profile of how the different revenue streams are performing is rapidly changing:
- Online growth is clearly outstripping print revenue trends
- Circulation revenues are performing better than advertising sales
- Subscription sales are stronger than retail copy sales.
- “Other revenues” (which include reader offers, events & services, as well as contract publishing) are showing medium growth, behind online, but ahead of print revenue streams
Some publishers are looking for growth in overseas markets and most are relying on a growing dependence on online & digital revenues. Yet the level of online activity varies significantly from publisher to publisher. Behind the turnover figures, the industry is essentially still in profit.
Jim Bilton, Managing Director of Wessenden Marketing and the report’s author:
“The feedback as to what is happening to publishers at the moment is massively varied. Each company and each market is very different. Yet what is clear is that there a lot of businesses which continue to perform well and profitably despite the testing market conditions. It is certainly gloom, but not necessarily doom.”
What does the future hold?
With the economic “turning point” felt to be in 2010/2011, recovery still feels some way off. Yet publisher confidence is robust, given the difficult environment. The general feeling is that the future for most publishing operations holds fast and challenging change rather than a dramatic transformation of the business model:
- The Turning Point. Respondents were asked about the “turning point” in their own trading environment. The answers varied considerably depending on the specific market sector, but the majority of companies (57%) see next year as when the recovery starts, albeit slowly in most cases. Another 23% are more cautious, looking to 2011.
- Confidence Levels. The question “On a scale of 1 to 10, how confident do you feel about the financial success of your company over the next two years?” produced an average score of 6.7 with 39% of respondents falling into the Optimist category (a score of 8 or more). So, considering the current climate, business confidence is remarkably robust.
- The Changing Business Model. Respondents were then asked to look at how radically they felt their core business model would change in the medium-term. The overall average score out of 10 was 6.0, pointing to significant shift, but not the dramatic sea-change predicted by many media pundits. The industry is rapidly adapting to changing conditions rather than being radically transformed.
Online is both a friend and an enemy, and is founded on an elusive business model, but it is opening up more opportunities than it is closing off. Yet its real challenge is that it demands a focus and a knowledge beyond many companies’ resources.
The recession is forcing most companies to take a long, hard look at the way they do business and to be ruthless about the real value and return on investment of activities which may have been taken for granted in the past. That means cutting headcount and squeezing costs, but it also involves training staff (or replacing them with people who already have the right skills) to operate in a fast-moving, multi-platform world. It is also making publishers look at new areas – new markets, tighter niches, new revenue streams and more international opportunities.
Jim Bilton, Managing Director of Wessenden Marketing:
“The repeated hope running through the survey is that recession will force weaker competition out of a market which is quite simply over-supplied in terms of the number of magazines, newspapers and websites available to both readers and advertisers.
“Yet behind this neat Darwinian theory is a massive practical issue. There is no doubting the resolve of the publishing industry in facing deep recession, but do all the companies have the resource and knowledge to turn their creative ideas into profitable practice? The simple answer to that is “no”. It is that which is the real challenge of the next 12 months, and that, as a number of respondents in the survey point out, comes down as much to positive and lateral thinking as to money. It is all about the survival of the fastest.”
View the full report
