Projecting media industry performance five years out would seem pretty gutsy at this juncture, given the wild-card dynamics of the recession on top of the digital revolution.
But for those who derive some sense of order from forecasts, PricewaterhouseCoopers’ Global Entertainment & Media Outlook 2009-2013 report assures that print magazines will still be around — while also stressing that industry growth will depend largely on how adept publishers prove at creating new digital business models.
While there are few surprises in the trends identified, the report underlines the financial imperatives behind the acceleration of efforts to forge those new models.
In the US, print magazines will suffer revenue declines through 2010, although they should begin recovering somewhat thereafter, according to Outlook data supplied to MediaWeek.
Magazine subscription and newsstand spending, hit by cutbacks in consumer discretionary purchases, is expected to lose 8% this year, and decline by a cumulative $1.3 billion (to $8.4 billion) between 2008 and 2013 before starting to pick up again.
Digital advertising for US consumer magazines is projected to show compound annual growth of 15%, to reach $1.8 billion by 2013. That would raise digital from 6.5% of total ad revenue last year to nearly 14%.
However, publishers’ digital advertising gains won’t outweigh the circulation and print advertising declines during the period. Total spending for consumer magazines is projected to dip by 1.7% over the five years, compared to projected 1.2% spending growth for total US media and 6% growth for internet advertising.
PwC also forecasts a total spending decline of 3.3% for the B2B magazine segment and a 5.9% drop for newspapers.
“Traditional, long-established revenue models in segments such as TV and magazines will be replaced by more targeted and tailored models that will differ widely within and across segments and geographies,” sum up the analysts.
New advertising metrics
On the advertising side of this epic transition struggle, one notable recent development is MRI’s launch of a new system called Admeasure, billed as delivering reliable, nationwide audience estimates for specific consumer print magazine ads, as well as numbers of readers who actually took action on the ads.
The idea is to provide consumer magazines — which saw ad revenue plummet 20% in Q1, according to TNS — with audience measurements that can approximate those of the internet and TV, thereby enabling them to compete more effectively.
The new ratings are derived by using a combination of MRI’s national Survey of the American Consumer (which measures average issue audience), projected MRI Starch profiling data and MRI’s Issue Specific Readership Study. Some critics have questioned the methodology, as well as whether the data will be timely enough to be truly meaningful for advertising buying purposes. But Time Inc and Starcom have already signed on. Further, MRI competitor Affinity, whose Vista magazine ad effectiveness ratings are in wide use already, is now at work on its own system for providing national ratings for specific magazine ads.
Such systems may evolve or change, but publishers aren’t going to give up on trying to somehow make magazine ad metrics comparable to those of digital media.
Online models
On the consumer revenue side, recent indicators (including research from the UK’s The7Stars) point to economic pressures making consumers less willing than ever to pay for online content. But that’s not deterring publishers from trying.
One model being cited as a potential breakthrough is ESPN’s recent move to close the free ESPN The Magazine website and merge this content into the paid ($6.95 per month, $39.95 per year) ESPN Insider service. The Insider, which offers original or exclusive content that includes sports video series, statistics, customisable game simulations and the latest buzz, as well as articles, has 350,000 subscribers. As Ad Age’s Nat Ives noted, exclusive content may well be the pivotal monetisation success factor. Covering an interest area that breeds genuine fanatics doesn’t hurt, either.
Time Inc continues to be the most aggressive in the quest for the winning integration strategy. So it speaks volumes about the challenges involved that, in mid-June, chairman / CEO Ann Moore sent out a refreshingly candid corporate memo announcing that she’d charged EVP John Squires with the mission of spending the summer “finding the right digital business model”.
While “print magazines are not going away” and the company’s sites have over 26 million unique visitors and 750 million page views per month, “we need to develop a strategy for the portable digital world and to refine our views on paid content,” in order to “put the genie back into the bottle,” she acknowledged. Time Inc is likely to seek partners, she added.
Moore summarised the company’s current core initiatives as evolving current web businesses by identifying and developing consumer revenue streams; accelerating the creation of applications for smart phone platforms; developing new products and business models for portable digital readers; and exploring partnerships with other publishers to develop the “optimal retail store” for Time Inc’s digital products.
