INDUSTRY: 5 Forces Model

Porter's Five Forces Diagram for the Magazine Publishing Industry

The competition for the magazine publishing industry is high and increasing. Magazine periodical publishers compete among themselves for readers and advertisers and well as with other mediums. In reviewing the market share the results are rather mixed as it is fragmented and concentrated. It’s concentrated as there are four industry leaders, but it’s fragmented in that the industry leaders only control 22 percent of the market, the other 80 percent is split among well over 20,000 other enterprises.

Barriers for new entrants are medium and steady, but not prohibitive. Sixty new magazines started in 2015, but the majority of new magazines were published by existing companies. It’s much more cost effective for an existing publisher to start a new publication than at startup; even though startup costs are fairly low.

The threat of substitutes is high as readers and advertisers have so many choices in print and digital platforms.  There is also great variation in the costs, this give readers and advertisers the opportunity to mix and match various mediums and outlets depending on their needs and wants. Of course the largest threat to print is digital and in many cases the content is free to the end-user.

The power of some suppliers is high at this time. The cost of paper is increasing even though developed countries are using less as they move towards digital formats. However emerging markets in underdeveloped countries are increasing the paper demand and consumption. Print publishers are also concerned when the price of postage increases as they have to pass these cost on their buyers.

The power of buyers is high as they have so many different choices to meet their needs. With the various new technologies available – end users are no longer held hostage with print media. Digital platforms including social media are becoming, if not reliable, viable sources for content on any subject. At the buyer level switching costs are low and the threat of backward integration is high as any reader can set up their own blog on any day.

The state of these five factors of the Porter’s Forces Framework are the reason that the magazine publishing industry is in a current state of decline with reduced profit margins; with so many factors at the high state leading to lower revenue.

In conclusion, even though the industry is in a state of decline, there are low barriers to entry and there is always opportunity within niche markets. Because of the various taste, preferences, hobbies, loves, hates, needs and wants of the 190 millions smartphone user in the United States alone; there is always room for one more specialty magazine in print or digital format.