INDUSTRY: Overview

The Magazine Publishing Industry

The magazine publishing industry is a $41.2 billion industry annually with a growth rate that is in slight decline at about -0.8 percent for 2015 and a projected decline for 2016. It’s interesting to note that industry employment is expected to take a slight dip over the next couple of years and then rise before going flat over the next three years; while revenues will take a slight dip and then rise over four or more years. My guess is that improved efficiencies will drive the increased revenues with fewer employees. Print advertising expenditures will also take a slight dip before rising and flattening for the foreseeable future.

As the annual growth indicates, the magazine publishing industry is currently in the decline stage of its life cycle. According to IBISWorld the key factors indicating an industry is on the decline are:

• Revenue grows slower than economy

• Falling company numbers; large firms dominate 
• Little technology and process change

• Declining per capita consumption of goods
• Stable and clearly segmented products and brands

The decline is mainly a result of declining print advertising expenditures which happened over the past ten years; having a major effect on the entire industry as 50 percent of the industry revenues are from advertising.

The growth of multimedia companies is one the most popular trends in the industry as companies increase their portfolios to offer more than one type of print publication along with a host of other outlets under the same umbrella. This offers a larger selection of demographic groups for their customers. Another trend is the removal of the middle man in the distribution process. Publishers now work directly with retailers to get their publications in stores. And lastly another trend for publishers is to move towards digital versions of their publications. They are providing downloadable data files with special software that offers easy navigation for readers.

As for trends in industry costs those are increasing as the price of paper increases. Although printing cost in the USA and other developed countries are going down, the international market for emerging economies is pushing the paper price up. The largest trend of the entire industry is the digital age. Everyone is trying is establish a digital presence with their niche market. Since customers have so many different ways that they can view content publishers are trying to make sure their content has a responsive design to increase ease of use for all customers. On the digital front that content is trending towards a younger audience as they are more technology savvy.

Research indicates that as far as sales are concerned a digital platform coupled with a print platform offers the best sales results.  But publishers did have to decrease their costs for print ads in order to survive the on slot of digital and it appears to there is no going back.

There aren’t really any new requirements, but the industry is subject to changes in tax rates, postage and copyright regulations. Publishers also sell or rent their contact list and that can fall into the area of consumer privacy in dealing with telemarketing and email marketing. Of course the industry is in opposition to any new laws that increase these costs. The level of regulation is light and the trend is steady.

The key success factors to the magazine publishing industry are:

• Access to niche markets – this is important when online offerings are a revenue driver
•  Access to a highly skilled workforce – this is the backbone of any good company
• Control of distribution arrangements – allows companies to maintain favorable arrangements
• Effective cost control – drives price competitiveness and profits
• Establishment of brand names – this is important because it can influence buyers’ perceptions and help drive sales

Companies demonstrating success in the magazine publishing industry are able to predict the trends of the future and get a head start on new product and service offerings. This is demonstrated by the industry leader Advance Publications, who is able to show growth while others are declining because of the early restructuring and reformatting of their major publications along with “timely investments in the digital market.”

In reviewing the standard financial ratios for the industry over the past ten years – there is a steady downward trend. The forecast for the next five years continues that downward trend. Of the key ratios such as revenue, revenue per employee and share of the economy – they are all on a downward slop with share of the economy dropping in half from 2006 to 2020 (from 0.12 to 0.06)