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Publishing in the knowledge economy
Competitiveness analysis of the UK publishing media sector
Main report

Publishing in the knowledge economy
Main report
This report was written by
Pira International, as a project
co-managed by the DTI & UK
Publishing Media, an alliance of
the Newspaper Society, The
Newspaper Publishers Association,
The Periodical Publishers Association
and the Publishers Association.
The executive summary is available
on-line at www.uk-publishing.info and
at www.dti.gov.uk/cii/services/
contentindustry/print_publishing_and_
information_industries.shtml
© Crown Copyright 2002

Publishing in the knowledge economy
Contents
Preface
Part 1 The industry today 1
Chapter 1 Introduction 2
1.1 What is publishing? 2
1.1.1 Magazines 2
1.2.2 Newspapers 3
1.2 How big is the UK publishing industry? 3
Chapter 2 Concepts of competitiveness 6
2.1 Introduction 6
2.2 Sector competitiveness as a concept 6
2.3 The competitiveness of publishing –
conceptual issues 6
2.3.1 Definition 6
2.3.2 Comparisons 7
2.4 Alternative approaches to measuring
competitiveness 7
2.5 Dual product markets 7
Chapter 3 Drivers of the publishing
industry 10
3.1 Main drivers 10
3.2 Advertising trends 10
3.2.1 The share of publishing 10
3.2.2 Advertising by type 13
3.2.3 Advertising forecast 13
3.3 Consumer expenditure of money and time 13
3.3.1 Money 13
3.3.2 Personal spending and shopping trends 15
3.4 Time 15
3.5 Demographic changes 17
3.6 Other factors affecting publishing 18
3.6.1 Internet connectivity 18
3.6.2 Reducing wastage 20
Chapter 4 Size and performance of
the industry 22
4.1 Turnover 22
4.1.1 Revenues from licensing and rights sales 22
4.2 Costs and resources 24
4.2.1 Paper prices 24
4.3 Cross industry comparison 26
4.4 International comparisons of productivity
and innovation 28
4.5 Conclusion 29
iv
Chapter 5 Book publishing 30
5.1 Revenues 30
5.2 Export performance 30
5.3 Titles 30
5.4 Prices 33
5.5 Profitability 33
5.6 Employment, skills and training 33
5.7 International comparisons 35
Chapter 6 Journal publishing 36
6.1 Revenues and costs 36
6.2 Prices 37
Chapter 7 Newspapers 38
7.1 Revenue trends 38
7.2 Circulation and cover prices 38
7.3 Number of titles 38
7.4 Employment and related issues 41
7.5 Skill levels and training 42
7.6 Productivity and costs 43
7.7 International comparisons 44
Chapter 8 Consumer magazines 46
8.1 Activity in the magazine sector 46
8.2 Revenues 46
8.3 Copy sales and cover prices 46
8.4 Titles and launches 48
8.5 Returns and wastage 49
8.6 Sales channels 49
8.7 Brand extension 49
8.8 Contract publishing 50
8.9 Pan-magazine sector data 50
8.9.1 Skill levels and skill shortages 50
8.9.2 Profitability 51
8.9.3 International comparisons 51
Chapter 9 Business to business media 54
9.1 Magazines 54
9.1.1 Advertising 54
9.1.2 Number of titles 54
9.1.3 Circulation 54
9.1.4 Diversification of revenues 54
9.2 Directories 57
9.2.1 Nature of directories 57
9.3 Newsletters and reports 59
9.4 Online business and STM information vendors 60
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Publishing in the knowledge economy
Contents
Chapter 10 The Internet 62
10.1 Opportunities and threats 62
10.2 Newspapers 62
10.3 Business magazines 62
10.4 Consumer magazines 63
10.5 Books 64
Chapter 11 Analysis of gaps in
data sources 66
11.1 General comments 66
11.2 Official versus unofficial statistics 66
11.3 Sub-sectors 66
11.3.1 Book publishing 66
11.3.2 Newspaper publishing 66
11.3.3 Magazine publishing 66
11.3.4 Journal publishing 67
11.3.5 Database and directory publishing 67
11.3.6 Newsletters 67
11.4 Summary of definitional issues and data gaps 68
Chapter 12 Typology of publishing
products according to brand and
format characteristics 70
12.1 Brand 70
12.2 Importance of format 70
12.3 Consumer media 70
12.4 Business media 71
12.5 Education and research market 71
Chapter 13 Strengths, weaknesses,
opportunities and threats 72
13.1 Introduction 72
13.2 Publishing – common strengths and issues 72
13.3 Books 74
13.4 Journals 76
13.5 Newspapers 78
13.6 Magazines, directories, business media and
business information 80
Chapter 14 Future scenarios 82
14.1 Introduction 82
14.2 Main drivers affecting the scenarios 82
14.2.1 Lifestyle 82
14.2.2 Work 82
14.2.3 Technology 82
14.2.4 Economy 82
14.3 The changing knowledge economy scenarios 83
14.3.1 Slow adaptation to a slowly developing
changing knowledge economy 83
14.3.2 The fast pace of the change in the
knowledge economy catches publishers unaware 84
14.3.3 Careful transition of business to the
knowledge economy 85
14.4 Scenario conclusion 85
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Publishing in the knowledge economy
Part 2 Issues for competitiveness 87
Chapter 15 The challenge of
sustainable growth 88
15.1 Introduction 88
15.2 Take the wrapper off 88
15.3 Can the UK publishing iIndustry compete
on a global scale? 89
15.3.1 Strengths and opportunities 89
15.3.2 Challenges 91
15.4 The skills to compete 93
15.4.1 Strengths and opportunities 94
15.4.2 Challenges 94
15.5 Industry profile 95
15.5.1 Strengths and opportunities 95
15.5.2 Challenges 96
15.6 Industry statistics 97
15.7 Technology adoption 97
15.7.1 Strengths and opportunities 97
15.7.2 Challenges 98
Chapter 16 The challenge of changes
in customer behaviour 100
16.1 Better understanding and servicing the
end customer 101
16.1.1 Strengths and opportunities 101
16.1.2 Challenges 101
16.2 Servicing the advertiser more effectively 102
16.3 Achieving a better balance of
revenue streams 103
16.3.1 Strengths and opportunities 104
16.3.2 Challenges 104
16.4 Establishing better routes to
the customer 106
16.4.1 Strengths and opportunities 106
16.4.2 Challenges 106
16.4.3 Supermarkets and super news retailers 109
16.4.4 Postal services 109
16.4.5 Conclusions and actions 109
Chapter 17 The challenge of
digital media 112
17.1 Strengths and opportunities 112
17.2 Challenges 112
17.2.1 The changing competitive landscape 112
17.2.2 Competition from publicly funded bodies 114
17.2.3 Copyright protection 115
17.2.4 Standards 116
17.2.5 Journal archiving 116
17.2.6 Gatekeeping 116
17.2.7 Taxation 117
17.2.8 Regulation of digital content 117
17.2.9 Caution on new platforms 117
Chapter 18 The conclusions and
proposed action plan 120
18.1 Conclusions 120
18.2 Proposed action plan 120
18.2.1 Essential actions 121
18.2.2 Necessary actions 123
18.2.3 Desirable actions 124
Appendices 125
A Methodology 126
B Participants in the study 128
C Text of the questionnaire 130
D Main sources consulted 142
iii

Publishing in the knowledge economy
Preface
This report and Action Plan has been commissioned by the Department of Trade and Industry (DTI)
as part of a series of investigations into the competitive performance and the factors promoting and
impeding competitiveness in UK industry sectors. This project has been co-managed by the DTI
and UK Publishing Media (UKPM), an alliance of the Newspaper Society (NS), the Newspaper
Publishers Association (NPA), The Periodical Publishers Association (PPA) and the Publishers
Association (PA).
The scope of the project has been wide ranging, covering books, national and regional
newspapers, magazines, journals, newsletters, business information, directory and database
publishing and Internet publishing.
A description of the methodology used; details of the many companies and organisations who
assisted us by filling in questionnaires and attending workshops; data sources consulted and the
text of the questionnaire are contained in Appendices to the report.
A separate Executive Summary for this report is available.
iv

Publishing in the knowledge economy
PART1
The industry today
1

Publishing in the knowledge economy
The industry today
CHAPTER
PART11
Introduction
1.1 What is publishing?
Historically, publishing has been inextricably
linked with the production of printed material,
whether in the form of books, scholarly journals,
newspapers or magazines. As we shall argue
throughout this report, while there is no sign of
the disappearance of print as a medium, it is no
longer helpful to conceive of publishing solely in
these terms. Increasingly, publishing is a set of
skills and core competences consisting of the
acquisition, selection, editing, management,
marketing and sale of content. The ‘wrapper’,
or more likely ‘wrappers’, in which this content
reaches its final user is not the crucial factor.
What is crucial for publishers is that they are
able to evolve their skill sets and their
understanding of the needs of the user in order
to remain strong and vibrant.
1.1.1 A global business
Publishing is increasingly a global business.
Thanks to the international use of English, there
has always been an important international
dimension to the UK publishing industry’s
activity, especially in book and journal
publishing. This use of English is spreading
beyond the traditional English speaking areas
of the world as English becomes the preferred
second language in many countries. This is
creating new opportunities for UK publishers.
There are also challenges here in terms of
competition with the US in Third World
countries, and the increasing importance of
penetrating the US market.
Both international competition, and the need
to deliver content in whatever form and via
whatever channel the customer wants, push
publishers towards greater scale in their
operations. At the same time, it is important that
smaller publishers – which are often the source
of innovation – are still able to secure footholds
in the marketplace.
The UK has not produced a player of global
Table note This list is not intended to be
comprehensive. Some companies are foreign-owned,
but have significant economic activity within the UK.
Table 1 Leading UK publishing companies
Magazines
BBC Worldwide
Dennis Publishing
EMAP
Haymarket
IPC
John Brown
National Magazines
Reed Business Information
Redwood
United Business Media
Newspapers
Daily Mail and General Trust (Associated
Newspapers and Northcliffe)
Guardian Media Group
Financial Times (Pearson)
Johnston Press
News International
Newsquest
Trinity Mirror
The Telegraph (Hollinger)
Books and journals
BBC Worldwide
Blackwell Science
Bloomsbury
Cambridge University Press
Dorling Kindersley (Pearson)
Faber & Faber
HarperCollins (News International)
Hodder Headline (WH Smith)
Little, Brown (AOL/Time Warner)
John Murray
Macmillan (Holtzbrinck)
Orion (Hachette)
Oxford University Press
Penguin (Pearson)
Random House (Bertelsmann)
Reed Elsevier
Scholastic
Taylor and Francis
Transworld (Bertelsmann)
John Wiley
Source Pira International
2 © Pira International Ltd

The industry today
Publishing in the knowledge economy
scale in consumer publishing, along the lines of
Germany’s Bertelsmann. But it has been able to
produce companies in the field of academic,
educational and business publishing that are
world leaders, such as Reed Elsevier and
Pearson.
Reuters is also a truly global player, both in its
traditional news agency role and in its much
larger financial intermediation businesses, as
well as its business information ventures. In its
innovative conjoining of technology and content,
and its development of new skills in information
handling, it may prefigure much of the future of
other parts of the publishing industry.
1.1.2 Social, political and cultural issues
Publishing is not simply a business. Its products
are hugely influential in the education system
and the social, cultural and political life of the
UK. This is reflected in the difficult decisions that
face governments and regulators in relation to
taxation, concentration of ownership, regulation
of the nature of published content (privacy,
obscenity, libel), and the degree to which
publishers are allowed to make use of personal
data. This latter point is particularly important in
being able to tailor products and services to the
user, and also in the continued availability of
some products such as directories. Digital
technologies also pose important challenges to
the existing copyright regime. There is a need to
reconcile the necessary reward to the creators
of knowledge and entertainment with the need
for society to have access to these products in
ways that are not over restrictive or that exclude
whole sections of society.
The increasing importance of the knowledge
economy is a major source of demand for the
products and services of the publishing industry,
and a source of supply for academic, STM and
business publishing.
Changes in the behaviour of consumers pose
particular challenges to the publishing industry.
The consumer appears to be devoting more
money, but less time, to many of the existing
products of the publishing industry, as media
and entertainment choices proliferate.
Demographic change in the form of an ageing
population may favour some products in the
short term, but in the longer term may pose
a threat to reading as a leisure pursuit.
The shifting pattern of shopping activity also
poses problems for the distribution of physical
newspapers and magazines, potentially
weakening newspaper buying further and
narrowing the range of magazines on offer.
1.2 How big is the UK publishing
industry?
Because of the shifting boundaries of the
industry, it is not straightforward to answer
this question. There are, in fact, a number of
different answers, based on the definitions
used in official statistics and unofficial ones.
This problem will be discussed in more detail
in Part 2 of the report. This section will confine
itself to a brief overview and some illustrative
comparisons.
According to the official Standard Industrial
Classification, publishing activity is covered by
SIC 22.1 and total turnover for that classification
for the latest available year, 2000, is £18.37bn.
This appears to understate some of the faster
growing areas of the industry, particularly
magazines, and excludes activities such as
exhibitions and conferences, databases, news
agencies and ‘advertising-related activities’ by
placing them elsewhere in the SIC.
The DCMS report Mapping the Creative
Industries produced a size for the industry of
about £18.5bn in 1999. Taking some unofficial
data for net revenues for newspapers and
conventional consumer magazines and sales of
books and adding in revenues from customer
magazines and business to business activities
(drawn from the special study Connecting
Business) gives a total turnover of just over
£22bn in 2000.
It would be fair to say that the datasets for
which there are time series all record a picture
of healthy growth. Series covering particular
sectors will be examined in Part 2.
Comparing the smallest of the turnover
estimates of £18.37bn with other UK >
3

Publishing in the knowledge economy
The industry today
industries shows that, in terms of turnover,
publishing is bigger than the manufacture of
pharmaceuticals (SIC 24.4) with a turnover of
£12.03bn. In terms of employment, again
according to official figures, publishing
employed 164,000 people in 2000, while
pharmaceuticals employed 65,000. Its turnover
is almost half the size of that of
telecommunications (SIC 64.2), which had
a turnover in 2000 of £42bn and employed
234,000. Clearly, if the larger estimates for
publishing are correct, and we believe that the
official figures do understate both turnover and
employment, then the comparisons are even
more startling. Startling, because although the
products of publishing are all around us every
day, as an industry it does not have the profile
its size would justify.
4

Publishing in the knowledge economy
The industry today
CHAPTER
2
Concepts of competitiveness
2.1 Introduction
This section of the report will try to paint a
picture of the industry as it currently is,
assessing its performance using a set of
indicators for the sector as a whole and its
constituent parts. It will begin by discussing the
conceptual and practical issues we encountered
in selecting the indicators and attempting to
source data to match them. Then, we discuss
and illustrate drivers for the publishing industry,
including advertising trends, consumer spending
and time use, and demographics. We go on to
examine some cross-industry and international
comparisons, followed by a discussion of
selected findings at the level of publishing and
then at sub-sector level. There is then a
discussion of the response of the publishing
industry to the Internet, which is followed by
a section summarising the areas where data
is unavailable or unreliable.
Following the quantitative analysis, there is
a section describing the strengths and
weaknesses, opportunities and threats facing
the industry. This is based on desk research
and on the performance indicators, as well as
the questionnaire responses, interviews and
focus groups held during the course of the
project. Finally, this section discusses scenarios
facing the industry.
2.2 Sector competitiveness as a concept
Competitiveness is about the extent to which
an individual firm, or national industry, can
survive and sustain itself, and the agility with
which it can respond to opportunities and
threats. A firm’s competitive advantage can lie in
the ability to produce at low cost; in proprietary
assets; in a high rate of innovation; in producing
high quality well differentiated products, and so
on. This depends on the industry in which it is
engaged, the stability of technology, barriers to
entry, the rate of entry and exit in the market
and so forth.
Sectoral competitiveness analysis throws up
some methodology issues. While it is fairly
straightforward to understand what is meant by
the competitiveness of an individual company,
the notion of the competitiveness of an entire
sector is more problematic. In the first place,
there is the question of the definition of a sector,
which is rarely clear cut. In the second place,
within any sector there will be some companies
that are extremely competitive and others that
are failing. In terms of definition, sectors are
bound to be blurred at the edges. It may well be
that within a broad sector, there are a number
of identifiable sub-sectors, some of which are
growing and healthy, others of which are
declining. Activity may be migrating away from
some sub-sectors into others within the sector,
or into an adjacent sector.
The economy is in constant flux, and it is
pointless to be too obsessed with definitions.
The competitiveness analysis must aim to
capture this movement and the common issues
and problems for the sector. Competitiveness is
also a comparative concept by its very nature.
This raises the issue what should publishing’s
performance be compared to – other sectors
of the UK economy, international
competitors or both?
2.3 The competitiveness of publishing
– conceptual issues
Measuring the competitiveness of publishing is
particularly prone to the problems outlined
above, firstly of definition, secondly of
comparison, and finally of data availability
(which is related to the first two).
2.3.1 Definition
Publishing has historically been linked with the
manufacturing process of printing. The two
activities have become increasingly decoupled
in recent years, even more in the UK than in the
rest of Europe, but the linkage has left a legacy
of intertwined statistics. Secondly, the activities
of publishing companies – especially the largest
and most important ones – have increasingly
come to span the whole gamut of print products,
and have expanded beyond print on paper to
electronic publishing, conferences and
exhibitions, training and audio-visual media. But
this shift is not reflected in the way that the
6

The industry today
Publishing in the knowledge economy
statistics are collected, which still tends to be
confined to the old divisions of books,
newspapers and periodicals. This division is
adhered to by official bodies, such as the Office
of National Statistics and Eurostat. These
bodies inevitably lag behind developments in
the economy by some years because of the
need to gain broad agreement on industry and
trade classifications – these aren’t lightly
changed because of the importance of
comparison over time and between countries.
These problems are exacerbated in a sector like
publishing where the speed and extent of
change has been significant in recent years.
However, the industry itself has also largely
collected statistics on the basis of the traditional
divisions. Of course, it may be argued that any
system of collection must be product focused
rather than company focused, since a single
company can produce a wide range of products
across many industries. The difficulty in
publishing is that the core asset – content – can
be manifested in a range of forms. It may be the
identical content, but it may have added-value
features – for example in its electronic form it
may be searchable or it may be possible to
integrate it into the customer’s own computer
system. It may be complementary content, for
example many newspaper websites differ from
the printed edition of the paper. The current data
collection process does not really capture that
dynamic in any way.
2.3.2 Comparisons
Some sectors are highly exposed to
international competition through trade, while
others are, for various reasons, largely
protected. In the case of much of the publishing
sector this protection is due to language and
cultural barriers to the import of published goods
from elsewhere, as well as to the physical
problems of distributing time-critical products,
such as newspapers, across large distances.
While the Internet has exposed some products,
for example the Financial Times, to international
competition in its home market, the effect is still
marginal to the newspaper sector as a whole.
Book publishing is a sector where international
trade is important but, increasingly, it is difficult
to measure its performance solely by means of
the trade balance. This is because the industry
is becoming more globalised: as well as being
exported, books are licensed to local publishers,
or produced overseas by the company itself or
sent electronically to be printed on demand in
local markets. The revenue from these activities
is treated in different ways by different
publishers, but generally the results are opaque
to the outside observer.
2.4 Alternative approaches to measuring
competitiveness
If products are internationally traded, then
clearly the trade balance is one way of
measuring competitiveness. In the absence of
this, the main approach taken was to attempt to
measure the efficiency with which companies
within a sector use inputs, or its productivity, in
other words. This is because the sector’s
outputs form inputs to the rest of the economy
and therefore its efficiency or otherwise is a
benefit or a cost to other parts of the economy.
A sector’s output may form part of the
infrastructure of an economy, which also has a
major impact on other economic activity. In the
case of publishing, its outputs are part of the
cultural and political life of the country as well as
inputs to other economic activity. For some
sectors, the price of output is the key variable of
concern (as an input to other sectors). For
publishing, price is important (for example
books and newspapers need to be within the
reach of the mass of people, and the price of
business information is significant for company
competitiveness), but variety, innovation and
quality are also extremely important. In addition,
we must try to benchmark a sector’s
performance against the performance of
corresponding sectors in other countries.
2.5 Dual product markets
Many publishing products (newspapers,
magazines, some directories and newsletters,
much electronic publishing, exhibitions and >
7

Publishing in the knowledge economy
The industry today
some events and conferences) operate in dual
product markets, where the publisher sells a
product to an end-user (whether consumer or
business) but also sells the attention of that
end-user to an advertiser. For these publishers,
the growth and distribution of advertising
expenditure is critical, as well as the growth and
distribution of consumer spending and trends
in revenue growth and profitability for the
corporate sector. The competitiveness of large
parts of the industry is certainly substantially
self-defined in terms of its ability to attract
advertising revenue. Hence the importance
accorded to advertising data in the indicators.
8

Publishing in the knowledge economy
The industry today
CHAPTER
3
Drivers of the publishing industry
3.1 Main drivers
There are two major drivers for the publishing
market: advertising and consumer spending.
Clearly there is a well-established relationship
between these and the economic cycle.
Advertising tends to expand as a proportion of
gross value-added during periods of boom and
contract as a proportion in times of recession.
Corporate revenue and profitability is a driver of
both advertising and of purchases of business
to business media, including magazines and
directories, business information, and spending
on conferences and exhibitions. As profits can
take some time to recover from recessions, this
impacts on the timing of publishing revenue
recovery. Consumer spending is obviously
related both to measurable factors, such as
economic growth and employment levels, and
to ‘consumer confidence’, which can be
enhanced or damaged by many other factors.
As well as cyclical factors, the share of both
advertising revenue and consumer spending
that will be achieved by the publishing industry
are also subject to more structural changes.
Publishing competes with other vehicles for
advertising, from television to bus shelters, at
least in terms of the attention of viewers/
readers. Advertisers may perceive that different
forms of advertising are more cost-effective,
and switch to those. Consumer use of media
products is affected by the time at their disposal
as well as their incomes, and the proliferation of
demands on their time and money is an issue
that will recur in this report. As media is a
discretionary purchase, fashion and
generational change are also crucial. Business
to business publishing and business information
is also constantly faced with opportunities and
threats arising from the shifting fortunes of the
industries it serves, the latest example being the
headlong expansion of telecommunications and
the subsequent ‘correction’.
Time spent on media use will be examined
later in the report. Drivers of particular subsectors,
such as education spending (e.g.
textbooks and journals), will also be examined
in the context of discussion of issues affecting
these sub-sectors.
3.2 Advertising trends
The charts opposite depict the trend in
advertising spending since 1980, first in
constant 1995 prices (Figure 3.1) and then as
a percentage of gross value-added (Figure 3.2).
They clearly show the broad upward trend in
spending, both absolutely and as a proportion of
GVA, broken only by the effects of the recession
in the early 1990s. Indications for 2001 will be
discussed separately.
3.2.1 The share of publishing
Looking at the share of the press (i.e.
magazines, newspapers and business and
professional media, including directories) in
total advertising spend (Figure 3.3), there is
a significant decline since 1980, from around
60% to around 50%. Although television has put
on about three percentage points, the more
interesting gains are those made by direct mail
and radio, since they represent a step change in
share, while television has hovered around 25-
27% for many years. The Internet makes a late
appearance, and clearly some element of that
will be accruing to the owners of the press,
although it amounted to less than £200m in
2000, it outstripped cinema.
However, it is important to stress that although
the share of the press has declined, the total
revenues accruing to the press from advertising
have grown strongly in the same period.
10

The industry today
Publishing in the knowledge economy
Figure 3.1 Advertising expenditure in real terms
Figure 3.3 Share of advertising spend by medium
10000
8000
100
• Internet
• Cinema
• Radio
Outdoor & transport
• DM
6000
80
4000
60
2000
40
20
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
1980
1982
1984
• TV • Total press 2000
1986
1988
1990
1992
1994
1996
1998
Source The Advertising Association
Source The Advertising Association
Figure 3.2 Advertising expenditure as
a percentage of gross value-added
2.5
Figure 3.4 Total press advertising
10000, £m
2.0
8000
1.5
1.0
6000
0.5
4000
1986
1987
1988
1992
1994
1996
1998
2000
2000
Source The Advertising Association
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Source The Advertising Association
>
11

Publishing in the knowledge economy
The industry today
Figure 3.5 Press media share of expenditure
on advertising
25, % National newspapers
Business and professional
• Regional newspapers • Directories
Figure 3.7 Real advertising expenditure forecasts
20, %
20
15
15
10
10
5
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Source Pira
1980
1982
1984
1986
1988
1990
1992
1994
1996
• Consumer magazines 2000
1998
Source The Advertising Association
Figure 3.6 Changes in advertising expenditure
by type in real terms
15000, £m
12000
Press classified
Press display
•
Total display
9000
6000
3000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Source The Advertising Association
12

The industry today
Publishing in the knowledge economy
The share of different publishing media
Figure 3.5 shows the share of the different
‘press’ media. Regional newspapers have
clearly lost most share, with national
newspapers and consumer, business and
professional magazines holding quite steady
and directories gaining, mainly in the early part
of the period. Shares of advertising are affected
not just by gradual changes, but by the step
changes arising from the introduction of new
advertising media or the sudden expansion of
others due to specific events, such as new
licences being made available. Radio is a case
in point – its share grew following changes in
licensing that permitted a major increase in the
number of commercial stations.
3.2.2 Advertising by type
It is also useful to look at the type of advertising
– broadly the distinction between display and
classified. This is because the drivers and the
threats to advertising vary according to the type
of advertising and the type of advertiser.
Different media have varying degrees of
dependence on different types of advertising
and also, within different media, particularly
newspapers, dependence varies with the nature
of the paper, e.g. tabloid or broadsheet. This is
another way of saying that all media don’t
necessarily compete head to head for all types
of advertising, although they do compete for
‘eyeballs’. This issue will be examined in greater
detail elsewhere in the report, especially in
relation to the challenges posed by the Internet.
The data in Figure 3.6 shows a very strong
growth in press classified advertising, and a
relatively weak growth in press display
compared to other types of display advertising.
The differential performance of regional and
national newspapers will be discussed below.
A by-product of the dot.com boom was the
temporary increase in advertising revenue both
for publishers’ print products and online sites
from dot.coms seeking to build brand and drive
traffic to their sites, and the loss of this revenue
is a factor in the decline of advertising revenue
in the last year to 18 months.
3.2.3 Advertising forecast
Figure 3.7 shows our forecast for advertising for
the remainder of the decade. The chart shows
three possible outcomes for total advertising
revenues for the remainder of the decade.
• The middle, heavy line shows a central
forecast for advertising based on its historical
trends and relationship with the performance
of the economy as a whole. This line
represents a continuation of forces that have
reshaped the economy in the last 10 years. It
predicts that 2002 expenditure will be similar
to the previous year, with modest growth of
only 2.5% in current terms, but thereafter
revenues bounce back and continue to grow
in real terms by 4-5% per annum.
• The higher line is based on the Advertising
Association’s ‘High Option’ in its 2001 forecast
of long-term trends in advertising expenditure.
It predicts a quicker bounce back and longterm
annual growth of 5-6% in current
advertising expenditures.
• The lower line is based on a combination of
our forecast for 2002 followed by the
Advertising Association’s ‘Low Option’ in the
same study, where revenues are assumed to
grow by 3-4% per annum for the remainder of
the decade.
3.3 Consumer expenditure of
money and time
3.3.1 Money
According to the recently published Mediaphile
2010 report from Screen Digest/ABN AMRO,
which analyses all aspects of consumer
spending on media since 1985, consumer
spending on all media products, including print,
music, TV, video, cinema, mobile and Internet,
both hardware and software, rose from 3.5% of
net income in 1985 to 6.8% in 2000. However,
spending on print media remained virtually static
in real terms over that period, and its share of
total media spend fell from 48% in 1985 to 20%
in 2000. As print products have relatively low
prices compared with, for example, video, music
and pay-TV, and as the growth in disposable
income and in the proportion devoted to >
13

Publishing in the knowledge economy
The industry today
Figure 3.8 Consumer expenditure on recreational
and cultural products
Figure 3.9 Trends in consumer credit and
out-of-town shopping
9%
8
7
16
14
12
10
8
6
4
2
Outstanding consumer credit, % GDP
No. of out-of-town shopping centres
700
600
500
400
300
200
100
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0
1987
1989
1991
1993
1995
1997
1999
2001
0
Source Pira
Source Pira
14

The industry today
Publishing in the knowledge economy
leisure and entertainment have risen
substantially, this fall in share is not surprising
and may not in itself matter. The same report
forecasts sales of books and magazines will
continue to rise until 2010, although at a slower
rate than in the period 1985-2000 (books by
3.6% per annum, compared with 5.5%;
magazines by 2.1% per annum, compared with
8%). Newspaper sales will, according to
Mediaphile, slow to 0.2% per annum in 2001-
2010, compared with an average growth of
3.3% in 1985-2000.
But these overall figures can disguise some
important trends. For example, the proportion of
consumers buying books has fallen, although
book sales are rising, perhaps leading to the
conclusion that the population is dividing into
heavy readers and non-readers.
Figure 3.8 shows our forecast for spending on
recreational and leisure products.
3.3.2 Personal spending and shopping
trends
■ Growth in consumer spending has been the
motor driving the economy for much of the
last two decades.
The chart illustrates the growing importance
of recreational and cultural goods, including
books, newspapers and periodicals as well as
gardening, records, leisure software, sports
and home computers, in the 1990s, and
produces forecasts for the next 10 years that
maintain the upward trend. The rate of growth
for this sector is in line with forecasts
produced by other organisations, such as
ABN-AMRO’s Mediaphile.
In addition to the amount consumers spend,
where they spend it is also an important factor
for the publishing industry, especially
magazines and newspapers. The following
chart shows our forecast for consumer credit
and out-of-town shopping.
■ The continuing trend towards what might be
called ‘consumption as lifestyle’ is most likely
to continue if two relatively recent
developments in UK retailing are maintained.
■ Figure 3.9 shows the growth in consumer
credit (line) together with the total numbers of
out-of-town shopping centres (area).
■ Consumer credit has risen sharply in the last
10 years, from under six percent of income to
nearly 14%. A sharp downturn in the housing
market or a rise in interest rates might halt this
trend, but even the recession of the early
1990s barely dented it.
■ After a pause in the mid-1990s when planning
regulations were tightened, out-of-town
centres have maintained their growing
importance as destinations for shopping.
The juxtaposition of the trends in out-of-town
shopping and consumer credit is not intended to
imply any relationship between the two. They
are simply two trends that have significant
impacts for publishing.
3.4 Time
What is somewhat more worrying is that the
time devoted to reading printed products is
falling. According to Mediaphile, the average
minutes per week spent on print media (books,
magazines and newspapers) has fallen from
106 minutes in 1985 to 81 minutes in 2000.
While time spent online is rising (83 minutes in
2000), the main beneficiaries of increased
media time usage have been radio, leisure
software (mainly game consoles), video and
music, as well as mobile phone usage. These
averages of course cover those people who
read nothing at all, and there is other evidence
– in connection with book reading, for example
– which suggests that whole age groups do little
book reading at all, while the amount of book
reading undertaken by other age and gender
groups is rising substantially.
It must also be noted that some media usage
takes place simultaneously with other activities,
particularly broadcasting. But this is unlikely to
be particularly beneficial to publishing. As much
as 20% of radio listening occurs while driving,
for example, and increased use of the car for
travelling to work could well have displaced
newspaper reading. This data forms an
interesting backdrop to the push by media >
15

Publishing in the knowledge economy
The industry today
Figure 3.10 Industry expectations of impact of
social change and globalisation
0 10 20 30 40 50 60 70
Next generation
Aging
English language
Increased demands
Labour market
Higher educational
EU enlargement
Figure 3.12 Regional press reach by age
80
70
60
50
40
30
20
10
World trade
15-24
25-34
35-44
45-54
55-64
65+
High speed networks
Eurozone
Source BMRB Target Group Index (TGI) 2001
Other
Source Pira Survey
• Positive • Negative • Neutral
Figure 3.13 Book buying propensity by
age group
• Age profile of book buyers • Age profile of population
20
Figure 3.11 Reach of national
newspapers by age
15
80
70
10
60
50
5
40
30
24 and
under
25-34
35-44
45-54
55-64
65+
20
Source Book Marketing Ltd
10
15-24 25-34 35-44 45-54
Source BMRB Target Group Index (TGI) 2001
55-64
65+
16

The industry today
Publishing in the knowledge economy
companies to develop cross-platform
strategies and to escape from rigid crossmedia
ownership constraints.
However, according to a Henley Centre study
for the Publishers’ Association, on how book
publishing is faring in relation to other media,
while time spent on media in total is not rising,
the percentage of total time spent reading is
being apportioned differently, with the share of
books rising (up from 44% in 1988 to 52% in
2000) and the share of newspapers (down from
44% to 32%) falling. Magazines’ share rose
from 1988 to 1998 (13% to 22%) but has since
fallen to 16%.
Interestingly, in contrast with Mediaphile, the
Henley Centre also found that the proportion of
time spent reading has risen relative to other
leisure activities, while time spent listening or
viewing has fallen, albeit slightly. The sharpest
rise, unsurprisingly, is in the proportion of time
spent ‘interacting’.
One of the questions asked in our survey of
industry companies (see Appendices for
methodology and text of the questionnaire)
related to the impact of various kinds of social
changes on the industry. The results suggest
that the increased demands on consumers’
time constitutes the most negatively perceived
aspect of anticipated social changes (see
Figure 3.10). It is also important to note that this
information refers only to consumer media
spending and use, not to the business to
business area.
3.5 Demographic changes
The age profile of the population has major
implications for the publishing industry. The
current trend towards the ageing of the
population is mainly seen as positive or neutral,
according to our questionnaire.
This is backed up by research which shows
that, for books and newspapers at any rate, the
usage is skewed towards older age groups.
This would imply a positive outlook for those
sectors because of the ageing of the population.
However, unless this pattern is reproduced as
generations mature, it is obvious that publishing
companies will eventually be in difficulty.
Because newspapers have actually
experienced declining circulations – not just in
the UK, but across the advanced countries –
Table 3.1 Newspaper readership
profiles by age
Age
group National Regional
15-24 13.5 13.9
25-34 17.4 18.1
35-44 17.8 18.4
45-54 17.5 16.6
55-64 13.5 13.1
65+ 20.2 19.8
Source BMRB Target Group Index (TGI) 2001
they have tended to be more concerned about
this issue than other segments. The Newspaper
Society carried out some research with BMRB
into media use by lifestage, which shows very
clearly how the different stages of life, e.g. ‘live
with parents’, ‘live with partner’, ‘children left
home’, affect the kind of media that is used and
how intensively. This lifestage analysis is
increasingly more useful than simple age
breakdowns, now that family formation occurs
at very varying ages, and second families are
becoming more common.
A particular problem faces national
newspapers in that they have a limited number
of brands at their disposal and these brands
tend to become identified with particular age
cohorts, with well-known examples being the
Daily Express and the Daily Telegraph.
Theoretically interactive media present great
opportunities for publishing companies to break
free of the format and brand constraints that can
prevent them appealing to new generations of
customers. In practice, it has been difficult so far
to deploy the power of the offline brand to
support the online one at the same time as
having enough flexibility in the online brand to
allow it to play the desired role of a new,
differentiating identity. Closely related to this is
the issue of monetising the online manifestation
of the brand, apart from by driving sales or >
17

Publishing in the knowledge economy
The industry today
defending advertising in the printed version.
In the print environment, some of our
interviewees argued that the Metro free dailies
in a number of UK cities have a greater appeal
to young people who do not normally read a
paper, indicating perhaps that digital media
are not the only vehicles for tackling the
generation divide.
Although book publishers have enjoyed rising
sales, they too are concerned that younger age
groups may be losing the reading habit. More
integrated research on reading habits and
motivations across the different sectors might
produce results that would be illuminating for
all of them.
3.6 Other factors affecting publishing
3.6.1 Internet connectivity
Figures 3.14, 3.15 and 3.16 show contrasting
scenario-based forecasts for Internet
connectivity.
Slowing proliferation of Internet connectivity
Take up of the Internet at home is an important
factor driving and reflecting changes in
consumer lifestyles. Data for Figure 3.14 is
taken from The Office of National Statistics’
quarterly survey of households accessing the
Internet from their home computer. Over the last
year, the rapid quarter-on-quarter increases
previously seen have tailed off.
The fitted curve continues this slowing of
household penetration continuing into the next
two years, with the total barely rising above
40%. Predictions are shown for part years to
indicate the fit of the forecast with actual data.
Although low by some alternative forecasts,
currently only 45% of UK households possess
a computer, so the final figure for Internet
access still represents over 90% of potential.
This forecast is most likely to be true when:
• the digital divide continues
• PC sales continue to stall
• broadband availability is limited.
■ The networking of UK society has been slow
compared to the US (the ‘Atlantic’ divide) and
much slower in lower income groups
compared to households higher up the social
scale (the digital divide). The networked
society scenario is therefore more likely to
occur if the divides are diminished over the
next two to three years.
■ Figure 3.15 shows the percentage of UK
households accessing the Internet for different
income groups in 2000 and 2001 (Source:
Family Expenditure Survey). For reference
purposes the relatively even penetration of
telephone use across income groups is also
shown. Income decile 1 is the poorest 10% of
households and so on up to the richest 10%.
■ In the highest income groups, 75% of
households can access the Internet from
home. If households from all income groups
could do the same, then the networked
society would be that much closer.
■ In 2001, decile 8 achieved the penetration
rate achieved by decile 10 in 2000, decile 7
achieved the rate in 2001 set by decile 9 in
2000 and so on. Each year, each decile
achieves roughly the same level of
penetration of the decile two places higher
in the previous year.
■ Supposing up-take of the Internet has already
reached maturity in the top decile and
historical trends continue we would have:
• 57% penetration by end 2003
• 65% penetration by end 2004
• 71% penetration by end 2005
Closing the Atlantic gap
Figure 3.16 shows the percentage of UK and
US households able to access the Internet from
home. The US data (US Online, US Census
Bureau) is much more sporadic than the UK
data, but typically the penetration rates
achieved in the US are 18-24 months ahead
of the UK.
If the historical trends continue then home
Internet access would reach 53% in the UK
by 2003, 50% higher than its mid-2001 figure.
To sum up, the short history of the technology
makes home Internet use difficult to forecast. If
current trends continue, then Internet access at
18

The industry today
Publishing in the knowledge economy
Figure 3.14 Online households forecast
Figure 3.16 Closing the Atlantic gap
50%, UK households online
• Online
• Predicted
60%, Households online
• UK • US
40
50
30
40
20
30
10
20
1998
2000
2002
2004
10
Source Pira, based on ONS data
1998
1999
2000
Figure 3.15 Closing the digital gap
• Telephone 2001 • Internet 2001 • Internet 2000
100%, Households
Sources ONS, US Bureau of the Census
80
60
40
20
1
2
3
4
5
6
Income decile
7
8
9
10
Source Family Expenditure Survey
>
19

Publishing in the knowledge economy
The industry today
home is likely to settle at penetration rates of
40-50% in the next two years. If, though, the
digital divide is reduced, penetration rates could
be much higher – 70 to 80%.
3.6.2 Reducing wastage
Wastage is a major problem in the newspaper,
magazine and book publishing sectors. The
drive to reduce waste is prompted both by the
financial costs to the publisher and other
elements in the supply chain, as well as the
environmental cost to society as a whole.
Targets have already been agreed with the
newspaper industry, and the book supply chain
has been the focus of a major report and a
series of subsequent industry initiatives. The
newspaper and magazine publishers and supply
chain organisations meet together in the Joint
Industry Group (JIG) and there are also a
number of separate initiatives. The sections
dealing with books and magazines in Part 1
give more information on the levels of returns
and wastage.
Although we discuss wastage essentially from
the point of view of its impact on
competitiveness, it is clear that the measures
we outline in Part 2 of the report to improve
the efficiency of the supply chain and to find
alternative routes to reaching the customer
will also have environmental benefits.
20

Publishing in the knowledge economy
The industry today
CHAPTER
4
Size and performance of the industry
4.1 Turnover
Figures 4.1 and 4.2 show the turnover of the
industry, according to the official definition, SIC
22.1 (revised 1992). Changes in the ABI mean
there are two overlapping sets of data that are
not strictly comparable with each other.
Research by ONS indicates that the post-1997
data collection is more reliable than pre-1997.
Both are given in Figure 4.2 to show as much of
a trend as possible. This shows a picture of
sustained and rapid growth apart from a slight
dip in 1997. Taking the two runs of data
separately, the industry grew by an annual
average rate of 7.4% in the period 1993-97 and
then slowed to an annual average of just under
4.8% over the period 1995-99.
An alternative set of data, shown in Table 4.1,
drawn from unofficial sources, yielded a higher
turnover figure for 1999 of £18.5bn, which has
tended to become the most widely quoted figure
for the size of the industry.
Table 4.1 Publishing turnover, based on
unofficial statistics, 1999, £m
Newspapers 7797
Magazines 6211
Books and journals 4476
Total 18,484
Sources The Advertising Association, Publishers’ Association,
Periodical Publishers’ Association
Neither of these data sets is ideal. The official
data has the merit of providing a relatively long
run of data from a single source, and being
comparable with international data (see section
on international comparisons, below). The ABI
gives a total for journals and periodicals in 1999
of £6.153bn, which appears to under-represent
the revenue from magazines, particularly
business-to-business publishing activities, which
other evidence suggests have been among the
fastest growing areas of the industry. Data on
journals is particularly difficult to obtain anyway,
so it is impossible to say what the figure for
‘periodicals’ alone might be (see Gap Analysis).
The unofficial data – at least as represented in
the constituent elements of the £18.5bn figure –
over-represents the revenue from newspapers
by using total expenditure rather than net
revenue (i.e. gross of advertising and
distribution expenses which accrue to other
elements of the value chain). For business
magazines, no net revenue figures are
available.
The data in Figure 4.3 is the sum of net
revenues for newspapers, conventional (i.e. not
contract or customer magazines) consumer
magazines and sales of books (invoiced at
warehouse prices). Adding in revenues from
customer magazines of £227m in 1999 and
£10.78bn of revenue from business-to-business
activities (drawn from the special study
Connecting Business, which excludes some
categories such as business TV and credit
reference agencies) gives a total turnover of
£22.33bn. Unfortunately, the B2B data is from a
one-off study. This means that the best we can
do is arrive at a number of inconclusive ‘sizes’
for the industry. What these different data have
in common, however, is that they all depict very
healthy growth.
4.1.1 Revenues from licensing and
rights sales
One of the most serious gaps in data is
information on the revenues publishers derive
from the licensing and sale of rights (see Table
4.2). Clearly, this is mainly in the area of book
and journal publishing, but magazine companies
also engage in the sale and purchase of
formats, often internationally, and license the
use of their brands. Business information
companies also license information to third
parties for redistribution. Some of this
information is in the public domain from annual
reports. A separate research exercise simply on
this topic would be worthwhile, though it might
reveal an unwillingness to divulge information.
One of the main opportunities for publishing
companies in the future is likely to be the use of
their core assets across many more platforms
and channels, not all of which will be under the
direct control of publishing companies.
Therefore, having data on this area will be
vital to understanding the total picture.
22

The industry today
Publishing in the knowledge economy
Figure 4.1 Publishing turnover, SIC 22.1
Figure 4.3 Net revenues – three sub-sectors
20000, £m
12000, £m
15000
10000
8000
10000
6000
4000
5000
2000
1995
1996
1997
1998
1999
2000
1991
1992
1993
1994
1995
1996
1997
1998
1999
Source Office of National Statistics, Annual Business Inquiry
(data for 2000 provisional)
Source The Advertising Association, PA
Figure 4.2 Trend turnover data from ABI, showing
data discontinuity
20000, £m
15000
10000
5000
1993
1994
1995
1996
1997
1997
1998
1999
Source Office of National Statistics, Annual Business Inquiry (data for
2000 provisional)
Table 4.2 Royalties, publishing, 1999, £m
Exports 376
Imports 168
Balance 208
Source UK Trade in Services
>
23

Publishing in the knowledge economy
The industry today
4.2 Costs and resources
There is little data available on costs for
publishing as a whole, but the Annual
Business Inquiry gives a figure for total
employment costs (Tables 4.3 and Figure 4.4).
Since employment data is unavailable before
1998, it is only possible to show gross valueadded
per employee for three years (Figure
4.5). It appears to have grown rapidly – GVA per
employee in printing grew by 13.9% in the same
period, for example.
More detailed data on purchases of goods
and services is only available up to 1999, with
the break in the series in 1997, so two numbers
are given for that year in Table 4.4. This
appears to show a fairly steep rise in the total
purchases of goods and materials from 1993 to
1997, and a slowing thereafter. This is very
much in line with the subsequent chart on paper
prices, showing the sharp rise in that period.
The rise in the figure for telecommunications
services and computer and related services is
more likely to reflect a more extensive use of
these services, rather than a rise in prices.
4.2.1 Paper prices
Figure 4.6 illustrates the trend in paper prices
since 1987, showing the volatility, the sharp rise
in newsprint prices in 2001 and the estimated
fall in 2002.
There is still concern, particularly in the
newspaper industry, about the increasing
concentration of paper supply and a fear that
inappropriate action to support European
producers would make the publishing industry
more vulnerable to price rises. The suppliers
have already declared their intention to try to
limit price volatility in future by controlling supply
more effectively.
Table 4.3 Employment, employment costs
and gross value-added
Turnover, Gross value- Employment Employment
basic £m added, basic 000s cosfs
prices, £m
1995 14059 6425 n.a. 2742
1996 15108 6316 n.a. 2929
1997 15053 6421 n.a. 3338
1998 16106 7147 173 3623
1999 16849 7790 163 3798
2000 18371 8409 164 4254
Source Office of National Statistics, Annual Business Inquiry
Table 4.4 Purchases of goods, materials
and services
Total purchases Purchases of Purchases of Purchases of
of goods, telecoms computer advertising
materials and services and related and marketing
services services services
£m £m £m £m
1993 5940.9 – – –
1994 6225.3 – – –
1995 7302.0 – – –
1996 8226.1 97.6 65.4 576.9
1997 8799.7 111.5 79.0 657.1
1997 8564 105 75 675
1998 9021 110 91 707
1999 9104 117 98 695
24

The industry today
Publishing in the knowledge economy
Figure 4.4 Gross value-added and
employment costs
10000
• Gross value added • Employment costs
Figure 4.6 Trends in publication paper pricing
1000, euro per ton
• Newsprint • SC • LWC
8000
800
6000
600
4000
2000
1987
1989
1991
1993
1995
1997
1999
2001E 2002E
Source Merrill Lynch
1995
1996
1997
1998
1999
2000
Note: LWC = Light weight coated; SC = Super calendared
Source ONS ABI
Figure 4.5 Gross value-added per employee
150, 1998 = 100
Figure 4.7 Newsprint capacity and demand
50
• Capacity • Demand
120
40
90
30
60
20
30
10
1998
1999
2000
Europe
N America
Asia
World
Source ONS ABI
Source World Press Trends
>
25

Publishing in the knowledge economy
The industry today
4.3 Cross industry comparison
In assessing the performance of the UK
publishing industry it is useful to have
comparisons across sectors, but finding
meaningful comparators is not straightforward,
especially for a sector such as publishing, which
straddles the manufacturing/service divide. The
OECD makes a useful division between
Information and Communications Technology
(ICT)-producing industries and ICT-using
industries, classifying publishing in with the
latter group. For the comparators we have
chosen sub-sectors mostly from the ICT-using
industries, with telecommunications from the
ICT-producers.
Figures 4.8 and 4.9 summarise data from the
Annual Business Inquiry and place publishing in
its context. There are many more enterprises in
printing compared to publishing, which has seen
a growth in enterprises in the 1990s alongside
the growth seen in the number of firms in the
advertising industry. The largest rate of growth –
although from the smallest base – is in the
recording media sub-sector.
Employment has been broadly stable in all
five industries, again with the exception of
recording media where the number of
employees rose by 50% between 1998 and
2000. Value-added is highest in the
telecommunications industry, which has seen
sharp rises in productivity during the 1990s.
The rise in value-added in publishing is more
modest and broadly matches that seen in
printing.
Comparative data on measures of
entrepreneurship are hard to find for any
industries. The UK competitiveness indicators
use figures from the Annual Respondents’
Database (ARD), but measures for sub-sectors
are only available at relatively high levels of
aggregation. Figure 4.10 illustrates this, showing
entry and exit rates per year for a number of
manufacturing industries 1 . Publishing is
amalgamated with printing and the pulp
industries in sector 22. As far as we can tell,
this sector is fairly representative of UK
manufacturing, with perhaps a slightly higher
than average rate of entry.
Entry and exit rates are used in the UK
Competitiveness Indicators as a marker of
entrepreneurship, on the basis that high levels
should in principle improve resource allocation.
However, high entry rates are not always a
good sign of entrepreneurship; business
growth rates and innovation also need to be
taken into account.
1 The information is from Entry, Exit and Establishment
Survival in UK Manufacturing by Richard Disney, Jonathan
Haskel and Ylva Heden
26

The industry today
Publishing in the knowledge economy
Figure 4.8 Number of enterprises,
five industries
Figure 4.10 Entry and exit rates in seven
industries
25000
Telecommunications • Advertising
Publishing •
• Printing
Reproduction of recorded media
0.4
• Entry rate • Exit rate
20000
0.3
15000
0.2
10000
0.1
5000
1995 1996 1997 1998 1999 2000
Source Office of National Statistics, Annual Business Inquiry
Figure 4.9 Value-added, five industries
Chemical
Mechanical eng.
Computers
Electrical eng
Instrumental
Food, tobacco drink
Textile
Printing/publishing
Source Entry, Exit and Establishment Survival in UK Manufacturing by
Richard Disney, Jonathan Haskel and Ylva Heden
ALL
20000
Telecommunications • Advertising
Publishing • Printing •
recorded media
Reproduction of
16000
12000
8000
4000
1995
1996
1997
1998
1999
2000
Source Office of National Statistics, Annual Business Inquiry
>
27

Publishing in the knowledge economy
The industry today
4.4 International comparisons of
productivity and innovation
We have noted already the scepticism with
which international comparisons should be
treated. Figure 4.11 shows productivity indices
for publishing in five countries during the 1990s,
based on data from the OECD, as compiled by
the Groningen Growth and Development Centre
in the Netherlands. Productivity is measured in
value added (1995 prices) per worker,
unadjusted for hours worked. In addition the UK
employment figure excludes the self-employed.
For all countries the index is set to 100 in 1990,
except for Germany (1991).
The pattern of change in productivity across
these five countries is at variance with the
standard picture of economy-wide productivity
growth in the 1990s. The US shows the
weakest productivity growth with the highest
rates of growth in continental Europe. The UK
lies somewhere in between, showing gentle
growth in productivity. Other industries covered
in the Groningen indices exhibit a more similar
pattern to the standard one, so it would appear
that the performance of publishing is, in fact, at
variance with the overall international
productivity picture. There are some possible
explanations: US companies suffered from the
strong dollar in the second half of the 1990s,
while conversely, Eurozone countries benefited
from the weakening Euro. With its strengths in
scientific publishing, the Netherlands has
particularly benefited from the strong dollar, as
has the German publishing industry. There is
other evidence from the Newspaper Association
of America that there was a continuing decline
in productivity in that part of the industry. We
have also been told in a number of interviews
that the diffusion of new technology and more
efficient working practices has perhaps not gone
as far within US newspaper publishing as might
be expected, and not as far as it has in the UK.
It must be emphasised that this graph depicts
growth trends, not absolute levels of
productivity. Further international comparisons
for sub-sectors of the industry are made in the
relevant sections of the report.
Reliable figures for comparisons of innovation
are even harder to find. The UK
competitiveness indicators uses data from the
second Community Innovation Survey (CIS)
(Figure 4.12), but at the level of the industry this
source becomes quite unreliable. ‘Publishing’ is
included with printing and wood pulp and only
133 firms in the UK are included in the sample.
It is also quite dated (from 1996-97 – although
CIS 3 is currently under preparation) and so its
relevance to 2002 must be taken with a pinch of
salt. The figure below shows the percentage of
firms in each industry stating that they
introduced a new or improved product within the
last year. The percentage of UK firms in this
category is above the average for the European
Union (plus Norway) as a whole, but below the
figures for Germany and the Netherlands.
Figure 4.13 illustrates the positive trade
balance in printed matter, which is the nearest
available data to publishing. The data is in
dollars – in national currency terms the picture
for Germany and the Netherlands would look
much better. Naturally this is not an ideal
definition, and it also should be pointed out that
UK publishers have made the decision to print
a great deal of material abroad both for cost
reasons and to facilitate access to third markets.
28

The industry today
Publishing in the knowledge economy
Figure 4.11 International comparisons of
productivity growth in publishing
150
120
90
• Netherlands • US • UK • Germany • France
1991 1993 1995 1997
Source Groningen Growth and Development Centre
1999
Figure 4.12 Product and process innovation
80
70
60
50
40
30
20
10
Wood pulp and paper; publishing
Financial intermediation
• Computer and related activities;
engineering services
4.5 Conclusion
Despite the very considerable difficulties and
dangers of drawing conclusions based on the
evidence available, it is possible to make some
general statements. In terms of value-added
and productivity, the data does not seem greatly
at variance with other UK industries, leading to
the conclusion that publishing is likely to occupy
the same sort of international ranking as UK
industry as a whole i.e. behind the US and the
more advanced continental European countries.
But as the (official) definition of publishing used
in these comparisons excludes at least some of
the fastest growing and most innovative
segments of the industry, the true picture might
be somewhat more positive.
In terms of broader measures of performance,
including product and service innovation and
diversity, we conclude that the UK publishing
industry is in the top rank internationally, a
conclusion broadly supported by an EU
Commission report which will be drawn on in
the sections considering sub-sectors, below.
The following sections look at the major
sectors of the publishing industry. It does not
analyse every indicator, but draws out the most
significant elements.
0
Germany
France
Ireland
Netherlands
Source Community Innovations Survey
Finland
Sweden
UK
Total
Figure 4.13 Trade balance in printed matter
2500, $
• US • UK • Germany • Netherlands • Singapore
2000
1500
1000
500
1996
1997
1998
1999
2000
Source United Nations
29

Publishing in the knowledge economy
The industry today
CHAPTER
5
Book publishing
5.1 Revenues
Figure 5.1 shows publishers’ total book sales,
home and export, at ex-warehouse prices,
based on the Publishers’ Association survey
and also on data from the ONS Prodcom series,
which arrive at similar figures via different
methodologies. Major revisions to the Prodcom
series have led us to use the latest run of data
(1997-2000) only. The PA figures carry us only
to 1999 at present, although the organisation is
in the process of changing to a more frequent
series based on distributors’ information.
The growing importance of the Internet as a
channel for selling books is clearly seen in
Figure 5.2, and it seems to be widely felt that
the Internet is growing the market rather than
simply taking share from the traditional channel.
To date, though, there is no firm support for this
conclusion.
5.2 Export performance
Figures 5.3 to 5.5 show the trend in home and
export sales; the performance by category and
the trade balance. However, as discussed
further in the section on expanding international
markets, below, the major difficulty in
interpreting this data is the increasing
globalisation of the book publishing industry.
More and more books are now produced under
licence or directly by subsidiaries in third
markets rather than being exported directly
from the UK, but this data is available to the
publishers, who treat the revenue in various
ways in their accounts, and is not captured in
a publicly available form. The charts might be
interpreted to suggest that there is some cause
for concern in the trade performance. In fact,
this cannot be implied reliably, but nevertheless
the period of declining trade balance (post-
1996) does coincide closely with the era of
the strong pound.
5.3 Titles
The data in Figure 5.6 shows that the industry
has greatly expanded the number of titles it
produces across all categories. In one sense
this is a great strength and a tribute to
innovation and creativity. But the downside is
that many of these titles are destined to be sold
unprofitably or not at all. They will be a cost
through the returns process, and finish up being
pulped, which represents an additional financial
and environmental cost. The book publishing
business historically concentrated on pushing
product out into the supply chain and has taken
less account than it should of whether the books
will sell. Typically 20% of a publisher’s titles will
account for 80% of the revenues. Publishers
seem divided over whether this is simply an
inevitable consequence of the business –
forecasting whether a particular title will sell is,
after all, not like forecasting demand for nappies
or baked beans – or something which
publishers should be actively trying to change.
Book publishing, especially on the fiction side,
resembles the music and film business, where
a few hits will be balanced by a large number of
failures. However, the odds can be shifted to
some extent by research into knowing the
customer better. There is much better data
available now both through the kind of surveys
carried out by Book Marketing and also through
Whitakers BookTrack, for example. Some
publishers seem able to make better use of
this than others in tailoring their offerings to
the market.
Book publishing is quite fragmented, but with
a small number of publishers and titles
accounting for the majority of sales. According
to a special report by KPMG in 1998, which
investigated the book supply chain, 3% of titles
accounted for 50% of the volume of retail sales.
Fewer than 40 out of 15,000 publishers
accounted for 56% of bookshop sales. But no
one publisher had a market share of more than
9%. Book retailing is also fragmented, but
dominated by four chains, which together
accounted for 42% of retail sales. Again,
according to KPMG, the cost of distribution
to publishers was extremely high, at 13% of
sales, compared with an average 6% in
industry overall.
Figure 5.7 shows the percentage of returns in
the market. Unfortunately, this figure is not
30

The industry today
Publishing in the knowledge economy
Figure 5.1 Total book sales, home and export,
£m, ex-warehouse prices
3500
Figure 5.2 UK book sales, retail value, £m
3000
2500
• Traditional channels • Internet
• Total sales • Sales (Prodcom) 500
3000
2500
2000
1500
2000
1500
1000
1000
500
1985 1987 1989
Source Mediaphile 2010
1991
1993
1995
1997
1999
2001
1990 1992 1994 1996
Sources The Publishers’ Association, ONS
1998
2000
Figure 5.3 UK sales: home and export
Figure 5.5 Exports as a percentage of sales
60%
Total exports, % of sales •
• School and ELT exports, % of sales •
Academic/prof. exports, % of sales
Consumer exports, % of sales
2500, £m
2000
• Total, home • Total, export
50
1500
40
30
1000
20
1990
1992
1994
1996
1998
10
Source PA
1990
1992
1994
1996
1998
Figure 5.4 Trade balance in books
Source PA
600, £m
500
400
300
200
100
1995
1996
1997
1997
1998
1999
2000
Source ONS
31

Publishing in the knowledge economy
The industry today
Figure 5.6 Titles published
120000
100000
80000
102102
98477
102925
108744
Figure 5.8 Trends in book prices
150
140
130
• ONS PPI (1990 = 100) • ONS PPI (1990 = 100), relative to RPI
60000
120
40000
110
20000
100
1996
1997
1998
1999
1990
1992
1994
1996
1998
Source J Whitaker
Source ONS
Figure 5.7 Returns as % of net sales
Consumer
150
140
Average books prices (1990 = 100); unit prices (Bookseller)
• RPI (1990 = 100)
School and ELT
Academic and professional
130
120
110
Total
100
0% 3 6 9 12 15
1990
1992
1994
1996
1998
Source PA
Sources The Bookseller, ONS
Figure 5.9 Employment
50000
40000
30000
20000
10000
1994 1996 1998 2000
Source Labour Force Survey (data for spring of each year)
32

The industry today
Publishing in the knowledge economy
Table 5.1 Financial indicators
Financial data 1996-97 1997-98 1998-99
Profit as % sales 6.8 8.3 8.3
Profit as % total assets 11.4 10 9.7
Profit as % of
capital employed 25.2 24 20.1
Pay per employee 20,363 21,059 22,492
Sales per employee 124,000 124,000 129,000
Capital employed
per employee 46,000 51,000 53,000
Pay to sales ratio 17.60 17.20 17.60
Source ICC, based on returns from 113 companies
Table 5.2 Regional distribution of employment, book
publishing and total publishing
All in employment in publishing by region; not seasonally adjusted;
UK, spring 2001
22.1 22.11: % of total % of total
publishing book in each in each
publishing region: region
publishing book
publishing
United Kingdom 194780 36401 100.0 100.0
Tyne & Wear 3801 453 2.0 1.24
Rest of North East 440 0 0.2 0
Greater Manchester 1978 0 1.01 0
Merseyside 853 0 0.43 0
Rest of North West 5256 1892 2.7 5.20
South Yorkshire 1789 0 0.9 0
West Yorkshire 4131 437 2.1 1.2
Rest of Yorkshire &
Humberside 2533 0 1.3 0
East Midlands 8926 1822 4.58 5.01
West Midlands
Metropolitan County 6183 580 3.17 1.59
Rest of West Midlands 4718 0 2.42 0
East of England 24019 4216 12.33 11.58
Inner London 31107 6659 15.97 18.29
Outer London 29108 6735 14.94 18.50
South East 34201 9826 17.56 27.0
South West 13013 2000 6.68 5.49
Wales 3947 536 2.03 1.47
Strathclyde 5783 852 2.97 2.34
Rest of Scotland 8578 393 4.40 1.08
Northern Ireland 4416 0 2.27 0
Source Labour Force Survey
available on a regular basis, so it is hard to say
what the trend is, but no-one suggested to us
that it was falling, although they pointed out that
the UK returns rate is actually a lot better than
in some international markets, notably the US.
But it is widely agreed that it needs to come
down, and that even at the current rate, costs
can be removed from the returns process
through automation – this is underway through
the Book Industry Communication (BIC) returns
initiative. Some publishers would like to see the
chain move to firm sale on backlist, which is
now in operation in Australia.
5.4 Prices
There are many different book price indices
available, but according to Book Marketing, the
most accurate measure is the PPI produced by
the Office of National Statistics, as this uses a
methodology that measures changes in a
sample of products that are as nearly identical
as possible. The trend in this is shown in Figure
5.8, nominally and relative to the Retail Price
Index. This indicates that book prices (across all
categories) have increased slightly faster than
the RPI. Looking at the Bookseller indices,
which measure the average cover prices rather
than the prices reflected in the books actually
sold, gives a slightly different picture, indicating
that while book prices outstripped the RPI quite
considerably over the period 1981 to 1999, they
rose slightly slower than the RPI in the period
1990-1999. Overall, 49% of books were sold at
discount in 1999, up from 41% in 1997.
5.5 Profitability
See Table 5.1.
5.6 Employment, skills and training
The variability of data on employment from the
Labour Force Survey has already been
mentioned as mainly an artefact of the small
sample size. There are no industry data
collected on employment in the sector. The high
number of staff employed on a non-standard
basis (freelancers, etc) is a complicating factor
in any attempt to arrive at a figure and it >
33

Publishing in the knowledge economy
The industry today
makes attempts to calculate output or revenue
per employee across the sector next to
impossible. Some individual companies told us
that they do measure this, or use indications
such as titles produced per employee. The data
from the ICC survey on sales per employee
may reflect only the full-time employees for the
companies concerned, which are in any case
the largest in the sector. They do show a
significant rise in 1988-99.
The regional data shows that 64% of all book
publishing employment is in London and the
South East, compared with 48% of all
publishing employment. This is a contributing
factor to some of the issues discussed in the
skill shortages part of the report, below.
Table 5.3 is based on the comprehensive
survey of skill levels and training issues carried
out by the Publishing National Training
Organisation (NTO). This will also be used in
other sections as the main source of information
on skills and related issues.
Data on skill levels shows the high average
level of qualification in the industry across the
board, including in sales and marketing and
even in office administration and secretarial.
This clearly reflects the perceived desirability of
the industry as an employer, and the attempt to
get one foot on the ladder. It is also interesting
to note the very high level of qualifications in
production, almost as high as management
and editorial.
Table 5.3 Skill levels in book publishing
Qualifications No or low Basic Intermediate Higher Advanced
level, % eg O levels eg A levels eg Degree eg postgraduate
% % % %
Management 4 8 6 68 8.0
Editorial 2 10 11 71 2.0
Support 9 14 30 42 0
Office admin. & sec. 6 21 31 34 0
Production 2 11 22 62 0
Sales, marketing
and circulation 3 16 30 44 0
Advertising 4 23 31 42 0
Other 5 16 26 37 0
Source Publishing NTO
Figure 5.10 Differing estimates of book
publishing employment
40000
35000
30000
25000
20000
15000
10000
5000
1994
1996
1998
Sources Annual Business Inquiry, Annual Employment Survey,
Labour Force Survey
• ABI • AES • LFS
2000
34

The industry today
Publishing in the knowledge economy
Figure 5.11 Book publishing turnover as % of GDP,
one of the indicators used for ranking
0.5%
0.4
0.3
0.2
0.1
Denmark Germany
Spain
Italy
Sweden
Source EU Commission, Competitiveness of the
European Publishing Industries
Figure 5.12 Book titles published
per million population
UK
EU average
EU average
Denmark
Germany
Greece
Spain
France
Ireland
Italy
Luxembourg
Netherlands
Austria
Portugal
Finland
Sweden
UK
0 500 1000 1500 2000 2500
Source EU Commission, Competitiveness of the
European Publishing Industries
5.7 International comparisons
A major report produced for the European
Commission in 1999, which explored
comparative competitiveness in the publishing
industries across the EU, found that the lack of
data on a national basis was compounded when
it came to trying to make comparisons across
borders. The indices the authors selected (for
want of any better in many cases) were:
• Titles per million population (we have already
discussed whether this is a strength or a
weakness, above)
• Turnover as % of GDP
• Trade balance (again, problems with this one)
• Turnover growth rate
On the basis of a weighted consideration of
all these factors, the UK was ranked in the top
group, along with Denmark, Germany, Spain,
Italy and Sweden.
35

Publishing in the knowledge economy
The industry today
CHAPTER
6
Journal publishing
6.1 Revenues and costs
Very little authoritative data is available on the
revenues or costs of journal publishers. The
Publishers Association and the Association of
Learned and Professional Society Publishers
(ALPSP) have commissioned a number of
surveys, which are referred to here, but these
have been hampered by high non-response
rates, especially on the part of the largest
publishers. The surveys, carried out in 2000
and 2001 for the PA and ALPSP by TFPL,
found that there was little overlap between the
respondents in both years, so they took the
decision to combine the data together, which
is shown below in table 6.1. Some data was
published by the Competition Commission in its
report on the Reed-Elsevier/Harcourt merger in
2001, which is also drawn on in this section.
Data from the Publishers’ Association shows
a healthy growth in worldwide revenues to UKbased
publishers (Figure 6.1).
The data from the surveys carried out by
TFPL for ALPSP and the PA shows the extreme
ranges of annual sales and number of titles
produced (Table 6.2). Sales data includes
revenue from subscriptions, licences,
advertising and any other source generated
directly by publication of the titles.
It also shows how internationalised the journal
market is, with total sales being far in excess of
UK sales. The survey also shows the
importance of electronic journals: 91 out of 169
publishers together produced over 1940 titles
electronically. In 1999, the number of titles
(based on 63 out of 96 respondents) was 1200.
58 of the respondents publish all their journals
in electronic form (Table 6.3).
Typical revenue and costs for an STM and
humanities/social science journal were supplied
to the Competition Commission by Journal
Publishing, but with the caveat that these vary
very widely from journal to journal, depending
on circulation (scale economies), subject matter
and ability to attract advertising. This shows
some significant differences between STM and
humanities/social science.
Figure 6.1 Journal revenues, £m
Revenues received by UK publishers from worldwide subscriptions to
their UK-based journals (excluding advertising, licensing, etc)
500
400
300
200
100
1997
Source Publishers Association
1998
1999
Table 6.1 Journal publishing indicators,
1999-2000, based on 169 respondents
Total sales, £m 554.3
Median turnover, £ 205,968
Range of annual sales
Minimum, £ 1,800
Maximum, £m 111.9
Number of titles produced
Total 2769
Median per publisher 3
Range 1-650
Table 6.2 UK sales, based on 167 publishers
Total UK sales, £m 190.6
Median turnover, £ 70,000
Range of annual UK sales
Minimum, £ 200
Maximum, £m 67
Source TFPL for ALPSP and PA
Table 6.3 Electronic journal publishing
No. of publishers producing electronic journals 91
No. of titles produced electronically 1940
Source TFPL for ALPSP and PA
36

The industry today
Publishing in the knowledge economy
Table 6.5 Typical income and costs of
a journal, percentage of total
Revenues
STM
Humanities and
social sciences
Subscriptions 85 74
Single-copy/back volumes 6 2
Advertising/mailing list 5 2
Offprints/reprints 1 8
Permissions 1 0
Page charges/submission fees 0 12
Other 2 0
Total 100 100
Costs
Production 58 56
Postage 6 7
Distribution 2 2
Total 66 64
Gross margin 34 36
Source Journal Publishing
Table 6.6 Percentage annual price increases
in journals
Science and Medicine Humanities and Inflation
technology social (based
sciences on RPI)
1990 12.5 13.5 11.9 9
1991 9 -1.9 18.3 6
1992 14.1 16.5 14.5 4
1993 7.8 5.9 6.9 2
1994 23.5 21.8 17.2 2
1995 10.5 8.8 7.3 3
1996 13.5 12.3 11.1 2
1997 9.3 10.7 7.4 3
1998 2.4 6 9.5 3
1999 10.6 5.9 9.4 2
2000 10 12 14 2
Source Blackwell’s
The Competition Commission report gave an
estimate of the number of new STM journals
launched each year from 1990 to 2000 as about
200-300, with considerable variation from year
to year and no obvious trend. The report said
that ‘considerably’ fewer than 200 journals are
successfully established each year. It does not
appear from figures given in the report that
large publishers (by market share) account for
a disproportionately large share of successful
launches. Medium-sized publishers did
especially well at launches compared with their
market share. Given the problem that library
budgets are limited, a new journal usually has
to replace a title and so the key factor is how
quickly a publisher can respond to a shift in
the interests of a research community.
Publishers of leading journals have tended to
increase the size and price of their ‘must-have’
journals, as an alternative to launching new
titles. This can squeeze the market space
available to new entrants.
6.2 Prices
The percentage changes in journal prices for
each year since 1990, according to Blackwell’s
Periodicals Division, show that prices have
tended to rise considerably faster than the
average rate of inflation.
37

Publishing in the knowledge economy
The industry today
CHAPTER
7
Newspapers
7.1 Revenue trends
Figures 7.1, 7.2 and 7.3 show the trend in net
revenues accruing to publishers, from both copy
sales and advertising, for national and regional
papers in the UK.
This positive overall picture conceals a
divergence in performance between revenues
from copy sales and advertising.
The divergence is particularly marked in the
case of regional papers, even when advertising
revenue for free papers is excluded. The logical
consequence of this is an increased
dependence on advertising, as illustrated in
Figure 7.4.
7.2 Circulation and cover prices
Revenue from copy sales of course reflects two
elements: circulation and cover price.
Cover prices (Figures 7.5 and 7.6) have risen
faster for regional papers than for nationals:
39% against 32% in the period 1991-2000.
Within the national press, the average cover
price of popular titles increased slightly faster
than that of the qualities.
On the circulation side, qualities have held up
better than the circulation of either the midmarket
or mass market titles (Figures 7.7 and
7.8) . On the face of it, this might indicate that
competitive pricing has succeeded in stimulating
purchase, and the cut in the price of The Times
has certainly had this effect. But there are many
other factors behind the decline in circulation of
the mass market titles, including a decline in
frequency of purchase, itself partly driven by the
sharp fall in home delivery. Over the period
1993-2001 3.4m fewer people have a paper
delivered on Mondays to Fridays, and 5.3m
fewer on Sundays.
Overall circulation of newspapers has recently
been boosted by the creation of free daily
metropolitan papers in London and other cities.
Free newspaper distribution has been rising
recently, even without the new free dailies
(Figure 7.9).
Looking at the trends in type of advertising,
we can see the effects of the higher growth in
classified advertising compared to display in
their share of revenues in 2000, compared with
1991. In national newspapers the share of
classifieds rose from 18.5% to 24.2%, while in
regionals (all papers, free and paid-for) it rose
from 61.2% in 1991 to 66.7% in 2000.
Of course, many of the highest circulation
papers in the national market do not depend on
classified advertising at all, but among the
broadsheets, some have important revenue
streams from recruitment classifieds in
particular.
Although the threat to classified revenues
(both regional and national) from Internet-only
competitors appears to have receded compared
with two years ago, the use of the Internet is
rising and the functionality of online classifieds
will continue to improve relative to paper, so
there remains an issue. All the papers have
taken defensive measures in relation to this
issue, which will be discussed further later in the
report. There is also a threat to these revenues
from free advertising ‘papers’, many of which
are distributed from racks in large supermarket
entrances.
7.3 Number of titles
The number of daily national titles has remained
stable since 1995, while the number of Sunday
papers has risen by two. The number of
regional dailies and Sundays has risen, with the
daily titles boosted by the launch of the free
Metros. Regional non-dailies have declined in
number slightly, and the total number of free
papers has also fallen, from 630 in 1996 to 581
in 2000. In general, barriers to entry for
newspapers are quite high, whereas it is
reasonably cheap to launch a free, advertisingonly
‘paper’, which, although it contains no
editorial, still represents a threat to the
advertising revenues of papers that do maintain
editorial staffs. These sheets can quickly attain
critical mass from an advertiser’s viewpoint if
they can secure good distribution methods.
38

The industry today
Publishing in the knowledge economy
Figure 7.1 Net revenues, all newspapers,
current prices
3500, £m
• All nationals • All regionals
Figure 7.3 Net revenue from advertising and
copy sales, regional paid-for newspapers
2000
• Advertising, paid for newspapers • Copy sales
3000
2500
1500
2000
1500
1000
1000
500
500
1991 1993 1995 1997 1999
1991 1993 1995
Source The Advertising Association
Source The Advertising Association
Figure 7.2 Net revenue from advertising and copy
sales, national newspapers
2000, £m
• Advertising • Copy sales 100, %
1997
1999
Figure 7.4 Advertising as % of net revenues,
regional papers
1500
80
60
1000
40
500
20
1991
1993
1995
1997
1999
1991
1993
1995
1997
1999
Source The Advertising Association
Source The Advertising Association
>
39

Publishing in the knowledge economy
The industry today
Figure 7.5 Average cover prices
50, pence
40
• Nationals • Regionals
Figure 7.8 Regional newspapers,
copies sold per annum
2600, m
30
2400
20
2200
10
2000
1991
1993
1995
1997
1999
Source The Advertising Association
1991
1993
1995
1997
1999
Source The Advertising Association
Figure 7.6 Prices by market segment,
national press
Figure 7.9 Free newspapers distributed per annum
70, pence
• All qualities • All populars
2000, m
• Weeklies • Dailies
60
50
1500
40
30
1000
20
500
10
1991
1993
1995
1997
1999
1991
1993
1995
1997
1999
Source The Advertising Association
Source The Advertising Association
Figure 7.7 Circulation of national dailies
Figure 7.10 Employment in newspaper publishing
10000, thousands
• Mass market • Mid market • Broadsheet
80000
8000
60000
6000
40000
4000
20000
1991 1993 1995
Source The Advertising Association
1997
1999
1995
1997
1999
2001
Source Labour Force Survey
40

The industry today
Publishing in the knowledge economy
Table 7.1 Regional pattern of employment
All in employment in publishing industry by region; not
seasonally adjusted; United Kingdom; spring 2001
22.1 22.12:
Publishing
Newspaper
publishing
United Kingdom 194780 67819
Tyne & Wear 3801 2464
Rest of North East 440 440
Greater Manchester 1978 1493
Merseyside 853 853
Rest of North West 5256 1331
South Yorkshire 1789 815
West Yorkshire 4131 1735
Rest of Yorkshire & Humberside 2533 2061
East Midlands 8926 4368
West Midlands
Metropolitan County 6183 2832
Rest of West Midlands 4718 3706
East of England 24019 5749
Inner London 31107 5057
Outer London 29108 7160
South East 34201 7307
South West 13013 6136
Wales 3947 2568
Strathclyde 5783 3992
Rest of Scotland 8578 4808
Northern Ireland 4416 2944
Source Labour Force Survey
7.4 Employment and related issues
Figure 7.10 shows employment in the
newspaper industry as recorded by the Labour
Force Survey. Data refers to the spring of each
year. No clear trend is discernible. The
variability is mainly a product of the very small
sample sizes at this level of detail. That is to
say, a single individual reporting that they work
in the sector, or that they no longer work in it, is
reflected in large movements in the reported
total employment. The Newspaper Society
collects some employment data for the regional
press, but is not confident that its survey is truly
representative. The Newspaper Publishers
Association collects no employment data for the
national press. Official data from the employer
side (Annual Employment Survey, Annual
Business Inquiry) also shows variability. Industry
representatives suggested that in recent years
newspapers took on quite a lot of staff to
develop electronic offerings and may
subsequently have reduced their numbers,
possibly accounting for part of the most recent
increases and decreases.
The regional pattern of employment (Table
7.1) differs from much of the rest of publishing
in being less centred on London and the South
East, as would be expected. Whereas 48.5% of
publishing employment is in London and the
South East, only 28.4% of newspaper
publishing employment is.
>
41

Publishing in the knowledge economy
The industry today
7.5 Skill levels and training
Skill levels in newspaper publishing are
generally high in management and editorial,
but markedly less so in sales, marketing and
administration, and in advertising (Table 7.2).
This is especially the case when compared with
magazines, where 40% of sales and marketing
staff have higher or advanced qualifications,
and a further 33% have intermediate level
qualifications, while 29% of advertising staff
have higher or advanced level qualifications
and a further 38% have intermediate level
qualifications.
However, significantly higher percentages of
newspaper employers have a training plan
compared with magazine employers (64%
against 40%) and only 5% of employers in
newspapers provide no training, against 11%
of magazine employers.
Only 8% of newspaper employers reported
having hard-to-fill vacancies, compared with
10% in publishing as a whole (Table 7.3). The
turnover rate in newspapers, at 15.9%, is also
lower than in publishing overall (22.4%).
Table 7.2 Skill levels in newspaper publishing
No or Basic Intermediate Higher Advanced
low e.g. e.g. e.g. e.g.
level O levels A levels degree postgraduate
Management 2 2 18 68 8
Editorial 1 4 25 64 4
Support 1 22 64 11 1
Office admin & sec 1 51 42 3 0
Production 1 49 46 1 0
Sales, marketing and
circulation 1 55 39 3 0
Advertising 1 83 12 0 0
Other 90 8 0 0 0
Source Publishing NTO
Table 7.3 Newspaper employers reporting
skill shortages
Employer reporting skill shortage, % 20
Employer reporting no skill shortage, % 80
Total 100
Source Publishing NTO
42

The industry today
Publishing in the knowledge economy
Figure 7.11 Purchases of services
300, £m
250
200
150
100
50
Telecommunications
Source ONS ABI
Computers
and related
purchases
Purchases of
road transport
• 1997 • 1998 • 1999
Purchases of
advertising and
marketing services
7.6 Productivity and costs
Data from the Annual Business Inquiry is only
available from 1993, and there is a break in the
consistency of the series in 1997, with some
variables not available even in these years. The
data that exists shows the following trends in
output, productivity, investment and costs (with
the caveats as mentioned in the employment
section above):
• Turnover as a percentage of GDP appears
to have slipped from 0.62% in 1995 to 0.56%
in 1999
• Turnover per employee rose by 15% between
1993 and 1997, and then by 8% between
1998 and 1999
• Employment costs rose sharply between 1993
and 1997, but then declined
• Capital expenditure declined in the years
1994 and 1995, rose in 1998 and then
declined slightly.
Figure 7.11 shows expenditure by newspaper
companies (SIC 22.12) on some of the most
important elements of their costs. Paper is not
broken out separately in the ABI data but trends
in newsprint prices were illustrated above.
>
43

Publishing in the knowledge economy
The industry today
7.7 International comparisons
The EU report referred to in the section on book
publishing also compared the performance of
newspaper publishing. The measures which it
used as competitiveness indices in the
newspaper sector were:
• Circulation per 1000 population (Figure 7.12)
• Titles per million
• Advertising revenue as % of GDP
• Sales revenue as % of GDP
• Turnover growth rate
On the basis of these measures, which were
weighted to give a total score, the UK, along
with Denmark and the Netherlands, occupied
the highest rank. The UK scored higher in
relation to revenue, but somewhat lower in
relation to circulation and number of titles per
million population than the other two.
The same report made some interesting
comparisons between cost and revenue
structures in the industries, albeit for 1997
(Table 7.4).
The figure for the UK does not equate to
the net revenue numbers in the UK Advertising
Association data. If ad revenue from free
newspapers is included, the advertising
contribution amounts to 68% for 1997, and if
only ad revenue from paid-for papers is
included, the figure is closer at 52%.
On the cost side, the report gives the data in
Table 7.5.
This shows considerable differences in the
cost structures. Content and administration and
marketing account for a higher proportion of
costs in the UK. This presumably reflects the
fact that the industry does not have to spend as
much as its European counterparts on printing
(labour costs are lower) or on distribution – it is
cheaper to distribute through the newstrade
than via subscription-based home delivery,
which is much more common in Europe.
The chart (Figure 7.13) showing international
comparisons of advertising revenue accruing to
newspapers shows that UK newspapers are
maintaining share better than most of their
international counterparts.
44

The industry today
Publishing in the knowledge economy
Figure 7.12 Circulation per 1000 population
2500
2000
1500
1000
500
Figure 7.13 Newspaper share of
advertising revenue
80, %
70
60
50
40
30
20
• 1996 • 2000
10
UK
Denmark
Source EU Commission
Germany
Netherlands
Sweden
Finland
France
Italy
EU average
UK
US
Germany
Source World Press Trends
France
Finland
Netherlands
Sweden
Italy
Japan
Table 7.4 Revenue structure differences in
the EU newspaper publishing industry, 1997
Advertising Circulation sales
contribution
contribution
to turnover, % to turnover, %
Belgium 51.6 48.4
Denmark 61.8 38.2
Germany 66.9 33.1
Greece 51.0 49.0
Spain 43.9 56.1
France 50 50
Ireland 44.5 55.5
Luxembourg 47.2 52.8
Netherlands 65.9 34.1
Austria 67.1 32.9
Portugal 31.7 68.3
Finland 53.3 46.7
Sweden 55.4 44.6
UK 58.9 41.1
Average 55.5 44.5
Source EU Commission
Table 7.5 Cost structure of selected newspaper industries,
% of total, 1997
1.1.1.2 Content Printing Administration Distribution
and paper and marketing
UK 40 20 28 12
Finland 23.2 31 21.4 23.4
Germany 23.2 35.4 21.6 19.8
France 16-22 25-35 22-33 10-25
Source EU Commission
45

Publishing in the knowledge economy
The industry today
CHAPTER
8
Consumer magazines
8.1 Activity in the magazine sector
Magazines divide broadly into consumer and
business-to-business magazines. They not only
have different end-user groups, but different
business models, levels of brand extension and
distribution methods. Data specifically referring
to business to business magazines will be
considered together with other business to
business media in the next section, as many,
although not all, of the companies involved
produce across the range of business media,
including magazines, directories, newsletters,
databases and events.
Statistics on the consumer part of the
business are more comprehensive than those
on the business side, but we are relying on
industry data rather than official statistics in
this segment as the definition ‘journals and
periodicals’ is not helpful in understanding
magazines per se.
However, some data on the industry will be
presented which crosses the divide: namely
financial data (as many companies are engaged
in both consumer and business to business
magazine publishing) and data relating to skill
levels and skill shortages. This is presented at
the end of the consumer section. International
comparisons will also be presented here.
8.2 Revenues
The revenue from consumer magazines, like
newspapers, comes from two main sources:
advertising and copy sales. The trends in
expenditure in these are shown in Figures 8.1
and 8.2.
It can be seen from the data on advertising
expenditure that the main revenue source and
growth area has been in display advertising
rather than classifieds. Magazines are
attempting to enhance their appeal to
advertisers in a number of ways. Individual
companies that possess a range of titles that
appeal to different age, gender and interest
groups are able to offer advertisers ‘one stop
shops’. If they also have radio stations and
online and digital TV interests then they can
offer cross-media deals, although there are
currently more high-profile examples of this in
the US than here e.g. AOL-Time Warner,
Proctor and Gamble. On an industry wide basis,
there are currently trials of an advertising
trading system, pioneered by the Periodical
Publishers’ Association, which aims to make it
much easier for advertisers to invite bids, book
ads, and eventually deal with invoices and
payments electronically. This is designed to
overcome the disadvantages of having to deal
with many titles, as well as reducing the
administrative burden on sales staff and cutting
down the level of routine disputes over whether
or not advertisements were booked.
8.3 Copy sales and cover prices
In terms of spending on magazines, the picture
has been one of remarkable growth,
with a recent levelling off.
Clearly this expenditure results from a
combination of the trends in cover prices and
the numbers of copies sold.
The trend in copies sold (Figure 8.3) reveals
that after growth to 1996, sales have been
declining somewhat. Cover prices have risen
quite substantially (Figure 8.4), from 72.3 pence
in 1991 to 133.4 pence in 2000. In constant
1995 prices (Figure 8.5), the average price per
copy rose from 80.8 pence in 1991 to 116.8
pence in 2000.
46

The industry today
Publishing in the knowledge economy
Figure 8.1 Advertising trends
Figure 8.4 Price trends
800, £m
700
600
500
400
300
200
100
• Classified • Display • Advertising
160, pence
140
120
100
80
60
40
20
1991
1993
1995
1997
1999
1991
1993
1995
1997
1999
Source The Advertising Association
Source The Advertising Association
Figure 8.2 Purchasers’ spending on magazines
Figure 8.5 Net revenue by source
2000, £m
200, £m
• From advertising • From copy sales • Total
1500
150
1000
100
500
50
1991
1993
1995
1997
1999
1991
1993
1995
1997
1999
Source The Advertising Association
Source The Advertising Association
Figure 8.3 Sales of conventional
consumer magazines
1500, m
1200
900
600
300
1991
1993
1995
1997
1999
Source The Advertising Association
>
47

Publishing in the knowledge economy
The industry today
8.4 Titles and launches
The appeal of magazines and the launch of new
titles (Figures 8.6 and 8.7, which have a higher
than average price) has managed to persuade
consumers to keep spending, although there
are some signs of a slowdown. Titles, and even
whole categories, can now show patterns of
boom and bust, perhaps revealing a more fickle
and less brand loyal readership.
New title launches are widely regarded as a
major driver of market expansion, although also
a source of difficulty in the supply chain,
including generating large amounts of waste
(with environmental implications).
It’s too soon to say what the real trend is in
launches, but the concentration of retailing
and changes in shopping habits (see Section
16.4) certainly pose a threat to future launch
activity, especially from smaller publishers or
new entrants.
Figure 8.6 Titles produced
3500
3000
2500
2000
1500
1000
500
1991 1993 1995
Source BRAD
Figure 8.7 Magazine launches
800
700
1997
1999
600
Table 8.1 Life cycle indicators, % changes,
year on year, sales volumes
1994 1995 1996 1997 1998
500
400
300
All titles 0.5 2.1 1.1 -0.6 -0.5
Constant titles 0.2 -1.6 -2.0 -4.0 -3.3
Constant and
dead titles -2.6 -3.6 -3.1 -4.3 -3.9
200
100
1991
1993
1995
1997
1999
Source Wessenden Marketing
Source Wessenden Marketing
48

The industry today
Publishing in the knowledge economy
Figure 8.8 Changing retail shares of
magazine sales
60, %
50
40
• 1995 • 2001
8.5 Returns and wastage
In the year 2000, the level of waste at the retail
level was estimated at 27% and that at the
wholesale level 3%. This apparently worsening
trend is partly due to some magazines being
moved from firm sale to sale or return, and
partly to better monitoring.
30
20
Table 8.2 Returns (Waste – level of returns, %)
1990 1994 1995-99 2000 2nd half
2000
10
CTN
Convenience store
Grocery
Source The Advertising Association
Petrol stations
Figure 8.9 Consumer magazine
publishers activities
100, %
80
60
40
20
Websites
Specials
List rental
Books
Title spin-offs
Personal products
CD-ROM products
Travel points
Database mgt
Fairs/events
Source PPA, Developing Consumer magazine brands (2001)
Other
Exhibitions
20 30 29-31 30 32
Source Wessenden Marketing
8.6 Sales channels
The majority of magazines are sold to
consumers through retail outlets rather than by
subscription (Figure 8.8), with 89% of sales via
retail and 11% by subscription in 2000,
according to the Periodical Publishers’
Association.
8.7 Brand extension
Consumer magazine publishers have engaged
in a variety of brand extension activities,
illustrated in Figure 8.9. While some are clearly
seen as almost indispensable (such as a
website), others, like spin-off merchandise,
are minority activities. Whether or not a title
will support an exhibition, for example,
depends very much on the size and type
of readership. Opportunities for platform
extensions (web, digital TV) are discussed in
the digital section of Part 2.
It may be worth noting here that the consumer
magazine publishers we spoke to all told us that
brand extension activities support brand
recognition and therefore are often helpful in
buttressing the magazine’s position, but they do
not represent serious revenue streams. This
can be because the activity is undertaken on a
publishers’ behalf by a contractor under licence,
since making clothes or cosmetics, or even
putting on exhibitions is not the core
competence of the publisher. Database or list
rental activities might be the exception to this
generalisation in terms of revenue generation.
49

Publishing in the knowledge economy
The industry today
8.8 Contract publishing
A major growth area of consumer publishing in
the last few years has been the production of
magazines under contract, often to major
companies such as retailers, supermarkets,
airlines, membership organisations and so on,
and usually for free distribution to their
customer or membership base (Figure 8.10).
This is part of an overall drive by organisations
to build customer loyalty and increase brand
strength. Traditional magazine publishers have
exploited this new market and advertising
agencies have also become big players as an
extension of the other brand building activities
they undertake for clients.
8.9 Pan-magazine sector data
8.9.1 Skill levels and skill shortages
In common with other areas of publishing, and
indeed even more so in some respects,
magazine publishing employees have very high
levels of qualifications, reflecting its desirability
as an occupation (Table 8.3).
Magazine employers were slightly poorer at
providing training than were publishers overall
(Table 8.4). At the time of the Skills Foresight
report survey, they also faced the highest level
of hard-to-fill vacancies, at 15% compared with
10% in publishing overall. Difficulty in filling
vacancies is also much more problematic in
London than elsewhere. The staff turnover rate
in magazines at 31.1% was much higher than in
publishing overall (22.4%).
Figure 8.10 Contract publishing agency turnover
250, £m
200
150
100
50
1991
1993
1995
Source The Advertising Association
Table 8.3 Skill levels in magazine publishing
1997
Table 8.4 Skill shortages and training
Skill shortages
1999
No or Basic Intermediate Higher Advanced
low e.g. e.g. e.g. e.g.
level O levels A levels degree postgraduate
Management 5 6 13 61 14
Editorial 5 4 15 63 8
Support 4 12 41 31 4
Office admin & sec 7 19 42 22 3
Production 6 15 33 34 2
Sales, marketing and
circulation 6 12 33 38 2
Advertising 5 14 38 27 2
Other 14 10 28 41 0
Source Publishing NTO
Employer reporting skill shortage, % 12
Employer reporting no skill shortage, % 88
Total 100
Training
Employers with training plan,% 40
Employers with training budget, % 52
Provides on and off job training, % 56
Provides off job training only, % 9
Provides on job training only, % 23
Provides neither, % 11
Neither, all publishing, % 10
Source Publishing NTO
50

The industry today
Publishing in the knowledge economy
8.9.2 Profitability
Indications of profitability and productivity are
drawn from only the largest companies in the
industry, as reported in their reports and
accounts and analysed by Prospect Shop.
This data shows an increase in sales per
employee but a slight fall in profit and return
on capital. The rise in capital per employee is
quite marked.
Table 8.5 Financial data (based on leading
150 companies, but actually drawn from
112 that filed)
1997-98 1998-99 1999-00
Return on capital 36.6 33.2 28.8
Pretax profit margin 12.7 11.4 11.2
Profit per £ of pay 0.82 0.73 0.69
Return on investment 33.9 30.4 25.2
Stocks/sales 2.0 2.0 1.9
Pay per employee, £ 19359 20861 22283
Sales per employee, £000 124 131 136
Capital employed per
employee, £000 44 46 54
Exports/sales 13.4 12.7 11.2
Debt/net worth 103.6 85.4 80
Source The Prospect Shop
8.9.3 International comparisons
The data in Figures 8.11 and 8.12 shows
magazine titles in different countries, in total
and per million population, which shows the
relatively large number produced in the UK,
which outperforms the other major magazine
producing countries (US, Germany and France)
on a per capita basis.
Magazines in the UK do not manage to
secure as high a proportion of the available
ad spend as several of their European
counterparts (Figure 8.13).
The study on EU publishing industry
competitiveness, referred to in the newspapers
and books sections above, uses a number of
variables to rank the magazine industries of
member states, illustrated in Table 8.7. It ranks
only the industries of France, the Netherlands
and Germany in the highest level. The UK falls
into the next highest, presumably on the basis
of advertising revenue and issue readership.
The study identifies a regional grouping,
including the UK, France and Germany, whose
strengths are:
• The consumer title segment
• The ability to develop strong international titles
• Good postal distribution systems
Weaknesses in this region are:
• Rising production and distribution costs
• Saturated domestic markets
This latter point would probably be disputed
by UK publishers. In our interviews we asked
all the consumer magazine publishers if they
believed that there were too many magazines
and they all said that the market was always
evolving, giving rise to new opportunities.
However, it is a function of the market’s maturity
that new titles will tend to grow at the expense
of others, and there is some evidence that new
titles are not growing the market as much as
they used to.
The table on distribution structure shows very
clearly the unusually strong role that retail plays
in the consumer magazine distribution structure
in the UK and conversely, the unusually high
rate of subscriptions in the US. In business
magazines, the prevalence of controlled
circulation models in the UK compared with,
for example, Germany, results in a very high
level of subscription in the UK compared with
Germany, but it is not out of line with other
countries.
>
51

Publishing in the knowledge economy
The industry today
Figure 8.11 International comparisons of
title numbers
Figure 8.13 Magazine share of total
advertising spend
France
Germany
Italy (1999)
Netherlands
Finland
Sweden
UK
US
2000 4000 6000 8000 10000
• Consumer
• Business
0 5 10 15 20 25 30 35
Sweden
Finland
Netherlands
Spain
Italy
Germany
France
UK
Source World Magazine Trends
Source World Magazine Trends
Figure 8.12 Titles per million
0 100 200 300 400 500
France
Germany
Italy (1999)
Netherlands
Finland
Sweden
UK
US
Source World Magazine Trends
Table 8.7 EU competitiveness indicators
Titles Advertising, Average issue Advertising Advertising
per million % of GDP readership growth rate revenue
per title
UK 108 0.147 86.5 30.3 0.198656
Denmark 136 0.0681 98.5 30.5 0.313502
Finland 515 0.103 97 21 0.034458
France 47 0.189 95.2 28.7 0.765442
Germany 76 0.193 96.5 28.4 0.501871
Italy 177 0.106 71.4 25.5 0.186361
Netherlands 303 0.261 97.7 0.9 0.151069
Spain 58 0.122 55.2 39.8 0.262224
Sweden 52 0.081 90 1.8 0.297931
EU average 126 0.128 79 22.5 0.280405
Source Competitiveness of the EU Publishing Industries
Table 8.8 Structure of distribution
Consumer
Business/professional
Subscription Retail Subscription Retail
UK 11 89 90 10
US 84 16 n.a n.a.
France 31.3 68.7 93.5 6.5
Germany 48 52 78 22
Italy 27 73 n.a. n.a.
Spain 5.5 94.5 95 5
Sweden 70 30 n.a n.a.
Source World Magazine Trends
52

Publishing in the knowledge economy
The industry today
CHAPTER
9
Business to business media
9.1 Magazines
9.1.1 Advertising
Advertising expenditure in business magazines
(Figure 9.1) shows a faster growth in the
classified segment than in display. Classified ad
spending rose from 28% of the total in 1991 to
40% by 2000.
Several publishers said they had the strategic
goal of moving as many of their ‘free’
subscribers on to a paying basis as possible
and diversifying revenue streams. One leading
B2B publisher told us:
“We are looking to convert a proportion from
free to paid for whenever the opportunity
presents itself. Traditional page advertising is
weakening, it is a vulnerable revenue stream.”
9.1.2 Number of titles
The number of business titles has been
growing until very recently. Some titles have
been hit by the decline in the technology and
telecoms sector, for example. The data in
Figure 9.2 shows the much greater number of
titles in the business sector than in consumer
magazine publishing.
9.1.3 Circulation
A different estimate, contained in World
Magazine Trends, for the total number of
business magazines sold and distributed in
2000 came to a fairly astonishing 6050 million.
Table 9.1 Total circulation of business press
titles, m copies
1995 1998
Controlled circulation 196 210
Paid-for 88 90
Total 284 300
Source Keynote
The data in Table 9.2 shows circulation and
number of titles in the top 10 sectors, according
to the Audit Bureau of Circulation.
Business magazines have a wider sale
beyond national borders than consumer
magazines, which tend to internationalise by
means of setting up editions elsewhere or
licensing formats to others for use. The differing
export shares are shown in Figure 9.3.
9.1.4 Diversification of revenues
Some very useful ‘snapshot’ information on
business magazine publishing was contained in
the Connecting Business study. This shows the
sheer numbers of companies engaged in the
sector and the number of titles produced, which
greatly exceeds the estimate from BRAD used
in the chart above. It also shows the extent to
which business publishers are using electronic
publishing to provide editorial content.
The revenue breakdown also shows
diversification. Although copy sales and
especially advertising in various forms
Table 9.2 Segment circulation
Top 10 business sectors Sector circulation, Sector circulation, No. of titles, No. of titles,
June 2000 June 2001 2000 2001
Business management 990,130 1,221,916 51 61
Finance and investment 420979 469269 32 36
Accountancy 421681 395088 10 10
Marketing 246306 404776 15 22
Agriculture 467657 362454 15 11
Architecture 20458 284902 12 15
Building 225548 242468 19 20
Medical 387125 385898 12 13
Personnel Management 202448 209959 4 4
Wines and spirit trade 173649 207205 11 11
Total 3,555,981 4,183,935 181 203
Source ABC
54

The industry today
Publishing in the knowledge economy
Table 9.3 Business magazine survey data
No. of companies 700
No. of titles (magazines and journals) 10,000
Turnover, £m 3,300
Employees 29,000
Revenue per title, £ 114,000
% of companies publishing only business or
professional titles 76
% publishing more than 50 titles 5
% of companies reporting that all their titles provide
some electronic editorial content 40
% of other companies reporting that more than
50% of their titles provide some electronic
editorial content 8
% of titles distributed free of charge to targeted
readership 70
Source Business Information Forum: Connecting Business
Figure 9.1 Advertising expenditure:
business magazines
1500
1200
900
600
300
1992
1994
Source The Advertising Association
1996
• Display • Classified • Total
1998
2000
Figure 9.2 Business and consumer magazine titles
6000, number of titles
• Consumer titles • Business titles
5000
4000
3000
2000
1000
1992
1994
1996
1998
2000
Source BRAD
Figure 9.3 Share of exports in circulation
15%
* Business category excludes
UK-based international titles
12
9
6
3
Consumer titles
Business titles*
Source ABC
>
55

Publishing in the knowledge economy
The industry today
constitute the vast bulk of revenue, there is
a significant element from electronic and from
the ‘other’ category.
The range of activities undertaken by
business magazine publishers is shown in
Figure 9.4.
Unlike consumer magazine publishers,
business publishers emphasised the importance
both of the diverse revenue streams and the
extent to which the brand of the magazine
acted as the validating umbrella for the other
activities. Some publishers felt that it was vital
to be present in all areas (magazines, direct
mail, directories, events) in order to offer
advertisers the choice of appropriate ways
to reach their customers:
“We try to have a magazine, directory and
event in every sector. We try to see markets in
the round and offer advertisers exactly the mix
they want – they will best judge whether they
want to use events, direct mail or print for a
campaign and we want to be able to give them
that choice. We can sell these as a package.
We don’t get our divisions to compete with each
other but to collaborate to give the customer
(advertisers) what they’re looking for. The brand
of the magazine is extended and it is the brand
which gives the advertiser the confidence to go
with us, as they know that the prestige of the
magazine brand will be conferred on the other
elements, whether they are exhibitions,
conferences or awards. Because the brand
gives confidence to the (ultimate) consumer, it
gives confidence to the advertiser.”
Others felt that synergies may be overstated:
“There’s lots of talk about the need to have a
directory, show, magazine, etc, in each sector
but I’m not convinced that drives revenues.”
However, that did not undermine the basic
proposition that the brand was crucial and that it
was desirable to have many different revenue
streams, whether electronic, print or eventbased.
Another specialist publisher of
magazines and directories told us:
“Ideally we would like to have a portfolio of
products for each market, but sometimes where
we have a magazine there is already a
Figure 9.4 Activities of business magazine
publishers
100, %
80
60
40
20
0
Websites
Printed directories
Contract publications
List rental/sales
Sponsored publications/
advertorials
Awards/events
Conferences
Exhibitions
Source PPA, B2B Media: Opportunities for growth (2001)
800
600
Table 9.4 Revenue sources, %
1000, £m, current prices
1992
1994
Source The Advertising Association
1996
1998
Newsletters
CD-ROM products
Hard copy subscriptions 17
Display advertising 43
Recruitment advertising 9
Other classified 8
Inserts 4
Electronic 5
Newstrade 3
Other 11
Total 100
Source Business Information Forum: Connecting Business
Figure 9.5 Advertising in directories
2000
56

The industry today
Publishing in the knowledge economy
competing directory or where we have a
directory and a magazine, there’s already a
strong exhibition. We try to expand in areas
where we have something already but we had
lots of bits and pieces that didn’t add up. We
have spent some time in last five years tidying
them up, divesting some, acquiring others, etc.”
9.2 Directories
9.2.1 Nature of directories
Directories fall into two broad categories: firstly,
the Yellow Pages business location type of
directory, which is free to the user and relies
on ubiquity of distribution to drive advertising
revenue. They will often list all the companies
or organisations free in order to guarantee
comprehensiveness and then sell bigger
placement advertising to companies wishing to
draw greater attention to their entries.
Secondly, there is the more specialist
directory. Directories of the latter type can
clearly be more or less general in content – they
may refer to all public companies in a country,
or to all the companies producing particular
types of equipment or services. These
directories often rely on copy sales revenue as
well as advertising revenue, and some
directories do not take advertising at all. Even
where there is no advertising in the directory
itself, the data in it can constitute a valuable
resource to firms wishing to target other firms in
Table 9.5 Directory publishing industry
Connecting Business survey results
Revenue, £m 1,464
Employees 20,000
Turnover per employee, £ 75,000
Source Business Information Forum: Connecting Business
that sector, and so there is a business model in
list rental and so on. A powerful niche can be
created in a particular industrial sector that acts
to bring together providers and users of
products and services. Clearly, directories are
hard to separate from databases, and electronic
versions of directories are a natural extension
and increasingly are replacing printed versions.
They are easier to keep up to date and more
functional for the user. Many directory
companies clearly are in the forefront of using
technology to hold content in a format-neutral
way to use in a number of different ways.
The data in Figure 9.5 and Tables 9.5 and 9.6
show the advertising revenue performance of
the sector, driven mainly by the Yellow Pagestype
of directory, and then snapshot data from
the BIF’s Connecting Business study and from
the survey of the industry carried out by
Kingston University for the Directory Publishers’
Association. Data from this survey which is of
particular interest includes the sources of
revenues by format/activity.
>
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Table 9.6 Directory industry survey data
Results from Kingston University/DPA surveys (based on 32 usable
responses from a sampling frame of 164 – too low to be generalisable)
Turnover category, % of respondents (number of
respondents varies)
1998 1999 2000
Small (up to £2.8m) 60 66 69
Medium (£2.9m-£11.2m) 0 3 3
Large (£11.2m+) 9 9 9
No response 31 22 19
Number of employees category, % of
respondents (number of respondents varies)
1998 1999 2000
0 to 5 28 35 25
6 to 10 25 28 25
11 to 20 9 9 19
21 to 50 16 19 22
Subtotal 78 91 91
Above 50 6 6 9
No response 16 3 0
Average turnover per employee, £ 132,000
Average turnover per title, £ 196,000
Firms by number of titles, % of respondents
(number of respondents varies)
1998 1999 2000
1 to 5 38 47 44
6 to 10 31 22 16
11 to 20 6 16 22
Sub total 75 85 82
Above 20 12 12 15
No response 13 3 3
NB same title may be sold in a number of different media
Sales revenue by medium,% of turnover
1998 1999 2000
Data sales
Hard copy 71 67 63
CD ROM 16 17 16
Internet 0 2 8
Mailing labels/lists 3 3 3
Data on disk 5 5 5
Subtotal, all data sales 95 94 94
Ad sales
Hard copy 5 6 5
CD ROM 0

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Table 9.7 Newsletters and
management reports
Connecting Business survey results
Number of companies involved 270
% with newsletters, etc, as primary activity 20
Employees 12,500
Turnover, £m 271
% publishing exclusively for business and
professional market 72
% publishing between 2 and 10 titles 48
% publishing between 10 and 50 titles 36
% publishing some editorial electronically 55
% of titles with electronic editorial content 22
Total circulation, million 11
Percentage with fewer than 10,000 subscribers 58
% with fewer than 1000 subscribers 26
% of companies offering multiple subscription
deals/site licences 57
Breakdown of revenues, %
Hard copy subscriptions 40
Display advertising 11
Recruitment advertising 3
Other classified 4
Inserts 14
Electronic 7
Newstrade 3
Other 18
Total 100
Source Business Information Forum: Connecting Business
9.3 Newsletters and reports
There is no regularly collected data on the
publishing of newsletters, but the data from the
BIF’s Connecting Business study shows that
this is an important segment of publishing,
although for the vast majority of companies, this
is not their primary activity. Twenty-six percent
have fewer than 1000 subscribers, indicating
newsletters can be a high value activity for
niche markets. Electronic distribution is also
becoming more important, as would be
expected for a medium which is based on
reaching a tightly defined business audience
with up-to-date news and analysis.
Some interviewees argued that the
commoditisation of news through the
proliferation of free sources of news and
information on the web were likely to spell a
decline in newsletter publishing. But this was
not widely felt. Against this, high value targeted
information was still seen as greatly in demand,
and the web and email as a more effective way
of delivering it. There is also an expectation that
as online-only news and information services
dwindle, so will the free competition to paid
content. But clearly, newsletters that fail to add
significant value are at risk.
The barriers to entry to newsletter publishing,
especially on the web and via email, are very
low. The data below will not capture many of the
businesses, which may be very small indeed.
Email marketing, the sale of lists, and
advertising embedded within email newsletters
have been seen as one of the more effective
online business models, certainly compared
with banner advertising. Many non-publishing
businesses are also using regular email
newsletters as a means of client contact, but
these are not generally revenue-generating in
themselves, but more a means of prompting
site visits.
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9.4 Online business and STM
information vendors
This segment of the market includes both pure
aggregators and the owners of content who also
operate aggregation services distributing thirdparty
content. The opportunities presented by
the Internet more generally are presented in the
following section.
While there are a lot of players in specific
areas (e.g. Derwent for patents, Dun &
Bradstreet for company information, Chemical
Abstracts) there has been a considerable
concentration in this market in the last few
years, with three major business information
vendors emerging: Thomson (which acquired
Dialog), Reed Elsevier’s Lexis Nexis, and
Factiva, which is a joint venture between
Reuters and Dow Jones. In STM, the major
players are Wolters Kluwer, Elsevier Science
and Thomson, as well as John Wiley.
One reason for actually naming these players
is that otherwise there is a good deal of
confusion about what constitutes this segment:
after all, the vast majority of business and STM
publishers now operate online services. These
players tend to be distinguished by size, global
reach, and their role as intermediaries as well
as content originators. Their core competences
of information handling, database management
and the integration of technological functionality
with content also mark them out as being on the
leading edge of what is the future for much of
the publishing industry as a whole. They have
also been in the forefront of trying to forge close
relationships with their end users. Some of
them, notably Factiva and Thomson, are also
moving rapidly to becoming information
solutions companies, as are newer web-based
information intermediaries such as Northern
Table 9.8 European online business
information market, £m, currrent prices
2000 2001
UK 283 297
% share 39.4 38.9
France 135 140
% share 18.8 18.3
Germany 122 137
% share 17 17.9
Scandinavia 57 61
% share 8 8
Italy 56 59
% share 7.8 7.7
Others 65 70
% share 9 9.2
Total 718 764
Source The European Online Information Market, Jan 2002, IRN
for Learned Information
Light. Thomson’s purchase of filtering service
NewsEdge is one indication of this, while
Factiva has developed its own software and
tools for information management, which it is
offering to client companies. Information
vendors are moving away from the area of the
business most in danger of impact from the
proliferation of free online content into higher
value-added services. In a recent survey, 75%
of business information professionals reported
using fee-based services less than before
because of the availability of free information.
The data in table 9.8 shows that the UK is the
largest market for online business information
consumption in Europe.
Overall, the market for online information in
Europe amounted to £984m in 2001, up 6% on
2000. Business information, including legal,
accounted for 77.6% and STM for the rest.
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CHAPTER
10
The Internet
10.1 Opportunities and threats
The advent of the World Wide Web running on
the Internet offered many opportunities and
threats to the publishing industry. Because the
industry was caught slightly off-guard, it was put
into a position of panic, responding to threats
that arose from all corners of the globe, while
seeking to generate revenues and profits similar
to that from its traditional business. Luckily for
the industry, the threat subsided for many
reasons and most traditional publishers are now
in a stronger position. What have been the
lessons learned and how should the industry
proceed from here?
The Internet is a daily part of most people’s
working lives and has penetrated some 40% of
our homes. The power of the World Wide Web
is only just being realised and major
developments will continue for a considerable
time to come. The publishing industry has
almost entirely embraced the Web and other
Internet protocols for marketing purposes and
part of it has developed sophisticated new
business models. As a marketing tool, the
Internet has proved very effective and a great
help to smaller publishers in reaching their
markets.
The web and other new services continue
to bring new opportunities and new players to
market. Many companies are finding
themselves ‘publishing’ on the Internet in new
ways to reach their customers. Even the
Government has found itself more visibly
publishing data and information. This may
broaden the scope of publishing, but does
not redefine the industry. It provides publishers
with an opportunity to exploit new revenue
sources, bringing professional services to
companies and organisations whose focus
needs to be elsewhere.
The move towards getting publishing services
into the corporate world has been started and
some major UK publishers, such as Pearson
and Reed-Elsevier, have demonstrated an
ability to service multiple markets using medianeutral
content as well as getting into the
workflow of corporate customers. These most
likely will be further developed, although the
business models will need to be developed
further and strategic alliances and partnerships
may be needed.
10.2 Newspapers
National newspapers were among the first
publishers to embrace the web. They have
created a variety of online services, some
based around, but extending, the printed titles,
such as FT.com, and others built more around
thematic areas, such as Associated
Newspapers’ Femail, and thisismoney.co.uk.
Some mass market newspapers have since
significantly downgraded their Internet
presence, such as Express Newspapers and
the popular News International titles (former
Express owners UNM and at one time, News
International, were shareholders in the ISP
LineOne, while The Sun also established
and then sold an Internet ISP and portal,
entitled The Bun). Trinity Mirror also had an
ambitious national and local Internet strategy
with ISP/portal ic24, which survives in its
regional form.
Regional newspapers have created sites
around the geographical locations they serve,
and also initiatives such as Newsquest’s
Communigate, which acts as a host for
community groups in the local area to have an
online presence. Local shopping sites have
also been launched, allowing smaller local
businesses (a pillar of the advertising base of
the papers) to get online under the auspices of
the newspaper. Crucially, five of the leading
groups also collaborated to establish a national
classified advertising service, called Fish4. This
has been important in defending newspapers’
classified revenues, whereas in the US the
major newspaper groups have failed to find
a workable co-operative model).
10.3 Business magazines
Magazines have taken varied approaches to the
Internet. In the case of business to business
magazines, it was embraced as a major
opportunity to extend the brands of the
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magazines into a new medium, something
that ran hand in hand with existing brand
extensions, for example into directories,
exhibitions, conferences and training. For a
time, it also presented threats in the form of
new, well-funded online-only competitors, such
as the B2B exchanges and so-called ‘vortals’
which intended to act as news and information
portals for vertical industries, with or without
links to transactional services. This presented
two threats: (theoretically) disintermediation of
directories and magazines, and (actually) the
loss of skilled staff attracted by the promise of
share options in dot.com businesses. A small
specialist publisher told us:
“The Internet is still there as an opportunity.
Three years ago we would have seen it as a
huge threat. We faced serious challenges from
well-funded new entrants. For a time we lost
staff to dot.coms and it was a very competitive
time for us. They had access to very cheap
capital, but luckily their business models mainly
failed. Traditional publishers had to use cash
flow to fund these initiatives. The staff issue was
the biggest threat, but pushed us towards
issuing share options and making bigger efforts
to motivate staff, so in some ways it was good.”
Clearly these online-only initiatives have
largely collapsed, although there are legacies
in the form of industry-run B2B exchanges in
a number of industries. Many magazine
publishers had to invest heavily in Internet
services and the hoped-for revenue streams,
including online advertising and even share of
transactions (which sites like UBM’s Farmgate
at one time anticipated) have not in general
materialised. Leading B2B publishers, including
Emap, Reed Business Information and UBM are
still dealing with the consequences, although all
still see the Internet as an important channel of
communication with the customer and as a
potential revenue earner, particularly through
added-value niche business information
services. One publisher told us:
“All of us are clearing up after the big party.
We are cutting back to the core business and
trying to work out what to do about the online
offering. There is not much growth out there
and we mostly went up a blind alley with online.
There will be more consolidation and more
cost cutting.”
Another commented:
“We have fewer companion websites than we
did. The means of gaining ad revenue online
have not proved effective. Banners, buttons,
etc, are too intrusive, like ads on teletext, they
get in the way of what the user is there for.
Revenue has to be based on subscriptions, and
that means having high value content that
extends beyond the existing magazine. One
paid service that we have launched has had
high take up. It’s not just updates on the print –
it’s high value new business information.”
10.4 Consumer magazines
The picture here is again diverse. Some of the
biggest publishers, such as IPC, launched major
web initiatives, both in the general lifestyle area
with women’s sites (BeMe) and men’s sites
(Uploaded) and in the consumer interest
focused area, with acclaimed sites such as the
New Scientist’s. In the heavily contested music
and travel segments magazine publishers again
faced online-only competition (or in some cases,
outlets for content) in all kinds of forms, as sites
offering MP3 files and fan sites mushroomed,
and travel intermediaries with content and news
were major areas for web investment. Other
publishers refrained from making big
investments and largely confined themselves to
reproducing covers of the latest issues and
having subscription information on the web.
Leaving content aside for a moment, it is also
clear that the online channel represents a
definite opportunity to increase subscriptions
to print products, to ease the crucial process
of renewal and to transfer some of the
administration of subscriptions to the consumer.
There is considerable evidence from the US to
support this, although of course, subscriptions
are a much higher proportion of sales there than
here. A British publisher, Dennis Publishing, has
also had considerable success in selling
subscriptions to the US edition of Maxim via >
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the Internet. For a fuller discussion of
subscriptions, see the customer focus section.
In common with mass market newspapers,
there has been a retreat from the Web on the
part of consumer magazine publishers, with
high-profile sites being closed or sold.
One publisher of specialist titles told us:
“The Internet should be an opportunity for some
specialised titles, mainly for commerce and
classifieds, e.g. travel and books, but it’s taking
a long time to take off. It is quite hard to
monetise it. For most interests, there is a natural
online community, but there’s masses
of stuff available on the Web from libraries,
universities, etc. The danger is that your site
just becomes a signpost. No-one is spending
any money at any point, so how can you get
a share of it?”
By contrast, a publisher of magazines aimed
at car buyers and male electronics purchasers
told us that the Internet:
“Is very significant for us. One of our sites is
profitable on the basis of selling display
advertising and selling content from it on to
other sites. It also generates print
subscriptions.”
A report by consultants McKinsey, published
in the McKinsey Quarterly 1st Quarter 2001,
summed up the dilemma facing many magazine
publishers:
“Many magazines fall between the available
choices: they spend a lot of money building a
complete website and end up with one too
costly to be a companion site but not compelling
enough to attract the high traffic and revenue of
a destination site. Resources are wasted, and
readers are unhappy; people who are
passionate about their magazines expect the
Web version to be as good as its print
counterpart, and if a site billed as a destination
experience fails to live up to those expectations,
the chances of success fall and the magazine
risks losing valuable print subscribers.”
Some of the same arguments apply to
so-called ‘masthead’ programming, that is,
magazine-branded television programming,
discussed below.
Recently, mobile has emerged as an
important platform/threat for teen magazines,
with text messaging absorbing ever increasing
amounts of time and money in the teen and
even pre-teen age groups.
10.5 Books
As has already been mentioned, there are a
number of ways in which book publishers have
embraced the Internet. For academic and STM
publishers it has become fundamental. It is a
major opportunity for them to create arrays of
new services that meet the demands of
academic, research and library users. One
leading academic publisher told us:
“I am a big believer in server-side e-books
(NetLibrary, ebrary, 24 by 7, etc). The ability to
search across the field and cross-refer is what
libraries want and what users want. But the
business model’s still unclear – many pioneers
have gone bust.”
Print on demand is also a big opportunity,
especially in this segment, as it allows
publishers to keep books in print that would
otherwise be uneconomic. However, the need
to clear third party rights before using the
content in this manner was described to us as
“a potential show-stopper”. Of course, as time
goes on, publishers will be securing rights to
use content in this way – or at least attempting
to do so.
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CHAPTER
11
Analysis of gaps in data sources
11.1 General comments
Given the analysis of methodological issues,
and the identified need to measure productivity
within the sector, the most serious gaps in the
data are for total turnover and value-added, and
agreed estimates of global employment within
the sector and sub-sectors, which would allow
some calculation of sales or value-added per
employee. An additional severe gap is in the
number of companies operating in the sector
and sub-sectors, for which estimates vary
extremely widely. This variable (and accurate
size distribution information) is crucial to the
ability to conduct statistically valid surveys.
11.2 Official versus unofficial statistics
It is notable that the official statistics do attempt
to measure the kind of variables that are useful
for analysing competitiveness, but the problem
with these is that they do not define publishing
in a way that encompasses all the relevant
activities, and sub-sectors are defined in ways
that amalgamate activities that are subject to
different market dynamics. Some of the subsectors,
notably newspaper publishing, are fairly
well defined in the official data and therefore it
is possible to use the official data for some
indicators. It will be necessary to rely on
aggregated 2-digit official data (publishing as a
whole in the SIC definition) to some extent. This
is in spite of the fact that it does not fully match
the activity definition – for example, activities
such as exhibitions and conferences,
databases, news agencies and ‘advertisingrelated
activities’ are scattered throughout the
Standard Industrial Classification – simply
because there isn’t anything else available. It
has the advantage of having long consistent
series properly collected on a sound
methodological basis.
Many variables are also available at the
4-digit level, which will cover book publishing
and newspaper publishing quite well, but the
third category, which encompasses ‘journal and
periodical publishing’, is much less satisfactorily
defined from the industry’s point of view.
The unofficial statistics tend to be strong in
measuring variables that help companies to
measure their market share, or the performance
of particular media against others, such as
advertising and sales revenue, number of titles,
and circulation. Even here there are problems
of coverage, especially in certain sub-sectors,
such as the business press.
11.3 Sub-sectors
11.3.1 Book publishing
• Huge variation in estimates of the number of
publishers with a 10-fold difference in official
data and unofficial estimates.
• Problems with employment data. No regular
industry source and data from the Labour
Force Survey differs substantially from the
AES data. This limits the possibility of
calculating productivity measures with any
degree of confidence.
• Sales revenue – unofficial data is improving
but it is necessary to use PRODCOM data
until this becomes available.
• No regular data concerning the level of stock
in the supply chain. There is a one-off figure in
the KPMG report ‘Unlocking the Supply
Chain’s Hidden Prize’.
• Financial data e.g. return on sales. There is
some partial data based on the largest
reporting firms.
• As already noted, the trade data does not fully
reflect the globalised nature of the sector.
• A critical gap is the lack of data on revenues
from licensing and the sale of rights, which is
an extremely important element in book
publishing activity.
In general, there is a lot of data which
companies use internally to measure their
performance, but which is not publicly available
for analysis, in some cases because it is
regarded as confidential.
11.3.2 Newspaper publishing
• Official data maps reasonably well onto
the sector, so there are fewer gaps than in
other areas.
• But the definitions of newspapers and journals
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and periodicals used in the official statistics
splits the sector in a way that does not reflect
the split between nationals and regionals,
which is quite crucial in some respects. For
this, unofficial data is necessary and here
there are gaps, notably in terms of reliable
employment data.
11.3.3 Magazine publishing
• No regular updated employment data.
• No agreed and continuously collected data
on the number of publishers – large tail of
small publishers in consumer, one-off data
for business.
• Official data combines journals and periodicals
(including some newspapers) together and
does not distinguish consumer from business
to business magazine publishing, which have
very different dynamics and business models.
These are becoming more pronounced rather
than less as they grasp the opportunities
presented by digital media. For example, there
is no regular data capturing the increasingly
important brand extension activities of B2B
magazine publishers.
• Sales and advertising revenue figures are
reliable for consumer magazines but much
less is available for business to business
periodicals. For example, no net revenue
data is calculated.
11.3.4 Journal publishing
• The Publishers Association (PA) and the
Association of Learned and Professional
Society Publishers have both carried out
surveys in the past, and are collaborating to
produce decent information, but this has been
hampered by the unwillingness of the largest
publishers to respond to surveys.
• Official data combines journals and
periodicals.
11.3.5 Database and directory publishing
• There is a small amount of snapshot
information available from the Business
Information Forum’s Connecting Business
study and from a regular survey carried out for
the Database Publishers’ Association by
Kingston University.
• There is a series of advertising revenue data
compiled by the Advertising Association.
11.3.6 Newsletters
• The only data is in the BIF’s Connecting
Business study.
>
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11.4 Summary of definitional issues and data gaps
Publishing
Newspapers
Books
Journals
Definitional issues
Official data covers
books, newspapers,
journals and periodicals
and some ‘other’
publishing but not
databases, news
agencies, list rental,
exhibitions, etc. No
satisfactory definition yet
exists – key requirement.
For some purposes and
at an international (e.g.
EU and OECD) level,
publishing is still
amalgamated with
printing and even wood
pulp and paper making
Official data splits
newspapers on basis of
frequency of publication
into newspapers and
journals and periodicals;
unofficial data splits by
national and regional
No major definitional
problems – though it can
be difficult to weed out
self-publishers and single
book publishers, leading
to wide variations in
enterprise numbers.
E-books, fragmentation of
'the book' and Print on
Demand may in future
throw up quantitative
issues
Official data merges all
journals and periodicals
together. Global nature of
academic/STM business
means it's important to
distinguish UK revenues,
worldwide revenues of
UK based publishers etc.
New electronic products
and aggregators need to
be accommodated in
definitions
Number of enterprises
Official data agreed to be
an underestimate
Comparatively high
concentration makes
'universe' calculable for
survey purposes. Good
unofficial data
No agreed data – official
numbers c. 3000,
unofficial 30,000-40,000
Unofficial data on UK
based publishers, but
quite high range of
numbers
Turnover and net
revenues
No agreed total – official
underestimates
Both official and unofficial
data exists
Both official and unofficial
data exists; unofficial data
is improving
Unofficial annual survey
data; problems of nonresponse/
unrepresentativeness
Value added
No agreed total – official
underestimates
Official data exists since
1993 but with gaps
Official data exists since
1993
No separate data
Employment
Labour Force Survey
data likely to be closer to
reality as it is self-defined
by employee, but
freelancing an issue
Labour Force Survey
data covers whole
industry but very small
sample size makes for
high variability from year
to year
Labour Force Survey
data covers whole
industry but very small
sample size makes for
high variability from year
to year
No separate data
Exports
Need agreement on how
to represent globalised
nature of book publishing
quantitatively
Need agreement on how
to represent globalised
nature of journal
publishing quantitatively
Rights and licensing
income
Some data in the balance
of trade in services
No data
No data – very significant
gap
Some data
Investment
Capital spending data
exists but what is really
needed is a measure of
investment in intellectual
property
Capital spending data
exists but what is really
needed is a measure of
investment in intellectual
property
Capital spending data
exists but what is really
needed is a measure of
investment in intellectual
property
No separate dat
Entrepreneurship
Entry and exit rates in
Annual Respondents
Database but publishing
merged with printing
No data
No data
No data
Innovation
Publishing included with
printing and paper in
Community Innovation
Survey
Proxy: Number of new
titles data
Proxy: number of new
titles data
Proxy: number of new
journals launched
Environmental/
wastage indicators
No overall data
No aggregate data
Survey data on returns
and estimates of pulping
– not regular
No data
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Consumer
magazines
Business
magazines
Directories
Newsletters
Definitional issues
Official data merges all
journals and periodicals
together. Also no split
between consumer and
B2B
Official data merges all
journals and periodicals
together. Also no split
between consumer and
B2B. How ancillary
revenues e.g.
conferences, databases
etc, be accounted for in
the official definitions
Increasing overlap with
databases, some titles
exist in electronic form
only and this will increase
over time
Many titles exist in
electronic form only and
this will increase over
time. Low barriers to
entry to email newsletters
imply large number of
small or microenterprises
not captured
in statistics
Number of enterprises
No agreed dat
No agreed data
Unofficial data
No agreed data
Turnover and net
revenues
Unofficial data on gross
and net revenues
Unofficial regular data on
gross advertising
revenue only, one-off
survey data on total
revenues
Unofficial annual survey
data; problems of nonresponse/unrepresentativ
eness
One off unofficial B2B
survey data
Value added
No separate data
No separate data
No data
No data
Employment
No separate data
No separate data
Annual survey data on
number of employees
per firm but can't be
grossed up
One off unofficial B2B
survey data
Exports
Some unofficial data on
percentage of sales
Some unofficial data on
percentage of sale
No data
No data
Rights and licensing
income
No data
No data
Some survey data on
ancillary revenues
No data
Investment
No separate data
No separate data
No data
No data
Entrepreneurship
No data
No data
No data
No data
Innovation
Proxy: new magazine
launches
Proxy: new magazine
launches
No data
No data
Environmental/
wastage indicators
Source Pira
Unofficial data – needs
careful interpretation to
adjust for changed
retailing conditions
Very difficult – no returns
on free magazines
No data
No data
69

Publishing in the knowledge economy
The industry today
CHAPTER
12
Typology of publishing products according
to brand and format characteristics
Following on from the discussion on brand
extension in the sections on consumer
magazines and business to business media,
and looking forward to the discussion on the
challenge of digital media in Chapter 17, we
have drawn up a typology of printed media
products. This attempts to place different media
products according to their brand strength and
the degree to which they are format-neutral.
12.1 Brand
Brand becomes ever more important in a
fragmented digital environment as a marker for
users to find content they can trust and want to
use (and may pay for). It is also important to
protect brands in environments where content
is passed though new intermediaries and
aggregators and to guard against
commoditisation of content.
12.2 Importance of format
Format-neutrality is an indicator of how far and
fast different products will tend to move into
multiple channels and platforms. For some
printed products, the format they appear in is
intrinsic to their appeal, e.g. portability,
disposability, the ability to cut pictures out, or
share the product with others easily. With
others, the content itself is the primary selling
point and its separation from the traditional
format may enhance its functionality. Some
products will be equally useful in different
formats, depending on their mode of use, e.g.
used in one form while the reader is on the
move, and another when they are at their desks
or at home.
The products are categorised by end-user:
consumer, business, and institutional
(education/research).
12.3 Consumer media
Medium
Book
Magazine
Broadsheets
Mass market
Regional and local
newspapers
Directories
(e.g. Yellow Pages)
Exhibitions and events
Format characteristics
Format intrinsic to appeal – at least until usability
issues are resolved with screens and through
generational change. Possible exceptions: reference
works, travel guides and the like
Format intrinsic to appeal, especially for glossies and
teen/women’s weeklies. TV listings as well, although
they face migration to/competition from EPGs. Some
buyer’s guide-type consumer magazines are more
format-neutral (PCs, cars, etc)
Format somewhat neutral, but paper still the
fundamental format
Format intrinsic to appeal
Format intrinsic to appeal; but classifieds gain
enormously in functionality from online
Format fluid. Paper products likely to persist for a
long time as they constitute a barrier to entry and
many users prefer paper. Electronic confers greater
functionality/updating
Format intrinsic to appeal; being present is the whole
point, although online can be complementary in
publicising/ preparing events
Brand characteristics
Mainly resides with author; longevity varies. Where
brand resides with imprint or publisher, it is long lived
Strong brands but may be relatively short-lived;
some ephemeral (resembles FMCG); brand
extension limited
Strong, long-lived brands. Some opportunity to create
linked, differentiating brands through interactive
media
Strong long lived brands; brand extension limited
Most strong and long lived but advertisement-only
papers can be weak and ephemeral. Opportunity to
create linked but differentiating brands (e.g. thisis)
Often very strong. Yellow Pages a generic brand as
well as an actual one
Some strong and long lived; others weak and
ephemeral
70

The industry today
Publishing in the knowledge economy
12.4 Business media
Medium
Newspapers
Magazines
Newsletters
Directories
Exhibitions,
conferences, events
Databases, online
information services
Format characteristics
Fluid: content is the USP. Functionality can be
different but equal in paper and other formats
Fluid: content is the USP. Non-paper formats can add
functionality especially where magazine is used for
intensive information gathering/archive, etc. Nonpaper
formats allow for updating
Fluid: content is the USP. Non-paper formats can add
functionality especially for intensive information
gathering/archive, etc. Non-paper formats allow for
updating
Fluid: content is the USP. Non-paper formats have
more functionality and are easily updated. Although
some users will prefer paper, this will change over
time. Paper likely to disappear
Format intrinsic to appeal; many are products of
brand extension. Online events lack networking
opportunities, although online can be complementary
in publicising/ preparing events
Format intrinsic to appeal – important to innovate in
technology and functionality constantly
Brand characteristics
Strong, long-lived
Many are strong and long-lived but niches can be
quickly overpopulated and the weak go to the wall
Tend to be short lived
Some long lived and strong; others weak and
ephemeral
Fairly weak in many cases, although some exhibitions
and events have extremely strong brands and are
very long-lived
Varies – e.g. Lexis, Reuters strong
Training
Books (management,
professional)
Multi-format – USP is cost-effectiveness
Format intrinsic to appeal; added value services
possible
Highly variable
Brand resides mainly with imprint, occasionally with
author
12.5 Education and research market
Medium
Monograph
Textbook
Journal
Format characteristics
Content is main USP, though paper format may
persist due to mode of use/portability. Usability issues
have to be resolved (e-book readers, etc)
Content is main USP: electronic formats can add
functionality and updatability, but usability issues
have to be resolved (e-book readers, etc)
Content is USP. Electronic formats can add to
functionality
Brand characteristics
Brand resides with author and imprint
Brand resides with imprint and sometimes author
Brand resides with journal; publisher has brand if
title belongs to them but may belong to society or
rarely, editorial board. Some danger of brand loss
in aggregation services – author could become
the brand
71

Publishing in the knowledge economy
The industry today
CHAPTER
13
Strengths, weaknesses,
opportunities and threats
13.1 Introduction
This section, analysing the strengths,
weaknesses and constraints, opportunities and
threats facing publishing and its constituent
parts, is based on our research, the
questionnaire responses, and input from
industry representatives in the form of
interviews and focus group meetings. Ultimately,
it is a product of Pira’s judgement.
This SWOT analysis points forwards to our
deeper analysis of the challenges facing the
industry, contained in Part 2, and to the Action
Plan. However, not all of the identified
weaknesses and threats, nor for that matter the
opportunities, will necessarily have an action
point specifically attached to it – some action
points, for example those concerned with the
adoption of e-business technologies, may
address a whole series of the weaknesses
and threats.
The analysis has been made for sub-sectors
of the industry, but there is also an introductory
section which draws together common factors
across publishing.
13.2 Publishing – common strengths
and issues
Strengths
• Use of English language internationally
• Highly qualified workforce
• Core competences in selection, editing
and manipulation of information are
extremely valuable in the new knowledgebased
economy
• No tax on information and knowledge in print
• Brands
• Self regulatory regimes in place in relation to
advertising, content and distribution
(ASA,PCC,JIG)
Weaknesses and constraints
• Lack of sufficiently close knowledge or
relationship with end customer
• Uneven adoption of vital underpinning
technologies to take advantage of
opportunities
• Competition laws and cross-media ownership
constraints limit scale
• Mature markets for print products
• Declining share of consumer time spent on
print products
• Lack of comprehensive statistics to assess
performance
• Lack of public profile as an industry
• Confused copyright licensing structure
• English language makes UK publishing
vulnerable
Threats
• Copyright infringement
• Disintermediation/reintermediation by nontraditional
‘publishers’ and others interposing
between publishers and their customers
• Inequitable taxation of electronic information
• Commoditisation of some content
• Skill shortages
• Increased demands on consumers’ time and
attention
• Regulation of content and privacy laws
• Competition from publicly funded bodies such
as the BBC can stifle new markets
Opportunities
• Closer relationship with customers
• Use of data about customers and relationships
with them to buttress advertising revenue and
allow the creation of new and customised
products and services
• New services based on new non-print
platforms and on digital printing/print on
demand
• Use of enabling e-business technologies in
production/supply chain/sales and
marketing/content management
• International markets driven by use of English
and empowered by new technologies
72

The industry today
Publishing in the knowledge economy
Figure 13.1 Publishing: perceived opportunities and threats
over three and 10 years
Opportunities
Launch of new products and services
Extension of existing products and services to
overseas markets (including sales of formats)
Acquisitions, mergers or alliances in the UK
Overseas acquisitions, mergers or alliances
Growth of high speed networks/broadband
Growth of digital television
Growth of 3G wireless networks
Improved exploitation of rights
Use of e-business technologies to
create new products and services
Use of e-business technologies to optimise
editorial and production processes
Use of e-business technologies to optimise
ordering, sales and marketing processes
Closer relationship with end customer
Price discounting
Other
•
3 years
10 years
0 50 100 150 200
Threats
Economic recession
Technological change e.g. development of
broadband and 3G wireless networks
Piracy/copyright infringement
Retention of rights by authors/
agents/institutions
New entrants to your market
Disintermediation by parts of the
existing value chain
Competition from existing customers
Overseas competition, including imports
Shifts in consumer spending patterns or
changes in consumer behaviour
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online)
Stricter regulation
Taxation changes
Source Pira survey
Price discounting
Government as information
•
3 years
provider/publisher
10 years
Other
0 20 40 60 80 100 120
>
73

Publishing in the knowledge economy
The industry today
13.3 Books
Strengths
• Use of English language internationally
• Established companies with international
networks
• No tax on information and knowledge in print
• Strengths in diverse sectors
• Ability to source books from many different
countries
• High rate of title generation (see weaknesses)
• Competitive pricing
• Increasingly educated population
• Popularity of reading
• More outlets for book sales – related to
discounting
• Highly attractive occupation to graduates
• Relatively strong export performance,
especially in ELT
Constraints and weaknesses
• Complexity of supply chain
• Low brand strength – brand resides mainly
with authors (some imprints and series
excepted)
• Fragmented
• No direct contact with end customer (except
book clubs)
• Publishers push out titles rather than being
focused on selling – chain is too supply driven
not demand driven
• More demands on consumers' time
• Level of returns – but not high relative to US
• Long tail of publishers slow to take up
technological innovations
• Low pay – strength if sustainable?
• Talent gap at middle level emerging
• Low spending on books in education
• Low spending on books in public libraries,
especially fiction
• Copyright infringement on the Internet
• Agents and authors retain more rights in order
to segment them further – may limit ability to
innovate in new platforms
• Power of bestselling authors to disintermediate
• Inequitable taxation of electronic information
• Proliferation of leisure activities and media
• Concentration of retailing/entry of US super
retailers
• Changing female aspirations and ambitions
may reduce supply of graduates
• End of the book writing culture (academic
publishing only)
Opportunities
• Market dominated by heavy buyers/readers
– only need to grow the market by a small
margin to get successful growth
• Print on demand – keeps books in print, and
as the title proliferation is mainly in
academic/niche/professional it allows
publishers to make sales without carrying cost
• Internet booksellers allow much more
exposure and sale of the backlist
• Expanding markets overseas due mainly to
spread of English language
• Tie-in opportunities arising from new leisure
pursuits
• E-business technologies in the production
process to drive efficiency/cost savings and
underpin reuse of content across platforms
• E-commerce in the supply chain to drive
efficiencies/reduce costs
• Closer relationship with customers, using
CRM-type technologies
• More exploitation of existing rights and
ensuring that ‘new’ rights are secured
and used
• E-books in some segments
Threats
• Erosion of territorial rights increases threat of
US competition
• Piracy
74

The industry today
Publishing in the knowledge economy
Figure 13.2 Books: perceived opportunities and threats
over three and 10 years
Opportunities
Launch of new products and services
Extension of existing products and services to
overseas markets (including sales of formats)
Acquisitions, mergers or alliances in the UK
Overseas acquisitions, mergers or alliances
Growth of high speed networks/broadband
Growth of digital television
Growth of 3G wireless networks
Improved exploitation of rights
Use of e-business technologies to create
new products and services
Use of e-business technologies to optimise
editorial and production processes
Use of e-business technologies to optimise
ordering, sales and marketing processes
Closer relationship with end customer
Price discounting
•
3 years
10 years
Other
0 50 100 150 200 250 300
Threats
Economic recession
Technological change e.g. development of
broadband and 3G wireless networks
Piracy/copyright infringement
Retention of rights by authors/agents/institutions
New entrants to your market
Disintermediation by parts of the existing value chain
Competition from existing customers
Overseas competition, including imports
Shifts in consumer spending patterns or
changes in consumer behaviour
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online)
Stricter regulation
Taxation changes
Price discounting
Government as information provider/publisher
•
3 years
10 years
Other
0 50 100 150 200 250
Source Pira survey
>
75

Publishing in the knowledge economy
The industry today
13.4 Journals
Strengths
• Subscription business model
• At forefront of technological developments
• No taxation of information and knowledge in
print
• English language – for content sourcing and
sales
• Science and research base
• Brand resides in journal (strength if owned)
• Ability to cross-promote from one journal to
another
• Direct relationships with subscribers in
many cases
Constraints and weaknesses
• Inadequate funding of higher education and
research
• Inadequate funding of academic libraries
• Brand resides in journal (weakness if owned
by institution or society)
• Hard to launch new titles – need to persuade
customers to drop one to make room
Threats
• Copyright infringement
• Disintermediation by academics publishing
direct in electronic journals
• New intermediaries may interpose between
publishers and customers and command the
customer relationship and customer data
• Inequitable taxation of electronic content and
migration of activity to US
• Cost of maintaining and managing digital
archive
• Power of library customers
• Electronic Inter-Library Loan
• Dissolution of the journal as a package of
articles – pay per item becomes prevalent
(could also be an opportunity)
• Concentration of ownership allows big players
to squeeze out smaller ones through bundling
and other practices
• Big players cause resentment among authors
and customers
• More aggressive use of patents limits content
availability
Opportunities
• Electronic distribution brings down costs
• New service offerings possible based on
closer relationship with customer and new
technologies
• Dissolution of the journal as a package of
articles – pay per item becomes prevalent
• New fields of study open up and high degree
of academic specialisation creates new journal
possibilities (but difficult to sell without
knocking out another title – budget constraints,
power of library intermediaries)
• Alliances between publishers and universities
to create e-learning platforms
76

The industry today
Publishing in the knowledge economy
Figure 13.3 Journals: perceived opportunities and threats
over three and 10 years
Opportunities
Launch of new products and services
Extension of existing products and services to
overseas markets (including sales of formats)
Acquisitions, mergers or alliances in the UK
Overseas acquisitions, mergers or alliances
Growth of high speed networks/broadband
Growth of digital television
Growth of 3G wireless networks
Improved exploitation of rights
Use of e-business technologies to create
new products and services
Use of e-business technologies to optimise
editorial and production processes
Use of e-business technologies to optimise
ordering, sales and marketing processes
Closer relationship with end customer
Price discounting
•
3 years
10 years
Other
0 50 100 150 200 250 300
Threats
Economic recession
Technological change eg development of
broadband and 3G wireless networks
Piracy/copyright infringement
Retention of rights by authors/agents/institutions
New entrants to your market
Disintermediation by parts of the existing value chain
Competition from existing customers
Overseas competition, including imports
Shifts in consumer spending patterns or
changes in consumer behaviour
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online)
Stricter regulation
Taxation changes
Price discounting
Government as information provider/publisher
•
3 years
10 years
Other
0 10 20 30 40 50 60 70 80
Source Pira survey
>
77

Publishing in the knowledge economy
The industry today
13.5 Newspapers
Strengths
• Strong brands
• High reach
• Authoritative content (qualities)
• Established distribution channels
• No tax on information and knowledge in print
• Strong newstrade distribution reduces costs of
reaching customers (compared with overseas
counterparts)
• Relationships with advertisers
• Trust (regional and local)
• Role of papers within economy and society
well established and understood
• National daily papers are mainly insulated
from international competition
• Many local papers do not compete directly
with others in same market
• Ad sales force has unparalleled local
relationships with businesses
• Portability
• Competitive price
• Low staff turnover
Constraints and weaknesses
• Mature market
• Declining circulation
• Special competition regime on mergers and
acquisitions limits ability to respond quickly to
deal opportunities
• Cross media ownership constraints limits scale
and cross-platform exploitation of assets
compared with books and magazines
• High cost of production and distribution for
physical product
• EU employment and working time regulations
make it more difficult to recruit and retain
delivery workers
• Greater reliance on advertising than a decade
ago, especially recruitment advertising
Threats
• Newspaper reading habit dying out in younger
generations
• Growing competition for readers’ attention
• Growing competition for advertising
• Classified advertising may migrate to Internet
rivals or be disintermediated i.e. advertisers
separately or in groups reach customers
directly via online or other interactive media
• Inequitable taxation of electronic information
• Public sector recruitment direct via Internet
• Online media brings other sources of news to
consumers
• News becoming a commodity
• Advertisers may continue to shift budgets
towards below the line campaigns
• Privacy laws could begin to follow European
model
• Paper prices may rise faster than ability to
raise cover prices
• Price wars could recur
• Decline in CTNs threatens home delivery and
frequency of purchase
• Advertising restrictions could increase
Opportunities
• Further consolidation
• Print format changes, partly enabled by digital
printing (more colour, more supplements,
regionalisation and special editions) to drive
advertising and purchase frequency
• Use of e-business technologies increases
ability to realise economies of scale (local
papers sharing content)
• Use of e-business technologies increases
ability to reuse editorial content across
different platforms
• Use of e-business technologies allows papers
to make maximum use of their advertising
content and data about advertisers and
customers
78

The industry today
Publishing in the knowledge economy
• E-commerce in supply chain (from advertising
to distribution) cuts costs, increases efficiency
• Use of interactive and supporting technology
to gain a closer relationship with customers
and build loyalty/subscriptions
• Remote printing and other means of access to
markets too distant to be cost effective
currently
• Local papers can become local info providers
via interactive media – brand extension
• Local papers can acquire radio stations in their
markets if regulation is loosened
• Advertising in newspapers papers may
become more attractive as TV audiences
fragment
• Transactional possibilities through Internet
(referral, e-commerce)
• Broadband will increase functionality of online
classifieds (double-edged sword)
• Polybagging presents an opportunity for
increased sales
Figure 13.4 Newspapers: perceived opportunities and
threats over three and 10 years
Opportunities
Launch of new products and services
Extension of existing products and services to
overseasmarkets (including sales of formats)
Acquisitions, mergers or alliances in the UK
Overseas acquisitions, mergers or alliances
Growth of high speed networks/broadband
Growth of digital television
Growth of 3G wireless networks
Improved exploitation of rights
Use of e-business technologies to create
new products and services
Use of e-business technologies to optimise
editorial and production processes
Use of e-business technologies to optimise
ordering,sales and marketing processes
Closer relationship with end customer
Price discounting
•
3 years
10 years
Other
0 50 100 150 200 250 300
Threats
Economic recession
Technological change eg development of
broadband and 3G wireless networks
Piracy/copyright infringement
Retention of rights by authors/agents/institutions
New entrants to your market
Disintermediation by parts of the existing value chain
Competition from existing customers
Overseas competition, including imports
Shifts in consumer spending patterns or
changes in consumer behaviour
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online)
Stricter regulation
Taxation changes
Price discounting
Government as information provider/publisher
•
3 years
10 years
Other
0 10 20 30 40 50
Source Pira survey
79

Publishing in the knowledge economy
The industry today
13.6 Magazines, directories, business
media and business information
Strengths
• Diversity
• Innovativeness
• Strong brands
• Relationships with advertisers
• Strong newstrade distribution provides a costeffective
route to market
• Successful brand extension strategy,
especially in business to business
• Niche nature of magazines in tune with
zeitgeist
• Highly attractive occupation for graduates
• Diversity of revenue streams
• High value information (B2B, directories,
business information services)
• Strong intermediary positions (B2B,
directories)
• Innovative technologies e.g. specialised tools
(business information services)
• Subscription model (some magazines,
business directories)
• UK strength in search and taxonomic systems
Constraints and weaknesses
• New product launches vital but no longer
growing the market so much
• Low level of subscriptions relative to foreign
countries
• Expense of postal service constrains growth
of subscriptions
• Fragility of the postal service
• Wastage is high – returns, new titles fail to
reach targets
• Hard for start ups to get seed capital
• Exhibitions and events do not have access to
cheap venues (relative to European
competitors)
Threats
• Change in shopping habits and decline of
CTNs threatens smaller publishers, new
launches, range of choice
• National distribution would accelerate decline
in independent retail outlets
• Fragmentation of postal distribution
• Environmental directives might increase costs
or even threaten some processes
• Advertising restrictions could increase
• Directives on distance selling, data protection
and cookies
• Increasing power of multiple retailers
squeezes margins
• Ageing population presents challenges in
some markets (women’s and men’s lifestyle)
• Disintermediation in some business to
business segments especially directories
• Competition from non-traditional sources
e.g. law firms, banks, ad agencies
• Competition for consumer time and attention
• Exhibitions and events highly sensitive to
economic climate
• Public sector recruitment direct via Internet
• UK Government and public sector and EU
engage in value added publishing (affects
magazines and directories)
• Availability of free content on the Web
undermines value proposition of some B2B
and information services at the margin (affects
business media, business information
aggregators/online services)
• Concentration of ownership of premium
80

The industry today
Publishing in the knowledge economy
content may affect pure aggregators in the
longer term
Opportunities
• New titles (magazines, directories)
• Consolidation
• New services based on customisation and
targeting
• Further brand extension and diversification
of revenue streams
• Broadband/interactive TV could spawn new
services
• Trend to niche interests supports magazine
new product development
• Demand for specialised, high value business
information as competitive environment
sharpens for all businesses
• Sales/licensing of formats abroad
• Direct sales to overseas markets (directories,
some business magazines)
• Remote short-run printing allows new markets
to be served cost effectively
• Licensing of brands to other media
• Use of e-business technologies increases
ability to reuse content across different
platforms
• Use of advertising content and advertiser
information to drive revenues
• Added value services – integration with
intranets/EIPs (business media/business
information)
• Taxonomy – development of new technologies
and expertise in content categorisation and
structure (business information, information
management services)
Figure 13.5 Magazines: perceived opportunities and threats
over three and 10 years
Opportunities
Launch of new products and services
Extension of existing products and services to
overseas markets (including sales of formats)
Threats
Acquisitions, mergers or alliances in the UK
Overseas acquisitions, mergers or alliances
Growth of high speed networks/broadband
Growth of digital television
Growth of 3G wireless networks
Improved exploitation of rights
Use of e-business technologies to create
new products and services
Use of e-business technologies to optimise
editorial and production processes
Use of e-business technologies to optimise
ordering, sales and marketing processes
Closer relationship with end customer
Price discounting
•
3 years
10 years
Other
0 50 100 150 200 250 300
Economic recession
Technological change eg development of
broadband and 3G wireless networks
Piracy/copyright infringement
Retention of rights by authors/agents/institutions
New entrants to your market
Disintermediation by parts of the existing value chain
Competition from existing customers
Overseas competition, including imports
Shifts in consumer spending patterns or
changes in consumer behaviour
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online)
Stricter regulation
Taxation changes
Price discounting
Government as information provider/publisher
•
3 years
10 years
Other
0 20 40 60 80 100 120
Source Pira survey
81

Publishing in the knowledge economy
The industry today
CHAPTER
14
Future scenarios
14.1 Introduction
The scenarios we have chosen to use are
designed to describe several potential future
circumstances within which the publishing
industry will be expected to operate. We also
hypothesize about the industry’s reaction to
these circumstances. This is done by describing
the premise, the implications for the industry
and finally what the outcome for publishing
industry is likely to be should the scenario
occur. These scenarios are built using the basic
drivers of the industry, the foregoing evidence
and the trends that we have presented earlier
providing a realistic picture.
The shift towards a knowledge economy is
not a single change but a complex process that
will continue to unfold and create opportunities
and challenges as it does so. Publishers will
have to adapt to an environment that demands
continual evolution of products, enabling
technologies, skills and business models.
These scenarios are a simplified, and by no
means exhaustive, representation of what will in
practice be a highly complex set of interacting
trends and processes.
14.2 Main drivers affecting the scenarios
In developing the scenarios we have considered
the most significant drivers that can impact the
business of publishing in the coming five to 10
years. The drivers influence the behaviour of
people and companies in the purchasing of
publishing product and their attitudes towards
using content or receiving advertising.
These drivers form the parameters which can
be varied in creating differing scenarios. We
have grouped the drivers into three main areas:
lifestyle; work; technology and economy.
14.2.1 Lifestyle
Drivers around lifestyle include:
• The competition for consumers time and
money
• The amount of time available for leisure
activities
• The requirements for easier access to
information
• The population demographics shifting towards
an ageing population
• The time spent shopping
• The effects of the desire for a higher “quality of
life”
• The effects of less time travelling to work
• The desire to better educate children
14.2.2 Work
Drivers around the working environment
include:
• More distant/home working
• Ability to access information from anywhere
at any time
• Better integration of customer information with
business information
• Faster decision making based on better
information available
• More mobility of workforce
• More international workforce as employment
laws are relaxed further and EU expands
14.2.3 Technology
Drivers around technology include:
• The adoption by the public of new network
services such as broadband, wireless and
digital television
• The adoption by publishers of technology to
improve current business processes
• The proliferation of connectivity to the Internet
• The level of comfort of people in working with
technology
• The success of promised technology in
delivering e-business functionality
• The ability of customer companies to integrate
publisher’s content into employee’s workflow
14.2.4 Economy
Economic drivers include:
• The growth of the economy
• The purchasing power of the consumer
• The increase in disposable income for
spending on publishers’ products
• The impact of the transport infrastructure
• The impact of the tax regime
82

The industry today
Publishing in the knowledge economy
14.3 The changing knowledge
economy scenarios
Considering the drivers in the publishing
business and analysing the trends it is apparent
that publishers, sooner or later, will be working
in a knowledge economy environment with the
following characteristics:
• High take up of broadband Internet, wireless
devices and digital TV and ubiquitous use of
personal devices in office, home, schools and
while travelling
• Content will have a high value to the
purchaser if it is in context at time of use
• The use of personal devices such as PDAs
and mobile telephones will increase as will
their functionality
• Businesses will deploy sophisticated CRM
techniques and can thus target products
accurately to consumers
• Advertisers will be targeting audiences more
precisely and will require more data to prove
effectiveness
• The Internet will increasingly become a
research tool
• Shopping will continue to be a major pastime
in large out of town centres
• Consumer will have easy access to products
from around the world and electronic
payments will be universally accepted
• Integration of different media will be easier and
more sought after, thus distinction between
broadcast and printed content diminished
• Younger generation will be technologically
sophisticated and take access to content
for granted
The change to a knowledge economy will lead
publishing to polarise into commoditised content
and contextualised content, as indicated in
Figure 14.1. The polarisation, however, will offer
companies many opportunities to establish new
products and services for traditional markets as
well as additional services to the end-user. The
impact on publishing depends on the rate of
change and the preparedness of the industry to
adapt to it at any given time. The implications
are discussed in the following sections.
Figure 14.1 The axes of the
knowledge economy
High
Work
Contextualised
content
Ubiquitous
USE
ACCESS
PRICE
Restricted
Commoditised
content
Home
Low
14.3.1 Slow adaptation to a slowly
developing changing knowledge economy
This scenario assesses the impact of the
publishing industry reacting slowly to the
changing business environment of content
re-use and targeted advertising. It is further
compounded by a decline in the existing
business conditions.
Premise
• Circulations and sales per title continue to fall
• Advertising spend decreases
• Taxes rise as priorities shift from personal
consumption to public goods, such as
transport and health
• Cautious, conservative attitude to life from the
general public
• Pace of technological change slows and
companies put off investments and upgrades
• Investments in new technology are not made
by publishers
• Publishers fail to seize the challenge of the
digital media
• New title output decreases
• Publishers fail to get close to the endcustomer
Implications
• Free to air and low cost media gain market
share as consumers cut back on
>
83

Publishing in the knowledge economy
The industry today
discretionary spending
• (But) low business profitability and low growth
hit B2B and B2C advertising
• Product innovation – e.g. new magazine
launches – slows
• E-commerce stalls as business investment
slows and consumers shun online shopping
• Consumers unwilling to share personal data
but are less fickle and more brand loyal
• Local media and libraries more valued as
people spend less time at work
• Mergers and acquisitions accelerate as media
companies attempt to gain scale
Outcome
If the new business environment is slow to
take off due to the slow take up of network
technologies, publishing companies will be
exposed to the weaknesses in the industry
where sales per title are declining and there will
be no chance of exploiting the opportunities
projected to occur in the new business
environment.
Should the industry not move to put into place
new processes and supporting technology to
reduce costs in the business, the problems will
be compounded as the industry will be faced
with diminishing revenues without being able
to reduce costs.
The publishing industry will lose out because
it will be exposed to its weaknesses and unable
to meet the challenges of a shrinking business
environment.
14.3.2 The fast pace of the change in
the knowledge economy catches
publishers unaware
This scenario assesses the impact of a very
dynamic change in the business and
competitive environment with the shift to a new
knowledge economy occurring at a rapid pace.
It further suggests that publishers have had
insufficient time to prepare for the new
environment and are exposed to the threats
that have been identified with regard to missing
out on exploiting the new opportunities.
Premise
• Economy supports personal consumption
growing at a faster rate
• Affluent and young consumers use interactive
technologies for (some) physical shopping,
digital purchases and billing and banking
transactions
• ‘Destination shopping’ occurs mainly in outof-town
developments incorporating other
entertainment facilities and ‘shop windows’ for
travel and financial services
• Pace of technology growth continues
• The roll out of broadband and wireless
technology accelerates
• Publishers squeezed by new entrants into
market
• Large funds are put into new start-ups, but
lessons are learnt from ‘Internet’
Implications
• Publishers are panicked into ‘Internet-type’
response
• Publishers forced to develop chargeable
services around creation and use of content
• Focus is lost on existing business as time and
money is spent on catching up
• Lack of incentives to create content
• Large investments are made adapting content
and advertising systems
• Publishers unprepared to exploit new
opportunities
• Content may be dumbed-down, but
information easily available to every consumer,
wherever they are
• Even greater fight for attention from
consumers
• Retail chain becomes less important
• Sophisticated CRM and CMS needed to
manage multiple channels
• Large retailers become major guardians of the
customer relationship and customer data
• Retail brands are the most trusted by
consumers and are extended back into
publishing value chain
Outcome
The speed of change is such that publishing
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The industry today
Publishing in the knowledge economy
companies are unable to move quickly enough
to respond to the opportunities and therefore
invest considerable time and money in
responding rapidly to new threats over which
they have little control. Focus is lost as
competition comes from new entrants into the
market and other media companies. Advertisers
move spending to the media that can deliver the
best mix of broad and targeted audiences.
14.3.3 Careful transition of business to the
knowledge economy
The scenario assesses the advent of the
changed knowledge economy occurring at
a pace that plays to the strengths of the
publishing industry. The publishers have
continued to put in place processes, technology
and business models which migrate their
businesses to operating in a managed and
measured transition from paper-based
publishing to digital media dominated
publishing. The publishers are therefore in a
position to exploit fully the opportunities of the
new environment, assuming that other
regulatory and economic factors are favourable.
Premise
• Adoption of technology by the general public
follows predicted trends
• Businesses adapt their processes at a
steady pace
• Take up of new network services mirrors take
up of Internet
• Companies implement integrated publishing
technology systems including DRM, CMS
and CRM
• Companies migrate their paper-based
businesses at a manageable pace to
digital businesses
• Strategic acquisitions, mergers and
partnerships are made to offer the best
products and services to end-customers and
advertisers.
Implications
• Publishing companies implement technologies
to improve processes and reduce costs while
preparing for the future
• Print revenues form the basis of publishing
company revenues for a good number of
years
• Investments are kept at reasonable levels
• Mergers and acquisitions can be carried
across media
Outcome
The publishing industry is able to develop
business models, implement technological
changes and staff training in a manner that can
be supported by its existing business and move
to strengthen further the industry. The industry
improves its competitive position and can react
quickly to exploit new opportunities and ward
off, as yet, unforeseen threats.
14.4 Scenario conclusion
The publishing industry must prepare itself for
life in a knowledge economy. The industry
cannot directly influence the rate of change in
that environment, but it can take actions now
to ensure it can migrate profitably to the
knowledge economy at the same time as
protecting itself from the effects of either a
recession and slow uptake or a dramatic
increase in the acceptance of the knowledge
economy by both business and the public.
Part 2 of the report will provide an analysis of
the main issues affecting future competitiveness
and draw out the necessary action points.
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Publishing in the knowledge economy
PART2 PART1
Issues for competitiveness
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Publishing in the knowledge economy
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CHAPTER
15
The challenge of sustainable growth
15.1 Introduction
The publishing industry has traditionally been
divided along the lines of publication or product
types. For example, newspaper publishers have
had very little in common with fiction book
publishers. Hence, the division into numerous
trade associations. Although this served the
relevant sectors very well in the past, the very
creation of UK Publishing Media, an alliance
of the PA, PPA, NPA and Newspaper Society,
indicates that the industry perceives the need
for reassessing these divisions. Indeed, one of
the first debates that was held with the steering
committee for this project, centred around
whether we were looking at the activity of
publishing as traditionally defined or at the
business of publishing companies, which may
include activities not currently in the
mainstream of publishing.
One of the first areas for analysis was the
infrastructure of the industry and its ability to
continue to support present activities and how
well placed it is to grow. Large and strong
companies leading an industry should help
more companies to start and flourish, bringing
more innovation to the industry as a whole.
Furthermore, the fragmentation of the industry
has been assessed in regard to the UK’s ability
Figure 15.1 Indication of migration of
revenue to new business model
Revenue
Source Pira International
New
Substitute
Old
Time
to be active in the global publishing/media
market and for companies to protect against
threats from new entrants into the market.
As has been described in the scenarios, the
publishing industry is in a transition towards a
rich, competitive knowledge economy through
which it needs to leverage its existing strengths
to build even stronger businesses. This provides
publishers with the challenge of migrating the
businesses from one of declining sales per title,
via a substitution of revenue by ways of revenue
generated by adaptations of existing product, to
an era of growth based on truly new products
and services. This is illustrated in Figure 15.1.
As one publishing executive said: “Publishers
are good at responding to demand, but not
good at creating it.”
15.2 Take the wrapper off
The products of the publishing industry have
until recently been closely identified with the
way they are packaged, rather than as content
that appears in different wrappers. For example,
newspapers predominantly see the printed
broadsheet or tabloid as the vehicle for their
news; magazine publishers see their brand
intrinsically coupled to the glossy paper carrying
their content. Some products – for example
learned journals and directories – have moved
much further in the direction of being
‘unwrapped’ than others. Both publishers and
users are beginning to evolve towards new
concepts of what they can do with content
using new technologies, but opportunities are
not always grasped.
Although it is essential to protect the printed
products and brands that currently provide the
lion’s share of the revenue (in most but not all
cases), publishers do need to reassess their
assets in terms of how to maximise the potential
of their content and use it outside of its
traditional wrappers.
Publishers who generate large proportions of
their revenues from advertising also need to
reassess the value of the advertising content
and also the information gathered from the use
of the advertisement. The business of the
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Issues for competitiveness
Publishing in the knowledge economy
publisher no longer finishes once an
advertisement is published accurately and
attractively on a page. A range of additional
revenue sources can be foreseen from
advertising in an online environment such as:
• Profiling
• Sales transactions
• User interaction
• Tight targeting
• Measurement of results
• Added functionality
Most publishers, when talking of
entrepreneurship, mean creating more products
of the same product type. A new product for a
magazine company is a new magazine, likewise
a new product for a book publisher is a new
book. It is time for publishers to take a fresh
entrepreneurial approach to product
development and use their content pool to
create new product types, not just more of the
same old products. These new product types,
free of their traditional wrappers, will find a place
in both old and new markets. It is no longer
good enough for a publisher to expect to grow
the business only by “publishing more books”
as one executive put it.
The first step in rising to the challenge of
sustainable growth for publishers is to take the
wrapper off all their content. This is happening
at various speeds throughout the industry and
we will return to this further on in the report.
15.3 Can the UK publishing industry
compete on a global scale?
Many publishers have said that the publishing
industry is now a global business. Nevertheless,
local markets have their own peculiarities in
terms of the language and culture. To compete
on a global scale, UK companies must have a
strong home base from which they can develop
a truly global business. This requires two main
factors: a) the regulation on company ownership
needs to be such that companies can grow in
the areas of media they need to develop their
businesses; and, b) that the companies
themselves have the financial, organisational
and technical infrastructure in place to exploit
the opportunities.
15.3.1 Strengths and opportunities
The proliferation of the English language across
the world should provide UK publishing
companies with many opportunities and it will
be one of their strengths. The innovation in the
publishing industry in the UK is also a strength.
Although the total of new titles has diminished
recently in consumer magazines, all other
sectors demonstrate an increase in new title
output (See Part 1).
As has been shown in Part 1 the publishing
industry in the UK is broad and diverse. Its
ability to export to both English and non-English
language markets is strong. Individual industry
sectors are on their own fiercely competitive,
which leads to strength in international
comparison terms.
In markets where there is no special
regulatory regime, UK companies have
demonstrated an ability to create successful
global businesses. In business publishing, for
example, both Pearson and Reed-Elsevier have
created powerful positions in their particular
segments. In fact, Reed-Elsevier has evolved
into a global business where it can operate any
part of its business in any part of the world,
moving to areas of the world offering the best
business environment.
Books and journals
Book and journal publishing has always been
the most internationally oriented of the
publishing industry sectors. Historically the most
important markets have been in Englishspeaking
areas of the world such as the
Commonwealth, as well as the US. Now there
is increasing trade with the EU and other nontraditional
regions such as Eastern Europe.
The journal publishing industry is now
dominated by a handful of global players, for
whom the major focus of activity, both in terms
of sourcing content and selling products and
services, is the US. Reed Elsevier and Wolters
Kluwer may be European in origin but in >
89

Publishing in the knowledge economy
Issues for competitiveness
practice they are global/US players. Even
Cambridge University Press operates equally
from the US and the UK, although its activity is
more on the book side. Pearson’s centre of
gravity is also increasingly in the US. The issues
specifically affecting the education and research
market are examined in the next section.
Digital technologies such as remote short run
printing are opening up other international
market opportunities for newspapers and
magazines, while the Internet has exposed all
publishers to a degree of potential competition
in their domestic markets and the possibility of
an international audience.
Drivers for international expansion
The growth of middle classes with higher
disposable incomes in many parts of the world
where English is widely understood, together
with the demand for learning the English
language in new regions, such as the former
Soviet republics in Central Asia, is opening up
new markets to British publishers. The market
opportunity is most obvious for English
Language Teaching (ELT) materials, but
there will increasingly be demand for other
types of books.
It also appears that the growing market for
books in English within the EU, where English is
increasingly the favoured second language, is
benefiting UK exporters more than those from
the US. East and Central Europe, which in
Table 15.1 includes Russia and Turkey, has
also been a major growth area for book exports
from the UK.
These figures must be accompanied by
various caveats about interpretation. As
mentioned in the section on statistical analysis
above, the book industry is increasingly
localising production, directly or under licence.
Therefore it should not be concluded from these
numbers that sales of books by UK publishers
in some markets, such as Australia and New
Zealand, have actually declined in this period.
Although these markets have been particularly
adversely affected by sterling’s relative strength,
they are also areas where UK publishers are
increasingly publishing via subsidiaries because
of changes in respect of territorial copyright
(see below).
Magazines and newspapers
Within advanced markets, the existence of highspeed
networks has facilitated remote printing in
general, and short-run digital printing now opens
up the possibility of economically servicing small
groups of readers overseas. This applies both to
business media, such as specialist business
magazines, and more general newspapers
targeted at travelling UK citizens, which are
currently distributed often very late and
expensively, or are unobtainable. Associated
Newspapers envisages a situation where
travellers may order a specially customised
edition, which will be delivered to a printer
located in their hotel, and be willing to pay
a premium price for it.
Format sales and international launches
There has long been an international trade in
magazine formats, with many crossing the
Atlantic and some arriving from Australia and
Germany. There appear to be no numbers
recording net or gross revenues from this trade
Figure 15.2 Sales of books, schools and ELT,
ex-warehouse prices, £m
300
250
200
150
100
50
1990
1992
Source Publishers’ Association
• School and ELT, home • School and ELT, export
1994
1996
1998
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Issues for competitiveness
Publishing in the knowledge economy
Table 15.1 Exports of books from the UK, £m, current prices
1995 1999 2000 2001
European Union 427.5 436.0 474.2 501.1
Rest of Western Europe 43.5 47.7 44.7 37.9
East and Central Europe 33.8 41.1 42.9 46.0
USA 169.0 201.9 212.6 213.1
Canada 26.6 29.4 32.7 25.6
Other America 37.3 41.5 39.1 44.3
Australia 81.9 75.9 69.5 66.9
New Zealand 15.9 13.2 14.5 12.9
Africa 75.4 70.7 67.4 76.1
Asia and Far East 178.1 166 176.3 181.5
World Total 1089.0 1123.4 1174.0 1205.4
At 2001 general prices 1265.8 1177.1 1194.7 1205.4
Source Overseas Trade Statistics
for UK publishers, and many UK magazine
publishers are part of international groups:
National Magazines (Hearst), IPC (now AOL-
Time Warner), Conde Nast, Advanstar, etc, so
there will be internal format transfers. Even
where this is the case, it would be instructive to
take note of the direction of transfer as an
indication of the location of creative innovation.
Sometimes publishers launch the international
editions of magazines directly. Hello! magazine
is a case in point, where the Spanish owners
launched both the English edition of !Hola! and
a French edition. Hello! is actually the UK’s
largest magazine export, owing to its
international subject matter (globally famous
people) and its relatively simple English, which
(almost!) qualifies it as an ELT product.
The Financial Times is the most internationally
oriented of UK newspapers, regarding itself
increasingly as addressing a global audience of
senior business people and policymakers. It has
launched separate editions of the newspaper for
the US market and for Germany, after having
had a separate European edition printed in
Frankfurt and other centres for many years. The
paper’s international expansion strategy has
also involved taking investment stakes in
European business newspaper and magazine
publishers such as Les Echos in France and
Recoletos in Spain.
15.3.2 Challenges
The challenges facing the industry in an
increasingly global marketplace are grouped
under three headings: competition regulation
and cross media ownership restrictions; US
competition and territorial rights; and copyright
protection and piracy.
Competition regulation and cross media
ownership restrictions 2
The Government to date has tended to view the
publishing industry as its individual sectors
rather than as a whole industry. For example,
the special competition rules around
newspapers mean that they are treated
differently from magazine and book publishers,
because of the potential impact of concentration
of ownership on political life. The consequence
is also that it reinforces the divisions in the
industry along vertical sub-sector lines, which
is at odds with the other drivers pushing the
industry towards scale and cross-platform
deployment of brands and content.
The UK lacks a major media player such as
Bertelsmann, Vivendi or AOL-Time Warner,
yet all these companies are active in the UK.
The regulation rules on media-ownership
2 Since writing this report, the UK Government has issued a
draft Communications Bill that addresses many of the issues
raised in this section. >
91

Publishing in the knowledge economy
Issues for competitiveness
undoubtedly have a role to play. They make it
easier for new entrants into the UK media
market from abroad to establish a presence
here than for UK companies to build a strong
home base. The definition of markets needs to
be carefully considered as the number of
channels through which end customers can
obtain information increases, so does the
potential for plurality and diversity. If the
Government is serious about creating the
conditions for a global UK-owned media player
to be established, competition law and media
ownership needs to be looked at afresh. This
is taking place, although the outcome is
unknown at the time of writing. What is evident
is that the UK has a relatively restrictive
competition regime in a small market, leading to
fragmentation, while international competitors
build scale and cross-platform capabilities.
Indeed, looking at markets such as ELT, STM
and professional publishing, where competition
and ownership rules are much more relaxed,
UK companies can compete on a global scale.
Specifically, cross-media ownership
constraints currently prevent local papers from
becoming cross-platform local information
providers. The argument for maintaining plurality
and diversity of opinion in these markets is open
to question as most local markets already have
access to more than one local radio station,
plus the BBC local radio stations. Furthermore,
the competition rules on newspaper mergers,
which require automatic referral to the
Competition Commission, lead to uncertainty
and unwarranted cost. Of 500 cases referred to
the Competition Commission only three have
resulted in a competitive issue being found.
The head of a regional newspaper company
said: “A level playing field in local markets must
be created, so that we can start to experiment
with extending our brand.”
Another said: “Newspapers could bring more
professionalism to local broadcasting.”
Action point
1 If the Government wants to encourage globally
powerful UK-based publishing and media
companies it must consider relaxing competition
law in how it treats the UK publishing sector and
re-examine its definition of the relevant publishing
sector market.
US competition and territorial rights
Just as penetrating the US market successfully
is the great prize for media companies in
general, so its products represent the greatest
potential challenge to British book publishers in
their home and third markets. It remains more
potential than actual, largely due to the
historically insular outlook of the American
publishing industry.
As one publisher put it: “The US industry
thinks American, whereas the UK industry
thinks international.”
And another said: “If the Americans got their
act in gear, they’d wipe the floor with us.”
Historically, territorial copyright has defined
the market areas where particular publishers’
book editions shall be sold. Authors and their
agents have made deals with publishers to sell
their books in particular geographical markets.
Booksellers in these markets and publishers of
other editions were not permitted to sell or
supply other editions into those markets.
The growth of Internet bookselling, where
consumers purchased US editions of books
directly from Amazon.com, for example, was
one challenge to this system, although the
volume impact was small. Since Amazon began
supplying from its own offshoots based inside
the UK and other countries, and since rights
information has been attached to book
descriptions, this has largely subsided.
The influx of US-owned super-retailers such
as Borders were also felt to place the system at
risk, but now the US publishers have
acknowledged that they should not supply
US editions to them.
A separate issue has been the decision of
some markets covered by UK publishers to
declare themselves open, or to impose time
limits within which UK publishers must publish a
local edition or face competition from a US one.
Many commentators (especially Americans)
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Issues for competitiveness
Publishing in the knowledge economy
have seen territorial rights as a hangover from a
past era, and argued that in a world of globally
transmitted information, the idea of rights based
on geography is outmoded. Before immediately
accepting what is a superficially compelling
argument, it is worth looking at the issue from
the point of view of the author and agent. They
may well wish to maximise their return from the
licensing of the work by doing deals with
separate publishers that have expertise in
particular markets. They will be unable to do this
if US editions, which will tend to be cheaper on
the back of their very large home market, are
allowed equal access to all markets. The ending
of territorial rights could also lead to a further
concentration of ownership in the industry,
which could be damaging to the range of
products on offer and employment levels within
UK publishing. It must also be said that
currently the US does not offer a level playing
field for international media companies to invest
in US media and has been unwilling to
exchange the old area, criticised as a relic of
the empire, for a new one in Europe.
Large UK publishers have also taken steps to
ensure that they do not publish too late or too
expensively in the relevant markets, so there
has been a converging effect, achieved partly
by local production. This is less open to smaller
publishers who may need more help in this
regard, since their overall contribution to UK
book exports is substantial.
Copyright protection and piracy
In addition to the issues surrounding digital
copyright, dealt with in the section on digital
media below, there is also a serious threat of
piracy of physical material. This is particularly
an issue in the book and directory industries.
Newspapers and magazines, being more
ephemeral and not so internationally traded,
are less affected.
Publishers are constantly engaged in small
skirmishes with pirates. Lately there has been
encouraging progress in some Asian markets
with the co-operation of governments and police
forces, but in some cases, piracy has been
actively encouraged, or at the least condoned,
by foreign governments. Here, high-level
support from the UK government in the form
of pressure on the offending state is vital.
Action point
24 Government must keep up high-level pressure
on foreign governments to cease piracy and to
take action against copyright violators.
15.4 The skills to compete
A strong, well-qualified workforce is essential to
the publishing industry’s continuing ability to
compete. However, the very success of the
industry as a magnet for talented and highly
qualified young people may be masking some
underlying problems.
In the course of our interviews senior
executives rarely identified a lack of skills as
being a constraint on their businesses. This may
be in part a reflection of the downturn in the
high technology and telecommunications
sectors following the bursting of the Internet
bubble, which has eased the difficulty and cost
of hiring specialist technical staff. Nevertheless,
in interviews with middle managers, those
responsible for publishing divisions and those
managing e-commerce projects, it became clear
that there are core skills which need to be
developed and extended. This is supported by
the results of the Publishing NTO Foresight
survey below. Furthermore, the concentration of
much of the publishing industry in London is
leading to other issues of a more social and
quality of life nature.
Table 15.2 Skill requirements
New skills are needed to cope with the
introduction of new technology 80
New skills are needed in order to develop new
products/services 69
New skills are needed to cope with new working
practices 66
Skill needs have not changed 13
Base 523
Source Publishing NTO Skills Foresight, 2001 Base All employers
%
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Publishing in the knowledge economy
Issues for competitiveness
15.4.1 Strengths and opportunities
The publishing industry has been highly
attractive to graduates and school-leavers for
some time. This trend continues and it offers an
opportunity for publishers to recruit bright young
people. In fact, the education level of people
working in publishing is well above average
(see Table 15.2).
The dynamic and fashionable nature of the
business attracts many people to the industry.
Indeed, in the early part of a person’s career
the concentration of the industry in London is
in itself an attraction. This provides the industry
with a highly qualified, relatively low cost
employee base.
15.4.2 Challenges
Most of the challenges concerning staffing are
centred on two areas. First, there are issues
relating to having a London and South Eastdominated,
young employee base with a high
proportion of female staff. Second, there is the
increasing importance of deploying new
technology in both business support and as
part of products. This is reflected in the
responses to the effect of skills and staff
constraints on the publishing industry questions
in our survey as shown in Figure 15.3.
There is a relatively high turnover of staff in
much of the industry. In interviews and during
the focus groups, several publishers stated that
attracting graduates into the industry in editorial
and marketing is not a problem, but retaining
the staff is difficult. Some publishers spoke of
a ‘talent gap’ in the middle level of editorial
departments. Reasons stated during interviews
as being causes of this are:
“the lack of a career path”
“more attractive offers from other industries”
“a desire for a better quality of life”
The latter reason is further compounded by
the industry having a high proportion of female
staff who often tend to migrate from London
when they have a family. Rising house prices,
congested transport and the lack of affordable
childcare are factors that affect all companies
operating in London and the south east. On the
other hand, even if it were feasible, a wholesale
migration of publishing from the creative and
vibrant environment offered by London would
adversely affect the industry in terms of its
ability to attract bright university graduates at
the entry level. Solving these issues is not going
to be easy but some of them can be alleviated
by industry initiatives, especially in relation to
training, career paths and flexible working.
As the industry moves more and more
towards the integration of content with
technology, publishers are being faced with the
need for more technically-oriented staff. This will
involve attracting new staff to the industry, but
Table 15.3 Publishing skill levels, %
No, or Basic Intermediate Higher level Advanced
low level e.g. O levels e.g. A levels e.g. degree qualifications
qualifications
e.g. postgraduate
All publishing
Management 5 5 12 65 12
Editorial 3 5 17 65 5
Support 5 16 44 29 2
Office admin & sec. 5 32 38 19 1
Production 4 25 35 30 1
Sales, marketing & circulation 4 28 34 27 1
Advertising 3 52 23 16 1
Other 53 10 12 19 0
Source Publishing NTO
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Issues for competitiveness
Publishing in the knowledge economy
also retraining existing staff. This is not purely
a requirement for software developers and the
like, but for employees who can combine
technical with editorial and management skills.
The changing nature of products also creates a
need to provide a higher degree of customer
service, in terms of help desks and sales desks.
As one manager of e-commerce projects said:
“The biggest problem in implementing this
application has been the retraining of both our
staff and those of the customers.”
The re-use of content and the need to put
this content in context is beginning to put new
demands on publishers. This is particularly
evident in the business, education and
academic publishing markets, although other
publishers will need to come to terms with this
over the next few years. New skills will be
needed to create the taxonomies and
information architectures that will underpin the
re-purposing of content. This is not a one-off
requirement, but one that will constantly develop
as the Internet and other networks evolve and
change. Furthermore, the better targeting of
Figure 15.3 Skill-related constraints
Difficulty in staff retention or recruitment
Skills shortages
Availability of experienced middle/senior managers
Does not constrain
Slightly constrains
Moderately constrains
•
Heavily constrains
Severely constrains
0% 5 10 15 20
Source Pira Survey
advertising and increased direct mail spend
will force publishers’ marketing and sales
departments to be trained in CRM techniques.
Action points
2 As the publishing industry moves ever closer to
producing new products and services that use
increasing degrees of integration of content with
value-added services, the need for specialists in
information engineering and technology will
increase. This will require the ability to attract
people into the industry and continually train and
re-train staff. A strong publishing Sector Skills
Council (SSC) must be established urgently to
ensure that the skills reflect those required in the
knowledge economy.
3 Proper career development paths using industrystandard
qualifications (driven by SSC) must be
put into place. This will encourage young
graduates into the industry who will be able to
compare the publishing industry more easily
with other potential careers.
15.5 Industry profile
The wide-range of customers and markets
serviced by the publishing industry means that
it is faced with a diverse range of issues and
makes it difficult to speak with one voice. The
competition from other media conglomerates
makes it imperative that the Government, other
industries and consumers understand the
expertise that is contained within the publishing
industry and how it can be exploited within the
knowledge economy. As stated above, the
industry already has highly-qualified people and
is adding more skills in information re-use, etc.
These are crucial to the UK becoming an
effective player in the global economy for
electronic information and e-commerce.
15.5.1 Strengths and opportunities
The publishing industry has a recognised and
important role to play in the cultural and
economic well-being of the country. This
manifests itself in the availability of the variety
of publications used, almost subconsciously, by
nearly everyone in the country every day of >
95

Publishing in the knowledge economy
Issues for competitiveness
their life. There is every reason to believe that
this will continue as the world moves towards
a knowledge economy and this is an important
opportunity for the publishing industry.
Individual sectors have varying degrees of
profile with the Government. The national and
regional newspapers are obviously very highprofile
and are used as a prime way of getting
messages over to the public. But Government
does not always see the newspaper industry as
an industry rather than as a platform for the
dissemination of messages.The role of
magazine and book publishers in society is
probably less obvious to government.
The skill sets available across the board
of publishing ranges from being able to
manipulate, contextualise and personalise
information through profiling end-user groups.
This is a core set of skills for the knowledge
economy and one that no other industry has to
such depth and breadth. There is an opportunity
to exploit this expertise outside of the traditional
publishing products.
The number of Hollywood films based on
novels is increasing dramatically. This provides
the book industry with further opportunities to
raise its profile as an influencer of society.
The business publications not only arm the
industry with a very valuable skill set, but also
Figure 15.4 Percentage of respondents
indicating importance of raising
industry profile
Most
important
Least
important
Not very
important
Moderately
important
Quite important
Source Pira Questionnaire
influence decisions taken throughout business.
Specialised business magazines influence
heavily design and purchasing decisions in
companies. Many economic decisions use
reports that the publishing industry is
responsible for initiating.
15.5.2 Challenges
It was noteworthy that 72% of respondents to
our survey thought that the profile of the
publishing industry should be higher.
Many industrial companies are beginning
to realise that their internal information and
documentation has commercial value. In certain
industries, such as pharmaceuticals and law,
companies are beginning to take on the role of
publishers with customised information tailored
to the needs of their clients and customers.
The profile of the industry is important in
attracting and retaining staff. As has been stated
previously, there is some concern in the
industry about its ability to retain staff and to
attract sufficient technological staff in times of
need. The industry needs to build on its current
profile to ensure that publishing across the
board is seen as a dynamic industry offering
excitement and challenges, to compete with
those offered by other areas of the media and
software industries.
The role of publishers in the education of
children and dissemination of research to the
benefit of UK Plc is often not recognised by the
general public and underestimated by
government. For example, early moves around
the Digital Curriculum were signs that not all
parts of the Government fully understood the
vital role that educational publishers play in
developing texts for schoolchildren. Had they
done so, the initial steps to encourage the BBC
to take a dominant role in creating the Digital
Curriculum would have been tempered with
active encouragement of the publishing industry.
This is also true in the academic world, where
journal publishers are often seen as the villains,
whereas many of the publishing outlets for
research would not be initiated and available
were it not for publishers.
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Issues for competitiveness
Publishing in the knowledge economy
Action points
4 The industry should undertake market research
to understand how it is perceived by end
customers, government and other industries.
This should be focused on determining what the
current perception of the industry is by these
groups; which particular expertise of the
publishing industry can be targeted to which
groups and developing a plan for increasing the
awareness among these groups.
15.6 Industry statistics
To date, the statistics gathered for the
publishing industry have been focused on
meeting the needs of individual sectors. For
example, advertising statistics are well covered
particularly by the newspapers and magazine
sectors. Sales figures are generally well
covered across the sectors. Nevertheless, as
fully described in Part 1, it is difficult to get an
overview of the industry as a whole. This needs
to be addressed for a number of reasons.
Companies and trade associations need to be
able to understand the changes occurring in the
industry and respond to them adequately. This
will enable threats to be addressed at an early
stage and significant changes in customer or
advertiser behaviour to be identified. It is also
important to be able to compare the publishing
industry with other industries. The industry is
also highly affected by regulation from the UK
Government, independent regulators and
international institutions. It needs to be able to
marshal evidence quickly in support of
representations. The ability to point to the size
and significance of the industry may be critical.
Action point
5 In order to capture the essential dynamics of the
industry in statistics:
• DTI, ONS and UKPM to collaborate with each
other and representatives of the EU publishing
industry in representations to EU on NACE
revisions (Eurostat 2006). This is an urgent
requirement as there is an autumn deadline for
submissions and the resulting definitions could
be in force for more than a decade.
• Study to be conducted based on the gap
analysis from this report to arrive at detailed
recommendations on the data that needs to
be collected.
• Government and UKPM to collaborate in an
initiative to communicate to the industry the
importance of supplying data.
15.7 Technology adoption
The results of the survey indicate many
publishers are struggling to comes to terms with
adoption of technology, both in the back-office
and in the front-office. Indeed, these are
becoming increasingly linked and we should
refer to publishing technology to cater for both.
The problems of integrating business
information systems, publishing systems,
fulfilment and order processing systems are
complicated in an industry almost unique in its
capacity to deliver products electronically.
15.7.1 Strengths and opportunities
Many web technology systems have already
been implemented in the publishing industry
and larger companies have made major
investments in creating new products.
Technology can take out a lot of costs in
production and marketing. One small book
Figure 15.5 Number of respondents
indicating better technological advice
is important for their future business
Most
important
Least
important
Not very
important
Moderately
important
Quite important
Source Pira Survey
>
97

Publishing in the knowledge economy
Issues for competitiveness
publisher interviewed stated that “the use of the
Internet for direct marketing has made my
business much cheaper to run”.
The responses to our questionnaire in the
areas of e-commerce and ICT illustrate clearly
that the vast majority of respondents have a
website and a clear majority have a site that
delivers content rather than being purely for
information purposes.
As far as enabling technologies for
production, distribution, advertising and
customer relationship management are
concerned, the picture is more patchy, but a
clear majority have an intranet and a majority
have or intend to deploy in the near future, fully
digital workflow, content management and
customer relationship management systems.
Slightly less than half have, or intend to deploy
in the near future, XML for media-independent
storage and data interchange. Publishers who
are already using content across a number of
platforms and channels – mainly
academic/STM/reference, B2B magazine and
directory publishers, major business information
database producers and a few newspapers
have moved furthest in the direction of
sophisticated metadata-driven content stores.
Responses to our questionnaire on
expectations for the potential of different
opportunities over three years also show that
most publishers see the use of e-business
technologies as extremely important (see
SWOT section in Part 1). They see them as a
means of creating new products and services
and as a way of optimising both editorial and
production processes and ordering, sales and
marketing processes.
There are extremely important initiatives
occurring across the board in the use of
e-commerce within the supply chain, including:
• The automated returns process and
initiatives to automate invoicing and payment
in the book supply chain
• Electronic advertisement trading trials are
underway in the magazine sector, and
movement towards Sales-Based
Replenishment
• Newspapers are moving rapidly towards
electronic advertisement acceptance and
there are some that have implemented
electronic trading of advertising. Some are
deploying sophisticated multi-channel
CRM systems.
Much more detailed analysis of the application
of ICT to transactions within the value chains of
publishing companies is contained in a parallel
Pira International Ecommerce Impact
Assessment Report on the publishing sector.
15.7.2 Challenges
Many publishers, both large and small, struggle
with the complexities of adopting new
technology. These difficulties are both at the
strategic and technical level. This is partly
related to the skill shortages identified earlier,
but it also relates to the lack of confidence felt
by senior and middle managers in their ability
to assess in detail the business case for
technological projects. One senior manager
stated: “We have well tested methods for taking
decisions on whether or not to publish new
titles; but when it comes to taking decisions
about implementing technology there is a lack
of sound methodologies for assessing the costbenefit
of each proposed project.”
There is a lack of standards in most areas
of technology adoption, making it difficult to
integrate systems effectively. Many of the
standardisation projects within the book and
magazine industries are making progress, but
these take time.
Action point
6 Sector-specific/common technology awareness
forums and other methods to communicate best
practice to be devised on key technology
opportunities aimed at both strategic and
technical levels and audiences.
7 Recognising that it is not the role of government
to mandate standards, it should use its
influence as far as possible to support open
standards for content provision on all existing
and new platforms.
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Publishing in the knowledge economy
Issues for competitiveness
CHAPTER
16
The challenge of changes in
customer behaviour
The publishing industry is being affected by
major changes in customer behaviour across
the board. The battle for the attention of the
consumer is increasingly being fought with
other established and new entrants into the
entertainment and ‘infotainment’ markets. The
plethora of new services and competition from
all quarters means that the consumer has less
time and money left over to spend on printed
media publications. In addition, the patterns in
the way that consumers shop have
consequences for the whole distribution and
retail chain of printed products.
Although the competition for the consumer’s
time and money is hotting up, forecasts indicate
that disposable income available for spending
on media products will increase by
approximately 30% by the year 2005.
Nevertheless the same source forecasts growth
in revenues for the major print media sectors
ranging from 0.5% per annum for newspapers,
through 2% per annum for magazines, to 5%
per annum for books over the same period. The
industry must up the ante in the battle for the
consumer and prepare itself now to exploit the
opportunities on the horizon.
In the information provision world, customers
are requiring more information focused on their
particular needs. This results in information not
only having to be supplied, but also put in
context. Competition to the traditional business
or news publisher comes from new entrants,
many of whom were formerly only customers of
publishers; now they compete. For example,
law firms are offering their clients packages of
information tailored specifically to their needs.
The response to the changing demands of
the customer will need to address four main
areas of competition for revenues from
existing sources:
• Better understanding and servicing the
customer
• Servicing the advertiser more effectively
• Achieving a better balance in revenue streams
• Establishing better routes to the customer.
Figure 16.1 Importance of a close
relationship with the customer, three years
Greatest
potential
Least
potential
Small
potential
Moderate
potential
Good potential
Source Pira Survey
Figure 16.2 Importance of a close
relationship with the customer, 10 years
Least
potential
Small
potential
Moderate
potential
Good
potential
Greatest
potential
Source Pira Survey
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Issues for competitiveness
Publishing in the knowledge economy
16.1 Better understanding and servicing
the end customer
The understanding of the customer’s habits and
use of information is vital in delivering the right
type of information to him at the right time in the
right context. Furthermore, establishing a closer
relationship enables better profiling for
advertisers which is essential if the forecast step
increase in direct mail advertising is not to turn
into a threat due to the increased availability of
techniques to major corporations and retailers in
identifying consumer usage patterns.
16.1.1 Strengths and opportunities
There has been a recognition by publishers of
the need to get closer to their end-users; 50%
and 64% of the respondents to our survey
indicated getting closer to the customer as
being an opportunity with great potential for
their business in three years and 10 years
respectively (Figures 16.1 and 16.2).
The wide-adoption of Internet marketing
technologies by most publishers (as evidenced
by the e-commerce impact assessment) has
pushed both small and large publishers closer
to the customer.
The newspapers and consumer magazine
industries have focused on reader groups which
has enabled them to collect good statistics on
these groups and develop brands. This forms
the basis for extension to more targeted
knowledge about the reading and buying habits
of these end customers.
The business publishers, including magazines
and directories, have started tailoring their
products to individual users. The business
model here has enabled the revenue streams to
continue to flow from corporate or institutional
sources while other sources of revenue have
been derived from additional services sold to
the end user. Many business publishers have
created new end-user services attached to their
traditional brands which are resulting in getting
closer to the end customer and generating
increased revenues.
16.1.2 Challenges
Publishers almost across the board have not
sold directly to end-users, but instead use
intermediaries for the selling and distribution
processes. This has built relatively efficient and
cost effective supply chains, but has led to the
culture of, as a book publisher said, “let’s push
as much as we can out there, and hope
someone will buy it”. This has been less so in
the case of magazines and newspapers, but
even here information has been collected in
terms of user groups rather than individual
users, mainly for the purposes of driving
advertising revenue rather than understanding
the needs of the reader better and developing
an ongoing relationship with them. This is
becoming more important as demands on
consumers’ time grow and loyalty weakens.
The ability to target customers with
contextualised, time sensitive content is
essential to the successful exploitation of
content on new platforms including warding off
the threat of free online content. To do this,
customers must be profiled very accurately and
carefully. (See ‘Achieving a better balance in
revenue streams’, Section 16.3.) There will be
an increasing need to understand what
consumers and professional information users
do on the Internet and how they use the
medium. This is helped by the use of new
technology which enables the easier profiling.
The industry also needs to address the way it
currently licences content to third parties and
customers. As the industry removes the
wrappers from its content it is important to make
it easy for customers to licence and re-use the
content. There are two main aspects to this.
1. Making the deal to use content must be
made simpler. The use of Digital Rights
Management technology will help
standardise licences and control of the terms
made by the publisher and understood and
adopted by licensees and customers. There
are however, different licensing bodies at
present for books and magazines on the one
hand, and newspapers on the other. The
industry should make an attempt to >
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Publishing in the knowledge economy
Issues for competitiveness
simplify this structure and give customers
one body with which to deal. Even if the
current multiple licensing bodies remain,
effort must be made to make it easier for
customers to use content legally.
2. The use of encrypted content needs to be
judicial. Some content will need heavy
protection, while other content will need
none at all. While understandable as a
reaction to the threat of massive copyright
infringement, putting all the emphasis on
locking content up ever more tightly could
backfire on the industry.
The ability for publishers to profile
customers more accurately and the use of
the information is threatened by regulatory
moves at European level to restrict the use
of cookies and enforce end customers to opt
on their personal information being stored
and re-used.
Action points
8 Publishers need to invest in Digital Rights
Management, Content Management Systems and
Customer Relationship Management technology
to better understand their end-users’ behaviour.
This will assist both selling products and services,
as well as being able to better target customers
for advertisers and direct marketing.
9 Industry must implement strategies throughout
companies and trade associations to collect data
about how information is used and its context, as
well as the current sales and advertising data.
25 In order to provide a simple way for customers
to use content legally, UKPM should explore the
possible creation of a single body to issue
blanket licences.
16.2 Servicing the advertiser
more effectively
The publishing industry as a whole needs to be
concerned about the steady decline in overall
advertising market share since 1990, even
though this has been accompanied by rises in
the actual amount of advertising revenue
accruing to the industry. One of the most
significant changes in the share of advertising
spending over the last decade is the rise in
direct mail advertising. The move towards
personalised direct mail is gathering pace,
based on response rates 36% higher than on
personalised direct mail. The personalisation of
direct mail is still in its infancy and more
sophisticated personalisation can be expected
in the coming 10 years.
One of the newspaper publishers we
interviewed put it as follows: “National
advertising costs have now become so high,
advertisers are asking themselves what is the
best way to spend the available budget. This is
not just a cyclical change, but a structural
change towards targeted marketing.”
The advent of new commercial radio stations
is a main driver for the use of radio, although
much of the advertising is purchased nationally
even for local radio stations. The ease of
purchase of this and the ability to target local
audiences from a central purchase is a major
factor in advertisers choosing radio.
Furthermore, the statistics show a consistent
level of TV advertising which has recently
become increasingly fragmented due to the
proliferation of satellite and digital TV channels.
An opportunity exists here to promote
newspapers and magazines as a valuable,
integrated advertising medium. There needs to
be a concerted campaign to raise awareness
among advertisers of the attractiveness of the
print media as vehicles for cost-effective
advertising.
A newspaper interviewee questioned: “How
smart is the national press at working together?
The industry needs to find ways to overcome
the barriers in order to make itself more
competitive in using its strengths to attract
advertisers.”
This was echoed by a magazine publisher:
“The share of the advertising market for
magazines is 6%, it should be about 15%. But
advertising directors prefer TV where they can
hide more costs. Yet magazines receive about
20% of the spend on food products. This needs
to expanded to other product types.”
The world of classified advertising has been
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Issues for competitiveness
Publishing in the knowledge economy
most affected by the Internet. Recruitment,
housing and auto trading are major sources of
classified advertising, particularly for regional
newspapers and specialist magazines. There
has been and still is a threat of
disintermediation by new start-ups such as
Monsterboard and existing players in the market
such as estate agents. Publishing companies
who rely on classifieds for major parts of their
revenues are migrating their businesses online,
primarily to defend their existing position. This is
not to say that newspaper advertising revenue
is likely to dry up in the short-term, but migration
will occur over a number of years, if not
decades. There are parallels here with the
problems that were faced by the STM industry
in the 1990s. The challenge facing companies
publishing classified ads is to get through the
transition from paper only to electronic only at
reasonable levels of investment.
As an industry executive interviewed said:
“People are complacent because of the dotcom
crash, but Internet use is increasing. We are
still in the early stages of online, exploring
capabilities and potential. Yet newspapers might
react by downshifting on the grounds that the
threat has diminished.”
Fish4 has helped to stave off competition and
has been a valuable initiative, but local
newspapers must not be complacent and must
continue to develop much stronger local-based
value-added services to further defend and
strengthen their position.
Companies must look for incremental online
revenue on top of their print-based advertising
which adds to the value proposition for
advertisers and readers alike. As an advertising
executive said: “Magazines need to exploit the
skill set of promoting products in context to
their users.”
This can include services such as publishing
online as soon as its submitted, and adding
other relevant information sources related to the
local area. The full transition may require
refocusing of journalistic skills into not just
providing local news, but also providing local
knowledge. Giving the customer simple
enhancements while migrating the business
over a number of years to a mixed print/online
model has proven very successful in STM
publishing.
16.3 Achieving a better balance of
revenue streams
The consumer magazine and newspaper
publishing businesses rely for a significant
portion of their income on advertising (see Part
1). In good economic times, this produces
excellent revenues and profit. Nevertheless,
because of its cyclical nature, advertising
income is an unreliable source of income, and
there is some evidence of structural shifts.
Furthermore, it has proven very difficult to
generate sufficient online advertising to sustain
online products, even if there has been a
significant demand for the product.
On the other hand, handling tens of
thousands of subscriptions has not been seen
as an attractive proposition due to the high cost
of postal charges, discounts on the cover price
that need to be offered and overhead in dealing
with a large number of subscribers. Some
publishers argue that the potential benefits of
up-selling and cross-selling could not offset this
to any extent, but others have suggested that
this is partly a self-fulfilling prophecy in that staff
are not trained to focus on this potential and so
up to now results have been disappointing. If
companies are to reduce reliance on cyclical
advertising income and make headway towards
running profitable websites, subscriptions are a
must. Furthermore, subscriptions (particularly
online) are essential in being able to profile the
individual end-user instead of just larger
demographic groups.
Moreover, the move to increasing the
proportion of subscriptions would reduce the
amount of wastage in the supply chain, which
would in itself cut costs as well as bringing
environmental benefits.
16.3.1 Strengths and opportunities
The strength and efficiency of the distribution
channel for magazines and newspapers
>
103

Publishing in the knowledge economy
Issues for competitiveness
results in high numbers of purchases through
newsagents and retailers at a relatively low cost
(although as explained elsewhere, there are
issues here).
The business and STM publishing industries
have managed to implement successfully
subscription-based services, although they do
deal with fewer paying customers than would be
expected from consumer titles. Nevertheless,
there are some niche consumer magazines that
have developed very profitable subscriptionbased
business models.
A subscription model gives a more stable
source of income and improves cashflow. The
cost of fulfillment, however, can make it too
expensive to implement successfully. Using the
Internet as a marketing and ordering tool can
reduce the cost significantly as well as
increasing the number of subscribers.
As one consumer magazine publisher stated:
“The Internet version of our magazine is driving
people to subscribe to the paper version.”
A newspaper publisher went further: “The
future of our online business will be based on a
subscription model. The revenues generated by
display advertising in newspapers will not be
affected by online, but subscription models have
to play a major role in online offerings.”
Having a more direct relationship with the end
user will also enable spin-offs in activities such
as direct mail and profiling. The use of retailers
such as CTNs, supermarkets and bookshops as
the main sales channel, means that publishers
are endangering their ability to profile users. A
subscription sales model is one step towards
improving this.
In summary, the head of one leading
magazine publishing company stated his dream
scenario to be: “The Internet revolutionizes
subscriptions, whereby customers subscribe to
the online versions by direct debit and still
purchase printed magazines. Better pricing is
also offered to subscribers and publishers get
closer to their end-users.”
16.3.2 Challenges
UK consumer magazine publishers have a
lower rate of subscription than international
publishers and B2B publishers are more
dependent on advertising (due to a higher rate
of free subscriptions).
According to the ABN.AMRO/Screen Digest
report Mediaphile 2010, the expenditure on print
media in the coming 10 years is likely to be flat,
yet subscriptions to digital TV, Internet and
mobile phones will continue to grow and
“subscriptions have emerged as the leading
source of media revenue”. It is imperative that
the publishing industry to put itself in the
position to take some of this pie. Subscriptions
are also less vulnerable to recession than oneoff
discretionary purchases.
A Pira study on the impact of advertising on
print shows there will be an increasing shift
towards direct mail over the coming decade
largely at the expense of newspapers and TV
(see Figure 16.3).
Fulfillment costs of subscriptions has been the
reason cited by many magazine publishers as a
major reason for the lack of emphasis given to
them. Postal service charges and cost of order
processing are key elements in this.
One consumer magazine executive
complained: “The costs of fulfilling subscriptions
make them currently uneconomic. Up to 50% of
subscription revenues go on postage and
packing alone.”
As the industry moves towards creating
increasing numbers of online services, having
substantial subscriptions to print products will
only help the process. As has been
demonstrated by journal and B2B publishers, it
104

Issues for competitiveness
Publishing in the knowledge economy
Figure 16.3 Projected changes in the market share
of advertising in the coming five years
6, %
5
4
3
2
1
0
-1
-2
-3
-4
-5
Telemarketing
Sponsorship
WAP&SMS
Email marketing
Internet
Radio
Broadcast/cable TV
iDTV
Instore POP
Cinema
Outdoor/posters
Catalogues/Directories
Brochures
Direct Mail
Magazines B2B
Magazines Consumer
Newspapers
Source Pira International ‘Future roles of print and digital media in
the Internet age’ 2002
is much easier to migrate an existing papersubscription
business to online based on a
subscription business model than it is to migrate
one based on an advertising model. Several
newspaper publishers and niche consumer
magazines have already indicated their
willingness to adopt online subscription models.
In the words of the head of an online aggregator
“the only way to make money online, at least
today, is by subscriptions”.
Action points
10 Relevant industry sectors to lobby for carefully
managed introduction of competition in mail
services to meet cost/efficiency goals without
threatening universal delivery.
11 Other routes to the customer must be developed
and/or strengthened in order to protect diversity
and innovation and to support frequency of
purchase. For example:
• Professional alternative home delivery services
should be created
• Subscriptions should be extended,
• Targeted direct mail should be exploited and
supported by Internet-based CRM techniques
12 Publishing trade associations, the industry and
supply chain partners need to accelerate adoption
of e-commerce initiatives and standards to
facilitate information exchange throughout the
supply chain.
>
105

Publishing in the knowledge economy
Issues for competitiveness
16.4 Establishing better routes to
the customer
In common with any business, publishing needs
to secure its routes to the customer. Publishing
faces some unique challenges in that many of
its products are highly time-critical – a
newspaper which doesn’t arrive on the
newsstand to catch the passing commuter or in
the shop in time for delivery to a home is a
useless commodity. Consumers expect their
magazines to appear on certain days of the
week. In the book trade there is the enormous
challenge of many thousands of unique
products to be kept track of through the process
of ordering, shipping, sale and return. Many
orders are very small, but when a customer
wants a particular book at a particular time, and
nothing else is a substitute.
As a result of the very large increase in the
number of magazine titles and book titles in the
last ten to twenty years, both these sectors face
an issue with the availability of retail shelf space
to display the range that is available.
Newspapers face issues about the number and
site of outlets. All sectors face consequences
from the changes in consumer shopping habits
and the shift in retail structure.
16.4.1 Strengths and opportunities
Magazine and newspaper publishers all made
the point that the UK newstrade is one of the
most efficient and vibrant in the world. They
contrasted it with countries like the US, where
magazines have to be delivered by post
because there are many areas where they
could not be purchased in a shop. To quote one
leading consumer magazine publisher:
“The UK newstrade has to be seen in
international context. They do a fantastic job.
There is still a vibrant newstrade with a healthy
CTN sector, though shifts are occurring between
independents and multiples. The cost of entry to
the magazine market is still relatively low – third
party distributors do a good job both for big
publishers and start-ups. Helps to keep a flow of
new ideas. If you were to try to launch straight
into the US market it could cost $50m to
establish a viable level of subscriptions against
an entry cost of £3-£4m here.”
Another consumer magazine publisher said:
“In the US they lose money on every copy they
sell by subscription. They are forced to do it to
build readership for advertisers and because the
country is so big that many people wouldn’t get
magazines any other way. We wouldn’t want to
go that route. Britain has an extremely efficient
newstrade distribution.”
The UK is a densely populated country and
is well served with news outlets, although the
number has started declining and the mix is
changing (see challenges below).
For its part, the book trade has successfully
handled a vast increase in the numbers of
titles available, with the aid of increasing use
of e-commerce processes within the supply
chain. Internet bookselling has been developing
as a significant new channel, which appears to
be growing the market and helping to sell
backlist books which would not otherwise find
shelf space.
The complexity of the book supply chain and
the issue of returns, which add considerably to
the industry’s costs, persist, but at least the
industry has faced up to the problems with the
Publishers’ Association/Booksellers’ Association
supported report on the book supply chain in
1997 and the initiatives that have flowed from it.
Books have also found new outlets in
supermarkets and garden centres and other
non-traditional stockists. Though this mainly
favours discounted bestsellers, the Internet
channel theoretically compensates. The
predicted catastrophe for independent
booksellers as a result of the ending of the Net
Book Agreement has not materialised, although
some publishers believe that the widespread
entry of US booksellers means that the end
game has not been reached.
16.4.2 Challenges
There are a series of interlinked challenges to
the magazine and newspaper supply chain.
They centre around changes in retail structure
and power.
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Issues for competitiveness
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• Changing shopping patterns and changing
retailer mix (see table 16.1). New high volume
outlets in the form of out of town shopping
centres and supermarkets and declines in
independent CTNs (confectioners, tobacconist,
newsagents). Declines in the high street now
seem to be slowing, but only in the ’better’
high streets.
• Growth in power of super retailers, both
those with high ranges of magazines (WHS)
and those with high volume, but small
ranges (supermarkets)
• Falling retail margins
• Pressure from super retailers for special
national distribution arrangements which would
exacerbate the decline of primary news
providers.
The consequences of these changes and
pressures are different for newspapers and
magazines, even though they derive from the
same causes.
Table 16.1 Number of press retailers by type
Retailer
Definition
1992
2000
Change
Convenience
stores
Store trading 7 days a week, approx 14 hours per
day. Varied stock which may include food, news, off
licence, chemist, video hire
2178
7794
+5616
Petrol stations
Shops or kiosks trading on petrol station forecourts
1469
5791
+4322
Supermarkets/
hypermarkets
Large self service grocery and household stores,
including kiosks outside checkout areas
1334
3751
+2417
Grocery and
general stores
Traditional grocery stores with majority of space
dedicated to grocery items
6714
7633
+919
Travel points
Airports, rail/bus/tube stations and motorway service
stations
979
1082
+103
News store
Major stores with many departments including
newspapers and magazines
1823
1829
+6
Seasonal points
Only trading in holiday periods (e.g. holiday camps)
400
404
+4
Roundsman
Trades by delivery only
1249
1201
-48
Street point
Street seller or kiosk other than at travel point
490
296
-194
News primary
News is primary profit contributor in a substantial
shop with a quality display of newspapers and
magazines
9561
8612
-949
News secondary
Smaller than primary, more likely to be in a
neighbourhood location
17,253
15,053
-2200
Miscellaneous
Unclassified
1024
1175
+151
TOTAL
44,474
54,261
+10,147
Source Wessenden Marketing/ANMW
>
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Publishing in the knowledge economy
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Newspapers
The decline in primary and secondary
news outlets (partly due to conversion to
convenience format) threatens home delivery
and frequency of newspaper purchase.
One regional newspaper group told us: “The
problem for newspapers is the pure number of
convenient outlets, as newspapers are a
purchase made on the way somewhere.”
As we noted in the section on newspapers
above (statistical analysis) the extent of home
delivery has declined substantially since 1992.
Frequency of purchase is doubly impacted by
the loss of home delivery and the loss of outlets
for impulse purchase.
Figure 16.4 Number of retail outlets
handling newspapers
60000
50000
40000
30000
20000
10000
1994
1996
1998
Source Association of Magazine and Newspaper Wholesalers
2000
Magazines
Here the threat is to range and to the entry of
new launches on to the market. The problem is
particularly acute for smaller publishers. A
leading magazine industry executive expressed
the problem to us like this: “There is great
concern among smaller publishers about the
reduction in numbers of independent
newsagents as a result of the changes in
shopping patterns. Although supermarkets and
petrol stations have filled the gap in terms of
volume, they do not carry the range of
magazines the independents do. On average a
supermarket will stock only 300-400 magazines,
and even the biggest will only take 700. There
are 3000 regular titles.
This is likely to damage both existing
specialist titles, and new launches, as it will be
impossible to get visibility. Again this will affect
smaller publishers more severely as they will
not be able to use the power of their big selling
titles to ensure that smaller titles or new
launches are stocked by the supermarkets.
There is a high degree of frustration among the
smaller publishers. These publishers are often
the source of new ideas and new opportunities
for the market as a whole, so it matters to
everyone.”
This view is supported by the chart (Figure
16.5) which shows the number of retailers
handling magazines by sizeband of circulation.
Figure 16.5 More retailers favour large
selling titles
500-1000
100-250
50-75
>25
0 10000 20000 30000 40000 50000
Source Wessenden Marketing
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Issues for competitiveness
Publishing in the knowledge economy
The major expansion in the number of retailers
in the mid-1990s favoured the larger selling
titles. According to Wessenden Marketing, the
smaller specialist titles saw a reduction in the
number of retail outlets handling their titles.
16.4.3 Supermarkets and super
news retailers
Magazine publishers also have concerns
about the way that supermarkets handle
magazine stock, though they told us that this
varies substantially between the chains, with
some dedicating specialists to it and others
allowing it to be done by whoever is available
at any time. They are also worried about
supermarket power: “The power of
supermarkets is a problem – they act as
gatekeepers to the customer, and their power
to ’delist’ magazines is worrying.”
A number of publishers complained about the
behaviour of WH Smith in relation to demands
for promotional payments, which they saw as an
abuse of their market position.
One consumer publisher told us: “When WHS
first invented promotional activity like ’fins’ and
’Hot off the press’ standouts it worked well for
publishers. Now if you won’t pay for fins then
they threaten to delist you.”
Another commented: “They can hold the
smaller titles to ransom in terms of cost. They
also are charging bigger publishers more for
promotional space e.g. for new launches.
Smaller magazines can’t afford to complain to
the OFT – they would be out of business by the
time the case was heard, since they depend
almost totally on WHS.“
16.4.4 Postal services
There is another set of issues around postal
services that affect magazines and books. Many
publishers told us the postal service was:
• Too expensive
• Becoming less efficient
• Changes its rates with insufficient notice,
affecting publishers’ budgets and planning.
The state of the postal service impacts on the
sectors in several ways:
• It affects current operations, including
customer relationships where publishers rely
on it for delivery of subscription copies
• It affects the willingness of publishers to invest
in moving more customers onto a subscription
basis, to offset the impact of the decline in
areas of the newstrade
• It raises the cost of doing business for book
publishers who now ship orders in smaller lots
in order to respond more accurately to
customer demand and reduce the levels of
inventory in the supply chain
In all these ways, it is problematic precisely
because it is preventing or hampering trends
towards greater responsiveness to the customer
and closer customer relationships, which we
have emphasised as critical issues for
publishers in a number of places in this report.
Several publishers expressed frustration that it
is in the common interest of the publishers and
Consignia/Royal Mail to satisfy and grow
demand for printed material through the post.
16.4.5 Conclusions and actions
It would be easy to see the change in shopping
patterns as an inexorable trend and therefore
consider that there is little or nothing that can be
done. However, the industry (including the
distribution companies and trade bodies) is
already attempting to support the better quality
independent newsagent through joint initiatives
and promotional activities. Given the potential
impact on consumer choice and innovation of
sharp further declines, this is an effort well worth
making in our view.
It is also important to invest in e-commerce in
order to try to meet the concerns of the major
retailers, but not at the expense of the
independents The Government and competition
authorities need to be sensitive to the whole
picture in relation to consumer choice, diversity
and innovation when making determinations.
Because it will improve efficiency and market
responsiveness, e-commerce in the supply
chain should also help to reduce the level of >
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unsold product which has to be returned and
destroyed. It is also vital for publishers to look to
the future The action points here supplement
the ones concluding the section on achieving a
better balance in revenue streams, above.
Although publishers are right to stress the
cost-effectiveness of the existing newstrade,
and seek to protect it, they also need to tackle
some of the obstacles to exploiting other routes
to the customer and consider other collateral
benefits, such as increased customer loyalty
and waste reduction.
Action points
13 Industry and distribution trade associations to
continue to support independent CTNs with
promotional campaigns, clubs and supply chain
innovations.
14 Supermarkets must include magazines,
newspapers and books in the supermarket code.
This code also needs to be made more robust.
15 Build on existing initiatives in book supply chain
arising from the report “Unlocking the Supply
Chain’s Hidden Prize” – use this opportunity to
inject fresh momentum.
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Publishing in the knowledge economy
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CHAPTER
17
The challenge of digital media
17.1 Strengths and opportunities
Digital technologies are fundamental to the
future of publishing. However, they affect
different elements of publishing in relation to the
customer and the nature of the product and the
business model in different ways and at different
speeds. The characterisation of formats in
Chapter 12 in Part 1 is an attempt to capture
some of this in relation to end customers. The
broad conclusion from that would be that the
segments most impacted by digital media are
business to business and institutional
publishing, but there are also significant impacts
on broadsheet national newspapers and local
newspapers. Arguably, consumer magazines
and fiction books are the least impacted,
although one should be careful to draw a
distinction between lifestyle glossy magazines,
general women’s, TV-related and celebrity
weeklies on the one hand and interest focused
magazines on the other, particularly those in
more technology or youth-oriented segments.
An overview of the responses of the industry
to the Internet was given in Chapter 10.
Our interviews revealed a pattern of attitudes
that are related to the ways in which digital
technologies have been exploited so far by the
different segments of publishing. Many book
publishers were affected by the financial losses
incurred in their enthusiasm for CD-ROM
development in the mid-90s, and so tend to be
cautious in their approach to e-books, although
not necessarily to print-on-demand. On the
other hand, they perceive the Internet positively,
mainly because Internet booksellers such as
Amazon are seen to be growing the market and
also selling books from the back list that would
not find shelf space at retail. For them, the
Internet – so far anyway – has represented an
additional revenue stream, or at the least has
not involved them in much cost. These
generalisations do not apply to journal and STM
publishers, who have moved much further down
the track of delivering content electronically. For
them, the Internet is a major channel to the
customer, with correspondingly high expenditure
and revenues. By contrast, many national
newspaper and some magazine publishers
have made very large expenditures on online
development, and in most cases, although not
all, they have seen virtually no revenue as a
result. This is bound to colour their attitudes to
developing content for broadband, for example.
At a more basic level, the Internet and its
underlying protocols and associated languages
(TCP/IP, browsers, HTML, XML, email) have
already had a huge impact on the processes of
production and on the supply chain, even where
the final product is a book, newspaper or
magazine printed on paper, delivered physically
to a retailer and carried home by the consumer.
Regardless of attitudes to the potential of new
platforms to generate revenue, publishers are
positive about the benefits of these technologies
within production and supply chain distribution.
Many publishers have been enthusiastic in
embracing new technologies and quick to see
the opportunities both for increasing internal
efficiency and for creating innovative products
and services. The evidence is there on the
Internet for all to see, and to a lesser extent on
other new platforms such as interactive TV and
mobile. Our questionnaire confirms this in
showing 78% of respondents have a website
for content delivery, rather than merely for
information purposes. Attitudes to broadband,
Digital TV and third generation mobile platforms
will be explored in a later section.
17.2 Challenges
A major challenge comes from changes in the
competitive environment, particularly
disintermediation (e.g. rights retention by
authors) and competition from existing parts of
the value chain, and from perceived sources of
unfair competition, such as the BBC, the UK
government and other public sector bodies.
17.2.1 The changing competitive landscape
Digital technologies have created what might
be termed a new competitive ‘hinterland’ for
publishing companies. Whereas in the offline
world, newspapers, magazines, TV and radio
form separate ‘channels’ with their own modes
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Issues for competitiveness
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of use and competitive advantages, in the world
of the Web (whether delivered over fat or thin
pipes) they sit side by side. Although not all
sites are created equal – those with powerful
offline brands and assets can bring these to
bear online – the Web is an arena where strong
brands that have not competed head to head
before, start to do so. This can have an
international dimension – say The Times versus
The New York Times, or CNN and the BBC, or
be across sectors.
The web also (in theory) permits customers to
reach suppliers without needing intermediaries,
or via new intermediaries, and vice versa. This
could take the form of authors trying to dispense
with publishers, where the author, or perhaps
journal, already has a big brand. It may involve
the dissolution of existing bundles of content,
such as the journal, into its constituent parts,
with customers buying only the part they want.
Aggregators of various kinds already exist to
facilitate this in both STM and academic
publishing and in the supply of business
information.
It has already taken the form of groups of
advertisers, such as real estate agents and
recruitment agencies, launching their own online
services to reach customers directly. Although
the issue of ‘disintermediation/reintermediation’
has apparently receded as a result of the
demise of most online-only start-ups, it would be
foolish to be complacent, especially in relation
to classified advertising. Online penetration is
still rising, a new generation used to interactive
technologies is maturing, and the functionality of
online classifieds is set to increase. One lettings
agency reports that 40% of its leads come from
online. Homebuyers’ and sellers’ packs are on
the horizon, and valuation and survey
information, together (eventually) with video will
make property searches very much easier
online than offline. Job searching is one of the
principal uses of corporate web sites, while
major companies are increasingly managing
their human resources functions electronically,
including handling all aspects of recruitment,
using specialist software. This will ultimately
tend to favour online recruitment. This could
particularly affect some of the national
broadsheets. There is also the threat that local
government and health jobs will be advertised
directly by councils and via NHS sites. It is
notable that papers such as The Guardian
have taken considerable steps to try to
protect this vital revenue stream by creating
content and even more crucially, functionality,
which considerably extends what is in the
printed paper.
It should be obvious that anything that tends
to separate advertising from editorial content
has the potential to break the business model
of the newspaper, if the newspaper does not
command that advertising revenue stream in
its other form.
The web can permit elements of the existing
supply chain to become competitive with their
suppliers or customers, for example, customers
of Reuters’ news wholesale business becoming
wholesalers in turn to other sites. It encourages
all kinds of companies to become publishers:
law firms, financial services companies and
consultancies, even supermarkets are
publishing much more extensive content as a
means of retaining clients or as a customer
service, rather than as a revenue generating
exercise. These companies could become
customers of publishers in a new sense
however – customers for their content but also
for their expertise in content handling and
editorial selection.
Business information suppliers are also
driving forward to integrate their services tightly
within customers’ IT systems, for example in
intranets, Enterprise Information Portals or
Enterprise Resource Planning systems. In the
process they have to get to grips with
technology issues which would never before
have been part of publishers’ core
competences. Reuters for example produces
software tool kits and offers consultancy advice,
not only to integrate Reuters’ information into
companies’ EIPs or intranets, but also to
organise companies’ own information. They
have formed partnerships with EIP
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Publishing in the knowledge economy
Issues for competitiveness
companies, but also find themselves in
competition with software suppliers and systems
integrators. It is a path which has also been
taken by TSO, which manages information and
even services the clients of other organisations.
As business magazine and directory
publishers expand their specialised offerings
into higher value areas via the Internet, they
also begin to compete more directly with the
general business information vendors, although
they also use them as a reselling channel.
17.2.2 Competition from publicly
funded bodies
Current financial pressures on publishing with
the fall in advertising revenue and the hangover
from the end of the technology and telecoms
booms have thrown the online activities of both
the BBC and government/EU into sharp relief,
as they are able to continue investing. In
addition, concern continues on the level of cross
promotion by the BBC on its free to air services.
Central and local government and the EU are
naturally keen to use the new platforms as a
means of reaching the citizen with information
and setting up cost-effective ways for people to
transact business with government departments
such as filing tax returns, obtaining driving
licences, etc. Some publishers see
governments overstepping the mark into
value-added publishing.
Our interviews revealed a degree of anger
and mistrust at perceived unfair competition
from both the government and EU, and also the
BBC. The sectors affected differed. Government
publishing activities were seen as most
threatening by business to business magazine
and directory publishers and local newspapers,
who fear the impact of central and local
government and NHS electronic publishing
activities on their advertising and sales
revenues. Publishers of specialist health and
municipal publications are particularly worried,
with local newspapers reporting concern but
also suggesting that a partnership model with
local public bodies is working.
Educational publishers were most upset by
the implications of the Government’s approach
to using the BBC to deliver the online
curriculum. There were a number of strands
to this. First of all, publishers perceive the
Government as downgrading the importance
of books and other printed material in the
classroom, and of being unaware of the degree
to which the efficacy of the online delivery of
education varies considerably by educational
subject. Secondly, they questioned the ‘topdown’
monolithic approach to the online
curriculum, which marginalises the role of
individual teachers in choosing material from
specialist publishers. Thirdly, they were very
angry at what is seen as ‘empire-building’ by
the BBC.
The initiatives taken by the Government to
create a digital curriculum in partnership
between the Government, commercial industry
and the BBC are well-intentioned. However, the
proposed implementation highlights many of
the problems of publishers operating in a
commercial environment at the same time as a
public broadcaster whose funding from public
funds can impinge on commercial activities. In
our survey, 18% of respondents said that they
have not proceeded with a project because of
the activities of the BBC.
This stems from a basic distrust among
publishers of the BBC activities and its tendency
to use ‘editorial control’ and ‘brand protection’
as major arguments for selecting publishing
suppliers when it is offering tenders. Despite
there being very strict rules in place governing
anti-competitive activity, the actions of the BBC
in practice, in particular the exclusive
relationship between the BBC and BBC
Worldwide, have given rise to tremendous
distrust among publishers as to its motives.
Publishers generally were also concerned
at the degree to which the BBC may now be
stifling the nascent online publishing
environment by its massive investment in the
medium, although there was also
acknowledgement that it had helped to bring
a wider audience to the Internet. As one of our
interviewees said:
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Issues for competitiveness
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“The BBC has done a fantastic job online. It is
high quality content. We just can’t compete with
the £90 million investment it took to create it.”
Publishers have learned to live with, and
in many cases, benefit from the BBC’s
conventional publishing activities, although they
believe that a much more open relationship
between the BBC public service and BBC
Worldwide is needed in order to maximise the
potential partnership opportunities. That modus
vivendi has not been attained in the online
environment, partly because there is a sense of
not knowing where the BBC may choose to
expand next, and what the attitude of the
Government and the regulators will be. This is
very apparent in the case of Curriculum Online.
There needs to be a re-establishment of trust,
based on clarity about what the ground rules
are and equally importantly, that they will be
enforced in spirit as well as letter. In drafting our
recommendations we are very aware of the
timing of this report, coming in the midst of the
creation of a new regulatory framework centred
around Ofcom, and that is why the stress is laid
not so much on detailed organisational
suggestions as on the fact that there is a
worrying breakdown of trust which any
regulatory set up will have to try to resolve.
Action points – BBC
26 Recognising the power of the BBC brand to
inspire consumer trust in new media, the BBC
could harness this in the interests of a vibrant
independent multimedia sector by commissioning
significant amounts of online/broadband content
from independent producers. This should be
monitored by OFCOM.
27 Independent research should be commissioned to
examine the impact of cross-promotion from BBC
broadcasting services to its online content and
suggest remedial action if necessary.
28 Electronic learning credits should be large enough
to prevent BBC from dominating the market. The
Publishers Association and BESA to encourage
private sector collaboration to provide a coherent
managed learning offering.
29 DFES to ensure its bidding processes for digital
curriculum activities are open and well publicised.
Action points – exploitation of government
information and government publishing
30 Government should establish as soon as possible
an advisory panel to HMSO, consisting of senior
private and public sector representatives to
monitor policies and practices in the public sector
information trading environment as recommended
in the Information Review.
31 Government to implement interoperable
standards on government content.
32 Non-exclusive licences on the use of raw
government information should be effectively
implemented, stimulating competing value-added
publishing ventures. Having stimulated valueadded
publishing ventures, the Government
should not undercut these. The panel of industry
representatives should monitor this
33 The Government should ensure that the principles
of the Information Review are widely
promulgated, and HMSO should propagate best
practice case studies on the respective roles of
public and private sectors in relation to publishing
as technology and the marketplace changes
34 Publishers should actively support and
government ensure the extension and
improvement of the Information Asset Register to
constitute a comprehensive resource discovery
service usable by the industry.
17.2.3 Copyright protection
Copyright protection in a digital world is a major
challenge: digital copies are perfect and highspeed
networks and file sharing services such
as Napster have the ability to disseminate
content across the world in an instant. The
effects of copyright infringement and file sharing
on the recorded music industry are well known,
though not all its recent poor performance can
be ascribed to this.
19 Government should maintain the UK’s strong
legal framework of publishers’ intellectual property
rights over all content and encourage UK and
international enforcement schemes for the >
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Publishing in the knowledge economy
Issues for competitiveness
worldwide protection of content (including the selfregulatory
remedial system for digital content)
covering the “take down” and “put back”
schemes.
23 Publishers must be diligent about contractually
securing rights and also making certain they have
transparent oversight of those that they do own. It
will be increasingly important for publishers to be
able to track their assets across multiple platforms
and to ensure that they use the rights they have.
17.2.4 Standards
There are challenging issues relating to
standards – how open will standards be on new
platforms? How costly will it be to deal with
mistakes about backing particular standards too
soon? Will other industries, such as film,
television and information technology set
standards which publishers will then have to
follow e.g. in the areas of Digital Rights
Management?
Some interviewees also expressed
frustration with the fact that there were different
technical standards for interactive content on
the three digital television platforms (Digital
Satellite Television, Digital Cable Television and
Digital Terrestrial Television) which added to
authoring costs and made it difficult to reuse
Web content, especially on Sky Digital which
has a proprietary standard.
Action point
21 The relevant industry sectors must create
industry-wide interoperable eXtensible Markup
Language (XML)-based standards for content
creation which can be maintained to ensure new
platforms are supported.
17.2.5 Journal archiving
Traditionally, the academic librarian has been
responsible for archiving of printed material. In
fact, this is one of the prime purposes of the
librarian. However, in the digital age, librarians
are seeing this as a function of the publisher.
This is fraught with problems as publishers,
being commercial organisations, are not an
independent archive for material that may be of
national importance. Furthermore, the cost to
publishers of not only archiving digital content,
but more importantly maintaining a record of
who has paid for access to the content and
making sure that they get access to it ad
infinitum is enormous.
This also favours the large commercial
publishers over some of the smaller and not-forprofit
ones. Indeed, one large publisher has
already announced that it will provide an archive
to all of its content. This is a large commercial
company using its vast resources to raise the
barrier of entry into the market and make life
more difficult for its smaller competitors with
much less resources.
Action point
22 If the UK is to protect access to research material
and ensure that small and not-for-profit publishers
are not unfairly disadvantaged, the archiving of
digital research should be organised at a national
level by Government. A content repository
together with access rights should be created by
Government and industry for use by national
academic and research institutions.
17.2.6 Gatekeeping
The slow rate of take up of broadband in the
UK compared with other parts of Europe and
the US is widely ascribed to BT’s exploitation
of its monopoly of the local loop in relation to
the speed and price of ADSL deployment
(although it is also true that cable companies
have been quite slow in deploying cable
modem services). This must not be allowed
to happen in the case of other platforms, such
as wireless networks, in future.
Some interviewees also complained of the
high cost of getting a presence on the Sky
Digital interactive platform and of arrogance on
the part of BskyB and the cable companies.
The Government and independent regulators
need to ensure that platform operators and
gatekeepers do not exploit monopoly or
dominant positions in the provision and cost of
the means of reaching customers in a way that
hampers competition or hinders take up.
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Issues for competitiveness
Publishing in the knowledge economy
17.2.7 Taxation
One of the UK publishing industry’s competitive
strengths is the historical commitment of the UK
government not to tax printed knowledge and
information, as the common good – in terms of
education, democracy, the general welfare and
the economy – is best served thereby. This has
been successfully defended within the
European Union, where there are varying
regimes in force in relation to VAT on printed
products. It is vital that this continues to be
defended.
However, the related problem of how, and if,
electronic information and content should be
taxed is a considerable challenge. This
encompasses not simply the rate of taxation,
but how clearly and consistently the rules are
applied, (for example to print/electronic bundles)
and what account is taken of the global nature
of the Internet in relation to the rules on place of
origin and place of purchase of content. Failure
to deal with this issue is affecting innovation –
UK publishers are continuing to bundle print
with electronic rather than developing innovative
electronic-only services and failing to reap the
cost benefits of moving fully digital. It could cost
jobs in the UK as journal publishers, for
example, move to the USA or elsewhere outside
the EU in order to compete with US publishers
on a level taxation playing field. As electronic
information serves the same purpose in relation
to the common good as information in print, it
seems to us that it should be treated in the
same way.
Action points
16 The Government’s policy not to tax knowledge in
the interests of the common good and the EU
derogation on VAT, which constitute a key
competitive strength for the UK publishing
industry, must be defended to the utmost.
17 Electronic information has the same purpose as
information in print and should be treated in the
same way. VAT at full rate on electronic
information discourages economic efficiency and
innovation and places UK firms at a competitive
disadvantage to those in the USA. Failure to
recognise the equivalence of purpose of
electronic and printed information is putting UK
companies at a severe disadvantage in their
ability to compete and innovate.
18 The Government should commission a study to
determine the scale of the impact of taxing
electronic information on costs, innovation and
the location of publishing activity.
17.2.8 Regulation of digital content
Many different regulations are emanating from
the UK government and the EU which affect
publishers in creating and selling innovative
products and services. These include rules on
distance selling and data protection, and on the
liability for content in relation to libel, obscenity
etc. There is a fear that the more proactive
philosophy on privacy and other matters
prevailing in much of Europe will particularly
disadvantage UK publishers, who are more
directly in competition with US ones, who
operate under more relaxed conditions,
because of the common language.
Action point
20 Government to commit at both national and EU
level to consistent and light-touch regulation of
new platforms in relation to:
• Content and liability (libel, obscenity, etc)
• Privacy and data protection
17.2.9 Caution on new platforms
The effect of the experiences of CD-ROM and
the Internet on the willingness of publishers to
develop content for new platforms in advance of
a proven demand for them. This is clearly
illustrated in the low expectations shown in our
questionnaire for opportunities presented by 3G
and digital TV, and to a lesser extent,
broadband (see SWOTs section).
There is a danger that publishers could miss
the next wave of technology through an
understandable caution about throwing good
money after bad. The same chart (Figure 17.1)
which demonstrates the positive view on
opportunities in e-business technologies also
shows a very low level of interest in third >
117

Publishing in the knowledge economy
Issues for competitiveness
Figure 17.1
Launch of new products and services
Extension of existing products and services
to overseas markets (including sales of formats)
Acquisitions, mergers or alliances in the UK
Overseas acquisitions, mergers or alliances
Growth of high speed
networks/broadband
Growth of digital television
Growth of 3G wireless networks
Improved exploitation of rights
Use of e-business technologies to
create new products and services
Use of e-business technologies to
optimise editorial and production processes
Use of e-business technologies to
optimise ordering, sales and marketing processes
Closer relationship with end customer
Price discounting
Other
0 50 100 150 200
Source Pira Questionnaire
generation wireless technologies and digital
television, though somewhat higher in
broadband in the three-year timeframe and
much greater in the 10-year one. While in one
sense this is realistic in terms of the maturity of
the technology (in the case of 3G and possibly
Digital Subscriber Line) and in terms of
consumer penetration (in all cases), it could also
lead to publishers leaving development plans
too late. This could compromise platform take
up, as most consumers are not drawn to
technologies as such, but to the pleasures and
the profit they can derive from using them.
There are some well-founded concerns on the
part of publishers about new platforms’
potential. Several consumer magazine
publishers have experimented with television,
and have found that low programme budgets
(now lower than ever in the period of audience
fragmentation) endanger their offline brand.
One publisher told us: "Programme budgets
are falling and the danger is that cheap shoddy
programmes would damage the magazine
brand. We did a series for a pay TV channel.
They wanted to continue – we said no, unless
they could quadruple the budget, and that was
when budgets were 10 times higher than now.”
Another said: “We feel that TV and magazines
are consumed very differently and that
magazines require very high production values
if translated to TV programmes if they aren’t to
disappoint readers and harm the brand. That is
very expensive.”
It is difficult to predict what people will do with
new platforms, but that can be an argument for
experimentation and innovation rather than
caution, as long as you don’t damage your core
assets. Who seriously foresaw the massive
growth of text messaging? Who predicted
success stories on the Internet such as eBay or
Friendsreunited.com? Book publishers
committed what may be called the ‘installed
base’ error with CD-ROM – if millions of people
had CD-ROM drives on their PCs, there must
be a market for CD-ROMs. With broadband,
publishers are waiting for take up to reach
critical mass before seriously developing
content. People did not have to pay (or perceive
they had to pay) for the CD-ROM drives on their
PCs – PC makers put them there in order for
software to be loaded. People do have to make
a conscious decision to buy broadband and
good, unique content will be a major driver.
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Publishing in the knowledge economy
Issues for competitiveness
CHAPTER
18
The conclusions and proposed action plan
18.1 Conclusions
The underlying indicators for the publishing
industry show that it is fundamentally strong and
vibrant. For example, new title output,
advertising revenue and exports are all up.
The industry has also come through a very
turbulent time with the explosion of the Internet
and all the threats that that posed.
Pira’s study concludes that the industry has
three challenges to meet as it moves towards
operating in a knowledge economy:
• The challenge of sustainable growth: to
compete on a global scale, UK companies
must have a strong home base from which
they can develop a truly global business. The
publishing industry must also adapt to and
become a central feature of a rich, competitive
knowledge economy.
• The challenge of changes in customer
behaviour: publishers need to improve their
understanding of their end-customers and offer
better, more targeted services to their
advertisers.
• The challenge of digital media: the competitive
landscape is changing and many regulatory
and technological challenges lie ahead.
The responses to our questionnaire,
interviews, focus groups and workshop indicate:
• The industry is aware of the need to launch
new products and services and get closer to
the end-customer. It also recognises the
importance of putting in place e-business
technologies to improve processes.
• The extension of international reach and
scale are seen as important to a greater or
lesser degree in the sectors, depending on
their focus.
• There is a considerable degree of caution
shown towards the opportunities that could be
offered by high-speed networks; those offered
by 3G wireless networks and digital television
are not yet on the radar screen.
Spanning the gap between the challenges
being faced and the industry’s existing progress
to meeting them is the key to further
strengthening the industry. Pira believes the
industry must:
• Make the links between the following:
– the desire to create new products and
services while getting closer to the endcustomer
– the use of e-business technology to
improve business practices while preparing
for the future
– the opportunities new channels, such as
broadband, 3G Wireless and interactive
television, offer to get close to the endcustomer
and increase revenues.
• Reap the benefits across the whole industry
by applying more broadly the partial
responses to some of the challenges in
the individual sectors.
• Migrate at a manageable pace to serving the
knowledge economy, where content drives
services to generate revenues from all
channels at low-cost of re-purposing.
• Realise that all information, including
advertising, should be treated as content
which can potentially earn revenues.
• Resist complacency and too cautious an
approach to the opportunities presented by
new platforms.
In conclusion, publishing is an industry without
boundaries, which has a strong future and can
be further strengthened by undertaking the
actions described in the following section. But,
there is no point in having an action plan that is
not implemented effectively, so we need a
mechanism for doing so.
Action point
35 The DTI and UKPM to create a joint
implementation team to ensure effective
follow up to this Action Plan.
18.2 Proposed action plan
Each action point can become the responsibility
of one of four groupings: the Government; the
industry; the trade associations; or a joint
responsibility. Figure 18.1 gives an indication of
120

Issues for competitiveness
Publishing in the knowledge economy
Figure 18.1 Division of responsibility for
each action point
Government influence
High
Government
action point
Joint
action point
where Pira considers responsibility should lie
for each of the action points.
The action points have also been ranked
according to the importance that Pira attaches
to them to achieve the state of preparedness of
the publishing industry to exploit the scenario
described careful transition to knowledge
economy. These rankings are essential,
necessary and desirable. Their order within
each category is simply a reflection of their
order within the report.
Industry
action point
Trade association influence
High government
influence
1 7 14 18 19 20
24 26 27 29 30 31
32 33 34
2 5 12 16 17 22
28 35
8 9 11 13 21 23 3 4 6 10 15 25
Industry influence
Trade association
action point
High
Joint actions
High trade
association influence
18.2.1 Essential actions
Competition law
• Action point 1 (Section 15.3.3)
If the Government wants to encourage globally
powerful UK-based publishing and media
companies it must consider relaxing competition
law in how it treats the UK publishing sector and
re-examine its definition of the relevant
publishing sector market.
A strong publishing Sector Skills
Council (SSC)
• Action point 2 (Section 15.4)
As the publishing industry moves ever closer to
producing new products and services that use
increasing degrees of integration of content with
value-added services, the need for specialists in
information engineering and technology will
increase. This will require the ability to attract
people into the industry and continually train
and re-train staff. A strong publishing skillsbased
SSC must be established urgently to
ensure that the skills reflect those required in
the knowledge economy.
Statistics
• Action point 5 (Section 15.6)
In order to capture the essential dynamics of the
industry in statistics:
– DTI, ONS and UKPM to collaborate with
each other and representatives of the EU
publishing industry in representations to EU
on NACE revisions (Eurostat 2006). This is
an urgent requirement as there is an
autumn deadline for submissions and the
121

Publishing in the knowledge economy
Issues for competitiveness
resulting definitions could be in force for
more than a decade.
– Study to be conducted based on the gap
analysis from this report to arrive at detailed
recommendations on the data that needs to
be collected.
– Government and UKPM to collaborate in an
initiative to communicate to the industry the
importance of supplying data.
Customer relationships
• Action point 8 (Section 16.3)
Publishers need to invest in Digital Rights
Management, Content Management Systems
and Customer Relationship Management
technology better to understand and service
their end-users behaviour. This will assist in
both selling products and services, as well as
being better able to target customers for
advertisers and direct marketing.
Supply chain
• Action point 12 (Section 16.3)
Publishing trade associations, the industry
and supply chain partners need to accelerate
adoption of e-commerce initiatives and
standards to facilitate information exchange
throughout the supply chain.
The BBC
• Action point 26 (Section 17.2.2)
Recognising the power of the BBC brand to
inspire consumer trust in new media, the BBC
should harness this in the interests of a vibrant
independent multimedia sector by
commissioning significant amounts of
online/broadband content from independent
producers. This should be monitored by
OFCOM.
• Action point 27 (Section 17.2.2)
Independent research should be commissioned
to examine the impact of cross-promotion from
BBC broadcasting services to its online content
and suggest remedial action if necessary.
• Action point 28 (Section 17.2.2)
Electronic learning credits should be large
enough to prevent BBC from dominating the
market. PA and BESA to encourage private
sector collaboration to provide a coherent
managed learning offering.
• Action point 29 (Section 17.2.2)
DFES to ensure its bidding processes for
digital curriculum activities are open and
well publicised.
Public sector information
• Action point 30 (Section 17.2.2)
Government should establish as soon
as possible an advisory panel to HMSO,
consisting of senior private and public sector
representatives to monitor policies and practices
in the public sector information trading
environment as recommended in the Cross
Cutting Review of the Knowledge Economy.
• Action point 32 (Section 17.2.2)
Non-exclusive licences on the use of raw
government information should be rolled-out,
stimulating competing value-added publishing
ventures. Having stimulated value-added
publishing ventures, the Government should not
undercut these. The panel of industry
representatives should monitor this.
• Action point 33 (Section 17.2.2)
HMSO should propagate best practice case
studies on the respective roles of public and
private sectors in relation to publishing as
technology and the marketplace changes.
Open standards and assets
• Action point 7 (Section 15.7)
Recognising that it is not the role of
government to mandate standards, it should
use its influence as far as possible to support
open standards for content provision on all
existing and new platforms.
• Action point 21 (Section 17.2.4)
The relevant industry sectors must create
industry-wide interoperable eXtensible Markup
Language (XML)-based standards for content
creation which can be maintained to ensure
new platforms are supported.
• Action point 23 (Section 17.2.3)
Publishers must be diligent about contractually
securing rights and also making certain they
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Issues for competitiveness
Publishing in the knowledge economy
have transparent oversight of those that they do
own. It will be increasingly important for
publishers to be
able to track their assets across multiple
platforms and to ensure that they use the rights
they have.
Taxation
• Action point 16 (Section 17.2.7)
The Government’s policy not to tax knowledge
in the interests of the common good and the EU
derogation on VAT, which constitute a key
competitive strength for the UK publishing
industry, must be defended to the utmost.
• Action point 17 (Section 17.2.7)
Electronic information has the same purpose as
information in print and should be treated in the
same way. VAT at full rate on electronic
information discourages economic efficiency
and innovation and places UK firms at a
competitive disadvantage to those in the US.
Failure to recognise the equivalence of purpose
of electronic and printed information is putting
UK companies at a severe disadvantage in their
ability to compete and innovate.
• Action point 18 (Section 17.2.7)
The Government should commission a study to
determine the scale of the impact of taxing
electronic information on costs, innovation and
the location of publishing activity.
Piracy
• Action point 24 (Section 15.3.5)
Government must keep up high level pressure
on foreign governments to prevent piracy and to
take action against copyright violators.
Competitiveness Analysis Project
implementation
• Action point 35 (Section 18.1)
The DTI and UKPM to create a joint
implementation team to ensure effective
follow up to this Action Plan.
18.2.2 Necessary actions
Career development
• Action point 3 (Section 15.4)
Proper career development paths using
industry-standard qualifications (driven by SSC)
must be put into place. This will encourage
young graduates into the industry who will be
more easily able to compare the publishing
industry with other potential careers.
Technology awareness
• Action point 6 (Section 15.7)
Sector-specific/common technology awareness
forums and other methods to communicate best
practice to be devised on key technology
opportunities aimed at both strategic and
technical levels and audiences.
Data analysis
• Action point 9 (Section 16.1)
Industry must implement strategies throughout
companies and trade associations to collect
data about how information is used and its
context, as well as the current sales and
advertising data.
Supply chain
• Action point 11 (Section 16.3)
Other routes to the customer must be
developed and/or strengthened in order to
protect diversity and innovation and to support
frequency of purchase. For example:
– Professional alternative home delivery
services should be created
– Subscriptions should be extended
– Targeted direct mail should be exploited
and supported by Internet-based CRM
techniques.
• Action point 13 (Section 16.4)
Industry and distribution trade associations
to continue to support independent CTNs
with promotional campaigns, clubs and
supply chain innovations.
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Publishing in the knowledge economy
Issues for competitiveness
Public sector information
• Action point 31 (Section 17.2.2)
Government to implement interoperable
standards on government content.
• Action point 34 (Section 17.2.2)
Publishers should actively support and
government ensure the extension and
improvement of the Information Asset Register
to constitute a comprehensive resource
discovery service usable by the industry.
Regulation and copyright protection
• Action point 19 (Section 17.2.3)
Government should maintain the UK’s strong
legal protection of publishers’ intellectual
property rights over all content and encourage
UK and international enforcement schemes for
the worldwide protection of content (including
the self-regulatory remedial system for digital
content) covering the “take down” and “put
back” schemes.
• Action point 20 (Section 17.2.8)
Government to commit at both national and EU
level to consistent and light regulation of new
platforms in relation to:
– Content and liability (libel, obscenity, etc.)
– Privacy and data protection.
18.2.3 Desirable actions
Profile
• Action point 4 (Section 15.4)
The industry should undertake market research
to understand how it is perceived by end
customers, government and other industries.
This should focus on determining what the
current perception of the industry is by these
groups and which particular expertise of the
publishing industry can be targeted to which
groups and developing a plan for increasing
awareness among these groups.
Supply chain
• Action point 10 (Section 16.3)
Relevant industry sectors to lobby for carefully
managed introduction of competition in mail
services to meet cost/efficiency goals without
threatening universal delivery.
• Action point 14 (Section 16.4)
Supermarkets must include magazines,
newspapers and books in the supermarket
code. This code also needs to be made
more robust.
• Action point 15 (Section 16.4)
Build on existing initiatives in book supply chain
arising from the report ‘Unlocking the Supply
Chain’s Hidden Prize’ – use this opportunity to
inject fresh momentum.
Digital archive
• Action point 22 (Section 17.2.5)
In order for the UK to protect access to
important research material and to ensure that
small and not-for-profit publishers are not
unfairly disadvantaged, the archiving
of digital research should be organised at a
national level by government. A content
repository together with access rights should be
created by government and industry for use by
national academic and research institutions.
Copyright licensing
• Action point 25 (Section 16.1)
In order to provide a simple way for customers
to use content legally, UKPM should explore
the possible creation of a single body to issue
blanket licences.
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Publishing in the knowledge economy
PART1
Appendices
125

Publishing in the knowledge economy
Appendix A
Methodology
The project has been divided into stages:
Stage one
1 Background desk research, including
examination of a number of previous studies
and reports that have been carried out in the
broad subject area of publishing. These
include material from trade associations,
private sector research bodies, universities
and government and government-funded
sources as well as company reports and
accounts. A list of the major reports consulted
is contained in Appendix D. This does not
include numerous news articles consulted, in
print and on the Internet.
2 Selection of the quantitative indicators by
which the industry’s relative performance may
be judged. This was followed by the
collection and analysis of the data
corresponding to the chosen indicators and
gaps identified. The process and its results
are examined in Part 1.
Stage two
1 A series of interviews was carried out with
representatives of trade associations and
other bodies, and ‘opinion formers’ within the
industry, mainly senior company executives.
These interviews aimed to ensure that the
broad range of issues of major concern to the
industry were identified as early as possible in
order to inform what was to follow. In all, 50
face to face interviews were completed.
2 A questionnaire was devised and sent out to
450 selected recipients. 69 questionnaires
were returned, with the responses being
representative of the intended profile.
3 The sample was chosen through profiling the
relative size of the different sub sectors within
publishing and obtaining names of proposed
recipients from the relevant trade
associations. We were unable to select a
sample that we could be confident would yield
quantitative results which could be grossed up
to give a statistically valid overall picture of the
industry. This is for several reasons, the most
important of which is that the size of the
universe of companies is not known. The
questionnaire was mainly qualitative,
attempting to reveal the major competitive
issues and concerns of companies in the
industry. Quantitative data was requested
principally in order to cross-tabulate other
results. The text is contained in Appendix C.
The results of the questionnaire are referred
to in various places throughout the report as
the relevant issues are discussed.
4 A SWOT analysis was carried out using the
results of the interviews and questionnaires,
and this was tested with focus groups
consisting of industry and trade association
representatives.
5 Three scenarios were devised and tested with
the same focus groups.
Stage three
1 A draft Action Plan was drawn up and debated
at a workshop of industry and DTI
representatives.
The final report was drafted.
A list of the participants in the study
(interviewees, questionnaire respondents, focus
groups and workshop attendees) is contained in
Appendix B.
Note on forecast methodology
The forecasts in this report are based on a four
step procedure.
1 Quantitative forecasts are only produced
where there is sufficient historical data to
produce meaningful results which can be
tested for their accuracy and reliability.
2 We use error-correction models, to construct
forecasts which are built from two
components: long-run trends and short-run
deviations from the trend. The components
are constructed using historical data on
important economic and social variables such
as GDP and household expenditure.
126

Publishing in the knowledge economy
3 In our central predictions, we assume that the
growth of the UK economy, prices and other
important variables matches the forecasts
produced by the UK Treasury.
4. In all the charts with forecasts, we have built
and estimated the models underlying the main
forecasts. Where possible we compare our
forecasts to those produced by experts and
use their ‘high’ and ‘low’ figures to provide
brackets for our own estimates. In the
remaining cases, we have produced our own
‘high’ and ‘low’ forecasts.
Definitional Note
Throughout the report the terms ‘publisher’ and
‘publishing’ occur many times. In the sections in
Part 1 which analyse statistical indicators, these
terms are defined according to the sources
used and comments are made within the
sections on the specific definitions.
Elsewhere in the report, we intend the terms
to be understood as those businesses whose
primary activity is the acquisition, selection,
arrangement and manipulation of content for
sale and for the purposes of securing audiences
for advertisers. This content may or may not be
disseminated in a printed form and can include
all kinds of electronic and audio-visual formats,
and even events and training, though the study
specifically excludes companies whose primary
activity is in broadcasting. It also excludes
music publishers. We are well aware that all
kinds of companies are now engaged in
publishing, whether in print or on the Internet,
for example retailers, airlines, banks,
recruitment agencies and estate agents. There
are also Web-based intermediaries such as
Lastminute.com or FriendsReunited, which also
engage in content acquisition and manipulation,
and perhaps could be described as Internet
publishers, but we do not define them as such.
Their activities have important implications for
the publishing industry, which are explored in
this report, but in our view, they do not form part
of the industry sector under scrutiny here.
>
127

Publishing in the knowledge economy
Appendix B
Participants in the study
Interviewees
Archant (formerly Eastern Counties
Newspapers Group)
Associated Newspapers
Attic Futura (UK)
Batch
Book Data
BBC
BBC Worldwide Ltd
BioMedCentral Ltd
Blacket Turner & Company Ltd
Book Industry Communication
CAB International
Cambridge University Press
CMP
COMAG
Dennis Publishing
Economist Group
EMAP Communications
Factiva
Fish4
Gale Group
The Guardian
Haymarket Magazines Ltd
Hello! Magazine
Hemming Group
Hodder Headline
Incisive Media
Ingenta plc
Institute of Physics
Johnston Press plc
Little, Brown & Co (UK)
Macmillan
MarketForce (UK)
Midland News Association
Moonlight Publishing
The National Magazine Company
Nelson Thornes
Newsquest Media Group
Northcliffe Newspapers
Pearson plc
Penguin Group UK
Scholastic
The Random House Group
Reed Business Information
Regional Independent Media
Reuters
The Scottish Newspaper Society
The Stationery Office
Trinity Mirror
J Whitaker
William Reed Publishing Ltd
Attended the focus groups and/or workshop
Advanstar Communications Ltd
Archant
Association of Learned and Professional
Society Publishers (ALPSP)
Association of Newspaper and Magazine
Wholesalers (ANMW)
Attic Futura (UK)
Booksellers Association
British Printing Industries Federation (BPIF)
Cube3 Publishing
Directory and Database Publishers Association
(DPA)
Dennis Publishing
Department of Trade and Industry
Electronic Publishing Services Ltd (EPS)
FT Business
Guardian Unlimited
Haymarket Magazines Ltd
Hello! Magazine
Hemming Group
Hodder Headline
James & James (Science Publishers) Ltd
John Murray Ltd
Kilborn Associates
National Federation of Retail Newsagents
(NFRN)
Nelson Thornes
Newbury News
News International
Newspaper Publishers Association
Newsquest Media Group
Newtrade Publishing
Northcliffe Newspapers
Oxford Brookes University
Pearson Education
Periodical Publishers Association
Public Sector Publishing Ltd
Publishers Association
128

Publishing in the knowledge economy
Publishing NTO
QCA
The Random House Group
The Stationery Office (TSO)
Thomson
Tudor Rose
William Reed Publishing Ltd
Questionnaire respondents
Advanstar Communications Ltd
Agenda Publishing
Alpha Science International Ltd
AP Information Services
The Barnsley Chronicle Ltd
Berg Publishers
The British Library
The British Museum Company
CABI Publishing
Communications Team
Constable & Robinson Ltd
Cube3 Publishing
Dakini Books Ltd
David Fulton Publishers
Dunfermline Press Group
EMAP Consumer Media
Ford & Mason Ltd
FT Business
G J Palmer & Sons
Guiton Group Ltd
Haymarket Magazines Ltd
Haymarket Publishing Ltd
Henry Stewart Publications
Hirst, Kidd & Rennie Ltd
Homebuilder Publications Ltd
Hopscotch Educational Publishing Ltd
Icom Publications Ltd
Institution of Chemical Engineers
Institute of Physics Publishing
Inter Varsity Press
Islamic Texts Society
IWA Publishing
James & James (Science Publishers) Ltd
Jessica Kingsley Publishers
Johnston Press plc
Kent Messenger Ltd
Kogan Page/Earthscan
MCB Up Ltd
MMT Ltd
Nature Publishing Group
Network Education Press Ltd
New Media
Newsquest Media Group
Newhall Publications Ltd
Newtrade Publishing
Northcliffe Newspapers Group Ltd
Open University Press
The Orion Publishing Group Ltd
Pearson plc
Pickering & Chatto Publishers
ProQuest Information & Learning Ltd (formerly
Chadwyck-Healey)
Pryor Publications
Public Sector Publishing Ltd
The Redan Company
Reed Educational and Professional Publishing
The Royal Society
The Royal Society of Chemistry
SCM-Canterbury Press
Simon & Schuster (UK) Ltd
Society for Endocrinology
Thoemmes Press
Thomas Telford Ltd
Trinity Mirror plc
Tudor Rose
Unity Media plc
Usborne Publishing Ltd
VNU Entertainment Media UK Ltd
Windhorse Publications
>
129

Publishing in the knowledge economy
Appendix C
Text of questionnaire
Company name__________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Company address _______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Contact name ___________________________________________________________________
Position ________________________________________________________________________
Department _____________________________________________________________________
Telephone ________________________________ Fax_________________________________
Email address ___________________________________________________________________
Please state whether you are responding for your whole company or on behalf of your division:
■ Company
■ Division
Section 1 About your company/division
A Which products and services does
your company/division produce? (Tick
all that apply)
■ Regional daily
■ Regional Sunday
■ Local weekly
Books
■ Consumer adult
■ Consumer children’s
■ Academic/professional
■ STM
■ Schools
■ ELT
■ Other, please specify __________________
Journals
■ Academic
■ Professional
■ Other, please specify __________________
Newspapers
Paid-for
■ National daily
■ National Sunday
Free
■ Daily
■ Sunday
■ Weekly
Magazines
■ Consumer
■ Business to business
■ Contract
■ Special interest
■ Other, please specify _______________________
Newsletters
■ Advertising supported
■ Subscription only
Directories
■ Advertising supported
■ Subscription only
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Publishing in the knowledge economy
■ Databases (other than online versions of
printed products)
■ Conferences or exhibitions
Other
■ Audio books
■ Contract printing
■ Leaflets/inserts/direct mail
■ Masthead programming
■ Business information not covered elsewhere,
eg brokerage, customised information
services, financial data services
■ Information solutions eg software, information
management consultancy
■ Web-based services other than versions of
printed product, eg infomediary, portal, vortal
■ List rental
■ Other, please specify ___________________
B What is the approximate turnover of
your company/division derived from the
products/services in Section 1A
■ Under £1m
■ Between £1m and £5m
■ Between £5m and £25m
■ Between £25m and £50m
■ Between £50m and £100m
■ Between £100m and 500m
■ More than £500m
C Approximately how many full-time
employees does your company/
division have?
______________________________________
D What is the approximate source of
your revenues of the products and
services in Section 1A? (tick one)
■ 100% Advertising; 0% sales/subscriptions/other fees
■ 75% Advertising 25% sales/subscriptions/other fees
■ 50% Advertising 50% sales/subscriptions/other fees
■ 25% Advertising 75% sales/subscriptions/other fees
■ 0% Advertising 100% sales/subscriptions/other fees
What percentage, if any, of your
advertising revenue is from
leaflets/inserts/direct mail?_____________%
What percentage, if any, of your total
revenue is from contract printing?_______%
What percentage, if any, of your total
revenue is derived from the licensing/
sale of rights? _______________________%
E Approximately what proportion of your
company’s/division’s earnings come
from overseas?
■ Less than 5%
■ 5%-25%
■ 25%-50%
■ More than 50%
F Platforms/delivery media – what is the
approximate percentage breakdown of
revenues from the following?
Print _______ %
Online ______ %
CD-ROM ____ %
Other _______ % (please specify ____________)
G Approximately what percentage of
your turnover is devoted to capital
investment?
_____________%
H Approximately what percentage of
your turnover is devoted to new product
development?
_____________%
>
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Publishing in the knowledge economy
Section 2 About your markets and the
business environment
A Are the end users of your products
and services: (tick one)
■ Mainly consumers
■ Mainly businesses
■ Mainly institutions (eg schools, universities)
B Origin of international revenues:
(tick one)
■ Mainly EU (excluding UK)
■ Mainly North America
■ Mainly from other areas, please specify ________.
C Over the last five years, has
competition within your market area:
■ Increased
■ Decreased
■ Remained stable
D If competition has increased, what has
been the major source?
■ New entrants to market from within UK
■ Established UK-based companies
■ Competition from players within your value chain
New entrants to market from:
■ EU
■ US
■ Other, please specify ____________________
Established foreign-based companies, in
■ EU
■ US
■ Other, please specify ____________________
E Using a scale of 1 to 5 (1 = does not constrain, 5 = constrains severely), indicate
to what extent each item constrains the expansion of your business.
1 2 3 4 5
Slow growth of market ■ ■ ■ ■ ■
Low profitability of sector ■ ■ ■ ■ ■
Regulation affecting your business, please specify ____________ ■ ■ ■ ■ ■
Inadequate enforcement of copyright/piracy ■ ■ ■ ■ ■
Lack of access to capital ■ ■ ■ ■ ■
Barriers to access to overseas markets ■ ■ ■ ■ ■
Distribution difficulties ■ ■ ■ ■ ■
Lack of access to retail channels or space ■ ■ ■ ■ ■
Difficulty in staff recruitment or retention ■ ■ ■ ■ ■
Skills shortages ■ ■ ■ ■ ■
Rising operating costs, please specify ______________________ ■ ■ ■ ■ ■
Cost of content acquisition ■ ■ ■ ■ ■
Overseas competition in the local market ■ ■ ■ ■ ■
Availability of experienced middle/senior managers ■ ■ ■ ■ ■
Other please specify ____________________________________ ■ ■ ■ ■ ■
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Publishing in the knowledge economy
F Supply chain problems: using a scale of 1 to 5 (1 = not problematic,
5 = severely problematic) indicate to what extent the items below cause
problems in your supply chain.
1 2 3 4 5
Concentration of ownership of paper supply ■ ■ ■ ■ ■
Inflexibility or cost of printing ■ ■ ■ ■ ■
Lack of systems interoperability with suppliers or customers ■ ■ ■ ■ ■
Creation of electronic content ■ ■ ■ ■ ■
Wastage/returns ■ ■ ■ ■ ■
Distribution of electronic content ■ ■ ■ ■ ■
Inflexibility or cost of distribution ■ ■ ■ ■ ■
Postal service efficiency and cost ■ ■ ■ ■ ■
Concentration of retailing ■ ■ ■ ■ ■
Other please specify ____________________________________ ■ ■ ■ ■ ■
G Impact of social change and globalisation: do you see the following changes as
positive/negative/neutral for your business?
Factor Positive Negative Neutral
The coming of a generation accustomed to the use of interactive technologies ■ ■ ■
Ageing of the population ■ ■ ■
Spread of English language proficiency internationally ■ ■ ■
Increased demands on consumers’ time, money and attention ■ ■ ■
The internationalisation of the labour market ■ ■ ■
Higher educational attainment of the population ■ ■ ■
European Union enlargement and integration ■ ■ ■
Accelerating world trade and investment liberalisation ■ ■ ■
Capacity to deliver content worldwide over high speed networks ■ ■ ■
The creation of the Eurozone ■ ■ ■
Other please specify ____________________________________ ■ ■ ■
H Using a scale of 1 to 5 (1 = least likely, 5 = most likely), indicate which activities
you intend to take to improve your competitiveness in the coming three years,
a) assuming continued steady economic growth; and, b) assuming a general
economic recession.
a) Assuming continued steady economic growth
1 2 3 4 5
Cut production costs ■ ■ ■ ■ ■
Cut distribution costs ■ ■ ■ ■ ■
Launch of new products and services ■ ■ ■ ■ ■
Acquire other companies or titles ■ ■ ■ ■ ■
Expand into other sectors in the UK ■ ■ ■ ■ ■
Expand into overseas markets ■ ■ ■ ■ ■
Gain closer relationship with end customer ■ ■ ■ ■ ■
Enhance brand recognition ■ ■ ■ ■ ■
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Publishing in the knowledge economy
More effective management of existing rights/assets ■ ■ ■ ■ ■
Acquisition and exploitation of new rights ■ ■ ■ ■ ■
Investment in workforce training ■ ■ ■ ■ ■
Enhance e-commerce/e-business ■ ■ ■ ■ ■
Increase capital investment ■ ■ ■ ■ ■
Other, please specify ____________________________________ ■ ■ ■ ■ ■
b) Assuming a general economic recession
1 2 3 4 5
Cut production costs ■ ■ ■ ■ ■
Cut distribution costs ■ ■ ■ ■ ■
Launch of new products and services ■ ■ ■ ■ ■
Acquire other companies or titles ■ ■ ■ ■ ■
Expand into other sectors in the UK ■ ■ ■ ■ ■
Expand into overseas markets ■ ■ ■ ■ ■
Gain closer relationship with end customer ■ ■ ■ ■ ■
Enhance brand recognition ■ ■ ■ ■ ■
More effective management of existing rights/assets ■ ■ ■ ■ ■
Acquisition and exploitation of new rights ■ ■ ■ ■ ■
Investment in workforce training ■ ■ ■ ■ ■
Enhance e-commerce/e-business ■ ■ ■ ■ ■
Increase capital investment ■ ■ ■ ■ ■
Other, please specify ____________________________________ ■ ■ ■ ■ ■
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Publishing in the knowledge economy
Section 3 Use of e-commerce and ICT
A Which of the following facilities does your company have or plan to have?
Currently Have plans Have no
have to deploy plans to
in near deploy
future
A website for information purposes only ■ ■ ■
A website for content delivery ■ ■ ■
The facility to allow the placing of orders online to suppliers ■ ■ ■
The facility to allow the taking of customer orders online ■ ■ ■
The facility to allow electronic payment by customers ■ ■ ■
The facility to pay suppliers electronically ■ ■ ■
B Which of the following IT systems does your company have or plan to have?
Currently Have plans Have no
have to deploy plans to
in near deploy
future
An intranet ■ ■ ■
The ability to accept advertisement placement electronically ■ ■ ■
A content management system ■ ■ ■
A rights management system ■ ■ ■
A customer relationship management system ■ ■ ■
XML for data interchange ■ ■ ■
XML for media-independent storage ■ ■ ■
Print-on-demand ■ ■ ■
Fully digital workflow ■ ■ ■
>
135

Publishing in the knowledge economy
Section 4 Expectations of the future
A Using a scale of 1 to 5 (1 = least, 5 = greatest) indicate the potential of each
of the following opportunities for your business in a) the next three years
b) the next 10 years?
3 years
1 2 3 4 5
Launch of new products and services ■ ■ ■ ■ ■
Extension of existing products and services to overseas
markets (including sales of formats) ■ ■ ■ ■ ■
Acquisitions, mergers or alliances in the UK ■ ■ ■ ■ ■
Overseas acquisitions, mergers or alliances ■ ■ ■ ■ ■
Growth of high speed networks/broadband ■ ■ ■ ■ ■
Growth of digital television ■ ■ ■ ■ ■
Growth of 3G wireless networks ■ ■ ■ ■ ■
Improved exploitation of rights ■ ■ ■ ■ ■
Use of e-business technologies to create new products and services ■ ■ ■ ■ ■
Use of e-business technologies to optimise editorial and production processes ■ ■ ■ ■ ■
Use of e-commerce technologies to optimise ordering, sales and
marketing processes ■ ■ ■ ■ ■
Closer relationship with end customer ■ ■ ■ ■ ■
Price discounting ■ ■ ■ ■ ■
Other, please specify ____________________________________ ■ ■ ■ ■ ■
10 years
1 2 3 4 5
Launch of new products and services ■ ■ ■ ■ ■
Extension of existing products and services to overseas
markets (including sales of formats) ■ ■ ■ ■ ■
Acquisitions, mergers or alliances in the UK ■ ■ ■ ■ ■
Overseas acquisitions, mergers or alliances ■ ■ ■ ■ ■
Growth of high speed networks/broadband ■ ■ ■ ■ ■
Growth of digital television ■ ■ ■ ■ ■
Growth of 3G wireless networks ■ ■ ■ ■ ■
Improved exploitation of rights ■ ■ ■ ■ ■
Use of e-business technologies to create new products and services ■ ■ ■ ■ ■
Use of e-business technologies to optimise editorial and production processes ■ ■ ■ ■ ■
Use of e-commerce technologies to optimise ordering, sales and
marketing processes ■ ■ ■ ■ ■
Closer relationship with end customer ■ ■ ■ ■ ■
Price discounting ■ ■ ■ ■ ■
Other, please specify ____________________________________ ■ ■ ■ ■ ■
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Publishing in the knowledge economy
B Using a scale of 1 to 5 (1 = least, 5 = greatest) indicate the potential threats to
your company’s success a) in the next three years? B) in the next ten years?
3 years
1 2 3 4 5
Economic recession ■ ■ ■ ■ ■
Technological change eg development of broadband and 3G wireless networks ■ ■ ■ ■ ■
Piracy/copyright infringement ■ ■ ■ ■ ■
Retention of rights by authors/agents/institutions ■ ■ ■ ■ ■
New entrants to your market ■ ■ ■ ■ ■
Disintermediation by parts of the existing value chain ■ ■ ■ ■ ■
Competition from existing customers ■ ■ ■ ■ ■
Overseas competition, including imports ■ ■ ■ ■ ■
Shifts in consumer spending patterns or changes in consumer behaviour ■ ■ ■ ■ ■
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online) ■ ■ ■ ■ ■
Stricter regulation, please specify __________________________ ■ ■ ■ ■ ■
Taxation changes ■ ■ ■ ■ ■
Price discounting ■ ■ ■ ■ ■
Government as information provider/publisher ■ ■ ■ ■ ■
Other, please specify ____________________________________ ■ ■ ■ ■ ■
10 years
1 2 3 4 5
Economic recession ■ ■ ■ ■ ■
Technological change eg development of broadband and 3G wireless networks ■ ■ ■ ■ ■
Piracy/copyright infringement ■ ■ ■ ■ ■
Retention of rights by authors/agents/institutions ■ ■ ■ ■ ■
New entrants to your market ■ ■ ■ ■ ■
Disintermediation by parts of the existing value chain ■ ■ ■ ■ ■
Competition from existing customers ■ ■ ■ ■ ■
Overseas competition, including imports ■ ■ ■ ■ ■
Shifts in consumer spending patterns or changes in consumer behaviour ■ ■ ■ ■ ■
Changes in the distribution of advertising expenditure
(eg from print to TV, direct mail or online) ■ ■ ■ ■ ■
Stricter regulation, please specify __________________________ ■ ■ ■ ■ ■
Taxation changes ■ ■ ■ ■ ■
Price discounting ■ ■ ■ ■ ■
Government as information provider/publisher ■ ■ ■ ■ ■
Other, please specify ____________________________________ ■ ■ ■ ■ ■
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Publishing in the knowledge economy
Section 5 Role of the Government/public sector in the
publishing market
A Do you regard the government in
its role as information supplier and
publisher as
■ A competitor
■ A partner
■ Both
■ Neither
B Are there any publishing projects you
have pursued as a result of co-operation
with a government department or public
sector body?
■ Yes, please specify ________________________
■ No
C Are there any projects you have not
pursued or curtailed as a result of the
publishing activities of a government
department or public sector body?
■ Yes, please specify ________________________
■ No
D Have you experienced problems in
accessing Government material for
commercial reuse since the policy on
the reuse of government information
was liberalised in 1999?
■ Yes
■ No
E Have you taken out an HMSO Click-
Use Licence which enables the re-use of
a wide range of government information
free of charge?
■ Yes
■ No
■ Being considered
■ Not aware
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Publishing in the knowledge economy
Section 6 Role of the BBC in the publishing market
A Do you regard the BBC as:
■ A competitor
■ A partner
■ Both
■ Neither
B Are there any projects you have
pursued as a result of co-operation with
the BBC?
■ Yes, please specify: _______________________
■ No
C Are there any projects you have not
pursued or curtailed as a result of the
activities of the BBC?
■ Yes, please specify ________________________
■ No
D Do you regard any of the following
BBC activities as an opportunity for
partnership or product development for
your company? Tick all that apply
■ Book publishing
■ Magazine publishing
■ Online services
■ Interactive television
■ Licensing or merchandising
■ Ability to use television or radio as crosspromotion
vehicle
■ None
E Do you regard any of the following
BBC activities as giving rise to problems
for your company? Tick all that apply
■ Book publishing
■ Magazine publishing
■ Online services
■ Interactive television
■ Licensing or merchandising
■ Ability to use television or radio as crosspromotion
vehicle
■ None
>
139

Publishing in the knowledge economy
Section 7 Role of industry and Government in improving
competitiveness
A Using a scale 1 to 5 (1 = least important, 5 = most important) indicate the positive
steps the industry could jointly take to improve its competitiveness.
1 2 3 4 5
Joint exporting initiatives ■ ■ ■ ■ ■
Incentives to improve the efficiency of production ■ ■ ■ ■ ■
Data standardisation projects to improve supply chain efficiency ■ ■ ■ ■ ■
Other industry wide e-commerce initiatives ■ ■ ■ ■ ■
Strengthening the industry in relation to the retail trade ■ ■ ■ ■ ■
Collective initiatives to improve the industry’s relationships with
advertisers and the advertising industry ■ ■ ■ ■ ■
Raising the profile of the industry ■ ■ ■ ■ ■
Co-ordinated training initiatives ■ ■ ■ ■ ■
Co-ordinated management development training ■ ■ ■ ■ ■
Better technological advice ■ ■ ■ ■ ■
Other please specify ____________________________________ ■ ■ ■ ■ ■
B Using a scale of 1 to 5 (1 = least, 5 = best) indicate how best the government can
assist in improving the competitiveness of the publishing industry.
1 2 3 4 5
Change existing regulation, please specify __________________ ■ ■ ■ ■ ■
Stimulate market demand for new services ■ ■ ■ ■ ■
End uncertainty in relation to VAT ■ ■ ■ ■ ■
Entry to the Euro ■ ■ ■ ■ ■
Expand access to broadband networks ■ ■ ■ ■ ■
Ensure that EU merger policy is transparent and consistent ■ ■ ■ ■ ■
Ensure fair media ownership framework ■ ■ ■ ■ ■
Ensure fair competition in the supply chain ■ ■ ■ ■ ■
Maintain flexible labour market ■ ■ ■ ■ ■
Improve the collection of statistics relating to the industry ■ ■ ■ ■ ■
Undertake targeted export initiatives ■ ■ ■ ■ ■
Invest in workforce training and education ■ ■ ■ ■ ■
Maintain levels of funding for schools and libraries ■ ■ ■ ■ ■
Ensure a favourable tax environment ■ ■ ■ ■ ■
Undertake exemplary action in procurement and use of information ■ ■ ■ ■ ■
Other please specify ____________________________________ ■ ■ ■ ■ ■
140

Publishing in the knowledge economy
Section 8 International competitiveness
If you feel you have insufficient knowledge of foreign publishing industries, please
disregard this question.
A Choose one country (other than the
UK) which you consider possesses the
most competitive publishing companies
within your sector of the market.
■ Name of country __________________________
C Does your company benchmark itself
against national or international
competitors?
■ National
■ International
■ Both
■ Neither
B Rate your agreement with these statements in relation to your chosen country’s
publishing companies:
Strongly Slightly Slightly Strongly
agree agree disagree disagree
1 Skill levels are higher in the UK publishing industry ■ ■ ■ ■
2 UK companies are keener to invest ■ ■ ■ ■
3 UK companies are more creative and innovative
in new product development ■ ■ ■ ■
4 UK companies are quicker to adopt new technologies ■ ■ ■ ■
5 The UK has a more favourable regulatory environment ■ ■ ■ ■
6 UK companies are more responsive to customers ■ ■ ■ ■
The following page is left blank for any additional comments you may wish to make.
Thank you. Your help is much appreciated.
Please email your completed questionnaire to sueo@pira.co.uk, alternatively
return by fax to 01372 802249.
>
141

Publishing in the knowledge economy
Appendix D
Main sources consulted
Government and trade associations
Department of Culture, Media and Sport
• Creative Industries Ministerial Steering Group: 2nd
• Creative Industries Mapping Document
(March 2001)
• Creative Industries Export Advisory Group: Exports:
our Hidden Potential (November 1999)
• Internet Inquiry: Snapshot of a Rolling Wave
(Feb. 2000)
Office of National Statistics
• Annual Business Inquiry Publishing, 1993-2000
• PRODCOM reports, 1993-2000
• Consumer Trends, 2001
• UK Trade in Services, 2000
• Standard Industrial Classification UK SIC 1992
• Matthew Barnes, Jonathan Haskel, Andrew Ross:
Understanding Productivity: new insights from the
ONS business databank (April 2001)
Department of Trade and Industry
• UK Competitiveness Indicators Second
Edition, 2001
• Digital Content Action Plan (Feb 2000)
• Business Clusters in the UK (Feb 2001)
• DTI/OST Information, Communication and Media
(ICM) Panel: The Future and Development of
Information Relationships (2001)
• The Advance of Electronic Publishing, (Feb 1999)
Publishers Association
• UK Book Industry in Statistics,2000
• UK publishers export sales by sector 1990-99
• Trends in Journal Subscriptions, 1998
• PA Brief on the Digital Curriculum, December 2000
Newspaper Society
• The Regional Press Factbook, March 2001
• Consumer’s Choice IV, 2001
• Reaching the Regions, 1997
Periodical Publishers’ Association
• The Magazine Handbook
• Executive Summary (various issues)
• B2B Media: opportunities for growth, May 2000
PPA/Wessenden Marketing
• The Future of Retailing: an overview of pressures
on the supply chain
• Magazine Retailing 2001
PPA/Blakes Marketing
• Magazines as Brands, May 1998
EU Commission
• The Competitiveness of the European Union
Publishing Industries, 2000
• Second Community Innovations Survey, 1998
Other organisations
• Business Information Forum: Connecting Business,
the UK business-to-business information and
communication industry 2001
• Publishing National Training Organisation: Skills
Foresight Report, April 2002
• Advertising Association: Advertising Statistics
Yearbook 2001 (NTC Publications)
• Screen Digest/ABN AMRO Mediaphile 2010
• Book Marketing Ltd: Book Facts 2000
• Learned Information: The European Online
Information Market, Jan 2002
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Publishing in the knowledge economy
• Kingston University/DPA 8th annual Directory and
Database Publishers Association Survey, 2000
• ALPSP/PA Journal Publishing Statistics Survey
(TFPL Ltd)
• Seymour: Launches in the UK Magazine Market,
Jan 2000
• The Prospect Shop: Periodical publishers, 2001
• Keynote: The Business Press 2001
• McKinsey Quarterly: Magazines’ home companion
Q1 2001
• FIPP: World Magazine Trends 2001
• World Association of Newspapers: World Press
Trends 2001
• Entry, Exit and Establishment Survival in UK
Manufacturing by Richard Disney, Jonathan Haskel
and Ylva Heden
• Ocean Consulting: Media Brands 2002
• Book Industry Communication: Returns: the New
Process – A Code of Practice, July 2000
• KPMG: Unlocking the Supply Chain’s Hidden Prize,
Feb 1998
• Paul Dobson: The impact of proposed national
distribution developments on the UK regional press
industry (‘The Dobson Report’), October 2000
• British Printing Industries Federation: Print 21
(June 2001)
• Bookseller Publications: Book Retailing in Britain
2001
Pira International
• The Future of Print (2000)
• The Impact of E-commerce on the UK print and
publishing industries (May 2001)
• The Future of Print and Digital Media in the Internet
Age (April 2002)
143

NPA
Britain’s National Press
Members of the project control board
Department of Trade and Industry
Chris Matthews, Director,
Publishing & New Media
Susan Moore, Policy Advisor &
Business Analyst, Publishing & New Media
Nick Rudoe, Statistical Advisor,
Industry Economics and Statistics Directorate
Michael Crosse, Economic Advisor,
Industry Economics and Statistics Directorate
Pira International
Michael Hancock, Managing Director
Richard Gray, Business Manager
Publishers Association
Ronnie Williams, Chief Executive
Periodical Publishers Association
Ian Locks, Chief Executive
Newspaper Publishers Association
Steve Oram, Director
Newspaper Society
David Newell, Director
Adviser to the DTI
David Worlock, Chairman,
Electronic Publishing Services Ltd
Our thanks for assistance from
Association of Learned and Professional Society Publishers;
Directory Publishers Association; Independent Publishers Guild;
Digital Content Forum; British Internet Publishers Association;
plus the large number of publishers and other key players
across the all the industry sectors who gave valuable time,
help and advice through the interviews, focus groups,
workshops, questionnaires, etc.
Mike Casey and Susan Sparks,
Pira International Report Authors.

Publishing in the knowledge economy
Competitiveness analysis of the UK publishing media sector
Main report
Department of Trade & Industry
151 Buckingham Palace Road,
London SW1H 9SS, UK
T +44 (0)20 7215 5000
W www.dti.gov.uk
Pira International Ltd
Randalls Road, Leatherhead,
Surrey KT22 7RU, UK
T +44 (0)1372 802000
E publish@pira.co.uk
W www.piranet.com