Publishing in the Knowledge Economy - DTI Home Page

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
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