Publishing in the Knowledge Economy - DTI Home Page

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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