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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
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