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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 90
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