Magazines are diaries of popular culture. They have intimate relationships with their readers that are not duplicated by other media channels, and they have close ties with other segments of the media and entertainment industry: The stories that appear in magazines often become sources of songs, books, and motion pictures. In addition, magazines exercise special influence in the social sphere they are players in setting the public agenda and mobilizing clusters of opinion leaders in both broad and narrow segments of society.
While magazines play important social roles, the magazine publishing industry is not expected to be an area of significant growth in the media and entertainment industry, compared to other segments. PricewaterhouseCoopers’ Global Entertainment and Media Outlook: 2005-2009 reports that globally, it will grow at a 4.1 percent compound annual growth rate (CAGR), from $87.3 billion in 2004 to $106.5 billion in 2009. The market consists of spending by advertisers in consumer and business-to-business or trade magazines, plus spending by readers to purchase magazines by subscription or individual issues in over-the-counter retail venues.
Slow and steady -- but all boats rise
The principal drivers of magazine publishing in all regions are improved economic conditions and new launches. However, there is some variation between different territories. U.S. magazines fare slightly better than the average, expanding by 4.6 percent CAGR from $33 billion in 2004 to $41.3 billion in 2009. Ad spending will grow faster than circulation 5.5 percent compared to 3.2 percent. In many regions, the Internet is playing an ever-larger role in the promotion and marketing of magazines.
Consumer magazine advertising emerged from the sector’s dip during 2001-2002. The segment rebounded in 2003 with a 4 percent increase, and even more in 2004, showing a 6 percent gain. Publishers have moderated the growth of prices and are optimistic that this area will continue to improve. The recovery of the business magazine advertising has been less robust, growing only 0.7 percent in 2003, but improving in 2004 with a 3.7 percent increase. Although recovery was delayed, the next two years are likely to be stronger, showing 8.7 percent growth in 2005 and 6.1 percent growth in 2006, for a 5.6 percent CAGR during the entire 2005-2009 forecast period.
Pages around the world
Europe, the Middle East, and Africa (EMEA) will advance at a 3.7 percent CAGR from $39.6 billion in 2004 to $47.6 billion in 2009. Mature publications are losing advertising share, so publishers are investing in new titles. Magazines that appeal to luxury audiences are likely to have the most success in EMEA.
Within the EMEA, there is a disparity between titles in Western Europe and new titles in Central and Eastern Europe, as the size of an affluent audience increases rapidly. For example, advertising in Western Europe will grow 3.9 percent during the 2004-2009 period; but will grow 11.7 percent in Central and Eastern Europe.
Asia/Pacific will show similar growth with a 3.8 percent CAGR, increasing from $11.7 billion in 2004 to $14 billion in 2009. The largest magazine markets in the region are Japan ($7.2 billion in 2004) and Australia ($1.4 billion in 2004). Countries in the Asia/Pacific region will see growing numbers of affluent audiences, even as the overall magazine advertising share declines.
Nevertheless, advertising will increase faster than circulation spending, as ad spending grows from $6.1 billion in 2004 to $7.6 billion in 2009, a 4.5 percent CAGR. By contrast, circulation spending will rise at a slower 2.9 percent CAGR. Free titles that attract young readers will expand the advertising market and new titles and improvements in distribution will increase circulation spending. Foreign publishers are rushing to get into this dynamic, including SEEC Media Growth, Conde Nast, and Redgate. A growing economy has also set the stage for the launch of new titles in India.
Latin America’s magazine industry will rise at a 4.6 percent CAGR, but the market was small at $1.8 billion in 2004 and will increase to $2.3 billion in 2009. Brazil is the largest market, followed by Mexico. This region is becoming easier for publishers to increase circulation due to increased urbanization, making distribution an easier task. Advertising will grow at a 5.5 percent CAGR, while circulation growth will be slower at 3.8 percent between 2004 and 2009.
The Canadian market will be slowest, growing at a 2.9 percent CAGR, from $1.2 to $1.3 billion during the 2004-2009 period. Dampers on magazines include increases in postal costs and cutbacks in government subsidy of domestic publishers, although niche consumer magazines will increase advertising share.
