The magazine segment represents a major chunk of the global print publishing market. Considering that more than 100,000 magazine titles are being published in the US and UK alone, the magazine publishing industry is huge in scale and operations.  Each year the US and UK magazine market sell upwards of 4 billion magazine copies. However, all is not well with the industry. The current economic conditions coupled with changing consumption patterns are presenting enormous challenges.

The magazine market (like the newspaper market) is driven by corporate spending (ad spending and sales) rather than consumer spending (subscriptions/reader base). Since ads are driven by readership, magazine publishers tend to:

• Price each copy of the magazine at a highly subsidized rate to increase readership
• Rely heavily on ad spending by corporate clients to recover costs and make profits

The current economic conditions have certainly exposed the fragility of this business model. Consumers have cut back on their spending, resulting in a shrinking reader base for most magazine publishers. Corporate spending too has reduced significantly – budget constraints being a major reason.  Another recent trend is reduced print spending on account of environment concerns. Companies are now moving to paperless operations in a bid to reduce costs and boost a green image.

The emergence of Web advertising has added to publisher woes. Print ads are billed higher and the shift in ad dollars to digital forms has seen substantial decline in print ad revenues. While publishers tend to push for print ads, advertisers look at digital ads as a cheaper yet effective means to address the reader. Production costs and increasing salaries coupled with distribution and printing are crippling publishers. The diagram below illustrates the relative cost and revenue contribution of each functional head in a typical magazine publisher’s work flow. It illustrates the pressures brought on by declining revenues and increasing costs: