Magazine and newspaper publishing is remarkably similar – in operation and how they manage workflow. While the frequency of printing/publishing remains different, both these publishing segments fall under the bracket - fast moving consumer goods (FMCG) – the value to the customer/reader remains only till the next issue (barring exceptions of course). The newspaper and magazine publishing segments are the largest contributors in terms of revenues to the global publishing industry – contributing close to 52% of global publishing industry revenues.

The newspaper and magazine publishers have already lost considerable revenues on account of dip in ad revenues over the last couple of years. This is attributable to the global economic slowdown, which has led to decrease in consumer and corporate spending as well as the growing impact of digital media. Will the drop in revenues and pressures on margins act as catalysts for these two publishing segments to outsource more? We conducted a survey of publishers to get some insights:

Top level findings from our survey indicate that most publishers are grappling with cost and margin pressures. While this is no surprise, there are other issues like expanding their business across geographies, providing value-added services within current offerings and adapting to new technologies that are posing significant challenges to publishers. The exhibit below provides an insight into the severity of challenges faced by publishers.

Apart from cost or margin pressures, publishers are finding it increasingly difficult to add value to their offerings. Considering the revenue pressures and the need to open new sources of generating revenues, publishers are keen to offer as much value as possible to their consumers. The publishing industry is rapidly adopting digital media. For newspaper and magazine publishers, differentiating their online presence requires creating and demonstrating value to their customers. It is for this reason that 83% of our respondents have indicated it as a challenge – out of which for 49% ‘value addition’ is a ‘key’ challenge. The 34% of responses (which consider value addition a manageable challenge) indicate companies that have identified value addition as a challenge and only need to implement it.

So do publishers think outsourcing can help them?

Outsourcing has been traditionally used by both magazine and newspaper publishers to address the lack of resources and capabilities in-house. For example, newspaper and magazine houses have relied on third parties for distribution or on freelancers for generating content. Can outsourcing effectively mitigate cost pressures and address the publishers’ need to create value? The following exhibit illustrates what publishers think. 

Most of our respondents indicate that cost pressures can be mitigated via outsourcing. For service providers growing cost pressures faced by publishers often will translate into production centric tasks. Interestingly, not many publishers consider outsourcing to help mitigate the challenge of “creating value” within offerings.

Growing dependence on digital presence means that providers have an opportunity to help publishers address varied forms, software, platforms and devices. While service providers aspire for these complex and high value tasks, buyers remain yet to be convinced. Value addition, is likely to remain an in-house task for many publishers, unless service providers can demonstrate significant capability. The need to add value will ultimately translate as more business for only those providers that are capable enough to deliver it.

This article is based on our report “Magazines and Newspapers: Will publishers outsource?” To know more about this report, please follow this link .