With the rapid pace of innovation and change in the world of media showing no signs of letting up, we explore the trends that industry leaders are seeing in the European publishing sector right now.
Like all regions around the globe, the European magazine publishing market is seeing a number of challenges as it seeks to adapt to a changing landscape, the digital revolution, new market entrants and changing audience habits. So, what do those in the industry think are the main trends for European players right now?
Of course, one of the biggest issues continues to be monetisation and revenue streams – how publishers can continue to drive revenue in an increasingly competitive marketplace and in a world where audiences can access so much free content.
Ralph Büchi, chairman of the supervisory board, Axel Springer, COO Ringier Group and chairman of the management board, FIPP – and who will be speaking at this year’s FIPP World Media Congress – says despite these obvious challenges, firms are getting innovative in the fight for revenue.
“The challenges for most of the European publishers look quite similar. Print is declining or at least not growing, and the digital advertising markets are dominated by Google and Facebook,” he says. “But we also see very positive developments: the paid content initiatives in digital publishing are quickly gaining ground, and there are more and more smart advertising alliances between different media players to defend their national markets and their client relations against the global platforms. Last but not least, the decision of the EU to set up the publisher’s right in the new Copyright Directive shows that the politicians have realised the importance of fair competition and a level playing field for our industry, which will help.”
Industry statistics certainly support the view that the European market must evolve in the face of a changing landscape. According to Statista, circulation revenue for consumer magazines across Western Europe fell by 25 per cent between 2009 and 2016 – and continues to fall today. Even though digital circulation revenues showed an upward trend during this period, the rise was not enough to counter the overall loss of consumer magazine revenues.
What’s more, with the Facebook and Google duopoly continuing to dominate publisher monetisation, a diverse portfolio of revenue streams for publishers is key to ensuring all potential avenues are explored to drive maximum profitability.
Tor Jacobsen, SVP consumer marketing and revenue at Schibsted Media – and who will also speak at November’s FIPP World Media Congress – agrees this move towards a diverse portfolio is important.
“A trend we’re certainly seeing here is that we are going from focusing on just content to focusing on the experience – so how can we make the experience different for the paying customer compared with the non-paying customer – to ensure they genuinely have a reason to take that up?”
Jacobsen adds that in Schibsted Media’s area of specialism, digital news, the really encouraging sign around revenues is the willingness for consumers to pay for content.
“One of the biggest things here is that people are willing to pay for news,” he says. “Five years ago, people didn’t believe in paying for digital news. Now they are very willing to do so. The whole paid-for content trend is doing very well. The other thing is that the subscription business is doing fantastically well, which is good for us given our model. Regarding the consumer side, that is getting more complicated. One trend there is that you are going from a very high sales focus to more of a focus on engagement, loyalty and longer-term customers.”
So how exactly are European companies harnessing this move to new revenue streams?
Both Büchi and Jacobsen agree that developments around data and audience insight are playing a pivotal role and are key trends in Europe right now.
“Data and analytics are seen as a crucial component in the vast majority of the core processes of editorial and consumer business rather than a standalone function here and we use audience data for several purposes, such as statistical modelling, content optimisation, pricing, segmentation, optimisation of customer service etc,” says Jacobsen. “The overall objective is to provide our users and customers with relevant and personalised experiences through fully data driven products.”
Büchi adds: “Technology and data have become key success factors for the media industry, and almost all of us have to work hard in this field to get the right experts, the competences and a successful innovation culture on board. What’s more, given all the new channels through which we can reach our customers in the digital world, we have to be vigilant not to lose our direct access to them. In my eyes, the classical subscription model still has huge upselling potential. Let’s stay as close as possible to our readers and users. Considering this, let’s use all the journalistic formats the digital world is offering to us: text, video, audio, pictures, interactions. That’s another important trend to watch in Europe.”
Jacobsen and Büchi certainly aren’t alone in those views. As Kaisa Ala-Laurila, FIPP board member and CEO of A-lehdet in Finland, recently told FIPP.com: “I think the key development in 2019 will continue to be the same as it was last year. Print circulation revenue as a whole will decline five to seven per cent per year with a great variety between different titles. Some news media types of magazines continue to do better, as well as targeted niche magazines, and some fashion and beauty magazines struggle the most.
“Facebook and Google are taking more than half of the markets and most of the growth while print advertising is declining rapidly. In 2019… for us, it is still about finding new revenues and new ways to produce.”
A linked trend here is that, with the days of publishers heavily relying on platforms for a considerable amount of their ad revenue rapidly decreasing, publishers have become savvier and are investing more in their own programmatic set up. A recent eMarketer report stated that programmatic advertising now accounts for the majority of digital display spending in France, Germany and the UK – following the trend that we’ve seen in the US.
Investing to grow
Europe is also witnessing other trends, one of which is the number of players actively investing for growth. As this year’s FIPP Innovation in Media Report highlighted, “investing provides perhaps a potential new source of revenue and almost certainly unique insights into new technologies, new markets, and new (and potentially competitive) businesses”. As such, the most active investors are the traditional media companies, “and they are mostly in Europe (Bertelsmann, Axel Springer, Schibsted, Bonnier, and Hubert Burda Media)”, the report states.
The European publishing market, it seems, is in defiant mood. And whether it’s through investing in the purchasing of other businesses, launching new revenue streams or finding new ways to be valuable, the challenges in the European market are providing plenty to think about – as well as plenty to discuss at this year’s FIPP World Media Congress.