Digital circulation and advertising will create a new source of revenue for consumer magazines across North America, a new industry forecast says. But even by 2015, overall spending on magazines will still be smaller than it was before the recession.
That’s the conclusion of PricewaterhouseCoopers’ "Global Entertainment and Media Outlook: 2011-2015," a report set for release June 14 that predicts at least a few more lean years for magazines.
Advertising on digital media—a category that now includes ads on mobile and tablet devices in addition to websites—will reach $2.8 billion in 2015, up from $1.1 billion in 2010, the report projects. Digital circulation, driven primarily by digital subscriptions, will generate an estimated $611 million for publishers by 2015 from almost nothing in 2010.
Meanwhile, the report anticipates that the shift by readers and advertisers online will limit the growth of print, the industry's lifeblood. While magazines’ print and circulation revenue combined will hit $25.1 billion in 2015, growing at a compound annual rate of 3.5 percent, it will still be lower than its 2007 level of $25.4 billion.
There's some good news: Advertising is starting to recover. After plunging 26.8 percent from 2007-2009, it crept up 2 percent in 2010.
But even that isn't all good news—underlying weakness in circulation will prevent publishers from growing print advertising at more than a modest pace. Competition from free sources, a weak economy, and decline in store visits has threatened newsstand and subscription sales. Celebrity and news magazines are particularly at risk because they trade in information that’s widely available for free online.
The good news is that a digital circulation revenue model has started to emerge as publishers launch apps and digital versions for tablets and e-readers. PwC estimates that the market won’t really take off until 2014, though, as the device market emerges.
Even then, though, digital circulation contributions won’t be enough to offset a downward trend in overall circulation revenue through the end of the forecast period.