The Big Picture: March 2012

Articles, Industry News — By on 01/03/2012 1:12 pm

The sudden arrival of the Sun on Sunday has done a great deal to add some spice to what has been a rather gloomy start to 2012.

Yet while the launch demonstrates that there is still life left in the print newspaper market, it is not massively significant in its own right. There are other, lower profile news items in the latest issue of Wessenden Briefing which tell us more about where the business is heading…..

The magazine ABCs show a business in flux with print sales dropping faster than digital editions can come on-stream. Subscriptions continue to grow their share of copy sales, but with Royal Mail looking set for big postal price rises for the foreseeable future, this direct-to-consumer channel is coming under increasing cost pressures, making publishers both refocus on retail sales and also accelerate their digital strategies. However, Future’s announcement that it has reached a digital crossover (the decline of its print products has been compensated, for the first time, by the growth of its digital brands) shows that revenue crossover is possible.

Looking to the middlemen, there is a great deal of distributor news, the main item being the sale of the US COMAG operation to the largest wholesaler in the States. While no one is suggesting that a similar move is about to happen in the UK, the development raises questions about the relative roles of wholesalers and national distributors in the UK supply chain which will have to find more economies over the next couple of years.

Tesco is gearing up to fight back after an unprecedented amount of negative PR coverage and its own admission that its core UK bricks-and-mortar operation has gone off the boil. Both competitors and suppliers had better watch out as the grocery giant is on a real mission and will be active in every channel: grocery, convenience, online….and anything else it can think of.

Yet if Tesco is a scary distribution partner, then what about Amazon? While the UK awaits the launch of the Kindle Fire colour tablet, US analysts estimate that each Fire being sold in the USA loses Amazon $3 per unit in manufacturing costs alone.

This loss leading strategy on the hardware is based on its assessment of the content revenue that each Fire user will generate in downloads, estimated to be around $135 per year.  Such a long-term, joined-up, lifetime value approach to consumer marketing should make every publisher pause for thought….much more than the launch of the Sun on Sunday.

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