Consumer magazine publishing
150 | South African entertainment and media outlook: 2012-2016
Chapter 7 Consumer magazine publishing Sharon Horsten Associate Director, PwC Southern Africa
The consumer magazine publishing market consists of spending by advertisers in consumer print magazines and online magazines, on magazine online websites, on magazine mobile websites and in magazines distributed to tablets and other mobile devices. Consumer magazine publishing includes spending by readers to purchase magazines via subscriptions or at retail outlets as well as paid digital circulation principally through downloads to tablets and smartphones. Trade magazines are covered in the chapter on business-to-business publishing.
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Outlook ... at a glance Consumer magazine publishing total spending (R millions)
2011
2016
4 365
5 653
2012-16 CAGR(%) 5.3
2012-16 CAGR (%)
2011
2016
2 400
3 400
7.2
12
56
36.1
Total advertising
2 412
3 456
7.5
Print
1 953
2 102
1.5
Print Digital
—
95
—
Total circulation
Digital
1 953
2 197
2.4
Total
4 365
5 653
5.3
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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Consumer magazine publishing
...in brief • Stronger than expected economic growth, the launch of a number of new titles, growth in readership and rising circulation have resulted in higher than expected growth in 2011. • Growing penetration of tablets and the launch of paid mobile apps will cut into print circulation by 2015-16 and stimulate the digital market. • Unlike print advertising, digital advertising is expected to grow at higher rates than the growth expectations for the economy in the forecast period. • Magazines are increasing their online presence by interacting with readers on their websites, through blogs and through social media.
Overview The consumer magazine market rose 7.8% in 2011, more than twice the 3.4% increase in 2010. This increase is significantly greater than the 1.6% we had anticipated in the last edition and is due to stronger than expected economic growth, the launch of a number of new titles, growth in readership and rising circulation. The growth in the economy is expected to slow in 2012, which we believe will lead to slower growth in consumer magazine spending. We then expect an improving economy during 2013-14 followed by moderating growth in 2015-16, a pattern that will be reflected in the consumer magazine market. Digital editions are becoming popular and are beginning to attract advertising. As broadband and mobile Internet penetration increases, we expect the digital market to grow. Rising digital readership will lead to large percentage gains in digital advertising from a currently small base. Publishers are developing mobile apps and a paid digital circulation spending market is emerging in 2012. Growing tablet penetration will expand the potential market for paid digital distribution. Digital circulation will become large enough to start to affect print circulation in 2015-16.
[The consumer magazine publishing scene] is a struggle for survival, with too many titles fighting for the number of existing readers and an everdiminishing slice of the advertising pie. Source: ‘The magazine circus!’, http://www.marketingmix. co.za/pebble.asp?relid=5743 (accessed 22 February 2012)
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Figure 7.1:
Percentage print vs digital circulation 2011 and 2016
4%
Print circulation Digital circulation 2011 – 100% 2016 – 96%
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Print circulation spending growth is expected to be moderate in 2012 and then pick up in 2013-14 as the economy accelerates. We then expect growth to slow in 2015 and spending to decline in 2016 as distribution to tablets begins to become significant enough to cut into the print market. Growth for the forecast period as a whole will average an estimated 1.5% compounded annually. We expect digital circulation spending to total approximately R95 million in 2016, which will boost overall circulation spending growth to 2.4% on a compound annual basis. We project total spending on consumer magazines to grow at a forecast 5.3% compound annual rate, rising to R5.7 billion in 2016 from R4.4 billion in 2011.
Figure 7.2:
Total consumer magazine spending (R millions)
6000 5500 5000 Total consumer magazine spending
4500 4000
2011 2012 2013 2014 2015 2016
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Print advertising is projected to increase at a 7.2% compound annual rate and a developing digital advertising market will boost overall advertising growth to a projected 7.5% compounded annually.
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Consumer magazine publishing
Consumer magazine publishing market (R millions)
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2 176
2 265
2 085
2 150
2 400
2 500
2 700
2 950
3 200
3 400
3
6
6
8
12
18
24
32
43
56
2 179
2 271
2 091
2 158
2 412
2 518
2 724
2 982
3 243
3 456
1 750
1 880
1 825
1 890
1 953
1 988
2 052
2 116
2 124
2 102
—
—
—
—
—
14
20
31
63
95
Total circulation
1 750
1 880
1 825
1 890
1 953
2 002
2 072
2 147
2 187
2 197
Total
3 929
4 151
3 916
4 048
4 365
4 520
4 796
5 129
5 430
5 653
2011
2012
2013
2014
2015
2016
2012-16 CAGR
Advertising Print Digital Total advertising Circulation Print Digital
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Consumer magazine publishing market growth (%)
2007
2008
2009
2010
Advertising Print Digital Total advertising Circulation Print Digital
9.6
4.1
-7.9
3.1
11.6
4.2
8.0
9.3
8.5
6.3
7.2
50.0 9.7
100.0
0.0
33.3
50.0
50.0
33.3
33.3
34.4
30.2
36.1
4.2
-7.9
3.2
11.8
4.4
8.2
9.5
8.8
6.6
7.5
8.0
7.4
-2.9
3.6
3.3
1.8
3.2
3.1
0.4
-1.0
1.5
—
—
—
—
—
—
42.9
55.0
103.2
50.8
—
Total circulation
8.0
7.4
-2.9
3.6
3.3
2.5
3.5
3.6
1.9
0.5
2.4
Total
8.9
5.7
-5.7
3.4
7.8
3.6
6.1
6.9
5.9
4.1
5.3
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Figure 7.3:
Advertising vs circulation spending: 2007 vs 2011 vs 2016
2016 2011 2007
Circulation Advertising
45% 39% 45%
55% 55% 61%
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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Advertising Print Print advertising jumped by 11.6% in 2011 due to an accelerating economy, an increase in readership and the introduction of a number of high-profile international titles. Playboy, Good Housekeeping, Rolling Stone South Africa, Top Gear, Forbes Africa and Quest were among the successful international publications that launched local versions in South Africa in 2011. Custom magazines – titles offered free to selected audiences as an advertising vehicle for the publisher – also flourished in 2011. Among the successful titles were W and Taste from Woolworths, Dish from MultiChoice, Mercedes from Mercedes Benz and Spaces from Plascon. Overall readership rose 4.6% to 23 million in 2011 from 22 million in 2010. South Africa is one of the few countries in which the print consumer magazine readership base is growing. The combination of increased readership and an expanding economy contributed to the double-digit increase in print advertising in 2011. Readership growth appears to be continuing in 2012. There were 13 titles that averaged more than one million readers per issue in 2011, led by Bona at more than three million and Drum, True Love, Kickoff, Move!, You and Huisgenoot at more than two million each. This is compared to 10 titles that averaged more than 1 million readers per issue in 2010. New titles continued to be introduced in 2012, including Grazia and Live SA. Free titles are also contributing to readership growth. On Route and Beer are two new free titles which were launched in 2012. Figure 7.4: Bona Drum True Love Kickoff Move! You Huisgenoot Amakhosi People TVPlus Vuk’Uzenzele Car Men’s Health
Average issue readership 2011 (millions) 3,772 2,895 2,722 2,707 2,475 2,428 2,264 1,681 1,475 1,370 1,261 1,145 1,003
Source: All Media and Products Study
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Consumer magazine publishing
Consumer magazines are one of the more cyclically sensitive advertising media because the readership base tends to be more upscale than other media. High-quality glossy paper, rich colours and targeted content make magazines attractive environments to display highquality products to a greater degree than other media. As one publishing blogger put it: ‘The real issue for us: What does the customer want (and what is she willing to pay for)?1’ Upscale products generally benefit more than staples do when the economy is expanding, but suffer more than staples when the economy is falling. The large swings in print advertising growth rates reflect this pattern. Print advertising rose 9.6% in 2007, fell 7.9% in 2009 and increased by 11.6% in 2011. The plunge in real GDP between 2007 and 2009 accounted for the decline in print advertising and the rebound in real GDP growth between 2009 and 2011 contributed to the rebound in consumer magazine print advertising.
Figure 7.5:
Real GDP growth vs print advertising growth %
12 10 8 6 4 2 0 -2 -4 -6 -8
With the economic growth 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 expected to be moderate Print advertising growth Real GDP Growth in 2012, we anticipate much slower growth in Sources: Statistics South Africa, PricewaterhouseCoopers LLP, Wilkofsky print advertising. We then Gruen Associates anticipate real GDP growth to accelerate during the subsequent two years and then decelerate, but still expand at healthy rates, between 2014 and 2016. Printed Magazines or Digital Magazines: Do We Have to Choose?, http://deadtreeedition.blogspot.com/2012/03/printed-magazines-or-digitalmagazines.html (accessed 5 June 2012)
1
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Consumer magazine publishing
Print consumer magazine advertising (R millions)
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2012-16 CAGR (%)
Print advertising
2 176
2 265
2 085
2 150
2 400
2 500
2 700
2 950
3 200
3 400
9.6
4.1
-7.9
3.1
11.6
4.2
8.0
9.3
8.5
6.3
7.2
% change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
We expect a similar pattern for consumer magazine print advertising. Growth will slow to 4.2% in 2012 and then accelerate during the subsequent two years, to reach a 9.3% increase in 2014. We then look for growth to moderate to 8.5% in 2015 and to 6.3% in 2016. For the forecast period as a whole, print advertising will increase at a projected 7.2% compound annual rate to R3.4 billion in 2016 from R2.4 billion in 2011.
Digital The digital market has been hampered by low broadband penetration, which has limited magazine website traffic and digital magazine advertising. This is changing as wired broadband penetration increases and mobile broadband access expands. Most magazines now have websites and they are using these sites to stimulate interest. Blogs, discussions, reader polls and original content are common features that are attracting visitors without simply providing a digital version of the print edition. So far, growth in website traffic has not cannibalised print readership. Digital readership is becoming appealing to advertisers, although this market is still very small in South Africa. Digital readers tend to be younger than print readers, and digital editions provide advertisers with tools not available in print. For example, readers can gain access to the advertisers website directly from an ad placed in the magazine. The advertiser can therefore generate an impulse sale and shortens the distance between the consumer and the sale. Magazines are also using social networks to expand their reach. Huisgenoot has a Facebook presence with approximately 190 000 members. Cosmopolitan, as with many other magazines now uses Twitter to keep in touch with readers and has more than 27 000 followers. Social networks help magazines sustain interest between editions and support ongoing readership. They also encourage visits to magazine websites. Magazine publishers are continuously seeking to create a brand and an identity for a magazine in order to stimulate interaction with their readers. This is done through creating new magazines as part of the same brand. Examples include the National Geographic brand launching various titles such as National Geographic, National Geographic Kids and National Geographic Traveller. Sarie, a popular women’s magazine, and owner of the titles Sarie Kos, Sarie Woon, Sarie Bruid and Sarie Gesond, launched an online store in April 2012, where visitors can buy anything from the newest fashion to kitchen equipment. Magazines traditionally have a stockist index at the end of the magazine, but now consumers can simply log on to the online store, purchase a product and have it delivered to them within a few days. Since its launch, the number of unique visitors to the website has doubled monthly. This is just another innovative way of using the magazine’s brand to further monetise the magazines customer base.
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Consumer magazine publishing
Digital consumer magazine advertising (R millions) Digital advertising % change
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2012-16 CAGR (%)
3
6
6
8
12
18
24
32
43
56
50.0
100.0
0.0
33.3
50.0
50.0
33.3
33.3
34.4
30.2
36.1
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Online offers advertisers greater opportunities to target audiences and specific niche markets, similar to niche magazines, but with the added appeal of data. The attraction for advertisers is that the platform can encourage interaction with video and via e-mail, and extend the longevity of print campaigns if, for example, readers purchase back issues. A digital magazine can provide monetisable knowledge of the customer as targeted advertising can be planned using rich data that emerges from digital tracking. The combination of broadband penetration growth and interesting website content facilitated through increased smartphone and tablet use will drive traffic to magazine websites. Growth in traffic will in turn attract advertising. With respect to advertising rates, digital readers are still less valuable to advertisers than print readers are. Consequently, digital reach does not generate advertising comparable to that of print. Nevertheless, a growing digital readership base is attracting more advertising. From a small base, we project digital magazine advertising to more than quadruple during the next five years, rising to R56 million in 2016 from R12 million in 2011, a 36.1% compound annual increase.
Figure 7.6:
Digital consumer magazine advertising (R millions)
60 50 40 30 20 10 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Total consumer magazine advertising
The way we promote all of the formats in which our content is distributed is just as important as what content we put on them. Noelle Skodzinski, editor of Publishing Executive
Total consumer magazine advertising, including digital consumer magazine advertising, will increase at a projected 7.5% compound annual rate during the next five years from R2.4 billion in 2011 to R3.5 billion in 2016. Digital advertising will comprise 1.6% of total consumer magazine advertising in 2016 compared to only 0.5% in 2011.
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Circulation spending Print South Africa is one of the few countries in which print unit circulation has been expanding. Between 2007 and 2011, print unit circulation rose by 11%. Because of its relatively low broadband penetration, South Africans rely less on the Internet for information than they do in other countries, and rely more on print media, including magazines. South Africa also has a growing middle class, which is the target market for most consumer magazines. Growth in this economic segment has expanded the market for consumer magazines. Approximately two-thirds of unit circulation in 2011 consisted of single-copy sales. The reliance on single-copy sales gives the current state of the economy greater influence over purchasing decisions than if the majority of sales were on a subscription basis. Discretionary income plays a major role for the single-copy buyer. The high percentage of single-copy sales also makes the market more vulnerable to a recession. In 2009, unit circulation fell 3%. In general, South Africa’s economy has grown faster than in many other countries, which has contributed to the long-term increase in unit circulation. During the past two years, unit circulation has increased by 6%. The market is slowly evolving. The 66% share of single-copy sales in 2011 was down from 77% in 2007. This pattern reflects a growing middle class that is making a greater commitment to magazines than in the past. In 2011, subscriptions increased by 9% while single-copy sales fell by 4%. If this pattern continues, and we expect it will, subscriptions will account for the majority of unit circulation in the next few years. This will make consumer magazines somewhat less sensitive to the state of the economy and provide a more stable rate base for advertisers. Print circulation has faced relatively little competition from digital alternatives, again in large part because of South Africa’s low broadband penetration. We expect this to change during the next five years as increased broadband and tablet penetration will make the digital option available to more people.
Access Outlook online for the full forecasts and economic analyses for 12 industry segments.
In order to support their print business, some publishers are bundling print and tablet circulation. We believe that many readers will continue to buy print versions because they prefer them, as do advertisers in such segments as luxury women’s fashion, where digital cannot reproduce the impact or colour accuracy of print.
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160 | South African entertainment and media outlook: 2012-2016
Consumer magazine publishing
In an effort to better engage with their consumers and advertisers, many South African magazines are launching more trade and consumer events. An example of this is the Your Family Crafts and Arts Expo, which has become an annual event, offering an opportunity to interact with a strong and loyal following. The ongoing trend towards the lifestyle-focused and enthusiast reader also helps encourage a more stable readership and circulation of titles focused on special interests such as golf, travel and running. Unit circulation rose 3.0% in 2011. We expect a more modest 1.4% increase in 2012 as economic growth slows, followed by somewhat faster increases in 2013-14 as the economy picks up. Beginning in 2015, a combination of moderating economic growth and increased digital competition will affect the print market. We project unit circulation to be flat in 2015 and to decline by 1.4% in 2016. For the forecast period as a whole, unit circulation will increase at a 1.1% compound annual rate from 6.9 million in 2011 to 7.3 million in 2016. We expect somewhat faster growth in circulation spending, reflecting modest growth in average prices. Print circulation spending will expand by 1.5% compounded annually from R2 billion in 2011 to R2.1 billion in 2016. Consumer magazine print circulation market 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2012-16 CAGR (%)
Per-issue print unit circulation (millions)
6.2
6.7
6.5
6.7
6.9
7.0
7.2
7.4
7.4
7.3
% change
6.9
8.1
-3.0
3.1
3.0
1.4
2.9
2.8
0.0
-1.4
1.1
1 750
1 880
1 825
1 890
1 953
1 988
2 052
2 116
2 124
2 102
8.0
7.4
-2.9
3.6
3.3
1.8
3.2
3.1
0.4
-1.0
1.5
Circulation spending (R millions) % change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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Digital While publishers have generally not been able to generate payments from online readers, they have begun to develop a paid circulation market through mobile platforms. Publishers are increasingly developing tablet applications to capitalise on the growing penetration of tablets in South Africa. Tablets offer video content, full colour, the convenience of a mobile device and often better picture quality than a computer, allowing for content that is not available in print versions. Tablets are very popular and declining prices will expand penetration and the potential market for paid digital circulation. While people are getting used to accessing free online content, they are more accustomed to paying for mobile content. Approximately two-thirds of circulation spending consists of single-copy sales. Singlecopy sales tend to be impulse buys where people view the cover and are induced to buy the magazine. Digital e-reader and tablet users are not faced with a cover unless they choose to access it. Device users, however, tend to be heavy readers. A subscription model in which subscribers would automatically receive downloads of the next issue and would automatically be billed through their account, would likely generate a much larger take-up rate and could result in a significant portion of the digital circulation market consisting of subscriptions, in contrast to the trend seen in the print circulation market. In the music and e-book markets, business models evolved over time until a workable solution was reached that led to significant expansion of the market. We expect a similar evolution with digital magazines and expect that a subscription model will ultimately become the norm. Contrary to the music and e-book market, digital copies of magazines are not cheaper than the print alternatives. Media24 has launched tablet apps for Go! Travel and for Landbou Weekblad and has set up a special unit, Touchlab, to develop tablet applications. Tablet versions of consumer magazines are now available and we expect they will become more popular in the next few years. In South Africa, there is currently an insignificant market for paid content online but, we believe people will be willing to pay for the convenience of having a magazine appear on their tablet. This will, however, take time – a survey conducted by US-based online research company Knowledge Networks shows that only 14% of current users would be willing to pay to get a special iPad edition of a magazine they already receive in print. What’s more, 86% of iPad owners indicated that they would be prepared to ‘watch’ ads to gain free access to content1. Paid digital circulation is developing and becoming more established in other countries and we expect it will develop in South Africa as well. We estimate that paid digital unit circulation will total 50 000 in 2012 and rise to 330 000 by 2016. We project digital circulation spending to generate R14 million in 2012 and to rise to R95 million by 2016.
1 ‘iPad users prefer advertising to pay model for content’, http://adage.com/print/148247 (accessed 6 June 2012)
162 | South African entertainment and media outlook: 2012-2016
Consumer magazine publishing
Consumer magazine digital circulation market
2012
2013
2014
2015
2016
Per-issue paid digital unit circulation (millions)
0.05
0.07
0.11
0.22
0.33
40.0
57.1
100.0
50.0
14
20
31
63
95
42.9
55.0
103.2
50.8
% change Circulation spending (R millions) % change Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Total circulation Total unit circulation will reach an estimated 7.63 million in 2016, a 2.0% compound annual increase from 2011. Total circulation spending will expand at a 2.4% compound annual rate to R2.2 billion in 2016. Paid digital circulation will account for approximately 39% of total circulation spending growth during the next five years. By 2016, digital will account for 4.3% of total circulation spending. Magazines inform, entertain and remain an enjoyable outlet for the reader. The digital and online world presents unique challenges to traditional print magazines, but they will continue to be an important part of the South African landscape over the next five years.
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Consumer magazine publishing –the legal landscape The consumer magazine industry faces similar legal challenges to publishers across the sector. As with most publishing outputs, consumers are increasingly accessing magazines online or downloading magazine content onto mobile devices. Magazine publishers will need to take note of the provisions of consumer law, company law, competition law, intellectual property law and the tenets of data protection and privacy law.
Access to information The Promotion of Access to Information Act (PAIA) gives third parties the right to approach private and public bodies to request information held by them, which is needed in the exercise or protection of any rights.
Advertising The Advertising Standards Authority (ASA) Advertising Code expects advertisers (online or otherwise) to comply with the following principles: • Adverts should be legal, decent, honest and truthful; • Adverts should be prepared with a sense of responsibility to the consumer; • Adverts should conform to the principles of fair competition in business; and • No advertisement should bring advertising into disrepute or reduce confidence in advertising as a service to industry and to the public.
Competition considerations Strategic alliances are being formed across the industry to allow for greater synergy between traditional publishing and other forms of media. This is attracting the attention of the Competition Commission. The law of unfair competition provides that anyone who intentionally or negligently causes loss or damage to a business rival (i.e. a competitor) through wrongful conduct will
164 | South African entertainment and media outlook: 2012-2016
be liable for damages. As an exclusionary right, the protection provided by intellectual property rights can lead to significant market power when no substitutes exist in a market.
Consumer rights The implementation of technological protection measures (TPMs) can conflict with the consumer’s freedom to access and interact with a purchased product. The Consumer Protection Act grants consumers the right to redress for faulty purchases, while Section 43 of the Electronic Communications and Transactions Act stipulates that online publishers must publish specific information about the company and that a sufficiently secure payment system must be used.
Contractual challenges Publishers need to obtain all the rights in a publication in order to trade legally with the final product. Cross-media ownership and the growth of online publishing require careful management of all relevant rights. The publishing agreement must provide for all the necessary rights in the publication. These rights could include: the rights to reprints, translations, film rights, format provision, distribution and warehousing agreements; syndication agreements; e-book agreements; digital rights management; trademark registration; confidential information and international publishing sale and distribution rights. Publishers are only allowed to mandate collective rights organisations to license the use of their publications if they are the owner of the work. Blanket licenses are ordinarily granted to educational institutions.
Copyright challenges The distribution of content to the public requires the consent of the copyright holder. The Copyright Act regulates the production and distribution of literary and artistic works. Publishers have to understand, exploit and avoid infringing copyright. Publishers must protect the copyright they control and take care when granting copyright licences to third parties. Piracy of digital books is a constant threat to the industry.
Consumer magazine publishing
The Copyright Act allows for ‘fair dealing’ as an exception to copyright infringement. The copying of parts of a protected work is allowed for private study or personal use of a work. Magazines copyright each issue as a collection. Copyright in individual articles, photographs and artworks is a separate copyright. Magazine publishers must register a trademark in their titles (usually the masthead). A trademark can combine a word as well as the way it is written.
Copyright notices Publishers should include copyright notices or warnings on the published work. If consumers are expected to agree to web-wrap contracts, end-user licences or any other form of licence, they need to be made aware of this fact in advance. Appropriate technological protection measures should be considered: Will the content be locked or will it grant only authorised persons the rights to access, reproduce or forward copies of the work? The ECT Act places a liability on Internet service providers to notify subscribers of infringement reports from copyright owners and to comply with take-down notices regarding infringement of protected content.
Defamation Publishers can be sued for publishing false and defamatory statements. Defamation law protects a person’s right to their reputation.
Digital rights management The move from print to online presents publishers with access control and copyright challenges. Digital rights management (DRM) is used by publishers and hardware manufacturers to limit the use of digital content after sale. But DRM is increasingly regarded as a challenge to the industry, less so than piracy. Consumers are increasingly expecting multi-format capacity on purchased products. Most DRM systems use technological protection measures to protect the product. The ECT Act provides
for a broad restriction on circumvention of any technological protection measures and does not have any limitations or exceptions for legitimate use. This can be regarded as an infringement of consumers’ fair dealing rights since DRM makes no distinction between infringing and legitimate use of a product. The challenges presented by DRM are that monopolies can be created over devices that handle the media and works are rendered inaccessible after copyright has expired, creating permanent lock-up in a product. Privacy rights can be affected by DRMs in the following ways: login and registration facilities, biometric identification, spyware that sends information about the user without the end user’s knowledge or approval, surveillance functionalities that gather information about users’ reading, viewing and listening habits. Publishers are increasingly becoming aware that while DRMs can be used not to enforce legal rights, they can displace them too. The constraint on information presents a challenge rather than an opportunity to publishers – thriving in an increasingly globalised, converged market requires a new approach. In managing their digital rights, publishers must now consider file sharing options and cross-border licensing of on-demand availability rights
Electronic marketing Section 45(1) of the ECT Act stipulates that where an online publisher sends unsolicited commercial communications to a consumer, the online publisher must on request from the consumer (i) remove the consumer from the mailing list and (ii) provide the consumer with the source of the consumer’s personal information.
Freedom of speech and expression Although both rights are protected by the Constitution, expression that amounts to hate speech is prohibited. This right is limited by the rights of others to, among others, dignity, non-discrimination and privacy.
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Consumer magazine publishing
Internet and electronic uses
Online publishing issues
Publishers cannot assume their rights to publish include publication on the Internet, as an e-book or in a multimedia format. Publishers must ensure they have the rights to publish online or electronic versions of a work.
Terms and conditions of use are a prerequisite and should cover data protection and privacy practices. Click-wrap and shrink-wrap end user licences must be clearly defined. Clickon payment facilities must be managed in line with the requirements of the Consumer Protection Act and the ECT Act.
Privacy Guaranteed by the Constitution, and weighed up against public interest considerations, this right safeguards private information from being published without reason. Invasion of privacy can take two forms: disclosure of private information and intrusion into the private sphere of another. Privacy rights are infringed when information is published and/or distributed without the provider’s consent. Publicity rights prevent the commercial exploitation of the value of an individual’s name and/or likeness and applies to anyone whose name and likeness is used without their permission.
Online payment Increasingly, online publishers are introducing pay walls for specialised content; this activity places publishers within the ambit of the provisions of the ECT Act.
Linkages (hyperlinks and metatags) in multimedia online content can expose publishers to copyright infringement of content owned by third parties.
Special content Certain content creates legal risks. Such content includes user-generated content, offensive content and content that is licensed and disseminated under alternative licensing models. Third parties may claim ownership in user-generated content or take offence at allegedly offensive content.
Social media Legal risks presented by the use of social media include unauthorised disclosure by employees of confidential information, unauthorised transfer of intellectual property, reputational risk and the loss and dilution of brand value. Denise Fouché – Technology Legal Advisory Services, PwC
View year-on-year growth for every data line. Visit Outlook online at www.pwc.co.za/outlook
166 | South African entertainment and media outlook: 2012-2016
Consumer magazine publishing
Global trends in the consumer magazine industry Outlook
• Overall global spending on consumer magazines fell by 0.8% in 2011, the result of a downturn in print advertising following a brief rebound in 2010 and ongoing decreases in print circulation spending. We project that spending will begin growing again in 2012, and will average 1.3% growth on a compound annual basis to reach $80.2 billion in 2016 from $75.2 billion in 2011. • Global print advertising in consumer magazines fell by 0.9% in 2011.We expect the market to turn around in 2012 and to expand at modest rates averaging 1.5% compounded annually to $30.9 billion in 2016 from $28.7 billion in 2011. • Digital advertising totalled an estimated $2.1 billion in 2011. We project that this will rise to $5.5 billion in 2016, a 20.8% compound annual increase. • As a result, digital advertising will account for 15.1 % of total consumer magazine advertising in 2016, compared with 7.0% in 2011. • Total consumer magazine advertising will increase from $30.9 billion in 2011 to $36.4 billion in 2016, a 3.4% compound annual advance. • Print circulation spending fell by 2.0% in 2011. We expect decreases averaging 1.5% compounded annually during the next five years to $40.9 billion from $44.2 billion in 2011. • A digital circulation spending market is developing that will total an estimated $2.9 billion in 2016. • Gains in digital circulation spending will begin to offset declines in print in 2015. However, total circulation spending will still be lower in 2016 than in 2011, registering a 0.3% compound annual decline to $43.7 billion in 2016. Key drivers
• Improving economic conditions will lead to modest growth in print advertising during the next five years. • However, gains will be dampened by declining print unit circulation as well as loss in advertising share to the Internet and television. As a result, growth will not keep pace with nominal GDP, nor will it expand as fast as inflation. • In real terms, print advertising will decline. However, growing digital readership will fuel digital advertising. • The lure of free online access and the emergence of mobile access on tablets will lead to continued decreases in print unit circulation and declining print circulation spending. • Growing penetration by tablets and the willingness to pay for mobile content will drive an emerging digital circulation spending market.
PwC | 167
Consumer magazine publishing
Global consumer magazine publishing market by component (US$ millions) 2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012-16 CAGR (%)
37 027
35 597
28 447
28 970
28 707
28 891
29 205
29 697
30 285
30 956
% change
3.1
-3.9
-20.1
1.8
-0.9
0.6
1.1
1.7
2.0
2.2
1.5
Digital advertising
809
1 478
1 479
1 781
2 149
2 641
3 189
3 810
4 576
5 518
% change
71.8
82.7
0.1
20.4
20.7
22.9
20.7
19.5
20.1
20.6
20.8
37 836
37 075
29 926
30 751
30 856
31 532
32 394
33 507
34 861
36 474
4.0
-2.0
-19.3
2.8
0.3
2.2
2.7
3.4
4.0
4.6
3.4
49 258
48 475
46 022
45 087
44 196
43 509
42 775
42 078
41 436
40 873
1.0
-1.6
-5.1
-2.0
-2.0
-1.6
-1.7
-1.6
-1.5
-1.4
-1.6
Digital circulation
—
—
—
17
169
300
529
1 081
1 934
2 860
% change
—
—
—
—
894.1
77.5
76.3
104.3
78.9
47.9
76.1
49 258
48 475
46 022
45 104
44 365
43 809
43 304
43 159
43 370
43 733
1.0
-1.6
-5.1
-2.0
-1.6
-1.3
-1.2
-0.3
0.5
0.8
-0.3
87 094
85 550
75 948
75 855
75 221
75 341
75 698
76 666
78 231
80 207
2.2
-1.8
-11.2
-0.1
-0.8
0.2
0.5
1.3
2.0
2.5
1.3
Print advertising
Total advertising % change Print circulation % change
Total circulation % change Total % change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, Global entertainment and media outlook 2012-2016 (PwC, 2012)
168 | South African entertainment and media outlook: 2012-2016
Consumer magazine publishing
PwC | 169
