THE FUTURE OF MAGAZINES

MARKET STUDY BY HOLMEN With the past decades’ rapid digital evolution, print media in almost all forms has taken a step back. As a company selling paper, Holmen Paper has observed and experienced this decline first hand. Newspapers was the first segment that suffered a rapid decrease in readers and is, as a result, no longer the largest end-use segment for graphical paper. Instead magazines now hold that position. Hence the future of the magazine market is crucial to the future of graphical paper. This is why we decided to conduct this study, where we look at how publishers meet the new challenges, how pricing is affected and how the readers demands are changing.

TABLE OF CONTENTS

MARKET SELLING PRICE 3 OVERVIEW 13 VS ADVERTISING How is the magazine market developing? What sets the price of a magazine? SHIFT IN MILLENNIALS’ BUSINESS READING 7 MODELS 16 HABITS Are the publishers’ changes radical enough? What does this group want in a printed magazine?

Understanding where the magazine market is heading, helps you to gain insights and make sound future business decisions. This study therefore starts by looking at the current state of the magazine market, including historic developments as well as forecasted development. It then proceeds to look at the market from a publisher’s perspective, based on qualitative interviews with European publishers. The outcome is an extensive summary of the challenges that many publishers are experiencing, but also how they adapt their business models to to overcome them. The study also includes a thorough analysis of a large number of consumer magazines, where attributes such as price versus advertising density are investigated. And nally, to really capture what will happen to printed magazines in the future, we have conducted a survey regarding the magazine reading habits of over one thousand European millennials’ and how they believe they will read magazines in the years to come.

We believe that print is part of the future, and by understanding the consumers and the market prerequisites we can work to ensure that print will continue to create value. We hope this study will help you in your future business decisions, and wish you an enjoyable read.

Holmen Insight Team

21 MARKET OVERVIEW

HOW IS THE MAGAZINE MARKET DEVELOPING?

The decline in European graphic paper was 7.2 Mtonnes between 2010 and 2015. 62% of this drop was a consequence of the decline in advertising and circulation revenue for newspapers and magazines. The biggest decline during the period has been found in the segment, making magazine the largest segment since 2015 and hence greater than newsprint. However, the magazine segment is forecasted to decrease by 49% between 2015 and 20251.

Thousand tonnes EUROPEAN 10 000

9 000 PAPER DEMAND

8 000 BY END-USAGE

7 000

6 000 Magazines 5 000

4 000 Newspapers 3 000 Supplements 2 000 Books 1 000

0 Directories 2010 2015 F2020 F2025

1Forecast made by Numera Analytics

Between 2015 and 2025 the paper consumption for the magazine market will be halved.

3 During the period 2010-2015 the magazine market decreased, largely due to factors connected to the global recession in 2008-2009 and the European recession in 2011 and 2015. This in turn affected the advertising expenditures, especially for print advertising. It also intensi ed the structural issues of declining circulation and led to a weakened of ce paper consumption. Simultaneously, media and entertainment content saw a rapid increase in digitalisation.

Million US $ ADVERTISING 250 EXPENDITURE CAGR +16% IN US$ MILLION 200 CAGR +3% 2010-2018

150 Newspapers

100 Magazines

TV 50 CAGR -6% CAGR +2% Radio CAGR -4% 0 Internet 2010 2011 2012 2013 2014 2015 2016 F2017 F2018

Source: Advertising expenditure forecasts, Zenith Optic Media Sep 2016

Looking ahead, print media metrics for 2015 to 2020 is forecasted to mirror the development during the previous 5 years (2010 to 2015), meaning that for example newspapers and magazines will continue to see their advertising and circulation revenue decline.

DEMAND DECREASE Until 2020 demand is forecasted to decrease by 277 000 tonnes/year for mechanical magazine paper. That equals more than one per year.

France, Germany and UK are the three major European maga- zine markets. Looking at ten of the largest magazine segments DIFFERENCES (special interest, TV guides, yellow press, home, lifestyle and usiness) in the above markets, the development has been IN READERSHIP steadily declining. Comparing circulation for titles in these segments, during the rst half of 2010 to the rst half of 2017, & CIRCULATION the compounded annual growth rate (CAGR) was -8% in BETWEEN FR, Germany, -4% in France and -6% in the UK. DE AND UK

4 The ranking of segments varies between the three markets. In Germany, the biggest segment is TV guides, followed by yellow press and lifestyle, in France lifestyle is number one, followed by TV-guides and home. In the UK, yellow press takes the lead, followed by lifestyle and TV guides. Despite what many might think, TV-guides obviously matter, placing top three in all these markets and constituting a considerable part of magazine circulation.

This can in part be explained by the fact that many titles have expanded their scope; today many TV-titles include gossip on celebrities and “behind the scenes” specula- tions. Yellow press as well has a large market share over all, making it clear that consumers still like to read gossip in print despite all social media development.

CAGR% 5% CAGR FOR H1 2010 - H2 2017

1% Special interest TV guides Yellow Pages Home Lifestyle Business

-1,0% -3% -1,9% -3,4% -3,4% -4% -4,3% -4,1% -4,9% -4,9% -5,5% -7% -6,3% -6,8% -7,2%

-8,5% -8,7%

-11% -10,5% -11,5% -12,5% -15% GERMANY, FRANCE & UK - CIRCULATION OF 10 Germany France UK BIGGEST MAGAZINES Source: Z-online Oct 2017 (Germany), ACPM Oct 2017 (France), ABC Oct 2017 (UK) PER SEGMENT

Digitalization in the media and entertainment market is forecasted to continue to grow as a consequence of the increased usage of smart E-MAGAZINES phones and tablets for all age groups. The growth in e-magazines will be no exception and is estimated to have 125 million readers CONTINUE TO worldwide in 2021, a threefold increase since 2015. The EU smart- phone penetration rate is estimated to be 62% in 2017 and above GROW 80% by 2025, and tablet penetration 45% in 2017 and over 50% by 2025. This development has, and will continue to come at the expense of traditional media.

E-magazines continue to be dependent on advertising revenue.

5 Billion US $ DIGITAL 30 CONSUMER 25 MAGAZINE 7,52 REVENUE 20 6,47 WORLDWIDE

15 5,59 4,37 3,22 10 2,41

Advertising 5 8,17 9,15 10,24 12,13 15,04 18,73

0 Circulation 2015 F2016 F2017 F2018 F2019 F2020

Source : TechNavio, Statista, 2016

The total e-magazine revenue is forecasted to increase as well, with the main revenue source being advertising. This, in combination with the increased advertising in social media, has contributed to a steady decline in print advertising, which is estimated to have a CAGR -6% for newspa- pers and CAGR -4% for magazines between 2010 and 2018. However, the revenue for printed magazines is distributed quite evenly between circulation and advertising, where the latter contributes slightly more. For e-magazines, less than a third of the revenue comes from circulation, the rest is dependent on advertising. And even though e-magazines continue to grow, it’s still the revenues from the printed titles that continue to be the backbone in publishers’ portfolios.

6 This part of the report is based on qualitative interviews conducted by Holmen Paper with a total of 33 companies2, of which 30 were publishing businesses. At the time, 30 of the interviewed companies were based in Europe and 3 in the US. A number of 26 companies were then selected for further quantitative analysis, which was made based on comparable data from identical question- naires. Extra emphasis in the analysis phase was placed on France, UK and Germany since they are the largest magazine publishing markets in Europe. SHIFT IN BUSINESS MODELS

BUT ARE THE PUBLISHERS' CHANGES RADICAL ENOUGH?

The publishing market is undeniably a tough market, which INTERVIEWED can be con rmed with just a quick look at the past years’ development in circulation gures and print advertis- PUBLISHING ing. This notion is also validated by respondents at COMPANIES all of the interviewed publishing houses. A very 3 / U.S.A common reaction has been to reorganize to be better equipped to face a changing 1 / Belgium market. In most cases the change is 6 / Germany incremental; very few publishers 2 / Czech Republic have dared to do disruptive changes to their business model and hence organiza- tional setup. The question is if a gradual change is enough? 4 / Nordics 6 / UK

4 / France 4 / Netherlands

2The companies can be found at the end of the report. 7 Several publishers have changed their business models, often spurred by two factors; changed MARKET consumer behaviour and digital development. But perhaps these should be considered to be one and DRIVEN the same? One of the challenges mentioned by many publishers is to anticipate what the market wants and CHANGES subsequently get the upper hand on their competi- tors. With the rapid changes during the past years it is a challenge for almost all organizations, regardless of their business, to keep pace. Many publishers are additionally under economic pressure due to increased costs and declining readership, conse- quently it becomes a challenge to invest money to innovate. Very few of the interviewed publishers felt that they could afford to develop their business through trial and error - instead they have aimed to maintain what they have, in order to avoid the risk of losing business. ‘No risk, no gain’ is not an expres- sion you will hear frequently in the publishing industry.

The traditional business model, which up until the 21st century was the most common model, had the printed edition in focus and each title usually BRAND FOCUSED managed by one editor. The entire business was centred on the creation of each printed edition and BUSINESS MODEL this was the only mean of communicating with the consumers. On certain occasions a special print AND DEVIATING edition could be launched as an add-on under the same brand. For example a special interest maga- BUSINESS zine focused on football could launch an extra print edition dedicated solely to the upcoming world MODELS championship. Then came the internet which introduced a new possible channel to communi- cate through.

PRINT Printed title BUSINESS MODEL

Special print editions

Digital Website App Magazine

8 Publishing extensions

TV Magazines

Mobile & iPad BRAND Products & applications BUSINESS Services MODEL

Online E-commerce

Events

The development lead to creation of websites, Customer magazines are popular among business- magazines becoming available in digital formats es and they usually involve the contracting of a and eventually in apps for smartphones. However publisher or content management bureau to create all publishers’ business models didn’t necessarily the magazine. These types of magazines are seen change because of this. For some publishers the as very attractive among publishers since they are printed edition was still the focus of their business not dependent on circulation and sales in the same and the other channels simply became add-ons. way as regular consumer magazines, instead the Nevertheless, many publishers did revise their publishers can secure a yielding business. Compe- business models and a very common end result tition among publishers for these types of assign- was a brand focused model. This was the most ments has however lead to decreasing margins and common action among the interviewed publishers. there is no knowing when a business might decide As the name implies no particular media is in focus, to switch partner, making the income from custom- instead they are all modelled after the brand and er magazines a non dependable one. Regarding several editors are usually involved under one brand. license publishing, the publisher can take advan- The brand focused model has an extended scope tage of a well known brand to help generate read- compared to the traditional model, it can include ers. In many cases some of the content can also be activities such as e-commerce, branded products licensed which cuts down the burden of inhouse and of course online content. content creation. However royalties must also be paid, and in a highly competitive magazine market There are also some clear exceptions to the normal margins can often be tight. The publisher must also business models employed by publishers and the accept a centralized control over the brand, which customer magazines and license publishing. might not go hand in hand with their own national strategy.

CUSTOMER LICENSE MAGAZINES PUBLISHING

A magazine produced by a business in order to License publishing involves two parties: The licensor and communicate directly with their customers. Many times the licensee, where the rst grants the latter the right to for it can look like a consumer magazine, but it’s nanced example use a brand name for a speci c publication. by the business and free for the customer. The main Generally the licensee pays royalties for this right. For a focus of a customer magazine is to support a particular licensor it’s a way to increase the revenue stream with business objective; such as brand building, create minimum effort, and in turn the licensee buys into some- loyalty or to stimulate up- or cross-selling. thing they couldn’t have accomplished on their own.

9 In the three focus markets for this survey (UK, France and Germa- ny) we could identify some minor, but signi cant, differences DIFFERENCES between how the publishers managed their portfolios, for example looking at sales channels for the printed magazine editions. In the IN BUSINESS UK, newsstands are clearly the dominant sales channel and also where publishers placed a lot of focus on attracting readers. In MODELS Germany there was a stronger focus on increasing subscriptions as this is considered the most attractive channel. In France we could observe that many publishers used a different paper grade for subscription magazines than for the version sold in newsstands. This could be for instance through the use of a lower basis weight for the subscription magazine in order to achieve some savings on distribution, which is a huge cost for most publishers. Some publishers even used a slightly different paper grade to cut costs further. Another topic high on the agenda in France was the new Ecofolio tax which has a big implication on publishers’ costs and hence their bottom line.

ECOFOLIO What it is: A non-pro t environmental organization, private but approved by public authorities.

Three main missions: Encourage collection of paper and improving the collection system, driving the cost of collection close to zero and promote eco-design of paper products.

Impact on publishers: In 2017 the ecofolio taxation of paper was extended to include publish- ers as well. The basic tax is 56€/ton paper, but it can change depending on a number of factors.

Digital strategy was discussed with 24 of the interviewed publishers in this study and one of the rst conclusions was that DIGITAL this topic is dif cult for many. Out of the 24 publishers only 18 could be deemed to have formulated a clear digital strategy that EFFORTS ARE the company consistently acted on. This didn’t necessarily mean that they were focusing a lot of attention on digital; it could be an DIFFICULT FOR active choice to only work with some brands online while remain focused on the print edition for other. The six publishers which MANY were considered to lack clear digital strategy did in some cases work with offering their titles online. However this was mainly PUBLISHERS driven by an insight that they needed to be digital, but they still hadn’t clearly de ned why and how to work with this successfully for their different titles and brands. A vast majority of the publishers reported that they were having a tough time in monetizing their digital efforts. Readers are less willing to pay for online content and the advertising incomes are low since publishers are competing with online advertising platforms such as Google and Facebook.

10 We have tried to launch digital-only titles, but it’s too hard to create the brand. You need the support of the printed version to

create brand awareness. - UK Publisher

YES A clear digital NO OVERVIEW OF 18 strategy 6 THE PUBLISHERS' DIGITAL Majority of Majority of PROGRESS titles online? titles online?

YES NO YES NO

13 5 3 3

With circulation going down in basically all markets and segments, a given consequence is that the size of each print run has also decreased. As a result several publishers have chosen DIFFERENT to switch to heatset instead of the previously used rotogravure due to the diminished number of copies. Heatset is now the PRINT most commonly used print method. Titles with high circulation are still using rotogravure, but will generally only stay with that METHODS AND method as long as the economy of scale makes it the cheaper option. PURCHASING

Rotogravure is also sometimes spurned due to the longer lead CHANNELS time compared to heatset, something that some publishers have circumvented by using both heatset and rotogravure. This is especially common for large weekly titles where the editorial content is usually prepared well in advance and can be printed using rotogravure, while the news section is printed in heatset to make sure that last minute changes or additions can be made.

Many publishers mention that delivering the les for printing in time to the printer is one of their challenges, since there are always last minute changes and alterations that can compro- mise the deadline.

11 More than half of the publishers that were interviewed for this study bought their paper straight from the paper manufactur- er with no intermediaries. This also correlated with the size of the publisher and hence the annual paper volume that they MILL DIRECT purchased; the larger the volume the more likely the publish- ers was to buy straight from the mill. For smaller publishers PURCHASING the most common way to purchase the paper was from the printer and many times the printer also played an advisory More than 50% of the publishers buy role for the paper choice. They considered it to be a conve- their paper directly from the paper nient method and viewed switching to buying directly from manufacturer. the paper manufacturer as requiring more administration and higher risk for price increases.

The more high-end the title is, the more important the paper choice becomes.

In summary there are both internal and external challenges that most publishers are dealing with. We have mentioned the need to CHALLENGES innovate business models and adapt to new digital circumstanc- es – which also creates opportunities. The production process for PUBLISHERS the printed magazine has also been forced to change due to decreased circulation and the need to minimize risks. But there ARE FACING are two additional challenges which we also want to shed some extra light on; rising distribution cost and reliance on advertising.

Most publishers have to deal with the rising cost of distribution as well as logistical concerns. Less and less communication is being sent by regular post (intended to reach the consumers’ mailbox). So the xed cost of keeping up a working postal delivery system in each country has to be payed by fewer senders, resulting in increased postage. The number of delivery routes and the frequency of delivery are also affected, making it harder to reach all consumers. As a measure to keep distribution cost down, many publishers have chosen to downgrade their paper and go for a lower . But there is a limit to how far you can downgrade and many publishers are eager to nd alternative solutions.

Printed magazines are in many cases reliant on revenue from advertising. This has become more dif cult in recent years since you have to compete with digital advertising opportunities that are much cheaper. Hence publishers want to decrease their dependency on advertising, for example by increasing the number of subscriptions. Subscriptions are many times easy to stimulate by offering package deals that include a gift, however the challenge is then to keep the subscribers after the deal period since that’s when they start to become pro table.

12 To further analyse the three focus markets in this study (France, Germany and the UK), 80 consumer magazines were collected in each country. In total 240 magazines were analysed based on the amount of ads, text, pictures, cover, format, price and paper choice. The main objective was to identify similarities within each segment as well as look at how big the differences were between speci c markets. SELLING PRICE VS ADVERTISING

WHAT SETS THE PRICE OF A MAGAZINE?

FACTS ABOUT Average number of pages: 116 THE COLLECTED Average weight: 246 g Average price: See table MAGAZINES

Special TV guides Yellow press Lifestyle Home interest Business

1,4€ 2,0€ 2,9€ 3,9€ 4,6€ 4,8€

In general German maga- German yellow press COUNTRY zines use a slightly lower magazines on average paper quality. only contain half the DIFFEREN- amount of text compared French magazines include to French and British CES a slightly lower amount yellow press magazines. of ads.

13 Two segments that stand out with high selling prices are business and special interest. For both of these we can see that the amount of ads versus text is quite low, and looking at these types of magazines they are usually lled with high quality editorial content that readers are willing to pay a higher price for. Consequently the title doesn’t become so dependent on advertising revenues.

OVERVIEW OF 240 Magazines COLLECTED MAGAZINES 80 80 80

FR UK DE

High Variation = 20 per segment Home Special interest

Lifestyle Yellow press Low Variation = < 10 per segment Business TV guides

The analysis also included looking for a possible connection between the amount of ads in a magazine and the selling price. The below graph presents the ad/text ratio, i.e. the amount of ads compared to the amount of text; the higher the bar, the higher the amount of ads in the magazine in relation to the amount of text.

Ad ratio Price (Euro) 3 6

5

2 4

3

1 2

1

0 0 FR DE UK FR DE UK FR DE UK FR DE UK FR DE UK FR DE UK

Business Home Lifestyle Special interest TV-guides Yellow press

Ad/text ratio Price (Euro)

14 OVERVIEW OF COLLECTED MAGAZINES

% of magazine Price (Euro)

100% 6

5 80%

4 60% 3 40% 2

20% 1

0% 0 FR DE UK FR DE UK FR DE UK FR DE UK FR DE UK FR DE UK

Business Home Lifestyle Special interest TV-guides Yellow press

Picture ratio Text ratio Price (Euro)

Images are a vital part of every magazine; in the form of ads but also as an important part of the editorial content. Just consider a design maga- IMAGE AND zine without inspirational images, would you buy it? Actually, sometimes even the ads serve as inspiration and can be part of the reasons why you INSPIRATION buy the magazine. The above graph presents the average amount of editorial pictures and text in the different segments. The remaining amount up to 100% is represented by ads. Not surprisingly, the segment with the highest amount of text and least amount of editorial images is TV-guides, while the lifestyle segment has quite the opposite ratio.

TYPES OF PAPER

Looking at the paper quality used for magazines there were some distinct variances between the different markets. For example business magazines in UK generally used a whereas in Germany the majority were on uncoated grades. The exact same difference could also be seen for the yellow press segment. The home segment, however, was very similar for all three markets and also lifestyle showed low variations in paper quality.

In home and special interest the type of paper varies the most and many titles are trying to stand out through paper choice and image. A rustic matt paper can for example be used in a cooking magazine to enhance the feeling of healthy and hip food. Paired with a matt luxurious varnish for the cover the magazine can stand out from many other titles on the store shelf.

15 MILLENNIALS’ READING HABITS WHAT DO THEY WANT IN A PRINTED MAGAZINE?

One of the most frequently discussed target groups are the millenni- als; they are the biggest living generation and their potential buying power has not peaked yet since many are still in school. There are a lot of studies and speculations regarding what this generation wants, their habits and not least their buying behaviour. Millennials grew up during a time of rapid change and this has inuenced their needs and demands compared to previous generations. So what expectations and requirements do millennials have on printed magazines?

Although there’s a multitude of studies made about millennials, we could not identify detailed AN IN-DEPTH SURVEY data on their reading habits, or speci cally their habitual practice of reading different kinds of ON READING HABITS publications. So we decided to conduct our own survey through an independent third party research company.

Gender Count Percentage The survey comprises a total of 1 025 millennials, Man 509 50% born between 1985 and 2002, and in an equal Woman 515 50% distribution between the focus markets France, Other 1 0% Germany and the UK. It focuses on millennials’ magazine reading habits, and speci cally on the factors driving those habits. Therefore, we Birth Count Percentage considered it irrelevant to have the survey include 1985-1990 345 24% millennials who rarely, if ever, read magazines. 1992-1996 433 34% The results from the survey consequently reect 1997-2002 336 33% the opinions of those who read printed maga- zines several times a year, or more.

Occupation Count Percentage

Employed 466 45% Student 372 45% Other 187 18%

16 As outlined earlier, one of the qualifying criteria for the survey was a custom of reading printed magazines on a regular basis. Therefore, from the original selection of 1 331 77% of millennials, 306 were screened out. This means that 77% of the initial group do spend time regularly on reading printed millennials magazines, and 49% do this at least on a weekly basis; quite high numbers for what is often referred to as the digital read printed generation. The survey results also show that the older millennials (born 1985-1990) are more inclined to reading on a daily basis compared to the youngest millennials (born magazines 1997-2002). However, looking speci cally at those who read on a weekly basis, the distribution is more or less equal for all on a regular three age spans. basis. Daily 15% HOW OFTEN DO YOU READ Weekly 34% A PRINTED I.E Monthly 17% PHYSICAL

Several times per year 11% MAGAZINE?

Once or twice per year 9%

Never 14%

0% 20% 40% 60% 80% 100%

Millennials born 1985-1990 buy magazines to a higher extent than younger millennials who, on the other hand, are more OLDER prone to borrow publications from friends and family. This is logical since older millennials are more likely to have a paying MILLENNIALS job while younger millennials often are still in school and don’t BUY TO A have the same purchasing power. Looking at how millennials get hold of the printed magazines HIGHER they read, the most common way is to buy them in store. A quite large number also subscribes to magazines. The buying DEGREE behaviour is similar in all three countries but older millennials buy to a higher extent than younger ones. A connection could also be found between the respondents who answered that they read free copies at public places and HOW DO YOU GET what type of magazines that they preferred reading. Those respondents read lifestyle and culinary HOLD OF THE magazines to a higher degree compared to PRINTED MAGAZINES respondents who get hold of their magazines in THAT YOU READ? other ways. For the millennials who buy their magazines in stores, the most important criteria when deciding which magazine to buy is if they have read and liked I buy them in store 64% the magazine previously, closely I subscribe 35% followed by high quality editorial content. Aspects I read free copies 28% such as give-aways and at public places recommendations I borrow them 24% from friends/family were only consid- ered important Other 1% by a third.

0% 20% 40% 60% 80% 100%

17 Three out of four millennials who today consume printed magazines on a regular basis believe that they in the future will read more or in the same way as they do today. The results correlate with how much they read today; millennials that read more often today tend to believe to a higher extent that they will read more in the future and vice versa. The same result was noticed for the question how millennials believe that they will read digital magazines in the future; millennials that read more often today tend to believe to a higher extent that they will read more in the future and vice versa. IN THE FUTURE I WILL Read printed magazines in the same way as I do today 46% MOST Read more printed magazines than I do today 29% LIKELY...

Read less printed magazined than I do today 25%

Read digital magazines in the same way as I do today 42%

Read more digital magazines than I do today 41%

Read less digital magazined than I do today 18%

0% 20% 40% 60% 80% 100%

Three out of four believe they will read the same amount of magazines or more in the future.

E-MAGAZINE CONSUMPTION

28% of millennials read digital magazines on a daily basis and 32% on a weekly basis. Millennials who read physical magazines several times per year or more also tend to read digital magazines on a regular basis.

The most common reasons for not reading digital magazines are that people do not like reading on the screen and also that they prefer the feeling of a physical magazine. Many are also unwilling to pay for reading content online.

18 WHAT MILLENNIALS WANT IN MAGAZINES

Higher quality content (better articles and editorial content) as well as a lower price, are the two most important factors for millennials in order to read more printed magazines. These results are valid for all types of printed magazines in this survey even though the degree (percentage) between different types of magazines can differ slightly.

Higher quality content (better articles and editorial content) 45%

Lower price 43%

Better availability (free magazines or new purchase channels) 28%

Lower amount of ads 25%

More specialised titles corresponding to my interests 24%

Better offers on subscriptions 21%

More/better give aways 18%

More pages in the magazine 16% WHAT WOULD

Higher quality of cover and paper material 15% MAKE YOU READ PRINTED Recommendations from others ( friends, social media etc.) 11% MAGAZINES? Other 1%

Nothing 8%

0% 20% 40% 60% 80% 100%

Millennials to a high degree associate printed magazines with entertainment, information and relaxation. Printed magazines are for example considered relaxing by 42%, WHY while only 26% thinks the same for digital magazines. However online games, TV, streaming services and on- MILLENNIALS line video channels are considered to be just as relaxing as printed magazines. Many also consider printed READ PRINTED magazines to be inspiring, in fact just as inspiring as blogs and online video channels. It is clear that MAGAZINES millennials turn to digital channels both for inspiration and relaxation, but printed magazines are considered just as good. However digital magazines fall behind on both accounts, while digital magazines are considered to be equivalent to printed ones for information and knowledge.

19 Many publishers mentioned that making changes to the look and feel (haptics) of the printed magazine was considered DO MILLENNIALS quite risky. If they changed the paper it was usually a small change that consumers wouldn’t really be able to notice CARE ABOUT unless they compared it to the old paper side by side. Some types of titles were also considered extra sensitive to chang- HAPTICS? es. For example most high-end titles were expected to be printed on a sturdy, high gloss paper and it was out of the question to make any alterations. Since this was a big focus area for publishers, a part of the survey focused on the paper and cover material. About a third of the respondents reected on these aspects often when reading a magazine, while one third only did so very seldom.

Avarage

HOW MUCH The surface of the paper (gloss/matte paper/print) 37 35 28 3,1

DO YOU The paper quality within the magazine 34 34 28 3,0 REFLECT ON THE The cover material and binding of the magazine 39 35 26 3,1 FOLLOWING The thickness of the paper within the magazine 36 33 31 3,0 FACTORS WHEN The weight of the magazine 31 30 39 2,6

READING A PRINTED 0% 20% 40% 60% 80% 100% MAGAZINE? Often (4-5) (3) Seldom (1-2)

OTHER QUICK FACTS FROM THE STUDY

Lifestyle magazines are the most commonly read maga- zines followed by tabloid/gossip in France and UK. In Germany the second most popular type of magazine is AWARENESS automotive/sport/ shing. OF THE 41% of the respondents in the study associate printed magazines with entertainment. ORIGIN

The most popular time to read printed magazines is in a A majority of millennials claim that waiting room or at home during the weekend. they care about the origin of the paper used in a magazine. 15% Quality content is considered the most important aspect to check this most of the time and 28% create a good brand image for a magazine. check if it’s clearly visible. 21% don’t check the origin of the paper but assume that is comes from German millennials associate printed magazines with sustainable sources. Millennials in education to a larger extent than in the other countries. France are more aware of the origin of the paper than millennials in Millennials who consume technology magazines do to a Germany and UK. higher extent think that higher quality of cover and paper material would make them read more printed magazines.

20 SIX SEGMENTS COULD BE FOUND IN THE SURVEY RESULT

SEGMENT 1 Looking speci cally at the types of magazines Consumes all types of magazines on a daily consumed by millennials, and by means of basis. Attributes: Employed, city/urban, clustering, we could identify six different college/university. 9% of the target group. segments. They apply to a majority of the total respondents, 65%, and pair demographic SEGMENT 2 information with reading preferences. For Consumes tabloid/gossip, lifestyle, culinary on instance, segment number 2 represents 18% a weekly basis. Attributes: Employed, women, of the total number of respondents and shows higher representation in the UK than in France a reading preference on a weekly basis for gossip, lifestyle and culinary magazines. The and Germany. 18% of the target group. typical millennial persona in this segment is a female employee. We also noticed a slightly SEGMENT 3 larger representation in the UK compared to Consumes tabloid/gossip and lifestyle several France and Germany. times per year. Attributes: Students, women, 2 persons in household, more representation in the UK than in France and Germany. 7% of the target group.

SEGMENT 4 Consumes lifestyle on a monthly basis. Attributes: Students, women, high school/prof. school, higher representation in Germany than in the UK and France. 10% of the target group.

SEGMENT 5 Consumes automotive/sport/ shing on a weekly basis. Attributes: Men, city/urban, higher representation in Germany and less in the UK. 12% of the target group.

SEGMENT 6 Consumes history/science/travel/photography on a weekly basis. Attributes: Students, college/university, higher representation in France than in the UK and Germany. 9% of the target group.

21 Millennials born 1985-1990 buy magazines to a higher extent than younger millennials who, on the other hand, are more prone to borrow publications from friends and family. This is logical since older millennials are more likely to have a paying job while younger millennials often are still in school and don’t have the same purchasing power.

Looking at how millennials get hold of the printed magazines they read, the most common way is to buy them in store. A quite large number also subscribes to magazines. The buying behaviour is similar in all three countries but older millennials buy to a higher extent than younger ones. A connection could also be found between the respondents who answered that they read free copies at public places and what type of magazines that they preferred reading. Those respondents read lifestyle and culinary magazines to a higher degree compared to respondents who get hold of their magazines in other ways. For the millennials who buy their magazines in stores, the most important criteria when deciding which magazine to buy is if they have read and liked the magazine previously, closely followed by high quality editorial content. Aspects such as give-aways and recommendations were only consid- ered important by a third.

THE FUTURE OF MAGAZINES

As both consumption of printed maga- of the most important factors with the zines and investment in printed advertising possibility to create new opportunities for are heading south, we conclude that the publishers. Still the print magazine edition readership of magazines is declining. The is crucial. The traditional magazines that decline in magazine circulation has taken have been around for decades are those its hardest toll in Germany. The study who are easiest to maintain and convert to shows that the home segment has man- online. It’s more dif cult to start up a new aged best to resist declines in circulation magazine and build a brand amongst throughout Europe. Despite what many readers for both print and online. think, TV guides is the largest segment in Europe looking at the number of copies. It turns out that a large share of millennials The reason for this being the a trend read printed magazines on a regular basis toward more “gossip”-like content, thus despite all the digital advances. The driving offering a low cost alternative for readers. forces behind reading a printed magazine are especially relaxation, information and Many publishers have reorganized in order entertainment. Quality content is the most to adapt to new market factors and a lot of important factor when millennials are focus has been put on developing digital deciding which magazine to buy. The business models and reducing costs. survey results show that a majority of Paper choice is discussed more often and millennials who consume printed maga- is seen as a possibility to both save cost zines also read digital magazines, and that and differentiate amongst other titles. A lot digital mediums are to a high extent part of of publishers (mainly smaller sized) de ned their lifestyle. This emphasizes the impor- themselves in “wait and see” mode rather tance of publishers being able to reach this than taking a trial an error approach. For audience by using several mediums and many publishers a digital strategy is not channels. The printed magazine creates available due to the market rapidly chang- relaxation more than any other medium ing and online content being dif cult to and a majority of millennials believe that monetize. Many publishers try to they will continue to read printed maga- decrease their reliance on advertising for zines in the future, many also believe their their printed magazine and focus on consumption will increase. It is clear that increasing sales of single copies and despite the fact that millennials are a growing their subscription base. young and a digital generation the printed magazine is valued and has a place in their Developing titles/brands online will be one everyday life.

22 BEHIND EVERY TREE LIES A FOREST OF POSSIBILITIES

Holmen is a Swedish forest industry group manufacturing paper, and SOURCES AND wood products. INTERVIEWED Through owning our own forests, water and wind power, we secure access to renewable COMPANIES raw materials that are sustainable, exible and amazingly useful, especially in our devel- Bauer Media Group De Persgroup opment of innovative products for customer Burda VPRO with high demands. Neo Advertising Paper2Day Motorpresse Groupe Altice Media Our business area Holmen Paper offers Bonnier Lagardère Active Nollelva Mondadori France innovative products for magazines, retail, Aller OY Figaro books and news. We support businesses Fokus Media Hearst where the ability to save money and emissions Otavamedia OY Conde nast is as important as the ability to keep or boost Astrosat Media s.r.o Titan Publishing impact. With knowledge and experience we Empresa Media a.s Egmont Publishing Athlon Publishing Seven create new possibilities, and take responsibility Meredith Publishing Antalis for a sustainable future. Together we make the AMI Time Inc difference. Sanoma Media Readly Netherlands B.V. Åkesson & Curry Reshift Digital OTW Communication

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