Via TBI Research
Magazine industry advertising revenue declined an average of 12% the past 2 years (18% in 2009) so most magazines need to reverse revenue declines while managing costs or face the real prospect of going out of business if the bleeding continues.
Some believe the iPad will enable magazines to reverse course in the near-term, but we believe these expectations are way off the mark. In particular:
- It’s going to be years for mobile ad revenue to become material.
- As a result, in the near-term magazines will need to look to subscription revenue to drive incremental profits.
- But, even if iPad sales wildly exceed expectations and users rush to purchase lots of magazine subscriptions (we don’t think they will), this will not be enough to drive meaningful revenue at most magazines.
EVEN IF IPADS FLY OFF THE SHELVES MAGAZINES WILL STILL ONLY REALIZE A SMALL PERCENT OF THEIR OVERALL PRINT REVENUE