Canadian Magazine Industry News
10 November 2008,     TORONTO
Highlights from the OMDC study of Ontario magazines

A government investment of $20 million is necessary to keep the Ontario magazine industry stable and growing, according to the authors of A Strategic Study of the Magazine Industry in Ontario, a report commissioned by the Ontario Media Development Corporation and prepared by TCI Management Consultants. The best way to pump the money in, the authors argue, is through tax credits, which already benefit all other creative industries in the province.

The report authors recommend, “any new funding…should focus on upgrading content.” An additional $20 million of funding in this area would, among other things, lead to more jobs. Currently there about 9000 magazine jobs in Ontario. “If content expenditures were to rise by top $40 million (assuming the industry matches government funding),” the report says, “it would not be unreasonable to expect a roughly proportionate increase in employment, i.e. up to 1800 new jobs.”

According to the report, Ontario’s magazine industry is worth about $1 billion, or about 57% of the total Canadian market.
 
The report lists four “barriers to growth” facing Ontario magazines:

  • Slim profits.  Average pre-tax margins are 10.5%. This number is  also deceiving—it masks the fact that the top ten Canadian publishing companies, which account for 82% of profits, have average margins around 15.9%, while for the remaining companies, average margins are 4.5%.
  • Limitations on increasing revenue. Canadian magazines attract 6.9% of total adspend in the country, compared to 14.9% for U.S. magazines and 12.6% for U.K. magazines.
  • Vulnerability to cost increases. Canada Post’s implementation of distance-related pricing is one example. The rising cost of paper is another.
  • Limited access to capital. Several publishers cited the fact that, because of foreign ownership rules, Canadian magazines can’t be sold to U.S. companies. This severely limits investment from abroad.

An extensive section delving into the topic of magazines online makes it clear that few publishers believe the Web to be a pool of gold:

"There is no consensus around how magazine publishers can derive revenue for their investments in the Internet, beyond certain benefits in terms of marketing and promotion."

Those benefits, however, shouldn't be downplayed too much:

"Every publisher interviewed operates a website. All recognize that it is an essential promotional tool for the magazine: both readers and advertisers expect to be able to find magazines on the Internet, and a website, once created, can be used effectively to promote both the print product and the authority of the magazine itself...between issues....The Internet offers a cost-effective way to manage subscriptions and renewals, one that is both efficient and much less expensive than the paper-based alternative. Some publishers have also been able to create loyal online communities by extending their Internet presence to tools, such as social networking and blogging, that encourage readers to interact with one another and, incidentally, with the editorial staff."

And despite the many challenges, there is plenty to be proud of, including the Canadian industry’s continuing success in staving off foreign competition:

“Magazines have been strikingly successful in retaining and increasing their hold in the Canadian market, despite strong competitive pressure from foreign, particularly American, periodicals. US circulation spill has been declining, from a level of 8.5 million in 2000 to 7.7 million in 2006. The circulation per spill title declined from 15,716 to 13,664 over the same period. Canadian magazine publishers have a significant share of the domestic market with some 41%. This is much greater than most other homegrown creative industries, such as English language film, which has less than 2% of the Canadian market.”
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