The Italian Press Market

The Italian press market has some characteristics that make it unique in the international context. Over the last few years the market has shown surprising rates of growth – despite difficult economic conditions. State regulations and contracts between distribution partners In Italy press products traditionally enjoy a special legal status. The trade with press is marked by regulations with the aim to promote the free dis- tribution/circulation of publications. The regulations give publishers the right to have each of their titles accepted for distribution. No partner in the distribution chain (national distributors, wholesalers and retailers) may discriminate one title in favour of another. In this regard there should exist no obstacles to the access to the market. Further, certain publications receive specific state subvention. Among those benefitting from this law are newspapers of political movements and linguistic minorities, but also publications by organizations and foundations of public welfare. Papers for the blind, and newspapers publishedor distributed abroad also receive financial support. The sales price of press products is set by the publishing house, and the retailer has no possibility to give any discounts. A new contract between the Italian newspaper association «Federazione Italiana Editori Giornali» (FIEG) and the major national organizations of retailers has come into force at the beginning of this year. For the negociations also representatives of the national and local distributors’ associations had been involved. This new contract allows the publisher extensive competences concerning the circulation strategy and regional distribution, as well as for all necessary marketing activities for its publications. It also regulates duties and responsibilities of the local distributors and retailers, the duration over which a publication has to be available, and directives regarding the opening hours of retailers and their holidays. In a separate part the agreement deals also with the economic conditions.

Products on offer
Traditionally the offer of press products is distinguished by the frequency of a publication. Newspapers (about eighty titles) represent 53% of distributed copies, andaround 36% of the turnover. Included in these figures are also by-products, about which more will be said below. The sector of magazines (just over 4.100 titles) is divided into weekly publications (representing a value of about 19% of the turnover and 16% of distributed copies), monthly titles (about 18% of the turnover and 11% of distributed copies), collectors’ items and products coming out on a irregular basis, that are sold together with music-CDs, DVDs or Videos (16% of the turnover, about 11% of the copies), and all other frequencies of publications (around 11% of the turnover and 16% of the copies). A recent phenomena has been the big success with sales of press products with additional items such as books, DVDs, videos or music-CDs (at a higherprice) for newspapers, weekly and monthly magazines over the last years. The reader has the option – for example with the magazine «Panorama» – to buy «only» the magazine, or to chose among up to three or four combinationswith additional products, at different prices. In 2003 and 2004 these new activities have grown with an average of 35% per year – and estimates for 2005 confirm the continuation of the trend. The factors for this success lie in the good relation of value for money, as well as in the ability – especially of newspapers – to meet the taste of their readers. Considering all frequencies and typologies of these products, their overall annual circulation reaches approximately 5 billion, generating around 1.75 billion unsolds.

Distribution structure
In Italy publications reach the retail outlets by two ways: - Publishers of daily newspapers are mostly in direct contact with the different local distribution companies. They make delivery plans, distribute to the retailers and take care of the returning of the unsolds. - Magazines usually work together with a national distributor, who takes over the contact with the local distribution companies. National distributors: Compared to the overall turnover, around 55% of the Italian press products find their way to the retailer this way. There are eight national distributors working in- dependently, while two were founded by publishers. Local distributors: There are around 180 local distribution companies, most of which cover the area of a province. Outside the main cities local distributors usually offer their services to all publishers and national distributors. Retail: In Italy there are about 40.000 retailers, all of whom are supplied by local distribution companies. Around 25% of them are newsstands and16% are in shops selling exclusively press products. 47% of the sales points also sell other products besides press, and about 4% of the retailers also organize home-delivery.

Press concentration in Italy
FIEG recently carried out a study on concentration in the press market. It shows that the three biggest newspapers make up for around 33% of the overall turnover (the ten biggest titles representing 61% and the twenty biggest titles 80% of the market). In the sector of weekly magazines 25% of the turnover are made with the main three titles (the main twenty titles controlling 50% of the market). There is significantly less concentration regarding weeklies, where the biggest three titles provide for only 6% of the turnover (the biggest twenty controlling 20% of the market).

Subscription
Distribution via subscription is very low in Italy. Only just 9% of the circulation of newspapers and about 23% of magazines are subscribed by their readers. The main reason for the weak development of subscription sales is certainly the not very reliable postal services. Publishers looking for subscribers have to advertise agressively, as they cannot offer acceptable on-time delivery. An exception is the business paper Il sole 24 orewith a very high percentage of subscribers – mostly delivered to offices in the main cities. Subscriptions have further gone down with the recent developments: the by-products mentioned above are more difficult to bring to the reader by subscription than at the newsstand. This makes the subscription market for the majority of titles strategically even less important.

Foreign press
Foreign press is usually distributed via the same distribution channels as national press. In big cities like Rome, Milano or Florence a high number of sales points get regular delivery of imported press products – in this case via specialized local distribution companies. In all other towns and provinces foreign press is normally distributed by the same local companies as national press – depending on the seasonal tourist situation and demand.

Current developments and initiatives in the retail network
For some time FIEG has promoted the computerization of the retail trade on the basis of a specially developed software. The aim is that people involved in local distribution get used to register sales in real-time on the same day and to proceed them. This should make distribution more efficient and bring down the number of unsold copies, as well as reduce the sell-out of titles before closing time (reducing the potential turnover). The Mondadori group has started a franchising project to promote the loyalty of retailers of newspapers and magazines, who also sell other products like books, DVDs, stationary and more. This is the first case of a retail «chain» in Italy, where historically no more than five newsstands could belong to the same owner.

Author: Renato Salvetti, FIEG