The Swedish Press Market

1. The press market in Sweden
The Swedish media market is characterized by many newspapers and a high market coverage – to a large extent thanks to subscriptions dominating the market. However during the last years magazines have proved to be more successful, and in the last two years more than 150 new titles have been launched annualy, while newspapers have seen their draws fall, and the profitability decrease. For decades the domestic media market has been dominated by Bonniers, a privately owned company dominating most of the media sectors in Sweden; newspapers, TV, magazines, books and films. Bonniers’ strong position makes it possible to get a quick analysis of the Swedish media market only by looking at their balance sheets. In mid 90’s Bonniers’ main profit came from their Stockholm based newspapers; Dagens Nyheter, Expressenand the daily business magazine Dagens Industri. Today books and magazines are the main profitable areas, with film/TV in the third place. The former profitable newspapers are bleeding – mainly due to the success of the free daily Metro. Metro is owned by the media group MTG, quoted on the stock exchange. It is a group that has changed the structure of the Swedish media market since it entered the market 20 years ago. However, MTG has never been successful in the magazine market, despite many attempts. So far also the second largest media group in Sweden – Norwegian owned Schibstedt – hasn’t succeded on the magazine market either. Only in 2005 they managed to launch a number of successful supplements to the largest newspaper in Sweden, the evening tabloid Aftonbladet, which is only sold at newsstands. The supplements are distributed together with Aftonbladetand get an excellent display in supermarkets, which are the main sales outlets for magazines. The consumers pay extra for the supplement, and the price is usually much higher than what the evening tabloid costs on its own.

2. Structure
2.1 Publishers
So far the leading publishing houses have managed to keep their strong position on the market. Beside Bonniers, the market is dominated by the Danish publishers Allers (mainly family and celebrity magazines) and Egmont (leader on the comics market). The three publishers represent 3 out of the 7 billions of the Swedish magazine market volume. Unlike many other European magazine markets Sweden also has about ten medium sized publishers. Some of them are foreign publishers that have established their titles in Sweden during the last 25 years – IDG (1983), Hachette Fillipachi(1988), TTG/Cosmopolitan (1999). Many of them are connected to or are owned by large corporate groups, but work as independent publishers – Forma Publishing Group, LRF Media and OK Förlaget. There are also a few totally independent privately owned publishers of considerable size. The largest among these are Albinsson & Sjöberg, focussing on car magazines, Mentor focussing on special interest titles, the Plaza Group with fashion and home decoration magazines, and Frida Förlag with lifestyle magazines aimed at teenagers and young women. Despite the presence of many big publishing houses, it is the smaller publishers that stand for almost 50% of the 150 launches every year. The most important explanation is that the market has more or less exploded, and that the obstacles to enter the market are relatively low in the magazine business. The technical development has lowered the production costs and there are many companies willing to take on the advertising sales on a commission basis. The hardest issue for start-ups is to get a reasonable distribution to the retailers.

2.2 Retailer network
In total there are about 10.000 press retailers in Sweden. About 60% of the domestic press is sold through supermarkets. The main chains are ICA, COOP and Axfood. Petrol stations cover about 15% of the market, with the biggest chains being Statoil, Preem and OKQ8. Pressbyrån with its 300 kiosks have about 10% market share. For the international press market Pressbyran is leader with a share of 65%.

2.3 Distribution
The largest distributor in Sweden, Tidsam, is owned by the major publishing houses and has been heavily criticised by the smaller publishers who feel unfairly treated. Tidsam distributes approximately 300 titles (only domestic) and has at times introduced a total stop for new titles due to lack of shelf space in the retailer stores. Even when they accept new titles the demands for draw as well as start-up costs are very high, making it practically impossible for smaller publishers to get distributed. The competing distributor, Interpress, with a focus on specialized domestic magazines and international press is an option for smaller publishers. While Tidsam distributes to 9.500 retailers, Interpress distributes to 4.000. Interpress distributes both international newspapers and magazines as well as domestic press. In total they distribute about 2.600 titles from 100 international and 170 domestic publishers.

2.4 Ratio single copy sales vs subscriptions
It is paradox that newsstand sales matter less for the large publishers who own Tidsam than they do for the smaller publishers. The three dominating publishers sell their magazines mainly via subscriptions. The consultancy firm M&M estimates the revenue shares for all large magazines in Sweden every year, and their estimates in April 2006 show that Bonniers magazines get 43% of their turnover from subscriptions, 18% from newsstands and 40% from advertising. Egmont got 60% from subscriptions, 26% from newsstands and only 15% from advertising. A smaller publisher like Plaza on the other hand has 13% of revenue from subscriptions, 48% from newsstands and 38% from advertising. For the market overall 37% of the revenue comes from subscriptions, 19% from newsstands and 36% from advertising, while 8% are covered by membership fees (from membership magazines).

3. Market for international press
International magazines have shown positive sales trends and annual increases of 3-5% over the last five years. One of the reasons is that Swedes travel a lot and become more and more internationalized. Another reason is that the national store chain Pressbyran lays a strong focus on press,and makes a lot of groundbreaking marketing activities in order to increase the interest and knowledge of the magazine market. With an annual sales increase of 15% this has proved to be a successful investment. Sales of international newspapers are stagnant, mostly due to the internet taking over more and more of this market.

4. Future
The future for domestic press looks very positive. The newspapers have problems in the main cities where the free newspapers have affected their results, but on the countryside the profitability is still high, even though Metro’s growth over the country creates a lot of worries. Metro has not yet reached the profitable local advertising market. Magazines are very profitable, even though the competition has increased as a consequence of numerous launches. American and German publishers haven’t made any attempts to establish themselves on the Swedish market, while the number of license magazines has increased since Bonnier opened up with Glamour, National Geographicand FHM.

Author: Peter Fagerström, Managing director Svenska Interpress