"I feel like it's just really barely keeping ahead of the overall market," said David Moss, a director with the entertainment and media practice at PricewaterhouseCoopers. "The fact they're still focused on the more basic current model even though the world is changing is still just amazing to me."
Up 1.5% this year
Consumer magazine revenue in the U.S. will expand by 1.5% this year, 2.3% next year, 3.1% in 2009, 3.3% in 2010 and 3.2% in 2011, according to the report. Ad revenue will grow more quickly than circulation revenue, with 2.8% growth expected in 2007, for example, while circulation revenue slips 0.2%. In 2011, the forecast predicts magazine ad revenue will jump 4.2% but circulation revenue will increase only 1.8%.
In dollar terms, consumer magazines should expect about $24.2 billion in total revenue this year and $27.2 million in 2011, the report said, for a 2.7% compound annual rate.
"These are big numbers," Mr. Moss said. "So I'm not in any way negative on it. It just seems like there's a slower uptake in moving toward digital than I would have expected."
The report includes some bright predictions for consumer magazines in the U.S., including the suggestion that better readership metrics will -- eventually -- make magazine audiences more readily comparable to TV audiences, facilitating the incorporation of magazines in overall ad campaigns.
"Magazines may also benefit from a possible shift in pharmaceutical advertising from television," the report says. "Pharmaceutical advertising in magazines has been one of the stronger categories, and magazines face less scrutiny than television does, because the print format permits more information to be provided than does a typical 30-second TV ad."
But the business still has its undertows to battle in the next few years. "While we expect these developments to have a positive effect on revenues and performance over the long run, in the near term, declining circulation rate bases and magazines closings will adversely affect the market," PricewaterhouseCoopers wrote. "Cutbacks in domestic auto advertising will also hurt the market and in contrast with prior years, so fewer major magazine launches are expected."