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The Rise of Digital Publishing – The Inflection Point

The Financial Times Group achieved revenues of £449 million (£443 million in 2012) with profits of £55 million, an underlying increase of 17% year-on-year. This was driven by strong growth in digital and content businesses and improved print circulation margins which more than offset weak advertising.

The Financial Times 2013 financial results reveal some interesting trends:

  • Print declines, printing plants are being closed as 55% of revenues are now from digital services, compared with just 31% in 2008.
  • 63% of revenues originated from content sales compared to 48% in 2008
  • Advertising accounted for 37% of FT Group revenues is down from 52% in 2008.
  • Digital subscribers are 415,000 of a total 652,000 across print and online, or two-thirds of paying audience, an 8% annual increase.
  • The FT claims that its subscriber base is now the highest since in its 125 year history.  It saw a 60% increase in corporate users’ subscriptions. The FT embarked four years ago on a strategy to reclaim its enterprise customer relationship from aggregators

Mobile is an increasingly important channel for the FT, driving 62% of subscriber consumption, 45% of total traffic and almost a quarter of new digital subscriptions. The FT’s flagship web app now has more than 5 million users and new FT apps on Google Newsstand and Flipboard have strengthened our mobile offering. Other innovations, including launching 24-hour news service fastFT, redesigns to mobile apps and improvements to FT.com, have helped significantly increase overall digital engagement.

The FT continues to expand its executive education business. FT in Education products, including annotation tool FT Newslines, are now used by almost 300 education institutions, including 37 of the world’s top 50 business schools. The FT launched its Non-Executive Director (NED) Diploma in Hong Kong. More than a third of NED enrolments are now outside the UK.

Outsell’s Affiliate Analyst Ken Doctor states in his recent Outsell Insight that the efficiency of the FT model, while nascent, is highly noteworthy.  The move from print to digital is inevitable, however most publishers are far from the crossover point that the FT is reaching.  On average, most publishers can only point to 15% to 25% of their businesses as truly digital. It isn’t until a crossover, around a 50% point, that legacy costs can be more effectively jettisoned.

Source:  Financial Times and Outsell Inc.

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