The Italian Market

The Italian economy has benefited little from the favourable developments in world trade and international finance, with the result that GDP in 2006 stagnated at 0.0% and exports continued to lose market share. Whilst medium to long term predictions point to an improvement, the outlook for growth is still lower than that of other European countries.

Despite the difficulties coming from the weakness of the Italian economy, periodical press performed very well both in terms of advertising and distribution in 2006. Paid circulation of weekly magazines increased by 2% year on year, with the average circulation per issue climbing to 17.6 million copies. Monthly magazines performed even better with an increase of 3.5% year on year and an average circulation of 24.7 million copies. There are just over 4,100 titles distributed in the Italian market. Weeklies represent 19% of the turnover and 16% of distributed copies, with monthlies about 18% of turnover and 11% of distributed copies. The rest is made up of collections (partworks, stickers etc) and all other frequencies of publications, including the large daily newspaper sector which forms the majority of distributed copies.

A recent phenomenon has been the big success of cover mounted books, DVDs and CDs which enable publishers to price their publications much higher than the average €3.95 price. In many cases, both a cover mounted and non cover mounted edition is available and this applies to both weekly and monthly publications. 2006 saw a 35% increase in this activity. There is much therefore for UK publishers to be positive about when considering Italy as a market for their titles, and this is further enhanced by the favourable legal regulations which apply to press.

State Regulations

In Italy, press products traditionally enjoy a special legal status which aims to promote the free distribution and circulation of publications. These regulations give publishers the right to have their titles accepted for distribution. No partner in the distribution chain (distributor, wholesaler or retailer) can discriminate against a title and no obstacles exist in accessing the market. Any publisher is therefore granted automatic distribution of their publication.

Distribution

In Italy, foreign press is distributed in two ways dependent on the nature of the title and quantity distributed. For the majority of foreign press, distribution is focused on the major cities such as Milan and Rome. In this case, specialised distribution companies, such as Intercontinental based in Milan, are used. Distribution is undertaken directly by the distributor who will select the appropriate retailers and deliver titles directly to the outlets. In this way, publishers can expect their title to be on sale in high destination locations both for tourists and the domestic market. This will include major travel points.

Publishers looking for a mass market distribution, with greater quantities, can work with a national distributor who is able to plan a distribution through approximately 180 wholesalers which criss-cross the country and distribute to domestic retailers, the majority of which are independent kiosks. Publishers should note, however, that national distribution may attract a distribution fee which is paid on every issue distributed. Publishers should seek guidance from their UK distributor on what type of distribution is suitable for their titles as, in addition to distribution fees, efficiencies vary greatly between direct distribution (around 45-50%) and national distribution (between 30% and 45%).

Retail

There are around 40,000 retailers in Italy, with approximately 10,000 selling foreign press. The majority of press retailers, around 95%, are made up of independent kiosks, all of which sell a wide range of press publications. This invariably leads to issues with availability and visibility, with many publications squeezed into the limited display area a kiosk allows. As retailers cannot refuse publications, many magazines are displayed on racks outside the kiosk or suspended on pegs from the ceiling. Other retailers selling press include small independent supermarkets, convenience stores and specialist outlets such as book and comic stores and specialist fashion and music retailers.

Fashion retailers are becoming more and more important for a number of specialist fashion and art publishers who see these outlets as a perfect fit for their titles. The majority of these retailers are located in Milan and Rome and will work closely with the local distributor to ensure high impact visibility, and promotional displays are organised during the major autumn and spring fashion weeks. Indeed, UK and international publishers will invest a considerable amount of copy and money in promoting their titles in these stores during these events, and will work closely with their UK distributor to ensure their on sale schedule corresponds with the timing of these weeks. As a result, fashion and music stores such as Messaggerie Musicali in the centre of Milan have sprung up as THE place to be seen for many fashion publishers during the fashion weeks.

Promotions

There are a variety of schemes available for publishers to promote their titles in the Italian market, from poster displays to merchandising activity; however, as there are no major chains to sell bespoke in-store displays, many of the promotional schemes available are invariably designed by the distributor who can charge what they want for the initiative. The majority of retailers are kiosks, and opportunities for promotions in these outlets are limited. As a result, mail outs, poster displays in specialist outlets and in town centres and merchandising activity are popular. A word of caution however; these schemes can be expensive and are rarely successful in delivering an immediate return for the publisher. Publishers should seek guidance from their UK distributor on what type of promotion is suitable for their title.

Foreign Language Editions

UK publishers wishing to significantly expand into the Italian market may wish to consider publishing an Italian edition of their UK title. The publisher would be treated as a domestic publisher and would attract domestic publisher terms which, in many cases, are more favourable than general export terms. VAT on magazines in Italy is 4%, one of the lowest rates outside the UK. Distribution would be through the national wholesale network, and, depending on frequency and volume distributed, may require the publisher to pay a distribution fee for each issue distributed. This is usually calculated on the number of copies distributed as opposed to the number of copies sold and so can be quite expensive. The publisher would also need to apply for an Italian barcode which, depending on the distributor used, can either be free or attract a small charge. Foreign language editions may not suit every title, so publishers should ensure extensive research is undertaken on the specific market sector by their UK distributor before deciding to progress. A key benefit to a publisher considering foreign editions is that many low growth sectors in the UK are developing fast in the Italian market. Hair and Beauty, Crafts and Fashion have all seen a significant growth in the Italian market in recent years and, with the quality of UK publications far exceeding those of the domestic market, a distinct opportunity exists for publishers willing to take a risk.

Sales Results

Whilst it is generally accepted that it can take up to six months for sales to finalise for any single issue in Europe, publishers may have to wait up to nine months for Italian sales to finalise. This is because, whilst the balance of power for distribution may rest with the publisher, a concession for the retailer allows them to make returns up to eight months after the issue comes off sale, and this concession is frequently used by the majority of retailers. This can be frustrating for a publisher trying to ascertain the success of their new launch or promoted issues, but, unfortunately, this policy is unlikely to change.

Subscriptions

Subscriptions make up around 23% of all magazines distributed in Italy. Domestic publishers tend not to offer this service extensively as, due to the erratic nature of the Italian postal service, publishers are unable to guarantee an acceptable on time delivery. As a result, the most successful subscription offers are those to offices in major cities which are usually undertaken by local distributors and independent companies.

Conclusion

Italy is certainly a country that challenges the publisher to think about how to develop sales of their magazines. The predominance of kiosks in the market makes it difficult for publishers to ensure that their titles are easily available and clearly visible, and the lack of promotional schemes to drive sales and an uncoordinated approach to distribution are certainly barriers that need to be overcome in order to be successful. However, the Government has recognised this and has imposed regulations that have favoured the publisher and encouraged the market to be inventive in its approach. Publishers willing to go that extra mile will be rewarded with a growing industry populated by exciting sectors. Just like a fine bottle of Chianti, the rewards are gained by carefully tasting the market and savouring what it has to offer.