Interview: Future CEO Stevie Spring on magazines' transition to digital, paywalls and the threat from piracy

TheMediaBriefing: Future Publishing CEO Stevie Spring on magazines' transition to digital - TheMediaBriefing

In the last few weeks on TheMediaBriefing has interviewed some of the biggest names in B2B publishing in London. But what about the multi-billion pound consumer space? Future is one of, if not the, most successful and durable UK-based specialist interest consumer mag publishers and is making the long hard road to multi-platform digital publishing with a suite of apps, sites and even games console based digital magazines, downloaded straight to your PS3 every week.

I met up with chief executive Stevie Spring - a week after the company's year-end results - to find out what's going on in her world. Watch the highlights video above and read a longer interview transcript below.

TheMediaBriefing: What health is the company in right now if we were to take a temperature check?

Stevie Spring: If you were looking at the micro-environment future you would be nothing but optimistic. Although if you look at the results for the year as a whole... global revenues were down just one percent, which in this environment is pretty good going; profits were up nearly 10 percent, debt down another 50 percent...

So the headline numbers are pretty good but if you split that between where we were at the half-year, it really is a game of two halves. In the second half of the year we saw proper revenue growth in both the UK and the US business which was very pleasing.

Particularly the two big areas we've been investing in - customer publishing, and digital: our customer publishing revenues were up 43 percent and digital, where revenues were up 30 percent for the second half and 14 percent for the year as a whole.

Do you have a target for what proportion of revenue you want to make from digital in 12 months?

No. I don't want that proportionality because all the other revenues have collapsed. that comes back to me being agnostic about where the revenue comes from.

Does that consumer confidence really hit you hard? Your magazines are consumer products after all...

I'd be careful on that. We're very lucky: we're a business that's made up of micro-business - we've got something like 150 P&Ls and we're not reliant on any single segment or product. If you look at our revenue streams, about 60 percent comes from the consumer pocket and 40 percent comes from client budgets in the broadest sense.

Newsstand, ad spend, some paid content in digital, some ecommerce... We're in a good place because we have diversified revenue streams.

You quote JFK in your last earnings release ("Time and the world do not stand still. Change is the law of life"). Is it right to talk of a revolution happening in your business?

We're now doing more than 25 percent of our revenues in digital - that's a big, big change. The web and the effect of broadband on every business, not just media, has been revolutionary. We are trying to steer the ship through these waters at a time when the pace of change in consumer behaviour and technology development is like nothing we've ever seen before.

Do you think the revenue will ever come back to print? What will the split be

I'm pretty much agnostic about where our revenue streams come from, providing the margin is appropriate. And in the digital space the theoretical margins are much higher because you've got a global audience and you are not reproducing content, you are delivering it each time.

We're already seeing margins over 30 percent in three or four of our websites so that proves that theory can turn into practice.

But I do think there will always be a place for the printed artifact. We are slowly entering an eco-system where some content is temporary - you just want to access it, and some content is permanent and you want to own it, if only for a period of time.

Is paywall the right word to describe your paid digital relationship with readers?

It's not a word that we use internally, I think it's been hijacked as a barrier to entry. We produce premium quality content and we are not afraid to charge a premium price for - our average cover price for our UK magazines is over £5.

The term has been hijacked by the news media and I am deeply, deeply sceptical about the ability of the UK news media to charge for access to news content. Good luck to them and God bless Rupert for trying and the others for following suit but it's very difficult when you are talking about absolute substitutability on the whole. When you've got BBC, Guardian, Sky News Loading... companies sky-news are all producing fabulous free content.

Has there been a challenge in changing the mindset of commercial staff in understanding digital?

So when people say to me, "how many people do you have employed in the digital piece of your business?" I always say 1,500, because everybody influences or is directly or indirectly involved with digital.

And when anyone asks who is the head of digital at Future, I always say "I am".

What are you most excited about for the company's immediate future, say for the 12 months ahead?

The strength of Future as a portfolio bet is that we're in lots of segments that are in growth and a tailor-made for increased leisure time. 50 percent of our revenues are in the entertainment space, we're in video games, we're in film - that's a good place to be and it's only growing.

This month the new World of Warcraft game will be the single biggest entertainment product in the world, ever, and that's in the same month that Call of Duty Black Ops launches. We're doing brilliantly in cycling, tech is in growth, guitar is in growth. So I'd rather be at Future than anywhere else.

And what's your biggest fear or threat?

The inexorable move to the digitisation of content has the downside risk of digital piracy and as long as we don't have the right to go to an ISP and get details of an unlawful site, that poses a huge challenge. What we don't want is the new tablets to become the new mp3 players and unlawful downloading (of magazine content) leading the way.

That's pretty high on my agenda of fears, but also establishing a model in new product development and recognising that the days of "cost plus" are gone, so it's no longer a case of saying it cost £10 to produce and therefore we'll sell it for £20; it's more about saying, the market with pay £12, so how do we produce it for £6?

I don't mean moving to a Demand Media type factory where you work off a base of slave labour, but we need to find different ways to produce, curate and commission content that makes the product affordable.

Stevie Spring is also chairman of BBC Children in Need - Pudsey was just out of shot in our interview. Go to www.bbc.co.uk/pudsey/donate if you feel like giving.