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section heading icon     overview

This note considers the 'colour pages' telephone directories and online search business.

It covers -

The following pages consider issues such as intellectual property aspects of directories, their future and directory mergers & acquisitions.

The note supplements discussion elsewhere on this site regarding telecommunications, privacy, the IPND in Australia and online search.

section marker     introduction

The 'colour pages' sector is of interest as an offshoot of - and often a major revenue earner for - traditional telephone companies such as Telstra, BT and Verizon and independent publishers such as VNU, Mediaset and Hearst or private equity funds such as Apax.

It is of interest as an illustration of change and continuity in information seeking and publishing.

Some observers for example claim that the major directories are doomed. Others argue that they will compete effectively with global/regional online search services such as Google and Yahoo! for years to come.

The sector is also of interest as an illustration of tensions within national intellectual property policymaking and practice. The US for example (in the 1988 Feist decision) gives significantly less protection for directories than is available under Australian law (eg in the 2002 Desktop Marketing Systems case).

Printed colour pages directories (and their online extension) feature categorised telephone and address information about businesses and other organisations within a particular geographical area.

The categorisation is typically by subject. That subject classification generally does not use industry/functional codes established by government statistical agencies or industry organisations. Geographical coverage typically, but not necessarily, reflects a telecommunications service area. Examples include cities and regions.

The directories are commercial services, with revenue generated through payment for the inclusion of contact information rather than by selling copies of the directory to consumers or charging consumers for electronic access (on a subscription or sessional search basis). Many directories provide contributors with opportunities to place advertisements, of differing sizes/formats, in addition to the ordinary contact information. Such advertisements may feature an organisation's logo, other graphics and additional text. Most publishers publish directories annually, with free distribution on the basis of a copy per fixed phone line.

Colour page directories (which are often printed on green or pink paper rather than paper with an egg-yolk hue) are thus distinct from those directories that are traditionally printed on white paper. The latter generally comprise all 'listed' telephone numbers for a particular service area in a standard format and alphabetical order rather than by subject.

Categorised 'trade' directories of organisations predate the telegraph and the telephone, reflecting the preparedness of businesses to pay for inclusion in a published listing and/or for consumers to pay for a copy of that listing. That is unsurprising for readers of Coase and Chandler about information/search costs. German and English trade directories from before the French Revolution included guides to shipping and insurance brokers and to establishments of ill repute.

Contemporary colour pages directories are an extension of those trade listings, leveraging information that is maintained by telephone network operators in the course of their business or that is independently collected by publishers from individual organisations.

section marker     the market

Although directory publishing - and directory printing - have a lower profile than the production of books, magazines and newspapers they comprise an industry with substantial revenue.

Simba Information for example claimed in 2005 that the global colour pages market grew 3.5% to US$30.41 billion in 2004, with telephone directory advertising revenues in 27 leading countries accounting for an estimated US$28.74 billion of that figure.

The top ten nations (US, Japan, UK, Italy, Australia, Canada, France, Germany, the Netherlands and Spain) accounted for 85.9% of the global market. The US alone, with revenue of US$15.49 billion, accounted for 50.9% of the global colour pages advertising market in 2004. Australia was supposedly the fastest growing market (with revenue up by 11.2%), followed by France (up 7.1%) and by New Zealand and Peru (6.8% each).

The Kelsey Report estimated global revenue for 2004 at US$28.9 billion, claiming that the industry employed over 73,000 people worldwide. In 2003 Kelsey suggested that the industry "remains tremendously profitable", generating an estimated US$10 billion in earnings before interest, taxes, depreciation and amortisation (EBITDA) on US$25.4 billion revenue. In Canada the Yellow Pages Group boasts profit margins of nearly 58%.

Revenue growth appears to reflect the capacity for publishers to increase charges rather than fundamental growth in the size of readership or more intensive use of the printed pages.

Inclusion in colour pages directories has been a major (indeed often the only) advertising mechanism for many small and medium-sized enterprises that draw most of their custom from a particular region and that might not be readily identified through the 'white' directories. That has meant the directory sector has often been less affected by economic downturns than other media, with publishers enjoying economies of scale, repeat business and perceptions among advertisers that inclusion in a particular directory is essential.

The 2004 Competition & Price Discrimination in Yellow Pages Advertising paper (PDF) by Meghan Busse & Marc Rysman notes that US local businesses value colour pages advertising

because customers are exposed to it at exactly the time they are poised to buy. Size, color, placement, and graphic design all contribute to the effectiveness of a Yellow Pages ad, although industry participants disagree over which elements generate the greatest return on investment for advertisers

section marker     the industry

The colour pages sector encompasses independent publishers, which often operate in several regions and countries, and telephone companies. The latter restrict their directory publishing to locations served by their networks.

In Australia, for example, Telstra dominates the market with colour pages produced by its Sensis subsidiary. In Britain the market is contested by specialist directory publisher Yell - which originated as a spin off from British Telecom (BT) and has expanded internationally - and by other entities, including BT's new directory arm.

In the US there is competition between independent publishers, the heirs of AT&T (such as Qwest and Verizon) and telephone service providers that are not affiliated with an RBOC. The independent publishers include companies whose operations were spun off from or sold by network operators or that launched competing directories, particularly after Feist confirmed perceptions that the market was open.

Several of the telco and independent publishers have expanded internationally. Most, as discussed below, are offering online versions of their directories.

Two examples are VNU and Eniro; others are highlighted in the following page of this note, which discusses recent churn and consolidation across the sector.

Netherlands-based publishing giant VNU, prior to late 2004, was the largest colour pages publisher in Europe. It was active in the Netherlands, Belgium, Portugal, Eire, Romania, Puerto Rico and South Africa with over 115 telephone directories. It enjoyed a market share of over 50% in the Netherlands and around 90% in Belgium, Portugal, Ireland, South Africa and Puerto Rico. In September 2004 VNU sold its VNU World Directories arm to Apax Partners and Cinven for €2.1 billion.

Eniro, a spin off from Telia (the Swedish counterpart of Telstra) published around 750 directory titles in 2004, operating in 22 countries. It boasts that Gula Sidorna, Sweden's dominant colour pages print directory and online service, is used by 97% of the population.

Expansion across regions reflects consolidation with the network industry, with the US RBOCs for example progressively engulfing each other. It also reflects economies of scale and ready access to funding, consistent with perceptions that publishers will continue to enjoy strong cash flows and that ongoing investment requirements are low once a market entrant has surmounted substantial initial barriers (eg brandbuilding, distribution and data gathering).

Busse & Rysman note that in the US the 'median person' is served by two directories from two separate publishers, with over 15% of consumers being served by three or more publishers. The US telco directories - like the Telstra colour pages - typically dominate their markets (with higher prices and sale of higher numbers of pages).

section marker     Australia

The Australian colour pages market has been dominated by Telstra, most recently through publishing by its Sensis subsidiary, although a range of businesses publish competing local trade guides.

In 2005 Sensis announced plans to double its revenues within five years to around $3 billion without sacrificing margins. At that time the printed directory, on paper of a distinctive colour, accounted for 60% of Sensis revenues; the aim is to reduce print revenue to 40% through a "diversified digital portfolio" that includes eBay-style transactions.

Sensis had accordingly acquired Universal Publishers (responsible for the UBD and Gregory's printed street map directories used by many Australian motorists), the 'Trading Post' classifieds group (for around $600 million) and expanded into online recruitment. In 2002 revenues rose 2% to $1.7 billion and contributed around 10% to Telstra's earnings before interest and tax.

Readers of this page should note that comment in this and the following pages regarding particular information products from Telstra and other entities is made on a scholarly basis. That comment necessarily refers to products and services that are subject to trade mark protection in Australia and overseas. It is made on the basis that readers can at all times reasonably differentiate the trademarked entity and this site's references to those entitities. This site does not feature a business directory of whatever colour.

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version of October 2007
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