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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.
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.
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
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).
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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