Carel Limburg, President - Asia, Axel Springer AG, Axel Springer International
"We are very interested in India, otherwise we wouldn't be here. India is a complex country with various religions and languages. Entering Indian market primarily requires finding a very good partner who has some local knowledge and understands each market. Given the additional complexities in India, I think we have to go in with a partner."
Carel Limburg joined the German media house Axel Springer in September 2001, initially as VP-International. In August 2004, he became President South-East Asia and moved base to Shanghai. He developed Axel Springer's Asian business particularly in China, Japan, South Korea, and is now looking at India.
Limburg has worked in consumer magazine publishing for over 22 years. He started his career with the Dutch-based Media house VNU in 1984, as a sales representative at Medianet, a subscription house. He became sales manager of VNU's magazine business in 1987; in 1989 he was appointed Marketing Manager for several women’s magazines at VNU-illustrated Press Amsterdam.
After VNU acquired publishing houses in Central Europe, Limburg moved to VNU Czech Republic as Sales & Marketing Director at Mona Publishing House in 1992. In 1996, he was appointed General Manager & Publishing Director at Erasmus Press/VNU-Hungary and General Manager at VNU-Hearst Romania. During his career, Limburg has launched over 15 magazines and became particularly skilled in restructuring processes, change in management and setting up of teams from different cultural and professional backgrounds.
In a wide-ranging interview with Sumita Patra of exchange4media, Limburg shares more about his company and its global and India plans. Excerpts: Q. What kind of attributes you would be looking at while choosing your partner?
The same, if we have to do licensing or enter a joint venture. We always question whether we want to have a small partner and have a lot of influence or do we choose a big partner and obviously then have less influence. In the case of India, we want to have a big partner who has knowledge and expertise in the market. We have discussed on products that we can launch together, not specifically magazines from our portfolio, but magazines that would be of interest to the Indian market. We talked about it with a lot of people and we have selected people who are willing to bring these types of products with us.
Also, Indian publishers are looking at the potential of international partners, in terms of their expertise, certain knowledge, which they can bring which is helpful for the industry. I think it's not only about money, the partnership is about marriage and that's long term. Fortunately, there was an Indian publisher who liked Axel Springer probably because of its portfolio structure or its people. If people like each other's view, I think that's a very big step forward in a corporation.
Q. Can you share a bit about the future plans of the company as a whole?
Q. You mean slow and steady wins the race...
Q. Which are the other markets you are looking at in terms of the licensing business?
Potentially the entire world. There are three major elements in the licensing business: newer type of concept, newer type of content, and brand. If you look at Auto Bild, which currently has 29 editions, it was called Auto Express in England, Auto Week in Holland and so on. We wanted to come out with new editions of Auto Bild, hence, Auto Bild Finland, Auto Bild Bulgaria, Auto Bild Hungary, Auto Bild Thailand, Auto Bild Spain, Auto Bild Japan and so on. The content that Axel Springer uses in Germany can be used in other countries too.
If we want to take Auto Bild in the United States, we have to see it differently because a car manufacturer in the US cannot use the same content. We have to build up new expertise in the US, so it doesn't really make sense to do a licensing over there. In China, Japan and India this would make sense as these countries have many German cars, which appeal to the same platform. That's why magazines like Cosmopolitan, ELLE or magazines related to fashion and beauty are much easier to launch in other countries because there is a global market for fashion, beauty, lifestyle and trends.
Q. Axel Springer is one of the largest newspaper and magazine publishers in Germany. Tell us more about your company.
Q. Tell us something about the partners with whom you are in discussion...
Q. Axel Springer as a company publishes a lot of niche titles. What do you think are the factors behind the growth of niche titles?
Axel Springer also publishes mass magazines. I think a magazine becomes mass if it sells more than 100,000 or 200,000 copies. I think a special interest magazine for hobbyists could be a successful niche publication. People look for titles that are specifically meant for them. With the influence of television, radio and of course Internet people are looking for greater number of magazines, which they can identify themselves with.
In the long run I also think that mass publications will go down and niche and special interest publications to go up. See the newspaper trends, newspaper circulations tend to go down. But there is an economic law: the moment you have niche or special interest publications, the cover price is 2-3 or maybe 4 times higher.
Q. Since you are contemplating to enter India in a partnership, by when do you think it will materialize?
Q. As a company what kind of vision you have set for yourself?
Q. What kind of business model are you going to adopt in India?
Q. You said that India is a complex market still you are interested in this market?
Q. How do you compare the readership of Indian readers vis-a vis their German counterparts?
Q. Five years down the line where do you see your company headed?
Q. What kind of opportunities do you as a company see in India. What are your plans for the Indian market?
Q. What kind of implications do you see for foreign publications who contemplate getting into India with a partner?
I feel it just hinders foreign investments. If you look at Axel Springer, we have corporations in Poland; in Hungary we also have newspapers, which we didn't have two years ago. It's around then we launched Auto Bild magazine in Poland, which became extremely popular. Our second newspaper has been launched in Poland which has been very successful and based on that success Springer is thinking of launching further newspapers in operations where we are active and that involves tens of millions of dollars of investments.
Now just imagine if we think that India would be the perfect country to launch a newspaper like this because we have such experience in other countries and that would involve investments of another 50-80 million euros. Because of restrictions, we cannot invest that much amount of money. If we think that there is no real partner to collaborate with us then we would not make that investment, which means the foreign investment gets limited. The same applies for China too. It simply limits investments as far as media is concerned, you have to live with it, and you cannot change it.
I really think there is a market for Indian publishers outside India, they have got the knowledge of dealing with religions and complicated structures which other Western European countries don't have except for Middle East. So if you want to be a global player, at least you have to start exporting your knowledge and media expertise and of course you have to live with the regulations also.
Q. So the licensing business is actually operated through partnerships?
Let me start with the history of Auto Bild to give perspective as to how our licensing business works because in newspapers it's very difficult to license. Auto Bild is an automobile magazine that was started 20 years ago. Germany is a car-based economy. Twenty years ago there were lot of magazines available on cars but there was no real magazine, which supplied objective information on cars.
When Auto Bild started testing cars, the content was credible, good and less expensive to generate that neighboring countries began asking for that content. Italy was the first country to show interest in buying the test reports followed by Poland. Then Springer thought of doing a syndication agreement, which is not just selling content to a local partner wherever, but it's also about licensing our products that is more than just content. It's a closer corporation than just a syndication agreement. That's how Axel Springer started to license part of the magazine.
Q. How much does the licensing business contribute to your entire business portfolio?
Well it's not lots as it's not our core business. Our core business is making magazines ourselves. In the licensing business you normally get 30 per cent of the revenue from that specific magazine and that percentage of revenue will never outpace if you sell a weekly magazine. Auto Bild in Germany currently sells slightly less than 700,00 copies on a weekly basis.
Licensing is a way of growing business; if you have got licensed products you also get knowledge about other countries; and if there is an interesting product you can also license that product to your own operation or to a joint venture and this is how you can start your own business eventually in other countries. It's just a model to grow.
Q. The Indian media industry, though buzzing with a lot of activities, has to grapple with regulatory issues. What is your take on that?
Q. If you were to change certain regulations proposed by the government, what are they going to be?
Q. How does this licensing business work?
Q. What is the difference between special interest magazines and niche magazines?
