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Publishing Express: The Impact of
Publishers Acknowledging Online Dominance |
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18 September 2006 |
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The time for puffery and posturing about print's power and
supplemental online revenues is officially past for many
publishing companies, yet many of those same companies have
failed to assemble a coherent strategy that will take them
forward into an era of online-dominant revenue models. The
latest market statistics point to an environment that will
not favor those who have not prepared to make that
transition. Getting content into context, going toe to toe
with private investors and building management that thinks
like digital natives are the keys to jumping on a train
just about out of the station. |
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The
ASIDIC Fall Meeting in Newport Beach, California had lively
discussions amongst industry veterans and a range of
up-and-coming companies that hope to represent the future of
publishing (you can catch up with our detailed coverage
here). Probably the most remarkable aspect of the event,
though, was the recognition that the forces that are shaping
publishing into an online-centric and user-driven model seem to
have reached the point of no return in 2006. There were many
discussions about how publishers ought to play with Google, for
example, but there was little discussion of whether or when
publishers need to play with Google: it's learn how to play
with or to position against Google and other search engines now
or move along. Discussions of social media have gone from a "is
it serious journalism" or "will it ever be profitable" vein to
recognizing that it is becoming a dominant force in many
sectors.
Several key statistics and events that have surfaced in the
last week alone serve to underscore the finality of this shift:
- In a recent
survey from GlobalSpec of engineering, technical and
industrial professionals 82 percent reported using the
Internet for research, compared to 68 percent a year ago; 90
percent use the Web for obtaining product specifications and
91 percent use it to find components and suppliers.
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The New York Times notes that online classified
advertising was 47 percent higher in July 2006 than a year
earlier, with the
Craigslist online classifieds service nearly doubling in
that period.
- According to a recent
KnowledgeStorm survey 53 percent of business and I.T.
professionals globally read weblogs weekly for business
information, with nearly half contributing comments to
weblogs at least once a month.
- While
Internet World Stats reports that the overall penetration
of the Internet has leveled off in the U.S. since last year
(U.S. broadband access went up 40 percent in the same period)
it is up ten percent in China in the last three months,
helping to bring Internet penetration of the world's
population to more than 16 percent.
This list leaves out other ongoing trends such as major
holders of magazines, newspapers and radio and television
stations divesting themselves of underperformers as their stock
holders become increasingly impatient. It appears that
publishers and media companies have acknowledged that the
online train is leaving the station for good. But knowing this
and being willing or able to do something about it are not
necessarily the same thing.
How to invest in markets that grew up without major assists
from existing publishers is a quandary for many established
companies. Buying from traditional institutional libraries has
moved from being a USD 25 billion market segment at its peak to
a USD 16 billion segment today, according to
Product
News Network's Publisher Paul Gerbino at the ASIDIC
meeting. This was a factor in PNN parent Thomas Publishing's
decision to terminate the publishing of the venerable print
edition of its product directories popular with libraries -
even though the print directories were still a profitable
product line. The time had come to invest in the present and
the future of markets that were moving away rapidly from their
traditional business model - before they disappeared into the
hands of new competitors altogether.
Strong publishers may have the wherewithal to invest in such
changes, but a few key factors argue against them in the long
run:
- Pushing the value of content over context. Most
publishers are still focused on the traditional editorial
process which assumes that high-quality editorial content
developed in-house will attract the lion's share of client
investment in content, be it through ads, subscriptions or
purchases. But a new world of content driven by search
engines, users and enterprise applications placing editorial
in its most valuable context is stripping away the economic
foundations of that fundamental assumption. Few publishers
have prepared their strategies to succeed in this new
environment fully for the long haul - leaving fertile ground
for new players who choose their own slice of profitable turf
in
The New Aggregation. For probably not the last time -
it's really, really, really not about
distribution any more.
- Competing with private capital. Small investments
in new publishing companies are paying off big for many
private investors, including self-funding pioneers equipped
with Web 2.0 technologies, draining off capital that would
otherwise find itself attracted to established players.
Public companies constrained by earnings commitments to
shareholders are loath to change their own investment
formulas - in spite of companies such as Google having a much
higher portion of their revenues invested in innovation. When
their investors are short-term thinkers, publishers that need
to invest for the long term suffer in a fast-moving
marketplace
- Minding the (generation) gap. It's no secret that
the temples at publishing industry conferences are greyer
than ever these days. A generation raised on the acme of mass
media's influence is at the helm of content companies whose
outlook is fundamentally at odds with a future in the hands
of digital
natives. There's plenty of wisdom and insight coming from
the senior management of many publishing companies but when
you look
Craigslist's Jim Buckmaster getting itchy unless he can
do a little coding each day it's far from clear how today's
leaders in publishing are going to be able to build up staff
close enough to their products and their clients to have a
comfortable spot at the table of online publishing.
It was a great ASIDIC meeting with great insights from some
of today's most insightful publishers. But with the future of
mainstream publishing requiring major strategic commitments in
increasingly tactical time frames one questions how the money,
talent and product focus is going to come into place for
publishers that have hesitated to jump on the online train
while it was still in the station. As
IDG
Communications' President Bob Carrigan
noted in FOLIO: Mazazine recently, "Don’t wait for the Web
to enable new companies to emerge outside your classic
competition...Online won’t continue to grow 20 percent per
year. This is the time to experiment." All aboard, folks - the
express is leaving town.
-
John Blossom
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