2009: Evolution is Out, Warp-Speed Integration is In

"It’s tough. It’s terrible. I think we’ve all stopped lying to each other." When the president of a leading publishing company utters those words in public, as Hearst Magazines’ Cathie Black did in December, you know things are tough.

No point in providing a litany of the latest magazine closings and layoffs here in the US (If you insist on the gory details, try magazinedeathpool.com). Suffice it to say that the economy continues to cut a swathe through consumer and business publishing companies alike, and it doesn’t take a clairvoyant to see that the casualty toll will keep mounting in the months ahead.

But the bigger story beyond these painful current realities is that this recession will be a permanent game-changer for the industry. Bad economies have always resulted in belt-tightening, closing of marginal magazines and job losses, followed by a gradual return to more or less familiar, if somewhat streamlined, business models. This time, we’ll be looking at a very different landscape once the economic tornado passes —not as much because of its severity as because the foundations were already shifting before it hit.

For the present, let’s focus on consumer publishing. Consumer magazines as a medium aren’t going anywhere, but there will be a lot fewer of them when the dust clears. Most of the shutdowns will be victims of insufficient margins as ad revenue no longer covers rising print production and distribution costs.

More fundamentally, the stronger, surviving brands — and "brands" is the critical word here — will be organised and staffed very differently than in the past. Yes, consumer publishers have been labouring to create successful cross-media models for years now, but this financial crisis has driven home the reality that "warp-speed integration is a must", to borrow the words of one anonymous publishing industry blogger.

Reorganisation

As Hearst’s Black observed, the industry is now being transformed on a "minute by minute" basis. And while only time will reveal the precise shape of the new business models that prevail, the basic direction is clear in the reorganisation activities now underway.

Black noted that US publishers need to adopt the smaller-staffed models of UK and Australian publishers. But body counts are just the tip of the iceberg. The more significant underlying dynamic is publishers’ urgent determination to create super-efficient, über teams capable of functioning across both brands and media.

Time Inc’s recent reorganisation, which came with about 600 layoffs, creates a structure in which major brands are grouped under a few, centralised internal business units. While this may well enable additional operational efficiencies in the traditional print arena, the overriding goal is streamlined brand oversight that dispenses once and for all with any remnants of a feudal, print-era mentality, clearing the way for multi-platform metamorphosis.

Of course, no publisher is about to neglect the nurturing of print properties that continue to be significant profit centres, not to mention brand anchors. But in the new era, the primary mission is cracking the code on monetising cross-media brand extensions as swiftly and cost-effectively as possible. The shift from circulation to audience development is being accelerated; editors and writers are starting to produce content suitable for multi-purposing across sister brands and platforms ranging from websites to video to mobile phones; and most graphic artists and production people who failed to leap swiftly from print to digital orientation were put out to pasture some time ago.

Within a few years, at most, the days of working primarily on a single print consumer magazine will be remembered as a quaint practice of a bygone era, at least within large companies. Which, in retrospect, has been inevitable since the day that the first advertiser paid for the first banner on a website.

How many will be left?

Along the way, the recession will also accelerate the transformation of the mass newsstand channel. One small newsstand publisher recently told me that he believes the current 3,000+ titles in the mass retail distribution system will be halved by the end of 2009, as retailers and financially precarious wholesalers winnow mainline fixture assortments down to the most profitable few within each editorial category.

For titles that lead their newsstand categories and the mostly large publishers who produce them, the speeding up of this weeding out process will be a welcome development. However, an ever more Darwinian retail landscape will also make it less likely than ever that even a seemingly brilliant launch concept will be able to get trial exposure in mass outlets, unless that concept is backed by a major, deep-pocketed publisher.

Meanwhile, the recession’s acceleration of the sea changes within the B2B publishing business is also very much underway. More on that next time.