What will your publishing business look like when it emerges from recession?
It’s hard to pick up a newspaper or turn on the news without being bombarded by negativity, fear and confusion. News flow for big publishers makes for grim reading: layoffs, regional newspapers closing, and media companies filing for bankruptcy.
Renewal rates are down, so are response rates to direct mail and sales campaigns. Conference attendance has slumped and even companies holding their own are beginning to lay off good people. And smaller businesses are by no means immune.
If you are anything like the many US and European publishers I have been talking to, there is a cyclone of change wreaking havoc through our profit centres, disrupting our business models, possibly irrevocably. If the cyclone hasn’t reached you yet, rest assured, it will.
It’s easy to blame the economy but, in fact, customer purchasing habits and changes to reading preferences have been driving these changes for years. Customer expectations, particularly from Generation Y (those born after 1980) are continuing to evolve, some would argue, at an accelerated pace.
Lessons from the music industry
If you need a wake-up call, look no further than the music industry.
Big music companies like EMI, Sony Universal and Warner have changed beyond all recognition as their original four core ‘pillars’ have been eroded one by one.
Let’s start with vinyl. Remember the LP record? Hard to reproduce and not surprisingly highly profitable as a format. The LP was king back when the only way to share music with your friends was to go round to their house. Vinyl is now all but gone while digital formats have made downloading and sharing music all too easy. Sales of CDs are now in long term decline while digital downloads soar.
Then there’s the sheer number of music producers. Anybody can create music and make it available online. Compare this with forty years ago, when production costs and barriers to entry to the music industry were high. These barriers ensured a relatively small number of players. See any parallels yet?
Then there was radio which played Big Music companies’ songs all day long for free, creating demand for their products without them so much as lifting a finger.
And, finally, music history shows that the Top 40 Chart accounted for the vast majority of record sales.
Compare all this with the music industry that survives today. iTunes, launched by Apple (let’s not forget a tech company), just a few short years ago, is celebrating its one billionth download. Amazon and other online retailers ensure a ‘long tail’ effect on sales of the music industry’s back catalogue, meaning tens of thousands of different tracks and albums are sold each week for all genres and age decades of music ever made.
Ask any music industry boss about changes in their industry and they’ll get misty eyed about the great business they used to have. But then point out that, though more complex, there is still money to be made.
The new consumer
So, is the same true of the specialised information publishing industry?
No question, the internet has disrupted our traditional newsletter business models beyond recognition. Some would argue for the better. Today’s publishers have successfully evolved over the last ten years and adapted to customer expectations online.
So let’s take a minute to consider what’s driving these changes. Who is this new ‘Web 2.0 customer’ we hear so much about and what do they want?
If you serve a younger demographic, then chances are you’re already dealing with so called ‘digital natives’ - essentially anyone under 22, who’s never experienced a dial up internet connection, watches YouTube and Hulu rather than TV, doesn’t know what a postage stamp is for, and only knows the word Google as a verb. This is a generation who think email is old hat, spend money on clothes for their online avatar and don’t know a world without voicemail. I could go on.
But importantly, digital natives do not view online content as something they should have to pay for. They don’t pay to read newspapers and are more likely to trust information coming from someone like them than traditional news sources like CNN or the BBC. This age group are very comfortable buying digital content online whether that’s iPhone applications, music or games. But digital natives are not just passive consumers of information but creators too via blogs, wikis and social networks.
Even if you don’t serve this age group now, these are your future customers and you can be sure that they are going to place very different demands on your business as they enter the workforce over the coming years.
For most of us, particularly B2B publishers, we serve digital ‘immigrants’ and ‘settlers’, internet users over 22 who have adapted and adopted the web as a place to do business and get things done. And while we’re at it, perhaps we can add ‘digital deportees’ to that classification list, those reluctantly being pushed online by their employers or families!
New rules apply
A couple of years ago, leading thinker, Christopher Carfi, laid down the gauntlet to online publishers with his Web 2.0 customer manifesto on SocialCustomer.com:
* I want to have a say
* I don’t want to do business with idiots
* I want to know when something is wrong and what you’re going to do to fix it
* I want to help shape things that I’ll find useful
* I want to connect with others who are working on similar problems
* I want to buy things on my schedule, not yours. I don’t care if it’s the end of your quarter
* I want to know what’s next. We’re in partnership…
And the last two years have seen some impressive progress by publishers towards meeting these demands. Today, our websites encourage an open dialogue and conversation with customers. From blogs, comments on articles, discussion groups and product reviews, the customer is enriching our sites with user-generated-content that both informs and engages others.
Smart publishers are working in partnership with customer groups to better understand their needs and launch products that closely match. In fact, it doesn’t stop there. From beta web launches to feedback throughout the launch process, customers are being invited to have their say and take a stake in the outcome of projects and new launches.
Product reviews, ratings and recommendations, like you find on Amazon.com, are proving incredibly popular and persuasive for online shoppers. These customer reviews help in building trust and ensuring buyers know what they are going to get when they buy. And negative comments are welcome too. They just serve to increase buyers’ confidence that this is indeed an open and honest exchange of views.
What are today’s B2B customers willing to pay for?
My company Melcrum, a research and training business serving mid-to-senior level executives, asked our customers what they would and would not be prepared to pay for. This was to inform our online strategy as we overhaul our websites and online services.
Our survey showed that customers were more than happy to pay for quality journalism, expert analysis, research, benchmarking and training and development for them and their teams, as well as face to face networking with people like them. But they said they were no longer prepared to pay for industry news, job listings and classifieds (particularly in the US), discussion groups, online networking or user-generated-content.
News, it seems, is increasingly seen as a commodity. The prevalence of social media has made online information and opinion easy to come by. But for busy people with time a precious commodity, they need and place premium value on a trusted source to tell them only what they need to know, what it means for them, and filter out the rest. For publishers with quality content, the media mix may change as we integrate new formats like online video, but the need for support, guidance and advice remains.
What does the future look like?
As website developers will be quick to tell you, this is a great time to invest in your websites so that you can emerge from the recession shiny and new and ready for anything the Web 2.0 customer throws your way. They want it mobile, on their Kindle / iPhone, no problem. Forget daily, weekly or monthly publishing schedules. Customers expect information on their schedule, as and when they need it, not when it’s convenient for you and your editors.
So, when the good times return, what will our businesses look like? Will print still be part of your mix? Where will your profits come from?
A lot of publishers are gazing into their crystal balls and pondering the answers to these questions.
The Holy Grail for many data-rich B2B publishers is to have their products and services integrated with customer work flow. So when the customer starts their day, they use our decision-support tools, data, and analysis to get their jobs done. The more ambitious amongst us want to ‘own the desktop’ but most of us can more modestly hope to be a core component of their work process.
Products, especially online services, are increasingly being developed in partnership with customers. From beta launches, to customer focus groups, to advisory boards, publishers are involving the end users in the development process, reducing their upfront risk and increasing the likelihood of success.
Those online services are more likely to feature greater interactivity for the end user, from integration of social media such as reader comments on articles, ratings, reviews, polls, to user-generated-content in every shape and form. Those services are also likely to be highly personalised with content shaped by customer preferences, delivered on a schedule and via media of their choosing, whether video, audio, print, online or other. Providing you serve a customer base that includes the over 30s then print is going to remain an important part of our mix for years to come. Or at least until the day when everyone owns and uses a Kindle or other truly portable digital reader.
Experts tell us the internet is still in its infancy. What we have seen so far is rather like the early days of the movie business, when cinema imitated other formats, with movies of stage plays proving popular. Like a small child, the internet is beginning to find its feet.
Our online business models will evolve in the years to come and, providing we continue to create great content, in whatever format is convenient for customers, then we will survive and thrive as publishers.
Vanity Fair reported that embattled New York Times publisher, Arthur Sulzberger, keeps a framed quotation by Winston Churchill in his office, taken from a speech Churchill delivered during Britain’s darkest hours: “Never give in, never give in, never, never, never, never — in nothing, great or small, large or petty — never give in.” The bulldog approach worked for Churchill, and it will work for publishers too.
