The promise of online advertising revenue must have stirred up feelings of comfort and convenience among the publishing elite. Yet, a reliance on the familiar has led to a near complete break-down in the viability of newspapers, magazines and trade journals in every niche and sector of the market.
As dollars once destined for print ads, inserts, circulars and classifieds shifted to the Web, publishers responded with a desperate grab for eyeballs. Give away the content for free via the Web site and the run up in page views will help capture enough of the online spend to make up the difference, or so they rationalized.
It was an understandable decision. For more than a century, publishing had been predominantly dependent upon the cost per thousand mind-set of advertisers. Although the return is tough to measure, the visibility and brand recognition delivered by print advertising made it a necessary part of most corporate marketing campaigns.
Search changed this. Google, Yahoo and a host of other engines are the door-way for information seeking Web users. Their business model is advertising driven as well, however search engines deliver eyeballs with interest in a more measurable way. Plus, search engines are merely aggregators, bypassing the significant costs associated with developing content.
Print publishers face a new reality that demands a rapid evolution of their business model. A single revenue stream of advertising will no longer sustain the business. It’s time to change or die.
Here’s my take on the three steps publishers must take to get back on a solid financial footing:
1. Get skinny…get focused. Although the media industry has swooned due to multiple rounds of layoffs, publishers should go through the difficult evaluation of content development and reporting. The evaluation criteria: if we can’t be a market leader or have a compelling differentiation in a particular area of coverage, then it needs to be cut.
The Washington Post has been roundly criticized for its decision to drop sections like the Sunday Source and fold business/finance reporting into the main section. It’s a savvy move though, designed to allow the newspaper’s leadership to focus on more critical areas of coverage.
2. Demand that readers cut a check for print and online access. Yes…publications will realize a shrinking subscriber base and dwindling Web traffic from this decision, and that will negatively impact top line revenue. But, the readers who remain will be a more engaged and loyal lot.
Additionally, the notion of actually making customers pay will reinforce the value and quality of the content. Publishers such as Hearst Newspapers, The New York Times and Time, Inc. are already said to be considering fees for Web access.
3. Block Google, Yahoo and every other search spider scouring the Web. This too will reduce readership, yet will further enhance the value of the content which is, of course, a publications’ most important asset.
As I see it, the newspaper and magazine of the future will be smaller in page count with fewer readers and advertising. However, the accuracy and integrity of the content should stand tall among a seedy pool of non-peer reviewed blogs and trade rags.
And make no mistake, it’s the high quality content that a certain set of readers will gladly pay for.
Sunday, April 19, 2009
Media's New Reality
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6 comments:
Nice posting! Food for thought. A few points from me:
Don't assume that just because blogs are not peer-reviewed that the content is suspect. That kind of comment is FUD. A lot of newspapers have peer reviewed content but are subject to the biases and prejudices of the media empires that control them. As a result, they are not more or less trustworthy than blogs. Get over it.
Also, developing content that people are willing to read is not as expensive as you think if thousands of bloggers do it well for free.
Some points to add for publishers (I agree with the first 3).
Point 4 - Provide content that is better than the free blogs. That's hard to do because out of 50 bloggers to one columnist, some will be almost as good.
Point 5 - As a newspaper, you performed the functions of gathering content, fact-checking, editorializing, publishing and distribution. The internet has made it feasible to separate these across multiple businesses. Decide which of these functions you will continue to perform, and which you will outsource or eliminate.
Point 6 - The internet allows for 2-way communication on the efficacy of content and advertising. Use the feedback loop to produce better content and more effective ads.
Point 7 - Traditional newspapers used to need expensive real-estate in the city centres to run their businesses. The slimmed-down versions of these companies can now work just as well in lower-cost facilities. Take advantage to unload your overpriced real-estate.
I agree that we are in a very tumultuous time right now in publishing with the value of the content we provide being de-valued by our readers and the public because of the abundance of free information on the web.
The challenge now is in changing consumer mentality. Our customers and consumers have been used to getting this material for free for some time now, so to start charging for material that arguably does have a substantial value to it will be a hard pill for some to swallow. Unfortunately those that subscribe to these free web services do not focus on the end result - by going to these free places on the web for materials that they are interested in reading, they are making the companies that provide that information lose a significant amount of money, which is why we need to change our business plans.
To survive, we need to charge for content, but we need our customers to understand the WHY part to the extent that we can keep a substantial part of our customer base after making this transition to pay for web materials and minimizing the hostile response we are sure to get. There will always be a significant amount of people that feel entitled to content and there will be nothing we can do to change their perspective, but I think the marketing of this transition will be the most important part to focus our attention on to see whether or not the publishing industry will be able to survive in this new digital arena.
Joy.
Your content is not being devalued by your readers. It is being devalued by the competition that charges less or does it for free (such as bloggers). For example, why would I buy an expensive textbook on, say, writing compilers when I can dig up that information for free on Wikipedia or some other source?
You cannot change the consumer's mentality. You have to change yours. Consumers don't care if you succeed or fail as a publisher. They care about how much they spend for the information they seek. Customers won't swallow any bitter pills if there are sweeter pills to swallow. These thoughts are hard pills for you to swallow, but they are true.
If your company is losing money, it is because you are paying to reach people that are not willing to pay for your content the way you have structured the pricing and the medium of delivery. You cannot credibly blame your customers any more than the weavers guild when they tried to blame Jacquard/Vaucanson and their programmable loom in the early 1800s.
As a successful book publisher, your company (McGraw Hill) has to figure out a compelling reason for somebody to go to your site, stay there, and then pay for your content whether online or in books. Look to O'Reilly.com and their Safari service. I would bet that McGraw Hill has a much bigger library of books that they could put online and charge for similar to Safari. You could also look at the royalty structure for books published online and in print at Lulu.com.
I believe that McGraw Hill is a strong brand in the publishing category. Until O'Reilly, it was one of the best providers of text books in my opinion. I believe that you can continue to profit from this brand.
There will continue to be a market for the kind of content you provide. You will survive if you can structure your costs to what is possible with the internet, and prices with what people are willing to pay.
Love the post... ballsy call to cut out Search... plenty to think about for the "content kings."
Interesting to see how we all try to think about helping to prevent extinction. Whether it is endangered animals or the press in this case. But I doubt that the three steps really help. It is more complicated than that. See my post http://xeeurl.com/A0693 a few month ago. But there are ways to re-engineer industrial media to a new live. I am working on a strategy for a publisher to do exactly that. We will see.
Lou & Marc.
I think you're right on with your comments about search.
Search is seductive. It lets you get your content "out there" for all to see. Readership should improve, and from that, it seems that fame and prosperity should follow.
However, search also puts all publishers on a level playing field. For example, my content and the content of McGraw Hill are indexed and presented in the same way to the search engine results. Search lowers the barrier of competitive analysis. For example if I am competing with you, and I see that you have some content that competes with mine, I can copy the concept (without violating copyrights) and duplicate it. If anybody can copy the concept of useful content, then that concept rapidly devalues. Also, one does not have to copy the concepts of all competitors. Only the top ranked competitors need to be copied.
When content is available to search, it enables the competitive "rat race", and that devalues the content. Blocking spiders (for example with user authentication for registered subscribers only) avoids the devaluation due to easy copying of concepts.
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