Frankfurt Bookfair Supply Chain Meeting: Publishing in a Digital Age

Editor's Notes

• #2: Good morning. This is my third address to this group but the first time I am not actually selling anything – other than myself. My contact details will be on the last slide of this presentation. The presentation will also be available on my blog (personanondata.blogspot.com), editeur.org and slideshare.net in the coming days. It is also being videotaped ( http://www.book-fair.com/en/company/press_pr/newsletter/daily/review/00833/index.html). Publishing in a Digital Age. Ambitious in 20 minutes; however, I hope you will find my presentation thought provoking, perhaps provocative. This is a subject many of us like to think about, argue about and be excited about. We also worry about it. No doubt you will agree with some of the points I make and disagree with others. All told, I don’t think my comments will be too far off base. This document was prepared by Michael Cairns, who performs the Management Consulting business of Information Media Partners in the United States. This document is supported by a verbal commentary contained in the notes section of this presentation. Without that commentary, this presentation would represent an incomplete and misrepresentation of this work. This document is covered by a Creative Commons license. This presentation may be used with attribution. Some of the images used in this document are not the property of either Michael Cairns or Information Media Partners and their ownership is noted in the pertinent notes section. Contact: Michael.Cairns @ Infomediapartners.com.
• #3: It’s obvious: Everything is changed. By ‘everything’, I mean all the underlying drivers and assumptions about how our industry is defined and how it works. We fight to find solutions for growth – even stability - and our natural tendency is to seek an emphatic view of the future. Achieving this is impossible. The task is made harder as change comes faster and faster and more unanticipated scenarios occur than any of us have ever had to deal with. Opportunities do exist but with caveats. For example, don’t be trapped by the idea that we can hit a home run with each new initiative. 3 out of every 10 initiatives will be moderately successful but only one of every ten will be a long term win. The lesson: You must try numerous initiatives in the hope that one works out. Focus on the customer is critical. The publishers I note in this presentation spend significantly to understand theirs. One in particular notes their current strategy is the result of 2 years of intense research into their customers’ needs and requirements. Image: Michael Cairns
• #4: This presentation is divided into two parts. Firstly a macro view: Those big changes impacting our business. Secondly, I will show you how some publishers are taking advantage of these changes and are moving forward. Publishing in a Digital Age is about more than content. It is not the business we grew up with. To paraphrase a comment attributed to John Ingram: “it’s not our fathers’ business anymore” So, let’s look at some issues influencing the business from a macro point of view. Image: Michael Cairns
• #5: First, two basic questions. Any item sold, described, broadcast, advertised and even printed is dependent on information published in some form. How about databases, data sets from experiments, market research, polling information, transaction data and usage information? We should include information in company files describing products, diagrams, plans, documents, records, and more. Much of this material that used to remain private or hard to access is becoming available. In my opinion, all companies are publishers and their ‘published material’ is of increasing importance to them. The good news for traditional publishers (all of us) is that most of these companies aren’t particularly good at publishing. As more continues to be published, we as publishers are presented with significant new opportunities. The web is voracious in its need for more and better information. This is our opportunity. Our strengths as publishers will have much wider application than even 10 yrs ago as we look forward.
• #6: This leads me to my second question: how big. (This is the point the video starts – why I have no idea). All that ‘published material’ has market value but is not accurately counted by anyone. Perhaps it can’t be. If you agree our market size is larger than we recognize then we should also have more opportunity than we might otherwise believe. Through the 1990’s the US market was estimated around $25-28Billion. BISG’s ‘under the radar’ report estimated the market to be worth many billions more. The ‘non-publishers’ BISG counted ranged from Mattel a major toy manufacturer to individuals delivering monthly real estate seminars at their local Holiday Inn. Currently, the US market is generally thought to be worth around $35bill. Give or take. Let me present an example of how the definition of our market may have changed and thus our opportunity. Image: Pearson, plc.
• #7: In the process of buying a printer, I visited the printers’ website. I’m not naming names. The experience was awful: It was frustrating and confusing. The experience was almost a disincentive to purchase. Why? Because the company doesn’t understand metadata and the relationships that can be created across their product suite using data and information. The result? A disjointed collection of manufactured products with inconsistent information, a poorly designed user interface and diminished opportunity for engagement. I believe a publisher could help this manufacturer sell more product. In the digital age, opportunities for publishers will evidence themselves in unconventional ways, and I will return to this example later.
• #8: Some publishers are addressing some of those big issues in an aggressive manner. In reaction to market changes some publishers are creating ‘platform’ based solutions that tie customers to their products and services. As a direct result, some companies now compete in much larger markets and are better equipped to take advantage of ‘non-traditional’ publishing opportunities similar to the one I just mentioned. To complete my overview of the macro influences on our business, let me present some thoughts on changes all media faces. In particular, the role of community, networking and the explosion of choice as critical drivers of change in our industry.
• #9: From Mayberry to Google. Mayberry was a fictional TV land where everyone knew each other, life was predictable, local, and had ‘boundaries’. The community of Mayberry was anchored by main street. Our main street is found on the pages of Myspace or Facebook. Self-expression was manifest in the newspaper’s ‘letter to the editor.’ On YouTube there are no boundaries to self-expression. Shopping has gone from ‘chore’ to ‘experience’ from the corner store to Amazon.com Discovery - to find resources, obtain solutions or a find a plumber, has gone from discussions over the back fence to Google. Exclusively content consumers, we are now also mass content producers in everything from email to photos to fiction. In 2008, our definition of ‘community’ would be unrecognizable to the Men of Mayberry. Had a media executive not lived through these changes in just the past 10 years, they would be completely disoriented by the changes we now take for granted but struggle to deal with. Image: http://www.allposters.com
• #10: Remember when we were presented with content on schedule or by appointment: the newspaper on the doorstep, or watching the evening news at 10pm. In this environment, content was shoveled to us in the hope we would consume it and we did because our choices were limited. Increasingly we retain the ability to engage media actively. We are making many of the choices for ourselves and we have begun to define our media experience - where, when, how, why and with whom. We proactively chose our media and with increasing regularity we are also able to explore our interest and engage with others: content being the unifying factor. Power has shifted to users and content producers must adapt themselves to this new environment. Image: Michael Cairns
• #11: The trends described on the prior two pages have conspired to turn us all into mini media moguls. I am a sophisticated user of media. I am at the center of my media experience where my media engagement is a collaboration between myself and the content provider. In this environment I can ‘converse’ and participate in the development of my current and future media choices. Increasingly, my media space is defined by me and I exert sole control. I have growing influence over other peoples behavior and perceptions and 32% of my blog readers trust my opinion enough to purchase (versus 7% who see an ad). I believe if you need to advertise there must be something wrong with it. The stats on internet users are from a comprehensive McCann Universal report on Internet usage. The numbers are actually being pulled down by the likes of the US, UK and Germany. In short, this is our business environment. Image: http://o.pticalillusions.com/
• #12: To summarize those macro points: Market boundaries are no longer clear What it means to publish and where our opportunities lie are no longer simple questions Our target market is now advantaged with publishing tools we never invented and probably can’t compete with Historic advantages such as scale production have been eroded The expectations of our customers both young and old are now sophisticated: they are accustomed to selecting and building their own channels of content and selecting their own applications What are publishers doing to react to these changes? I don’t have all the answers but I can show you how information publishers and education publishers are publishing in the digital future. Perhaps some of their experience may resonate.
• #13: Some of you may be familiar with the concept of the publishing platform. A publisher builds a suite of services, applications and content unified by branding resulting in something close to one-stop-shopping for customers. The platform concept isn’t new in business – IBM sold service contracts and consulting worth far more than the hardware. The principle is familiar but the internet brings leverage to the concept. In publishing, there is a spectrum of sophistication with the more advanced applications of information publishers at one end, the less advanced educational publishers in the middle and the trade publishers with limited practical understanding at the other end. Information publishers embarked on this effort many years ago having gathered content assets through the 1990s. Education publishers as a group have completed a barrage of consolidation and are rapidly building the platform infrastructure. Comparatively, trade hasn’t got very far. The publishing platform concept goes beyond what all of us traditionally think of as publishing.
• #14: The platform concept treats content as a starting point not the end. Some of the sophisticated practitioners in publishing include Thomson/ Reuters, Reed, Bloomberg, D&B and McGraw Hill. These companies have a deep understanding of the cultural and technology changes I spoke about earlier: Firstly, as the predominant first or second player in each segment they can invest from a position of strength. Secondly, by listening to their customers they deliver the work flow solutions (automating tasks, consolidating data sources, powerful analytics, etc), that their customers demand. Thirdly, they have taken advantage of increased computing power, expansive networking capability and lower costs of storage. These have enabled the application of more computing power to their content inventories and thus contributed greater advantage. Fourth and often hidden, the publishers have invested in meta tagging and the development of taxonomy and ontology tools that makes the search experience more consistent and enables the user to find the content. Image: http://ntis04.hgac.cog.tx.us/website/photolab/photos/energy/oil-rig.jpg
• #15: Lexis Nexus is a strong proponent of the platform approach and this quote from Judy Vezmar shows how they have focused on the user. LN spent 2 years understanding the workflows, needs and requirements of their customers and implemented their solutions accordingly.
• #16: The LN example identifies another important strategic benefit. As a total solutions provider, LN has redefined the marketplace in which they operate. 1972: They operated in a print market worth $2bn 1990: A legal research market: $7Bn 2004: A Legal Research and Tools Market: $12bn 2008 As a ‘total solutions provider’ their market is worth $48B Why? It is not because their market has suddenly exploded; rather, they now offer services and solutions to a much wider segment of the legal industry. I don’t think there is anyone in this room who wouldn’t want to see their market opportunity quadruple from $1mm to $4mm or $10mm to $40mm. At least I hope not. Anyway you cut it that represents a massive change in expectations and opportunity. Remember my market size estimate and perhaps it starts to look more reasonable if LN thinks the value of their legal publishing market to be $48B
• #17: This is how LN views their market. Each of the practice areas across the top of the chart are supported by the content, applications, databases, etc. below. The company started with significant content but has aggregated companies with particular content (recently public records) and purchased solutions providers that support their clients requirements. LN supports all levels of the legal community from small office, to large partnership to corporate counsel. To their customers they provide a range of products including specific legal content, business & client news, accounting and practice management software and even social networking. Image: http://www.unodc.org/unodc/en/legal-tools/index.html
• #18: Pearson is the platform leader in education. They are some years ahead of their market; however with the influx of PE into this market we will see a ‘race’ develop as the larger players build models similar to one I described at LN. Pearson is already a good example. This company has consolidated content: K-12, college and distance learning. They have acquired educational materials, assessment & testing companies, remediation tools, course management tools and school administrative management products. These acquisitions include traditional content but importantly software and services application providers. Pearson – an educational publisher – also owns a chain of schools. Pearson now see themselves operating in a market segment significantly larger than the one they operated in five years ago. Now they are in a position to say to schools and colleges we have all this content but we can also do far more to help you manage your institution more effectively. Image: www.seaburyhall.edu
• #19: Adoption of all or some of the elements of the publishing platform approach result a more comprehensive experience for your customers. When generated from a clear understanding of the needs and requirements of your customer base your position as a publisher is solidified. Utility is maximized. User stats support customer objectives and new product development.
• #20: Inherent in Judy Vezmar’s quote is the strong belief that a focus on the customer will generate competitive advantage. Remember: 2yrs invested in customer research at LN. Binding workflow with content is game changing because it solidifies your customer relationships, reduces sales churn and sales cycling. Switching vendors becomes a much more deliberative and potentially expensive proposition for customers than it was when it was ‘just a database.’ or ‘just a textbook.’ Margin growth enables continued product enhancements & improvements which drives customer retention closer to 100%. In my view the platform approach is mature in Information. This doesn’t mean that they will stop investing but with respect to LN (and Reed Elsevier) they are in a ‘consolidation mode’ where they are seeing increasing organic revenue and operating margin growth. LN sees a great opportunity to expand the same model to all major international markets (non-English) and other content verticals like insurance and they are busy targeting content specifically in support of this strategy. Image: Michael Cairns
• #21: Some in the audience will be aware of or even self-published a title with iUniverse.com, LULU (600,000 titles), Xlibris or someone similar. As publishers you need to know about them and similar publishing operations such as Blurb.com, Photobucket, mypublisher.com. In my own experience of Blurb.com I truly did not believe I could produce a quality four color, 100 page hard cover book of photos for less than $100. I was shocked at the result but don’t take my word for it go and take the small risk yourself. Lulu offers all kinds of publishing and media services. They have published an astounding 600K titles in six years. And the annual number keeps going up. Is there a similar solution for trade? Probably, but the outcome is less clear. Business drivers are different. For example, there may or may not be a concentration of content around subjects like there is in tax, legal and education. Trade may not be in a position to lead the transition because digital initiatives in trade – think Kindle – are running ahead of the publishers. They are forced to react. Information publishers had the luxury of being able to proactively manage their digital future. Many of the larger trade publishers are developing initiatives: Harlequin has built a strong community around their content that supports distribution and engagement. HC has an author-centric site named authonomy and a book community site named BookArmy. There are others. To be successful, we as publishers have to be more aware of our expertise and capabilities, focus on our customers needs and requirements and think expansively about how we extend our business across content based services.
• #22: I noted I would return to this. Your Publishing opportunities may come from unusual or unfamiliar directions. My printer manufacturer experience may be one of these. As publishers, we understand information and data. We manage publishing processes. We can interrelate discrete elements of information and make them relevant. We have taxonomies and ontologies. We understand structure, flow and story. We manage experts and expertise. So in this example, is it so far fetched to see a computer book publisher managing the catalog information for a manufacturer that would result in revenues for both? Better yet why isn’t that computer book publisher operating a subscription based help desk service like yahoo answers or ITtoolbox.com? The wise publisher would be looking for service opportunities that leverage their content and expertise to the betterment of their existing and new customers. Their relationship with a consumer becomes on-going rather than a cycle of separate transactions. This is what Thomson, Reed, Pearson, Harlequin, Lulu and some others are already proving is a viable business strategy.
• #23: In Conclusion: I believe our market opportunity is far greater than we recognize. We need to understand that our customers young and old are the mini-media moguls I spoke about. Seeking out our customers, listening to them and engaging them in development has been important to the success of companies like Pearson and LN and this approach will work for you as well. I have shown how the development of a platform approach that combines content with applications and service may come to define how we construct our companies for the 21 st century. So I ask the following: Do we want to hang on with our finger tips operating in an increasingly unfamiliar business environment? Or, do we embrace the opportunities that digital publishing offers and endeavor to influence and manipulate the publishing environment of the future to our advantage? The answer is obvious but it connotes significant change.
• #24: Lastly, I hope you will not begrudge me for not mentioning supply chain once in this presentation. Frankly, the changes I have discussed will change everything about our supply chain and that much should be obvious. Thank you.