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Monday, October 6, 2014

Can Old School Publishers Win In The Digital Age? Yes, But...

Print Media's Digital Malpractice.

Old school publishers are STILL hung up on integrating and assimilating digital technology to best advantage. This has resulted in ever narrowing profits supplied mostly from the print side of their organizations.

In short --- old school publishers are leaving a bundle of money on the table! Let's talk about why and what can be done to correct old school publishing's dwindling profit margins.

Key excerpts from tonights resource article:

"While many believe that publishing is dead, there is more opportunity now than in Luce’s time.  While it took him decades to build his empire, Huffington Post and Bleacher Report created hundreds of millions of dollars of value in just a few short years.  The real problems old-line publishers face today are not ones of talent or even technology, but culture." 

"In the final analysis, the challenges of the publishing industry are not so much economic or technological as they are cultural.  It’s not technology that publishers need to conquer, but their own organizations."

"Every media market is different, but some principles are universal.  Perhaps the most significant of these has been the press-TV tradeoff, which is the starting point for understanding the media economics of any given place.  The stronger the TV ad market is, the weaker the press market will be and vice versa."

"The situation of the publishing business is by no means unique, eventually all business models fail.  Unfortunately, publishing executives who built their careers on selling ad pages and pushing rates are often unwilling to accept that the economics of digital are fundamentally different than print.  That has to change."

Greg Satell, a US based consultant who focuses on content marketing and digital innovation, contributed this to Forbes magazine:


How Old School Publishers Can Win In The Digital Age


Like many millennials today, Yale classmates Henry Luce and Briton Hadden left their jobs to create a startup.  They found newspapers dry, longwinded and boring and thought they could do better by presenting stories in a faster paced, more personality centered format.
In 1923 they launched Time magazine and it became a runaway success.  Hadden died of a freak infection in 1928, but Luce went on to create Fortune and Life in the 30’s and eventually build the greatest publishing empire the world has ever seen.
While many believe that publishing is dead, there is more opportunity now than in Luce’s time.  While it took him decades to build his empire, Huffington Post and Bleacher Report created hundreds of millions of dollars of value in just a few short years.  The real problems old-line publishers face today are not ones of talent or even technology, but culture.
How The Publishing Business Model Got Broken
Every media market is different, but some principles are universal.  Perhaps the most significant of these has been the press-TV tradeoff, which is the starting point for understanding the media economics of any given place.  The stronger the TV ad market is, the weaker the press market will be and vice versa.
The US has been unique in this regard.  Because its TV ad market is fragmented into 210 DMA’s, strong national broadcast advertising opportunities were historically rare.  Magazines, however, offered large, targeted national audiences and newspapers flourished with localized content.  That made publishing in the US a truly phenomenal business for a long time.
Yet digital technology changed the game entirely.  At first, because the Web was primarily used for direct response marketing, only newspapers were affected.  But with the arrival of more visually impactful tablets, magazines’ display advertising business has come under attack as well.  Profit margins, once in the mid-to-high 20’s, are now in the low teens.
The situation of the publishing business is by no means unique, eventually all business models fail.  Unfortunately, publishing executives who built their careers on selling ad pages and pushing rates are often unwilling to accept that the economics of digital are fundamentally different than print.  That has to change.
The Paywall Trap
The greatest challenge for publishers today is to create new business models.  Unfortunately, most haven’t even begun the process due to misplaced nostalgia for distribution revenue.  In that sense, paywalls represent the greatest threat to old-line publishers.
To see why, let’s look at what is considered a paywall success story: The New York Times.  According to its most recent annual report, circulation revenues increased by 3.7%, from $795 million to $824 million, but its advertising revenues fell by 6.3% from $712 million to $667 million, for a net loss of $15 million. That’s no way to grow a business.
A quick examination of the digital business alone shows what an enormous failure this is.  In 2012, digital made up about a quarter of the NY Times ad revenues or $170 million.  In 2013 US digital ad growth was 17%.  If the NY times achieved that growth, it would have earned about $200 million, but instead its digital ad revenues fell by 4.3%!
So what should have been a $30 million increase turned into a $5 million decline.  In a sense, this shouldn’t have been surprising.  Print and distribution has historically not been a profit center for print publishers, how do they expect to make money on it in the digital age when distribution is now essentially free?
The golden rule of media is that marketers will pay more for consumers than consumers will pay for content.  That doesn’t mean that digital subscription businesses can’t work, some can, but it does mean that paywalls are mostly a waste of time and effort that could be spent more productively elsewhere.
It’s Not The Technology, It’s The Culture
Most people assume that the problem with old-line publishers is that they don’t understand the new technology.  That may be true in some cases, but it’s mostly a red herring.  Many publishers have excellent technology teams and successful new players like Bleacher Report and Huffington Post rarely have particularly sophisticated platforms.

The real barrier to success lies in publishers’ organizational culture, which has for far too long been dominated by the “Chinese wall” that was originally instituted to separate the business and journalistic sides of the enterprise.  While the “separation of church and state” certainly played an important role in preserving integrity, it also had costs.
As I noted in an earlier post on innovation failure at the NY Times, the Chinese wall has made it almost impossible to innovate.  To see what I mean, look at these two quotes from the NY Times innovation report
We heard from editors who said the fear of impropriety meant that they actively avoided communicating with business colleagues altogether.
The fear that a single stray word can derail a conversation is keenly felt, particularly on the business side.
No business can function that way and expect to compete in the rabidly competitive digital environment.  Business model innovation is a highly collaborative process.  It requires people to work very closely together and establish trustful relationships.  That can’t happen if people with different skill sets don’t talk to each other.
So that, in a nutshell, is the state of old line publishers today.  On the one hand, you have business side people with little real understanding of the product and on the other you have journalists who want to ply their craft as if the business never existed.  No wonder there are problems!
A New World Of Digital Opportunity
The publishing industry has clearly failed to adapt.  Samir Husni, Director of the Magazine Innovation Center, estimates that magazine publishers today earn less than 3% of their revenue from digital.  While the NY Times earnings report suggests that newspapers fare somewhat better, they still earn the majority of revenues from print.
You would think that with such a paltry digital effort the old-line publishers would be going out of business, but they continue to profit and grow, albeit moderately.  They are even launching successful new print titles like All RecipesHGTV and Food Network.  Magazine giant Hearst recently reported its best month ever.
That old-line publishers continue to survive is testament to how good they are at plying their basic craft.  Editors know what their readers want and journalists are skilled at delivering it powerfully.   Combining the publishing expertise of industry incumbents with the digital savvy of the new upstarts has the potential to be a great business.
There is no clear path to prosperity, but here are some suggestions:
Tear Down The Chinese Walls:  I noted this above, but it is important enough to mention it again.  There are well established techniques for innovating business models, but all of them require intense integration and collaboration.  While concerns about preserving integrity are real and important, there are other ways of addressing them.
Take TV Money:  For decades, publishers have been whining about how much money goes to TV.  Now, with online video booming, they have an opportunity to compete with broadcasters on an equal playing field.  It is unconscionable that so few are seizing it.
Spin Out Brands:  New brands are much cheaper to launch on the Internet than in print and easier to get to profitability.  Some publishers, like Atlantic Media have been aggressively pushing out satellite digital brands.  Most however have not.
It’s worth mentioning here that some publishers have ample assets to create new digital brands at negligible cost.  Surely, The New York Times, with its abundant archive of book and movie reviews, could launch competitors to Goodreads and IMDb.  Again, so many opportunities available, but so few taken.

E-Books: Another way that digital publishers are creating incremental revenues is by repackaging existing assets to create short e-books.  Politico, for example, created a 2012 election guide.  Others sell pregnancy and vacation guides.
Create a business model innovation process:  The ideas I outlined above merely scratch the surface.  In truth, there are unlimited opportunities in publishing today, but business models need to adapt and evolve.

There is no mystery about innovating business models.  People like Steve BlankEric Ries and Alex Osterwalder have laid out clear principles that work.  I’ve also written a basic guide for innovating business models as well as one that applies to the media industry specifically.
In the final analysis, the challenges of the publishing industry are not so much economic or technological as they are cultural.  It’s not technology that publishers need to conquer, but their own organizations.





Sunday, September 7, 2014

Onix 3.0 - Retrofitting the 200-Year-Old Structure of Legacy Publishing

Upgrading/Retrofitting the Publishing Industry
First, click the following link for a short background on Onix (Publishing Protocol), ONline Information eXchang.

Standardization has greatly simplified, streamlined, cut costs and increased profits for all manufacturing companies in the past - and it has accomplished this globally which has further increased international trade. 

Standardization makes parts interchangeable to fit better. When you go buy a 60 watt incandescent light bulb, for instance, you take for granted that it will screw into the standardized electrical outlet. The same goes for auto parts, electronic parts, building material parts, etc.

And the same is becoming a reality for ALL sectors of the publishing industry in both print and digital. 

Tonight's post explains how.

Key excerpts:

"... Retrofitting a 200-year-old structure—legacy publishing—with new metadata standards to improve commerce in the digital age is, at best, a complex process. For example, the now-ubiquitous ISBN took years to become an industry standard."

"Chris Sayor, metadata specialist at the metadata management company GiantChair (www.giantchair.com) and head of a newly formed BISG working group on Onix 3.0, says that the new standard is the “Esperanto of global publishing.” He adds, “It is multilingual, making possible communication of the same messages both across the industry and across the globe, whether in China, the U.S., or Latin America, in Mandarin, English, or Spanish.”"

"Pat Payton, senior manager of publisher relations and content development at Bowker, notes that until the millennium—and in some cases, to this day—publishers, printers, distributors, retailers, and librarians exchanged information about products through a variety of means, including spreadsheets, texts, and even non-Onix XML."

"... All of the major players—such as Ingram, Bowker, B&N, and Amazon—used different formats for gathering the critical metadata. Today, with the advent of digital products and global sales opportunities, sharing correct metadata is critical."

"Although its birth was somewhat chaotic organizationally (not unusual for a global standard), Onix is now governed by an international steering committee representing 15 countries, with oversight provided by the collaboration of Editeur, BIC, Bowker, and BISG."

"Moreover, it levels the playing field for small- and medium-sized companies, which can now use the significantly expanded and disciplined Onix 3.0 to reach a truly worldwide marketplace and take advantage of a much broader spectrum of online retailers."

I believe that the Onix 3.0 standardization will also make marketing your books instantly easier by allowing access to global/international markets/retailers not available before --- and do it posthaste!


Jim Lichtenberg provides more detail about Onix 3.0 in this article from Publishers Weekly:



Can Onix 3.0 Create a Global Digital Publishing Industry?

Publishers and their partners are pushing for widespread adoption of the new standard


Standards are like plumbing: they are only noticed when they don’t work. And like plumbing, retrofitting a 200-year-old structure—legacy publishing—with new metadata standards to improve commerce in the digital age is, at best, a complex process. For example, the now-ubiquitous ISBN took years to become an industry standard. Moreover, senior publishing executives have rarely focused their attention on metadata, choosing to leave the discussion of such issues to people responsible for production or IT. Onix 3.0 may change this point of view. Ken Michaels, global COO at Macmillan Science and Education, observes that, with version 3.0, “Onix has the potential to be the critical communication format that helps bind a fragmented supply chain across the full spectrum of titles, information sheets, catalogue information, and promotional materials.” He further notes that “editorial and marketing departments’ specific ‘knowledge’ about the authors’ or the content objects’ intent can be retained and passed on to all channel partners to help streamline commerce [globally], reduce costs, and optimize revenue.”

Chris Sayor, metadata specialist at the metadata management company GiantChair (www.giantchair.com) and head of a newly formed BISG working group on Onix 3.0, says that the new standard is the “Esperanto of global publishing.” He adds, “It is multilingual, making possible communication of the same messages both across the industry and across the globe, whether in China, the U.S., or Latin America, in Mandarin, English, or Spanish.”

Begun in 1990, Onix (the Online Information Exchange) is a standard for the electronic transfer of rich product metadata about books across the entire supply chain. Pat Payton, senior manager of publisher relations and content development at Bowker, notes that until the millennium—and in some cases, to this day—publishers, printers, distributors, retailers, and librarians exchanged information about products through a variety of means, including spreadsheets, texts, and even non-Onix XML. Prior to 2001, Payton says, processes for getting data about each book from publishers to customers were inefficient because all of the major players—such as Ingram, Bowker, B&N, and Amazon—used different formats for gathering the critical metadata. Today, with the advent of digital products and global sales opportunities, sharing correct metadata is critical.

Despite difficulties in establishing Onix, everyone in the publishing industry is now at least aware of the standard. The first full version, Onix 1.0, was released in 2000, and different versions of the standard are currently widely in use throughout the book and e-book supply chains in North America, Europe, Australasia, and, increasingly, the Asia-Pacific region. Onix greatly reduces costs, as publishers no longer need to provide data in unique formats. In some cases, a single data feed is suitable for all of a publisher’s supply chain partners. And, by providing a template for the content and structure of a product record, Onix has helped to stimulate the industry-wide creation of better internal information systems, which bring together metadata needed for the promotion of both new and backlist titles.

As Firebrand Technologies’ website reminds its visitors, however, Onix is a format for transmitting data—it’s not the data transmitted using this format. More specifically, Onix is a standard XML format (a sort of digital bento box) that provides a consistent way to communicate among supply chain partners, allowing data to be exchanged between any number of databases. It is not limited to a single language, nor to the particulars of a specific national book trade. In fact, Onix gives publishers a standard format for the title, author, publisher, page count, pub date, even digitized cover art not only of books, but also serials (online subscription products, including e-books) and publication licenses. When used correctly, information is exchanged instantly once the Onix information has been entered, which diminishes the need for manual intervention and reduces human error.

Although its birth was somewhat chaotic organizationally (not unusual for a global standard), Onix is now governed by an international steering committee representing 15 countries, with oversight provided by the collaboration of Editeur, BIC, Bowker, and BISG. To some degree, each of these organizations still uses its own “flavor” of Onix, making it a useful standard... but not as useful as it could be. BISG has actively promoted an Onix certification program, and Payton estimates that Bowker receives “clean” data, using the current Onix 2.1 standard about 80% of the time.

The underlying problem facing the industry is that, with the onrush of new technologies (smart phones, tablets, sensors, social media, the cloud), Onix 2.1 structures have become too limited to handle new formats or marketing and promotional requirements. Thus, Onix 3.0—which began development in 2009 based on global user input—is a watershed for a number of reasons. It supports a wider range of data, including delivery format, DRM protection, pricing in different markets, rights and royalties information, as well as links to information outside typical book metadata (author videos on YouTube, etc.). Moreover, it levels the playing field for small- and medium-sized companies, which can now use the significantly expanded and disciplined Onix 3.0 to reach a truly worldwide marketplace and take advantage of a much broader spectrum of online retailers.

Curiously, larger publishers may be at a disadvantage when it comes to implementing Onix 3.0. As the number of people entering information into Onix in given company rises, inconsistencies occur more often, according to Payton. In addition, the sheer size of major publishers creates an even larger gap between those tasked with implementing Onix and those responsible for the strategy and direction of the company. This gap represents a vulnerability, especially as an understanding of technology becomes more critical to the formulations of strategic responses to changes in the marketplace. Sayor of GiantChair recalls that during a webinar organized by BIC and Booksellerthe last year, one of the publishers involved commented, “What we need is a metadata expert on the board of directors!”

In one sense, however, experience with Onix gives all of publishing an advantage. One of the most disruptive technologies in the coming decade will be the so-called Internet of Everything (IOE). Cisco, the tech systems giant, estimates that there will be some 50 billion “smart” things that can communicate with digital devices and each other by 2020. The IOE will make it possible for machines, processes, and disparate systems to be interconnected across any value chain, linking end users and creators through an integrated network. In a sense, Onix is a forerunner of this, allowing the publishing industry across the globe to maximize its many networks to create new service opportunities, product differentiation, and revenue. As Michaels at Macmillan warns, however, the “metadata being right, and communicated correctly,” remains the critical factor. “Onix enables [all these benefits],” he advises, “only if everyone in the supply chain does this.”

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Tuesday, August 12, 2014

New Publishing Model: The Latest News is Being Distributed on Social Networks and Consumed on Mobile Devices

Traditional, established media such as the Washington Post and the LA Times are being out covered and out valued by technology upstarts like BuzzFeed that 'uses technology to help come up with ideas for articles that will attract readers, and it has connected with advertisers because it creates sponsored stories for their brands—promoting Pepsi, for example, with animated images about staying cool in the summer.'

Seems to me, and some others, too, as reflected by my research, that there is a chance of mashing up advertising with legitimate news and other reporting. But, this may be the trend of the future and will bring in tons of revenue.

There are literally billions of dollars being created and attracted to the newer tech-laden publishing platforms that cater to the latest technological devices.

Tonight's post gives insight into some of the money valuations and exploding expansions coming into play --- especially Re BuzzFeed. 

Pertinent excerpt from tonight's research source: "BuzzFeed said Monday that the funding will let the company expand to Mumbai, Mexico City, Berlin and Tokyo and convert its video division into BuzzFeed Motion Pictures, which will focus on everything from animated online images to feature- length films."

This from Bloomberg news as reported in Crain's New York Business:


BuzzFeed's $850M valuation tops Tribune's
The site's $50 million cash infusion is a bet that the site can be more valuable than top traditional news media.

BuzzFeed, Inc. raised $50 million on a bet its mix of everything from animal lists to serious news is more valuable than the coverage produced by established media like the Washington Post and Los Angeles Times.
The investment from venture-capital firm Andreessen Horowitz propelled BuzzFeed's valuation beyond those traditional big-name publications to about $850 million, according to the New York Times. While that's about half the market capitalization of the Times itself, it's in line with other Web startups at about seven times annual revenue, according to Paul Sweeney, an analyst at Bloomberg Intelligence.
Andreessen Horowitz joins BuzzFeed investors Hearst Corp., SoftBank Corp. and New Enterprise Associates in wagering that the site can rank among the titans of media. BuzzFeed uses technology to help come up with ideas for articles that will attract readers, and it has connected with advertisers because it creates sponsored stories for their brands—promoting Pepsi, for example, with animated images about staying cool in the summer.
"There's a lot of potential for BuzzFeed, and it's well positioned to move into a lot of key areas," said Peter Krasilovsky, vice president of BIA Kelsey, a media research company based in Chantilly, Virginia. "They've put a lot of their money into figuring out which stories are being read. I can understand why you would want to invest in BuzzFeed."
BuzzFeed said Monday that the funding will let the company expand to Mumbai, Mexico City, Berlin and Tokyo and convert its video division into BuzzFeed Motion Pictures, which will focus on everything from animated online images to feature- length films.
'Effectively unbounded'
"We are very excited to work with everyone at BuzzFeed to help them realize their dreams of a profoundly important new media institution," Marc Andreessen, co-founder of Andreessen Horowitz, said on Twitter. The company's opportunity is "effectively unbounded," he said.
At the end of last year, the company had forecast revenue of as much as $120 million in 2014, people familiar with the matter said at the time. Ashley McCollum, a BuzzFeed spokeswoman, said she couldn't confirm the valuation.
The startup, which has more than 500 employees, is profitable, Chief Executive Officer Jonah Peretti said in September 2013. With the new investment, BuzzFeed has garnered almost $100 million in funding since the company debuted in 2006.
"The investment from Andreessen Horowitz really validates BuzzFeed, as a company and as an entity," said Mr. Sweeney of Bloomberg Intelligence. "BuzzFeed has really proven itself as a business."

Wednesday, July 23, 2014

Inside Intrigue at Conde Nast - Moving and Shaking Going On

Anna Wintour - One of the most
Powerful women in publishing
Conde Nast is a very influential publishing and mass media company with a lot of transformation going on. And tonight we are going to take a look at all the Conde Nast inside intrigue.

I believe this kind of analysis gives all aspiring writers, authors and indie publishers insight into the current day evolving industry that will empower them in their future endeavors. 

First, what is a mass media company (Conde Nast has grown into one over recent years)?

Secondly, a little history of Conde Nast: Condé Nast, a division of Advance Publications, is a mass media company headquartered in the Condé Nast Building in New York City. The company attracts more than 164 million consumers across its 20 print and digital media brands: Allure, Architectural Digest, Ars Technica, Bon Appétit, Brides, Condé Nast Traveler, Details, Epicurious, Glamour, Golf Digest, Golf World, GQ, Lucky, The New Yorker, Self, Teen Vogue,Vanity Fair, Vogue, W and Wired.
The company launched Condé Nast Entertainment in 2011 to develop film, television and digital video programming. The company also owns Fairchild Fashion Media (FFM) and its portfolio of comprehensive fashion journalism brands: Beauty Inc.Footwear NewsMStyle.com and WWD.
The company was founded in 1909 by Condé Montrose Nast and has been owned by the Newhouse family since 1959. Samuel Irving Newhouse, Jr. is the chairman and CEO of Advance Publications, Charles H. Townsend is its chief executive officer and Robert A. Sauerberg is its president.


And now this from Crain's New York Business by  :


Anna Wintour consolidates her power at Condé Nast

An executive transition also gave President Bob Sauerberg new responsibilities.

  A long-expected executive transition took a step forward at Condé Nast on Wednesday with the announcement that President Bob Sauerberg would assume new responsibilities and Vogue Editor-in-Chief Anna Wintour  will have no rival in her role as creative director.
Editorial Director Tom Wallace will leave the company. Though he is not being replaced, his job was considered redundant after Ms. Wintour was named creative director last year. John Bellando, a 15-year veteran who was both chief financial officer and chief operating officer, is also leaving the company, to be replaced by an executive from Time Inc.
Mr. Sauerberg, appointed president four years ago Wednesday, will "assume a leading role in all revenue generation activities," CEO Chuck Townsend wrote in a memo to staffers. That leading role will include overseeing Condé Nast Media Group, the division that handles the large corporate advertising sales that have traditionally produced 80% of the company's ad revenue.
Brought in following a brutal advertising recession, Mr. Sauerberg was charged with finding new sources of revenue, and already oversees consumer marketing, digital operations, business development, corporate administration and the new television arm Condé Nast Entertainment. He is also the heir apparent to Mr. Townsend, who is 69.
Mr. Townsend acknowledged the power shift in his memo, noting that "Bob and I have worked side by side as CEO and president to ensure we prepare the company to reach new heights." The changes announced Wednesday begin "this seamless transition."
As part of the transition, Mr. Sauerberg added to his corporate team, bringing in David Geithner from Time Inc. to replace the well-liked Mr. Bellando, who was considered "Chuck's right arm," according to a former Condé Nast executive. Mr. Geithner will report to Mr. Sauerberg, as will Lou Cona, president of Conde Nast Media Group.
Ms. Wintour's ascension was no surprise. 
"Anna really has more power than Bob and Chuck combined," said the former executive. "She's the person everyone sees as a visionary and as having a huge amount of influence inside and outside of the building."
Condé Nast—part of the privately held, Newhouse family-owned Advance Publications—still has its own way of doing things, with roles that are not always clearly defined. For instance, some publishers report to Mr. Townsend, while others report to Mr. Sauerberg. With Wednesday's announcement, they will all report to Mr. Sauerberg, according to a person familiar with the matter, although one publisher was unaware of any change.
"At a company like this it doesn't matter," he said. "You have very little oversight either way."
Correction: All Condé Nast publishers will report to President Bob Sauerberg. This fact was misstated in a previous version of this article, published online July 23, 2014.





Resource article:
http://www.crainsnewyork.com/article/20140723/MEDIA_ENTERTAINMENT/140729938/anna-wintour-consolidates-her-power-at-condeacute-nast