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Issues for competitiveness Publishing in the knowledge economy of use and competitive advantages, in the world of the Web (whether delivered over fat or thin pipes) they sit side by side. Although not all sites are created equal – those with powerful offline brands and assets can bring these to bear online – the Web is an arena where strong brands that have not competed head to head before, start to do so. This can have an international dimension – say The Times versus The New York Times, or CNN and the BBC, or be across sectors. The web also (in theory) permits customers to reach suppliers without needing intermediaries, or via new intermediaries, and vice versa. This could take the form of authors trying to dispense with publishers, where the author, or perhaps journal, already has a big brand. It may involve the dissolution of existing bundles of content, such as the journal, into its constituent parts, with customers buying only the part they want. Aggregators of various kinds already exist to facilitate this in both STM and academic publishing and in the supply of business information. It has already taken the form of groups of advertisers, such as real estate agents and recruitment agencies, launching their own online services to reach customers directly. Although the issue of ‘disintermediation/reintermediation’ has apparently receded as a result of the demise of most online-only start-ups, it would be foolish to be complacent, especially in relation to classified advertising. Online penetration is still rising, a new generation used to interactive technologies is maturing, and the functionality of online classifieds is set to increase. One lettings agency reports that 40% of its leads come from online. Homebuyers’ and sellers’ packs are on the horizon, and valuation and survey information, together (eventually) with video will make property searches very much easier online than offline. Job searching is one of the principal uses of corporate web sites, while major companies are increasingly managing their human resources functions electronically, including handling all aspects of recruitment, using specialist software. This will ultimately tend to favour online recruitment. This could particularly affect some of the national broadsheets. There is also the threat that local government and health jobs will be advertised directly by councils and via NHS sites. It is notable that papers such as The Guardian have taken considerable steps to try to protect this vital revenue stream by creating content and even more crucially, functionality, which considerably extends what is in the printed paper. It should be obvious that anything that tends to separate advertising from editorial content has the potential to break the business model of the newspaper, if the newspaper does not command that advertising revenue stream in its other form. The web can permit elements of the existing supply chain to become competitive with their suppliers or customers, for example, customers of Reuters’ news wholesale business becoming wholesalers in turn to other sites. It encourages all kinds of companies to become publishers: law firms, financial services companies and consultancies, even supermarkets are publishing much more extensive content as a means of retaining clients or as a customer service, rather than as a revenue generating exercise. These companies could become customers of publishers in a new sense however – customers for their content but also for their expertise in content handling and editorial selection. Business information suppliers are also driving forward to integrate their services tightly within customers’ IT systems, for example in intranets, Enterprise Information Portals or Enterprise Resource Planning systems. In the process they have to get to grips with technology issues which would never before have been part of publishers’ core competences. Reuters for example produces software tool kits and offers consultancy advice, not only to integrate Reuters’ information into companies’ EIPs or intranets, but also to organise companies’ own information. They have formed partnerships with EIP 113
Publishing in the knowledge economy Issues for competitiveness companies, but also find themselves in competition with software suppliers and systems integrators. It is a path which has also been taken by TSO, which manages information and even services the clients of other organisations. As business magazine and directory publishers expand their specialised offerings into higher value areas via the Internet, they also begin to compete more directly with the general business information vendors, although they also use them as a reselling channel. 17.2.2 Competition from publicly funded bodies Current financial pressures on publishing with the fall in advertising revenue and the hangover from the end of the technology and telecoms booms have thrown the online activities of both the BBC and government/EU into sharp relief, as they are able to continue investing. In addition, concern continues on the level of cross promotion by the BBC on its free to air services. Central and local government and the EU are naturally keen to use the new platforms as a means of reaching the citizen with information and setting up cost-effective ways for people to transact business with government departments such as filing tax returns, obtaining driving licences, etc. Some publishers see governments overstepping the mark into value-added publishing. Our interviews revealed a degree of anger and mistrust at perceived unfair competition from both the government and EU, and also the BBC. The sectors affected differed. Government publishing activities were seen as most threatening by business to business magazine and directory publishers and local newspapers, who fear the impact of central and local government and NHS electronic publishing activities on their advertising and sales revenues. Publishers of specialist health and municipal publications are particularly worried, with local newspapers reporting concern but also suggesting that a partnership model with local public bodies is working. Educational publishers were most upset by the implications of the Government’s approach to using the BBC to deliver the online curriculum. There were a number of strands to this. First of all, publishers perceive the Government as downgrading the importance of books and other printed material in the classroom, and of being unaware of the degree to which the efficacy of the online delivery of education varies considerably by educational subject. Secondly, they questioned the ‘topdown’ monolithic approach to the online curriculum, which marginalises the role of individual teachers in choosing material from specialist publishers. Thirdly, they were very angry at what is seen as ‘empire-building’ by the BBC. The initiatives taken by the Government to create a digital curriculum in partnership between the Government, commercial industry and the BBC are well-intentioned. However, the proposed implementation highlights many of the problems of publishers operating in a commercial environment at the same time as a public broadcaster whose funding from public funds can impinge on commercial activities. In our survey, 18% of respondents said that they have not proceeded with a project because of the activities of the BBC. This stems from a basic distrust among publishers of the BBC activities and its tendency to use ‘editorial control’ and ‘brand protection’ as major arguments for selecting publishing suppliers when it is offering tenders. Despite there being very strict rules in place governing anti-competitive activity, the actions of the BBC in practice, in particular the exclusive relationship between the BBC and BBC Worldwide, have given rise to tremendous distrust among publishers as to its motives. Publishers generally were also concerned at the degree to which the BBC may now be stifling the nascent online publishing environment by its massive investment in the medium, although there was also acknowledgement that it had helped to bring a wider audience to the Internet. As one of our interviewees said: 114
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