Publishing in the Knowledge Economy - DTI Home Page

The industry today
Publishing in the knowledge economy
magazines into a new medium, something
that ran hand in hand with existing brand
extensions, for example into directories,
exhibitions, conferences and training. For a
time, it also presented threats in the form of
new, well-funded online-only competitors, such
as the B2B exchanges and so-called ‘vortals’
which intended to act as news and information
portals for vertical industries, with or without
links to transactional services. This presented
two threats: (theoretically) disintermediation of
directories and magazines, and (actually) the
loss of skilled staff attracted by the promise of
share options in dot.com businesses. A small
specialist publisher told us:
“The Internet is still there as an opportunity.
Three years ago we would have seen it as a
huge threat. We faced serious challenges from
well-funded new entrants. For a time we lost
staff to dot.coms and it was a very competitive
time for us. They had access to very cheap
capital, but luckily their business models mainly
failed. Traditional publishers had to use cash
flow to fund these initiatives. The staff issue was
the biggest threat, but pushed us towards
issuing share options and making bigger efforts
to motivate staff, so in some ways it was good.”
Clearly these online-only initiatives have
largely collapsed, although there are legacies
in the form of industry-run B2B exchanges in
a number of industries. Many magazine
publishers had to invest heavily in Internet
services and the hoped-for revenue streams,
including online advertising and even share of
transactions (which sites like UBM’s Farmgate
at one time anticipated) have not in general
materialised. Leading B2B publishers, including
Emap, Reed Business Information and UBM are
still dealing with the consequences, although all
still see the Internet as an important channel of
communication with the customer and as a
potential revenue earner, particularly through
added-value niche business information
services. One publisher told us:
“All of us are clearing up after the big party.
We are cutting back to the core business and
trying to work out what to do about the online
offering. There is not much growth out there
and we mostly went up a blind alley with online.
There will be more consolidation and more
cost cutting.”
Another commented:
“We have fewer companion websites than we
did. The means of gaining ad revenue online
have not proved effective. Banners, buttons,
etc, are too intrusive, like ads on teletext, they
get in the way of what the user is there for.
Revenue has to be based on subscriptions, and
that means having high value content that
extends beyond the existing magazine. One
paid service that we have launched has had
high take up. It’s not just updates on the print –
it’s high value new business information.”
10.4 Consumer magazines
The picture here is again diverse. Some of the
biggest publishers, such as IPC, launched major
web initiatives, both in the general lifestyle area
with women’s sites (BeMe) and men’s sites
(Uploaded) and in the consumer interest
focused area, with acclaimed sites such as the
New Scientist’s. In the heavily contested music
and travel segments magazine publishers again
faced online-only competition (or in some cases,
outlets for content) in all kinds of forms, as sites
offering MP3 files and fan sites mushroomed,
and travel intermediaries with content and news
were major areas for web investment. Other
publishers refrained from making big
investments and largely confined themselves to
reproducing covers of the latest issues and
having subscription information on the web.
Leaving content aside for a moment, it is also
clear that the online channel represents a
definite opportunity to increase subscriptions
to print products, to ease the crucial process
of renewal and to transfer some of the
administration of subscriptions to the consumer.
There is considerable evidence from the US to
support this, although of course, subscriptions
are a much higher proportion of sales there than
here. A British publisher, Dennis Publishing, has
also had considerable success in selling
subscriptions to the US edition of Maxim via >
63