Do rigid business models restrict growth for publishers?
Regular readers of A Brand Day Out know that one of the things I am passionate about is the need to have an open mind and be prepared to adapt to change. Yet as digital outputs have grown in recent years, it seems that many publishers are simply using the new technology to replicate old business models.
For book publishers, instead of the book trade we have Amazon and digital retailers. Instead of the book we have the e-book – but still being retailed via trade rather than direct. However, I was interested to read this article in The Media Briefing today which discusses the results of Reed Elsevier, Informa and UBM. Even the “big boys” are showing static results.
Media commentator and former Incisive Media executive Rory Brown shed further light on these figures in his blog. We read about cost control strategies, focus on high-end niche materials and consolidation. The problem, it seems to me, for larger corporations is two-fold: demand for returns from investors and groupthink.
When a business has grown to prominence, the need to please investors is often the driving force at management level. Unfortunately, this often comes at the expense of marketing focus and customer satisfaction.
My years in legal publishing, for example, make me fully aware that often the only tools open to management are price manipulation and increasing the number of information “issues” in order to sustain revenues. The result here is that customers decline and prices are compelled to rise – creating yet further subscriber attrition.
I am not surprised, therefore, to read that even Lexis-Nexis’ profits are down to a “mere” 14% (although many a book publisher I know would love to have even half that amount).
Similarly, in an environment where demands are for revenues and sustained or improved profit levels, it is often easy to focus on finance rather than customers. Corporate groupthink becomes obsessed with this with the result that product “improvements” or “enhancements” are little other than consolidation exercises – reducing costs while appearing to grow sales.
Similarly, we also read of “global platforms” and brand strategies which impose new brands on customers where old brands in recognition tests out perform the perceived replacement often by 30 or 40 times. In environments like this, customers come second to corporate vanity.
While these approaches are clearly logical from a business point of view, they deny true entrepreneurialism and – crucially – let in competitors. Companies wedded to process and profit will, in the end, lose out to smaller companies more fleet of foot. Little surprise that when publishers sell off what are often called “non-core assets” to smaller outfits, those assets often grow those assets and harvest greater profits.
Yet some large companies, such as Informa, pride themselves on an entrepreneurial style, often giving great freedom to staff at all levels to introduce new ideas. Yes to financial growth, ROI and profit but also yes to new ideas and solutions. Acquisitions are not simply subsumed but are allowed to flourish and grow. Product management is a comprehensive mix of product delivery, brand relevance and focused – and contiguous – marketing.
Management freedom and culture has a large part to play: risk-taking, combined with quality and strategic ambition are crucial to sustained growth and brand relevance. Complacency, or business model replication, or even just groupthink cannot be anything other than the management of a model rather than attracting and retaining customers through relevance.
Clearly, in a market of change, things are not easy. Digital solutions are having a major impact on how publishers operate in a world where information is being commoditised, where consumers are being trained to be price – rather than value – conscious and where previous cash-cow customers such as academic institutions are starting to fight back against perceived “corporate greed”.
Yet those publishers which will survive are those which retain a consumer focus: understanding requirement and leveraging technology, brand perception and product delivery to remain relevant and profitable. True growth in results will come from sustained relevance of brand.
Image: HMS Commonwealth in heavy seas, taken from The Royal Navy in Old Photographs in the possession of the author (now out of print but copies still available from the usual online second-hand retailers)