Thursday, September 25, 2008

The Future of Business Media Part 1 - The End of Business

Whilst we wait for news of the RBI deal (the word is that there are two serious bidders in round three, that the deal will get done but at a price closer to £1b than £1.3b) it might be useful to start thinking about what strategy a new owner should employ. What will work for RBI will likely work for other traditional b2b publishers.

Lets begin in this piece by agreeing about what has gone wrong for the business magazine model and then we can consider how each of the issues might be addressed.

1) The paid copy model is dying. There are subscription model opportunities in high level must have data, but not for news and features. The few business magazines that still have paid circulation are strugggling to maintain subscriptions and have seen news trade sales wither.
2) The cost of controlled circulation distribution is increasing as proportion of total costs, partly due to price increases, but also because of the collapse of classified advertsing (See 3). With size based pricing it is not possible to flex the cost down as pagination falls. In a downturn this has important implications for margins.
3) The historic high margin classified and recruitment market has been disintermediated by the web.
4) Free web based information means a news model with a weekly frequency is less than compelling as an essential driver of readership. Although business news consumption and disribution has changed dramatciall in ten years, most weekly business magazines are producing news using the same definition of "news", the same presentation and approach as in 1970. They are of course doing this with fewer journalists than ever.
5) B2B magazine brands have different attributes than they used to enjoy. Once they were beacons of essentailness, independence, trusted sources, bibles of the industry they served. Today a blog is just as likely to be credible to a reader (forget whether this is true or not, it is how readers think) and the gateway to finding stuf out is a search engine, a blog roll, favourites, RSS as well as some residual loyalty to the old brands.
6) Advertisers are doubting the ROI of traditional print advertsing. Many are spending more on SEM, their own sites and email marketing than they are on print. Why spend £3000 on a display page with no proof of readership or noting when for the same money I can buy 300,000 page impressions?

Does this mean the end for business magazines? Not necessarily. But the cure is painful and shocking. I'll come back to this is upcoming posts and share with you my recipe for saving the business magazine industry.

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