The publishing model is dead, and has been for years…

In our latest weekly column, Howard Sharman, managing director of strategy and communications consultancy ERD Associates, asks whether Rupert Murdoch has finally “realised something that has eluded business publishers, formerly the masters of targeted audiences?  Is he willing to lose millions of (valueless) unique users because the ones that will be left are so much more valuable to advertisers?”

Philip Larkin famously declared – in his poem Annus Mirablis – that “Sexual intercourse began in nineteen sixty-three”.  For Business Publishing, that was a similar annus mirablis, with the arrival from the United States of the controlled circulation publishing model.

In the year that Macmillan stepped down as PM because of a sex scandal, business publishers were about to embark on their own ‘never had it so good’ trajectory.

But all trajectories fall to the ground eventually and now, 47 years later, having created a number of publishing fortunes along the way, that model is dying.  Actually, it’s dead, and has been dead for as long as ten years, but like the fabled chicken running round the farmyard with its head lying in a corner, it hasn’t realised that.

But in recent weeks, a couple of quite important chickens have stopped running and have fallen over.  Personnel Today moved from print to online-only and Computing, once one of the fattest and most profitable weekly titles in the UK, went to fortnightly frequency.

Other titles, maybe more familiar to the MediaTel audience, that have changed medium or frequency are Media Week and Press Gazette (both now online-only) and Precision Marketing (print weekly, then fortnightly, then absorbed into Marketing Week).

And these will not be the last chickens to fall.

Everyone has a natural inclination to hang onto a (previously) profitable business model for as long as possible and, in this case, hope beyond hope that the ad revenue will come back.  What’s confusing business publishers is that the underlying demand for what business publishing provided is still there.  They just don’t know how to service that demand profitably.

The underlying demand is the need for information.  Buyers of products and services need information about what is available in their marketplace.  Providers of these same products and services need to promote their offerings to interested and relevant buyers.

This was the magic of the controlled circulation model.  First you identified a group of actual or potential advertisers whose promotional needs were not being adequately met.  Then you worked out what editorial product would appeal to the buyers that this group wanted to reach.  Finally, you provided this editorial product free to that group, ensuring that your publication only went to highly qualified readers – qualified by their relevance to the advertising base and their proclivity to purchase the relevant goods and services.  Then, hey presto, if you’d done your job well you had a committed and interested readership that was totally relevant to the advertisers.  The advertising revenue rolled in.

Prior to the existence of controlled circulation, which promised to deliver all of a relevant marketplace to advertisers in one place, there was a much smaller number of paid-for business magazines some of which date back to the Victorian era – titles like The Grocer (launched in 1862) and The Engineer (1856).  And whilst these titles carried display and classified advertising, much of the sales and marketing effort of providers of products and services went through extensive sales forces, out on the road, cold-calling, travelling with change in their pockets so that they could stop at public phone boxes and make calls to actual and potential clients in the area on the off-chance that they could pop in and make a sales call.

So, like sexual intercourse, which must pre-date 1963, there has always been an information need that has been satisfied in different ways.  Mass sales forces died out, and now it looks as though controlled circulation weekly magazines are going the same way – maybe monthlies too, but there is probably more hope for them.

The big problem for the business publishers is that all of the real money in the marketplace was made by the weeklies.  Indeed, applying the 80/20 rule, at least 80% of the profits in the sector were made by 20% of the titles.  And it actually may well have been a 95/5 rule.  So when the big profit earners lose their recruitment advertising to upstart job sites, and their display advertising to Google, the sector is in deep trouble.

In a strange way, we are back to the era of massive sales forces, but now these are measured in click throughs on Google AdWords rather than in sales calls delivered by men in slightly dodgy suits driving Ford Escorts.

The myth of Google is that an algorithm can deliver the targeting that used to be provided by professional publishers, and before that by sales forces that knew their sales territories in massive detail.

The publishers, in thrall to the myth of the algorithm, have moved their free content in print into free content online, having forgotten why the print content was free in the first place.  It was free precisely because it was targeted.

Which brings us to your real thought for the day: Has Rupert Murdoch, in moving The Times and The Sunday Times to paid-for websites, finally realised something that has eluded the business publishers, formerly the masters of targeted audiences?  Is he willing to lose millions of (valueless) unique users because the ones that will be left are so much more valuable to advertisers?

For more information, see erdassociates.com