I’ve seen the future, and it hurts…. InCirculation September 2007

Much has been said about the future. Many people have made many wild predictions. This week, I even told someone that Magic Sky would romp home in the 3.15 at Uttoxeter. Even more remarkably, I was right. ….

Download the_future_of_b2b_subs.doc

In the same vein, there are those who said, in the late nineties, that the arrival of the Internet would bring the demise of dead-tree media before the end of the century.

Regional newspapers were particularly doomed, as I remember. Why would anyone bother with the local press when the Internet could give them all they wanted and more? B2B magazines were also on the way out. Obviously, web access at work would kill them off. What’s happened? Well, there’s not been a huge volume of launches, but the closures haven’t accelerated either, and the Reigate and Redhill Life still flops through the door every week, packed with inserts.

Now regionalisation, community and localisation, are flavour of the month in many circles, including the digital ones. ‘Narrowcasting’ is seriously in vogue.  Social networking is even more fashionable. YouTube, a business with few revenues and a hopeful business model, has just been sold for a grotesque amount of money. Blogs have made everyone a publisher. Google Ads has given them a revenue source with no cost attached. Here we are at ‘Web 2.0’. Once again, they think it’s all over. Are they right this time? Maybe.

It’s a complex landscape. How can you see how it lies? Well, remember PEST? Not your little brother, but that handy environmental audit mnemonic.

  • Political – deregulation of postal systems all over the world has brought many benefits for circulation execs. But what will the end game be? Can former domestic monopolies compete with new entrants? Will the universal service survive?
  • Economic – energy is getting more expensive. Two gulf wars, OPEC and various taxation regimes have made electricity, gas and petrol shoot up in price. Air freight (and sea freight) could become a great deal more expensive. This could make it more expensive to print things, and to deliver them.
  • Sociological – All work and no play? Are people really working all the time now? The new work-life (im)balance has made everyone time-poor, has anyone got time for browsing magazines in the new paradigm?
  • Technological – It’s the Internet, stupid. But what does the 24/7/365 bit really mean? What about mobile technology? Can information be always-up-to-date and always-on-call? Will corporate intranets be most business people’s key source of information?

Sometimes, you could be forgiven for thinking that someone’s just trying to scare you. If only someone could say what will really happen in the subscription equivalent of the 3.15.

Now it’s always fun to predict the future – so I’m going to. But to help my speculation be based on more than just my own biased and bigoted opinions, I’ve done a survey of opinion among b2b circulation’s finest minds. Thanks for your contributions, you know who you are.

So what did they think? I was surprised by the general consensus – clearly the circulation fraternity is of one mind (the accountants would probably say we’ve only had one between us for years anyway). This either means we’ve got a fairly clear picture of the next ten years, or we’re all suffering the same delusion.

The following six ‘clumps’ are a summary of the findings – and try to bring together the strands on which there was general agreement.

  1. CC is doomed

B2b controlled circulation titles have a business model which is severely under threat from the Internet. Their reliance on display (declining since the last century) and recruitment advertising puts them on very shaky ground, either now, or in the near future. Postal changes (see below) will not help either. Our survey says ‘Nnh-nnh’ I’m afraid. Within five years there will be a significant bunch of closures.

  1. Read my lips, no new magazines

There will be very few launches of any kind going forward. It’s always been tough to launch, but now, if there isn’t a blog in your chosen niche already, you’re probably the only person in the world interested. Launching is going to be very hard indeed.

  1. Bundle!

The favourite playground shout will be heard throughout the publishing houses of the land as magazines include access to their websites with the print subscription – if they don’t already that is. Further, we can expect to see structured, tiered services above the basic subscription, as publishers try to play the ‘high-value information’ game. Some will set their news content free, compelled to by burgeoning free access news sites in their sectors. But some – perhaps the most specialist – will not. Either way, moving pictures, audio files, mobile access and other ‘multimedia’ content will become important parts of subscription packages, and subscribers’ buying decisions.

4. No more money

That’s not in salaries, although I think that’s also probably a safer prediction even than Magic Sky was. Despite the huge added value that the bundling above represents, we will find it difficult to drive yield accordingly. The pressure of free websites (and perhaps the increasingly desperate, dying efforts of cc publishers) will make it a hard job just to preserve them at today’s levels.

  1. Subscriptions begin to fall

Under pressure from free websites, and from social networking based media, paid subscriptions will fall. However, we will not see wholesale closures. Magazines will struggle on – the clever ones managing to migrate to online business models as profitable, or more so, than those they run today. Newstrade will of course be a distribution method which will become unavailable for b2b, and in ten years even firm sale will be a thing of the past. Those b2b publishers relying on the trade need to find alternatives, soon.

  1. Last post

It seems clear that Royal Mail wants to significantly increase the profitability of magazine distribution services, and if that decreases volume, well they’re not that bothered. When they are released from their universal service shackles (most feel that this will happen within five years to allow proper competition with DHL and others) anyone with a significant rural distribution will find rising costs, and falling service levels. Professional titles going to home addresses will feel the squeeze particularly. Rural subscribers will become expensive to serve – will we have different prices a subscriber in London, and one in an isolated part of Scotland? Probably. Additionally, any Royal mail competitor is likely to find quickest uptake for non-urgent services, the ones they’re likely to be able to price most keenly. B2b publishers enthusiastic adoption of these will accelerate the migration of time sensitive content online. So Royal Mail’s cost increases will, if anything, accelerate the move online, and the reduction of print volume. Ironic.

So some things are clear then. But what will this all mean for b2b publishers?

In such situations, I’ve found scenario planning to be a useful tool. This is when you typically ‘think the unthinkable’ and then work out what you should have done before it happened. So you prepare some scenarios, imagine they’re reality, and think how you would have liked to have prepared for them. The scenarios below are based on the reality canvassed from my survey. How would you have liked to prepare?

  1. Proliferation

Localisation, and specialisation, becomes a key social and business need. Magazines evolve through digital printing techniques to provide narrowcast editions – virtually bespoke editions for individual reader needs. Allied to sophisticated internet activity, this brings a huge increase in the number of b2b niches that can be filled by commercially viable ‘magazine’ packages. Barriers to entry will fall – anyone can be a publisher – Google, individual hobbyists… anyone. However, companies unable to embrace or to nimbly exploit small communities struggle. Clearly the larger publishers with hungry overheads will find this a difficult landscape. Their wide focus brands focussing only as far as an industry (like farming) will become less and less relevant to people’s daily business needs, and will decline. In ten years, the largest 10 b2b publishers will be entirely different to the largest 10 now.

  1. Decimation

The internet, and in particular search engines, produce an increasing desire for the specific. Printing and delivery technology fails to advance, however, and most people begin to find their key business information on the web. Collaborative communities built along the lines of MySpace start to provide better and more up to date information than publishers can. Readers begin to self serve. Clever and nimble aggregators and search players find ways of collecting b2b information, and of providing effective advertising solutions for b2b magazine customers than the publishers can conceive. Their ability to do so without pricing to protect the legacy of sizeable magazine operations ensures that most b2b magazine publishers cease trading. First to go are the cc magazines – their business model is most at risk, and they prove the weakest. In ten years, the largest ten b2b information providers are entirely different to the largest ten now.

  1. Stasis

It’s the stagnant pond – apparently nothing has happened. However, although there are broadly the same number of magazines as there are now, their publishers are a different group. Information needs become much more specific, and the pressure on reader’s time increases. This drives a huge increase in the need for interpretation, reporting, analysis and aggregation. Originating useful content becomes insufficient to maintain a competitive edge, and only those who can bring together several strands in an analytical context will survive. These are naturally the larger companies, although some are not publishers at all, but aggregators and intelligent search providers. Today’s publishers are unable to shift from origination to aggregation and the intermediaries take over.

  1. Condensation

The current trend for news and recruitment to move to an online service continues. These become both free and commoditised.  However, their provision becomes increasingly the preserve of the hobbyist serving his own micro-community. Few such services are commercial, so few commercially minded providers can compete. Niches therefore become more difficult to exploit unless they are large. B2b magazines begin to merge to survive – the ‘Whizzer and Chips’ effect. Eventually, only a dozen or so large circulation but highly generalised sectoral magazines exist, and these owned by those who had the deepest pockets, or the furthest vision.

  1. Chaos

Led by radical change in mail services, the world becomes a ridiculous place. In order to promote genuine and fair competition between national operators like Royal Mail, and the new entrants to local postal markets, regulators remove the universal delivery requirement. People in rural areas begin collecting their mail from boxes at the ends of their roads. This doesn’t matter much to true b2b publishing – as delivery is in general to business addresses in urban centres. Professional publishing though, delivering mainly to home addresses, becomes increasingly untenable. Large franchises in law, accountancy and engineering become seriously unprofitable. Further, hikes in aviation fuel prices driven by taxes forced by Kyoto style environmental considerations make airmail economically unusable. Magazines can only be delivered internationally by sea, slowly, and at great expense. Magazine closures are commonplace, those which stay in business are those which either focus on highly localised communities, or which most effectively make use of internet technology to reach dispersed groups.

Could any of these scenarios come true? Which is the most likely? Does it matter?

Well, what you can see from all of them is that publishers who don’t move with the times will struggle. Learning that is a rather similar experience to listening to those ‘scientific research’ reports that reveal to us that women like shopping, or that men never listen.

Each of these scenarios suggests that the more nimble, innovative, technology friendly companies will prevail. That too is expected.

What they all suggest though is that those who connect themselves most closely to communities will be the most successful. This is of course something that good b2b publishers have always done. The identification and profitable serving of a group of individuals united by a set of business information needs has been the foundation of b2b media success for two hundred years.

Plus ca change, plus c’est la meme chose? Let’s hope so.

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