Before you redo

June 28, 2010

Those with myopia see near objects clearly but far away objects appear blurred. That is exactly the case for people in companies and the companies themselves in the markets they serve. It is only natural to focus on the things, people and processes we know and to consider the way it has always been as the way it will always be.

It is not technological change itself, nor the disruptions of markets or the changes in customer behavior it causes, that force companies to adapt and adopt. The reason companies do change lies in the ability to understand these changes and to translate them into a vision, a strategy and a plan. In order to do just that, companies as a first step have to accept that myopia is a natural state of being. One has to accept that the future is not ours to see. One has to understand and accept that foresight is just a fantasy. Fantasies don’t pay the bills.

Foresight should never be applied. Do not look forward, look backwards. Hindsight is better than foresight.

Take a look at the web and how it affected your market and your product or service.

Is your core product news? Has the web and it’s still increasing exponential curves of change changed your basic product? What happened in this short period of time?

Is it your core service to gather readers and to offer this community of people to other people who are willing to pay top dollars to reach these people?

Rethink before you redo.


Outsider looking in

June 25, 2010

Outsiders watch industries under pressure and are not hampered by tradition. An industry under pressure is an industry where profits are evaporating. It’s really that simple. Tradition is the mentality of ‘business as usual’ combined with myopia. That’s simple as well.

Take the music industry. When analogue became digital, record companies pushed their libraries of content and made a fortune. A perfect reason for myopia:  less money to spend, higher margins and a huge demand. So execs became lazy. They forgot their basic audience: young kids without money, but with lots of time. The sole reason a young man came up with the idea of P2P, was that he could not buy a single anymore. Just one piece of music, not the whole album.

We all copied music when we were young. We all exchanged our music. This time however the bazaar was global and 24/7. Record companies sued users. Sharing sites were closed. While the record companies were defending their turf, an outsider came up with a new idea. As always.

Better copies for people with more money than time. Search, find, pay and play all in one well designed device. A single device, so to speak. What Apple basicly did was what they have been doing al along. Look at people, examine their needs and wants and come up with a multi user approach. All in one. Seller, artist, distributor, buyer, listener. Everybody happy.

But there were mp3 players all around us at the time. Why became the iPod this success? Well, as I told, it is not just a device, it is not just a gadget. It is a multi user thing. Just like the Mac was and just like the iPhone and iPad are.

Just keep watching as the iPad is taking the world of books, newspapers, magazines, tv and video by surprise.

Surprise?


Outside in & inside out

June 23, 2010

Business model innovation for newspapers these days is not just about making money or moving online, as it used to be. Now is the time to examine the whole enchilada. Publishers need to look from the outside in and from the inside out.

Why? Simple! The traditional two revenue streams keep declining. New technology based threats are around the corner and the economic crises, yes plural, increase in strength. A rather explosive mix.

Most publishers however think the current threats will end, as they always did. Several stunning examples of this approach could be witnessed this week, at least in my own country. The editor in chief of one of Holland’s largest nationwide papers publicly called for help from advertisers. One of the advertisers in the room asked himself why he should advertise. The response: because a lot of people read the paper. Response from the advertiser: a lot of people read Donald Duck as well. Another nationwide paper still carries a lot of full colour advertisments for the paper itself. Think about it: buy the product you have already bought.  A third paper received a hefty fine, because they used illegal immigrants to deliver the paper product.

And then there is this other thing. A lot of papers offer products to their readers. They try to sell cases of wine, books, music, trips, magazines and even computers or umbrellas. What they basicly are saying to their clients is: I sell the same sort of product as you do, but I don’t pay to advertise. But you have to.

Will they?

The inside out innovation should focus on the quality of the product and the way it is produced. Even today we can still witness different and not cooperating departments for print and online news. Not to mention the organizational and mental barriers between content and commerce.

Looking outside in newspapers have to look at competing news sources and devices and do a simple SWOT. And then examine themselves from the viewpoint of advertisers in a similar way.

If and when colleagues do not combine their strengths to tackle existential and therefore essential problems, who will? Maybe it is time for commerce and content to sit down at one table and begin to ask questions like:

  • who are our readers
  • what is it they consider news
  • what is it they want
  • and need
  • what do they do all day
  • how much time do they have
  • why should an advertiser pay to reach our readers

Asking questions is what they normally do, isn’t it?


Predictions

June 22, 2010

When and if you’re dealing with possible scenario’s for the future, it is wise to read books from the past and discover what eminent people predicted a few years back. It will lead to a proper sense of humility.

In his 1995 book ‘The Road Ahead’ Bill Gates was quite convinced that we would see the birth of someting called The Information Super Highway. He percieved the Internet as just a precursor of that.  However, one has to admire him and his company for one of the speediest transformations in corporate history a bit later.

William H. Davidow, famous for his sales and marketing stunts at Intel and his, even today still applicable, book ‘Marketing High Technology’ (1986), published ‘The Virtual Corporation. Structuring and revitalizing the Corporation for the 21st Century’ in 1992, together with Michael S. Malone, another great business mind.

Only to point out that predictions should be treated with the utmost caution, I quote a passage relevant for today’s transformations in publishing and media industries.

‘Why print at all?

With broadband telecommunications, image compression, full-motion video transmission and storage on CD-ROM and laser disk, and portable color liquid crystal displays, within a generation it propably will be cheaper to recieve all this information from a hand-held terminal than it will from newsprint.

Information that is not only fully customized to the particular interests of each consumer but backed by libraries of supporting material for curious minds.

Hints at what is to come can be found in Apple’s promotion of just such a terminal, to be called the Knowledge Navigator, and Knight-Ridder’s current investigations into videotex and nonprint newspapers’

I rest my case.

On second thoughts however, how many years are considered to be one generation?


The most pressing pressure?

June 21, 2010

Pressures within the value chain of newspapers are growing. Top down from advertisers. Bottom up by customers. Both pressures will continue to grow. At the same time pressures from the outside continue to grow even more rapidly. All these disruptions occur at the same time and blend into what seems to be the most pressing pressure of all: the disappearance of money. 

There have been many warnings on the effects and risks of disruptive technologies. But the biggest driver for change is the evaporation of turnover and profits, not new technology. Since September 2008 we can witness the disruptions in the media markets grow because advertisers stopped spending. Before that it was basicly just talk.

This simple fact will fuel already existing pressures and will set all things in motion. Change will have to come. We need to start and experiment with new ways of advertising, more innovative tools to measure the effects of advertising, more mixed media delivery, new content formats and new forms of cooperation between the content people and their commercial counterparts.

Journalists and editors view their commercial co workers mainly as opponents. Vice versa the same. Somehow the departments don’t mix. Collegues are viewed as people from another planet.

The two most pressing pressures are the evaporation of profits and the need to come up with new forms of cooperation within new types of news organizations.

Only by exploring new ways of cooperation and redefining centuries old practices newspapers will find a way out of this mess and recreate their quality product. Then the money will follow.

The other way around will not work.


Evaporation

June 18, 2010

The future is not what it used to be. Things seem to change quite rapidly. Most media and publishing companies I encounter however show a lack of action because they don’t really understand where they and their clients are heading. This is especially the case in Europe. That is dangerous, because Asia and the US don’t show signs of this attitude of wait & see.

If a company doesn’t move and innovate because of a lack of vision, a vision has to be developed asap.  Most of the time however I suspect there is no action because of an attitude of avoiding risks. An attitude of wishful thinking that the business will be as usual. That is very dangerous indeed, because it will not.

Changes in customer behavior take time. It takes around 20 years for an invention to be accepted and fully used, experts say. The web is about as old as that.  Today there are youngsters who don’t even know what life is without the web. It’s been there forever. All things are digital.

But if we consider the production of original content, the way it is distributed and offered to customers I would conclude that most media companies still think and act from an analogue point of view. Content and quality content is scarce they seem to think, but it is not. Advertising as the sole driver of business will be back they hope, but this revenue model is in collapse.

This time of multiple crises is very exciting for media industries because of the disappearance of money. It is not the technology, that’s been around now for long enough. It’s the speed of the evaporation of the green stuff, the stuff that dreams are made of.

This is the moment to change. A time to look back. Hindsight is better than foresight. Consider the changes the web induced and multiply them with the nascent move to mobile. Everything will be at the fingertips of the customers, but this time unleashed from their desks.


Your basic advertiser these days

June 17, 2010

Recently I had the pleasure to speak with the chairman of a company that has actually some money to spend on advertising. He told me he could get rebates up to 40%. Newspapers called these offers ‘last minute specials’.

He also told me that he never had been able to measure the effects of his advertisements in the newspaper. The only thing he could conclude after examining his sales, was whether or not his marketingmix had been allright.

What did I learn from this single conversation?

  • The newspaper was selling to him directly.
  • No advertising agency was involved.
  • Nor was a media buying company part of the deal.
  • The argument of price has been the only argument used to sell.
  • There is no way for him to tell what he got for his money.

If prices are down and the only sales argument to persuade potential customers is rebates, newpapers are in trouble.  But if newspapers do not understand the one and only very simple reason for the enormous success of GOOG in advertising, they are in far more trouble than I thought.