Publishing in Trouble Once Again August 20, 2010Posted by Peter Varhol in Publishing.
I have a long and rocky professional history in technology publishing. Part of that rockiness is my own doing, for a variety of reasons. A fatal flaw, so to speak. But another part of it is the business itself, in which management always seems to want to fall back on what worked in the past. Another fatal flaw.
Now the world of publishing for profit is shifting again, and again it’s bad news. Because publishing never came up with a viable business model for the Web, this latest shift may be the last that this field sees before it sinks beneath the waves.
Let me talk for a minute about advertising. Advertising is the business model that the vast majority of publications of all types uses. The most valuable thing that publishers own isn’t content, it’s the list of names, interests, and affiliations that they deliver content and ads to. If publishers have good lists, advertisers want to reach those people.
Advertising serves many different purposes. In my early days in publishing, a print ad was an expensive proposition. It wasn’t uncommon for a hardware or software company to spend ten or even twenty percent of their total revenue on print advertising. A reader interested in more information couldn’t visit a web site or send an email; rather, they would fill out a business reply card and mail it in.
This meant that print advertising was an expensive and largely unproductive way to obtain sales leads. But print advertising also served other purposes. Chief among those purposes were product awareness, mindshare, and branding. These purposes required a long term commitment by the vendor to spend money on advertising, because you achieved these over a period of years. So print advertising was stable, because those committed to these purposes signed annual advertising contracts like clockwork.
Sometime after 9/11 and the dotcom crash, advertising went through a significant shift. Leading that shift was web banner advertising, which brought down the price of sales lead generation significantly, because you didn’t have to buy a magazine to see the ad. And interested readers didn’t have to send in a business reply card; they clicked on the ad, went to the web site, or sent an email.
But the price of the other purposes (awareness, mindshare, and branding) didn’t go down substantially. In fact, they were more difficult than ever to pursue, because of all of the other companies trying to do the same things. You had to stand out from the crowd, either by spending more or doing something very different.
And in the mild post-9/11 recession, companies shifted from the expensive branding and awareness to generating sales leads. It was a lot cheaper, and had a much faster and more direct impact to the bottom line. For a while, companies largely forgot about other purposes.
Sometime in the mid-2000s the concept of user-generated content became popular. If you read blog comments, many product reviews, or read CNN i-Reporter news, then you are reading user-generated content. In online publishing, the Holy Grail is to generate millions of page views while paying for an absolute minimum (if any) of professional content. User-generated content is the current path to that goal.
So here we are today, on the eve of combining the advantages of print and web advertising with user-generated content on the next advertising platform. That platform is, of course, the mobile phone. Except for web surfing, it’s all user-generated content. Our calls, texts, IMs, and just about everything else is all generated by us.
Now we’re going to get ads on our phones (some of us already are). But with Android, Google’s ad strategy to date and its acquisition of AdMob, and Apple’s upcoming ad platform, we can all expect to see a rich collection of ads on our phones, when we’re calling, surfing, playing games, or just about any other activity.
You can reasonably ask the question of why you are paying the carriers’ access and airtime fees, and still have to see ads, and I don’t know the answer to that, other than it’s a route to still more money for the phone platforms. But I do know that advertisers have found a much better way of reaching just about anyone, at any time, without costly content and printing costs. I don’t see the traditional publishing business surviving this.
And I can’t help but wonder when Microsoft will wake up and realize that Windows is one big honking advertising platform.