I had dinner recently with a friend at a big traditional magazine publishing house. We talked about the predicament of the majors: circulations in decline; ad rates falling; a reduction in the number of pages per issue. The traditional publishing model is hanging by a thread. And as we’ve all seen, blue-chip magazines are closing their doors as they can’t make ends meet in the new world of media.
My friend works in the online division, and has lots of exposure to senior company executives. And one thing he told me surprised me: When he talks with his higher-ups, they just plain don’t acknowledge that online is the future of their business. They’re too preoccupied trying to figure out how to save their bread and butter versus figuring out how it will morph to completely different model – an online one.
Now don’t get me wrong. I’m not saying that online is going to save the traditional magazine. It’s not. The economics of online publishing are arguably even worse than traditional publishing. But that doesn’t change the fact that consumption of content is moving rapidly and unstoppably from offline to the web and mobile web; and that means that the offline publishing business is in inevitable decline.
The options for an old-school publisher are simple: they can harvest their declining businesses; or begin the hard journey of building a new business to replace them. But what is very clear is that the two cannot be done at the same time. Inevitably, the companies that will succeed in the new digital economy are the ones that are willing to make sacrifices to their existing businesses.
My favorite example of a company that is committed to this sacrifice comes from the world of semiconductors. For years, Intel demonstrated the philosophy of obsolescing their own products by creating new ones – before their competitors did. Each generation of microprocessor they produced put the prior one – just a year or two old – out of business. This is a survival skill in a fast-changing industry like semiconductors.
But decades-old publishers, steeped in their own business heritage, act as though they their world is not changing; when in fact it is changing as fast as microprocessors themselves. Is it that they don’t know, or that they don’t care?