February 10th, 2007

The Rapid Transformation Of Publishing Economics

by

The death of print publishing is coming, it’s just a matter of whether it happens in 5 years, 10 years, or 15 years. I’m betting it happens sooner than anyone expects. Colin Crawford, the SVP of online for IDG, posted some stunning figures:

Today the absolute dollar growth of our online revenues now exceeds the decline in our print revenues. This occurred in the US in 2006 and in Europe during the last quarter.

With this change in the revenue mix and the higher margins from our online businesses – the company is more profitably today than it has been previously.

and

In the US, our online revenue now accounts for over 35% of our total US publishing revenues. Next year, for many brands online revenues will be greater than print revenues, if fact they already are at some of our key brands and by 2009 – approximately 50% of IDG’s US revenues will come from online.

When you think about how fast the fundamental business model of publishing is changing, it’s truly mind boggling. These numbers are already moving faster than anyone expected last year — the rate of acceleration will continue to exceed expectations. Colin goes on to say:

The brutal reality that we’re facing today is the costly process of dismantling and replacing legacy operations and cultures and business models with ones with new and yet to be fully proven business models. However, we face greater risks if we don’t transform our organization and take some chances.

Print publishing is kept alive today only by inertia, because dismantling the business is a huge cost to bear, not because the business itself has any sustainable rationale. The efficiencies of digital distribution of information will soon reduce print publishing to an art form. There will be plenty of artistic reasons to publish in print, but for news and business information, it will become an utterly irrational undertaking.

  • Scott, I work for a major magazine publisher in Australia, and I publish on the subject of innovation in publishing at my site, www.skunktank.com. I'll fess up that I quoted you in this piece, at http://skunktank.typepad.com/w..., but respectfully. I agree with your sentiments, but there needs to be a good substitute product ready to replace the incumbent. Nevertheless, Australian mags have now hit 'peak print', so the slow decline is about to begin. This aside, I am enjoying your work, so thanks.

  • Ryan,

    "Feigned horror"? How horrible.


    What is the big deal about Google not doing so well in offline advertising if papers are losing ground as fast as you claim here?

    Ask Google investors who need Goog to hit its aggressive growth targets?

  • ryan

    Ok so a few days ago you feigned horror at the thought that Google might not succeed in the offline advertising world, but then in this post you say how quickly old world media such as newspapers are going downhill. What is the big deal about Google not doing so well in offline advertising if papers are losing ground as fast as you claim here?

  • People are very attached to books. You don't have to turn them on, plug them in or recharge their batteries. They are convenient and user friendly. I'm guessing they will last much longer than you imagine.

    I agree, though, that up-to-the-minute information will be delivered almost exclusively digitally, and magazines will migrate online. But books will exist in the next century.

  • Going, going ... but gone? When Google is selling newspaper ads?
    When newspapers are refocusing on local and using print to support online?

    I began my migration from print to the web in 1994 and I'm still astonished by the foolishness of dead tree media companies. But they'll continue killing trees as long as there's an audience, and there will always be an audience for print. Smaller and more specialized, perhaps; but dead, no. IDG and other business publishers are special cases. It's hard to imagine supermarket checkouts of the future without celebrity and weight-loss mags and tabs. Local newspapers will gradually convert to free circ and will drive traffic to online community sites.

    Just as predictions of the demise of television are premature, I think the same applies to print. We should continue to focus on making ours the best and most powerful medium and use non-interactive media to our benefit.

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