Thursday, January 05, 2017

Predictions 2017: Subscribe To Me

The end of one year and the beginning of another always represents an opportunity to reflect and think about what the future will bring.  That is, if you've nothing better to do over the two week break for Christmas and New Year’s.   Like many others, I've been doing this for most of my career and, over the past ten years of PND's history, I've been publishing annual prognostications.  As I have said before, it is less about being right about the future than being thoughtful about the future.  Trying to think about what it all means and making sense of what you see is important to planning how your business operates and confronts change.

This year I also looked back to 2016 at some of the big stories of the year and I've decided to use a similar, shorter format for my predictions for 2017.  At the bottom of this post are links to my predictions from prior years.  Read them (and perhaps laugh).

Subscriptions Are All In:

The explosion in podcasting is an indicator for publishing – specifically of the rapid growth of subscription models for content.  According to McKinsey's annual Entertainment and Media Report, consumers are spending less to buy content and more to access it without owning it.  And, as the trend gains in momentum, any doubt or concern about ownership seems to be waning.   Subscription models are offered for everything from jets and cars, to vacation homes and movie services.  Spending to buy content fell by 8% and access to view content grew by 31% in 2015.  Access to content will overtake ownership by 2018, according to McKinsey.

How subscription models will continue to evolve and expand will be a strong theme during 2017.  According to consulting company Activate, subscription revenues represent 50% of the $1.7Tillion content market and will grow by $226B (or 5%) by 2021.  Additionally, consumer pay models (subscription) for the top 100 (by revenue) non-game apps represent 71% of app downloads and 86% of revenue generated in 2016 versus 65% and 82% in 2015.  The strength and growth of content subscription models is real and will expand beyond video and entertainment to all content markets in the coming years.

Personalisation and Opt-in Marketing

More content and technology companies will work out how to tailor content for specific users and they will do this via browser and opt-in newsletter marketing.  Driving usage of content will become a mantra - not at the expense of irrelevance - for engaged users who receive highly relevant content, which will drive high-value subscription revenues.   The NYT has been using technology to "profile" users and deliver relevant content for several years now and the Washington Post (under new management) has aggressively used technology to create opt-in marketing programs oriented around user interests.

For publishers, the effort to market their content more effectively cannot be done without the use of third-party platforms such as Twitter and Facebook.  In particular, the adoption of live events (Facebook Live) will help publishers enliven their content and also reach a much wider market - than traditional book tours, for example.   Additionally, publishers will create "news teams" to maintain (constant) activity via these new avenues to readers.  Thus, avenues such as Facebook Live, Opt-In marketing/newsletter programs and similar initiatives will become vibrant channels delivering content to specific interested groups which will, in turn, drive purchasing.  Facebook Live Audio will be particularly applicable to the expanded role audio books will play in publishers planning for 2017.

While platforms are critical and an unavoidable necessity, don't underestimate the power of newsletters and personalized content delivery.  Understanding how your users interact with your content, making sense of that and then acting on it via a variety of efforts will be a focus for publishers in 2017.  Simply counting page hits “vanity stats” is not good enough.  Renewals is where it's at.

Rights Management

For many publishers, rights management and royalty processing is a complex business process.  And things will only get worse as markets become increasingly border-less.  Managing a more complex environment of publishers, authors, companies, territories, business segments, product types, formats and many other criteria will become standard practice with each deal.   All interested parties (not least authors) expect the "Amazon experience" where information is presented in real time and in an easy-to-understand manner.  Most media and publishers are years away from achieving anything like this level of transparency, but movement in this direction will be precipitated by numerous high-profile royalties audits as well as possible financial regulation requirements.

Over the coming years, more publishers will need to replace their royalties software as well as extract more value from the rights they hold.  These two trends are not mutually exclusive.

Some other more quick thoughts:
  • It’s unlikely we'll see much consolidation in publishing this year.  S&S is probably still stuck in the Viacom mess.   If only: Pearson may be sold to private equity.
  • I expect a big shake-out in the K-12 edtech market.  Some consolidation but more failures than you can count.  The market is too saturated for (me-to) edtech products and with uncertainty over the direction of federal policy this will cause many small providers to run out of time.
  • How long can NetFlix owner(s) withstand the ever-increasing values and still not sell?  More to the point, can Apple resist buying its own content business?  If the ATT/TW deal is not approved, then does the value of NetFlix go even higher?  Stay tuned.
  • Publishers will be doing much more with data - particularly in scholarly and academic - and will use tools like Tableau to rapidly experiment with and iterate new products.
  • Will Trump's AG go after Amazon for unfair trading practices because of the Washington Post’s coverage of the Trump administration?  I'd buy that subscription.
Past year predictions:

2017: Predictions 2017: Subscribe To Me
2016: Predictions 2016: Education, China, Platforms and Blockchain.
2013: Predictions 2013: The Death of the Middle Man
2012: Predictions 2012: The Search for Attention

2011: Predictions 2011: The Growth of Intimacy
2010: Predictions 2010: Cloudy With A Chance of Alarm

2009: Predictions 2009: Death and Resurrection:
2008: Predictions 2008

2007: Predictions 2007

2007-2013: My Big Book of Posts & Predictions on Slideshare

No comments: