Predictions 2009: Death and Resurrection: (Repost)

A year end repost of some of the predictions I made for 2009. Originally posted on 1/5/09


Like the guy who is asked how he went bankrupt, ‘slowly and then quickly’, the escalating economic downturn in 2008 has really been brewing since the end of 2007, but we only fell off the cliff in fall 2008. I still believe (as I noted in January 2008) that 2007 will be viewed historically as a watershed year for media: the economic decline will further accelerate the macro trends the industry witnessed as 2007 evolved. These trends include:

• the rapid commitment to electronic delivery of content in both education and trade
• separation of ad-based and subscription-based models in both information and professional publishing
• forced concentration in the traditional publishing supply chain countered by (nascent) new channels including direct-to-consumer
• further blurring of the edges across media segments: More publishers will offer all content – not just their own - wider services and applications, and broader linking and partnerships designed to draw customers
  

The economic difficulties today are stark compared to the boisterous 2007 where the price for publishing assets kept going up and many big deals were made. During 2008, many high-profile divestitures were either abandoned (Reed Business) or ignominiously completed (TVGuide magazine sold for $1). 2009 is likely to see both the unraveling of some of the deals done in 2007 and some opportunistic buying but, more generally, the deferment of many companies' corporate development strategies.

Naturally, 2009 will see new companies emerge and there are numerous precedents for companies launched in economically challenging markets ultimately becoming very successful. Perhaps challenging the status quo is easier when the status quo is concentrating on just staying "status".

Predictions 2009

• An easy one: It gets much worse before it gets better. When times were good an oversupply of market options – particularly in retail – hid a myriad of structural problems. Right-sizing in media retailing and distribution will result in one major physical book retailer, one wholesaler and one online retailer. Media will be a sideshow compared with some other segments, particularly clothing and department stores.
  

• Another easy one: Several major city newspapers will change hands for less than the debt they carry. Local and hyper-local models will expand and further encroach on the market for traditional big city news. Coupled with linking, content licensing and arrangements with classified providers like Craigslist and Ebay, there will be a rapid expansion of the (hyper) local online news provider market.

• Out-of-work journalists will see increasing opportunities to become ‘content producers’ as more and more companies seek to enrich their sites with professional content that appeals to their target market. The typical website ‘experience’ becomes more expansive and deeper than a company catalog or press release site. Journalism as a function becomes more widely dispersed across many business segments.

• The NYTimes will either close the Boston Globe and ‘rebrand’ a NYTimes version for the Boston Market or sell it for a $1 saddled with as much debt as they can get away with. Sunday's paper will now come on Saturday: The UK market successfully went down this road and the US will (belatedly) follow.
  

• In media M&A, look for companies that have lots of cash to act opportunistically: NewsCorp, Holtzbrink, Bauer, Bonnier, Bertlesmann, Axel Springer, Lagardère, BBC (Commercial).
  

• Gathering of ‘equals’: Media owners unable to sell assets may seek to partner with another media company in the same boat and combine assets to form a new company. One combination that could be interesting is Nielsen Business Media with Reed Business Information (– pure speculation on my part). Others in this space looking for options might include Primedia, McGrawHill, Penton.

• The Obama administration will make wholesale revisions to education policy which will pain education publishers who have made particular investments in assessment companies. Long term, the assessment market will be robust; however, with explicit indications that student performance is no better for the ‘no child left behind’ programs, fundamental changes will be instituted including a more federalist direction. Ready your lobbying dollars.

• Evidence that the edges of media segments continue to overlap: Google will bid for the 2014 and 2016 Olympic broadcast rights.

• Social networking and ‘community’ building will become the CEO’s pet project as a ‘cheap’ alternative to decreased ad and marketing budgets with, predictably negative results. Senior-level misunderstandings of what constitutes effective social programs will result in efforts being treated casually. Piecemeal approaches will predominate and there will be a continued lack of cohesion of marketing with social networking. Programs backfire as customers witness the cynicism. Effective social networking is not just for Christmas.

• Professional and information publishing will effectively leverage Linkedin-like networks (possibly using their platform) to extend social networking to their closed networks. Lexis/Martindale is creating a private legal social network platform.

• Too much Linkedin with my Facebook. More people will do what I did in 2008 and build barriers around their online social networks and selectively cull ‘friends’ or ‘connections’ Sheer numbers have no logic, friendship is earned and legitimate business connections are money. Quality, not quantity, will reign. Don’t take it personally.

London's Libraries and Distributed Collections

In a letter to the editor of The Times a reader reflects on how London's libraries offered an early model for distributed physical storage (Times):

Sir, In 1946 the London metropolitan borough public libraries instigated a scheme where each of the libraries had a part of the alphabet for which they were to aim to collect all the fiction works of authors within their allocation, to enable out of print novels to be available through the inter-library loan systems. The scheme allowed libraries to send to the appropriate library fiction that was past its use-by date and therefore allowed a copy to be preserved.

Hence when Harold Pinter was looking for Murphy, a novel by Samuel Beckett, it would have been no surprise to find that a copy was sitting in the reserve stock of Bermondsey public library, since its allocation was BAJ-BEC (“Pinter’s 59-year pause”, letter, Dec 16).

Rarely did the participating libraries prior to 1988 catalogue their collections but they were known within London at least and the scheme was well used. In 1988 the scheme was enlarged so that many public libraries throughout England are participating in a “fiction reserve” scheme on a similar basis.

MediaWeek (Vol 2, No 50): Random House, Dissertations, Cormac McCarthy, Ian Dury

Random House is taking an aggressive stand on the rights they assume over digital versions of their backlists are reported in The Wall Street Journal:

In the letter, dated Dec. 11, Markus Dohle, CEO of the Bertelsmann AG publishing arm, writes that the "vast majority of our backlist contracts grant us the exclusive right to publish books in electronic formats." Mr. Dohle writes that many of the older agreements "often give the exclusive right to publish 'in book form' or 'in any and all editions.' "

and,

"I don't accept Random House's position, and I don't think anybody else will either," Mr. Sobel said. "You are entitled to the rights stated in your contract. And contracts 20 years ago didn't cover electronic rights. And the courts have already agreed with this position."

Stuart Applebaum, a spokesman for Random House, said, "We believe Random House has the right to publish our authors' backlist titles as e-books. We think we can do the best job for our authors' e-books."

The story was also covered by The NYT:

The discussions about the digital fate of Mr. Styron’s work are similar to the negotiations playing out across the book industry as publishers hustle to capture the rights to release e-book versions of so-called backlist books. Indeed, the same new e-book venture Mr. Styron’s family hopes to use has run into similar resistance from the print publisher of “Catch-22” by Joseph Heller. On Friday, Markus Dohle, chief executive of Random House, sent a letter to dozens of literary agents, writing that the company’s older agreements gave it “the exclusive right to publish in electronic book publishing formats.”Backlist titles, which continue to be reprinted long after their initial release, are crucial to publishing houses because of their promise of lucrative revenue year after year. But authors and agents are particularly concerned that traditional publishers are not offering sufficient royalties on e-book editions, which they point out are cheaper for publishers to produce. Some are considering taking their digital rights elsewhere, which could deal a financial blow to the hobbled publishing industry.

UC Berkeley: Paper is out, digital is in, when it comes to dissertations (Link)

For the last few years, Berkeley students have been able to file their ProQuest copy digitally, but Lemontt says few took advantage because they still needed to produce a perfect printed copy for the library. The move to all-electronic has been in the works for a year or more, according to Lemontt. The Graduate Council signed off on it in October.In addition to making Berkeley students' research far more widely available, going electronic is "a major step in line with campus 'green' initiatives" and also is in line with Chancellor Robert Birgeneau's directive to streamline business processes, according to an August memo from Graduate Dean Andrew Szeri to council chair Ronald Cohen.Revisions of the library's procedures made the cataloguing of electronic papers possible. The final hurdles were concerns that that research published instantly online might be more susceptible to plagiarism, and that some students might want to delay digital publication while they revise their dissertation into a publishable book.

There's a movie out about Ian Dury and an interview with his son Baxter. (Link) Cormac McCarthy talks about The Road The Road tops our pool of the decade’s best 100 books. In a rare interview, its author, Cormac McCarthy, talks about religion, fatherhood and the future of humanity. (Link)

The writer himself, however, has proved more elusive. He won’t be found at book festivals, readings and other places where novelists gather. McCarthy prefers hanging out with “smart people” outside his field, such as professional poker players and the thinkers at the Santa Fe Institute, a theoretical science foundation in New Mexico where he has been a longtime Fellow.

In recent years his circle has inched farther into Hollywood. Now, set for release in January, is a screen adaptation of The Road. As intimate as it is grim, the book tells the story of a man’s bond with his young son as the two struggle for survival years after a cataclysm has erased society. The novel won a Pulitzer Prize in 2007 and was promoted heavily by Oprah Winfrey as a surprising selection for her book club.

Watching the News (Repost)

Every Friday I am saving myself some effort by re-posting something from the archive. The following post was my first on May 17, 2006.

Watching the News:

I watch a lot of news; NY local news, NBC, BBC, Local NJ news and Jon Stewart. Virtually without fail each evening we ask ourselves while watching the BBC news 'was this even mentioned on NBC'. It is readily apparent to me that the US news - in this case NBC - is bland, bias and boring. That is not to say the comparison - in this case the BBC - doesn't have its faults but we used to watch the network news for the broader view point and a bigger national and international perspective but network news just doesn't cut it. Routinely, the BBC news will have deeper analysis and reportage about US relevant issues - particularly the situation in Iraq and will also offer perspective and insight on stories domestically - New Orleans and the illegal immigration situation. In contrast NBC and the other networks are the comic book version of the news, providing glossed over stories, bland reporting and limited coverage.

Perhaps the strangest confluence of news stories this week, Newsnight with Jon Stewart did a story on illegal border crossings from Canada to the US and interviewed some poor misguided gent who singlehandedly is holding back the tide of illegal Canadian migrants (hockey players?). In the nature of Comedy Central this was conducted tongue in cheek but in a similar vein, the BBC interviewed a similar gent earlier this week from the South who was just as hard to understand and just as confusedly dangerous.

My Apple a Daily and Action Comics

In 1997 I spent a month with Jimmy Lai aboard his rocket-like media story Apple Daily. Who is Jimmy Lai? He's the guy they said swam across from China to Hong Kong with nothing, rose up to found the down-market Gap like Giordano (which he sold for a $1.0billion) and went on to start a newspaper business (complete with his own printing presses) just as China was regaining Hong Kong.

Apple Daily was just over a year old when I was engaged as a member of a PriceWaterhouse consulting team and, even then, Apple Daily was already the most talked-about newspaper in Hong Kong. And they did it sensationally. In the weeks I was there, the scandalous and the salacious were on full color display: I will not forget the images of mobster "Big Spender," who was tried, sentenced and hanged all in the month I was there. There's only room for a summary appeal in China and to the satisfaction - no doubt - of the Apple Daily editors, the story reached its denouement in double-quick time. They promptly moved on to the next story.

Apple Daily has continued to grow and is now also published in Taiwan. The newspaper is also readily available on newsstands in New York City. In the past two weeks, Apple Daily has gained international attention for their recreations of the Tiger Woods story. These 'action comics' (my words) are amusing - and they are also typical of Apple Daily where the scandalous and salacious are often front and center. This is Apple Daily's bread and butter but while the US media seems to be 'taken' with these 'action comics', there is a little more behind the headlines. These action comics are a fairly recent feature of the Apple Daily empire and one of the earliest was a recreation of the Seattle cop killings of a few weeks ago. In total bad taste, but well within the boundaries (or lack thereof) set in the very early days of Apple Daily.

In the biggest story featured while I was in Hong Kong, the newspaper had developed a story around a laborer - no one 'important' - who got mixed up with drugs, girls and gambling. On the face of it nothing too extraordinary: But this blue collar guy had a wife and small child and Apple Daily pursued and tormented him and his family so much he threw himself out a window. This was over the course of four or five days. With a suicide on their hands, the newspaper printed a front-page apology but the 'damage' was done: Higher circulation.

Jimmy Lai and his media company Next Media are a powerful force for good in the pursuit of wider democracy for all Chinese and the elimination of political corruption and cronyism; but, the scandal-mongering is an important aspect of Apple Daily's appeal. The negative implications of the indiscriminate salaciousness have been conveniently ignored because the Woods 'action comics are funny and cute.

Houghton Mifflin Invests

A profile of Houghton Mifflin in the Irish Independent references a €350m investment supported by Enterprise Ireland for digital learning products (Link):

From simple mathematics to the intricacies of the Pythagoras' Theorem, Stevens shows how through the use of laptops in the classroom, as well as at home in their own time via social networking, kids can absorb vital knowledge at a critical stage in their development. The lessons appear as visual quizzes, puzzles and games to keep young minds engaged. Teachers can monitor their progress and ensure that struggling students are supported. Entire education clouds where teachers can share knowledge, arrange lesson plans and file reports are now being used to manage millions of students in the US. "These platforms are not just delivering content," explains Fiona O'Carroll, executive vice-president at HMH in Dublin. "They instruct their young minds and also allow teachers to assess the children and provide them with individualised learning paths. Kids with particular needs can be ushered in the direction of individualised lessons."

UK Researchers: Can't You Hear Me Knocking

A new report this week from the UK Council on Graduate Education suggests researchers are facing increasing difficulties gaining access to research materials. The report concedes that researchers have better access to search and discovery that identifies appropriate materials but (as a group) they are frequently stymied when they try to gain access. (Link)

The report’s findings show that the impact of this lack of access on the efficiency, as well as the quality, of research across the higher education sector and beyond is very real. New technological developments, including moves towards open access publishing models and the availability of e-books may help to solve some of theses problems, but there is little evidence from the report to show that they have had a positive impact to date.

And,

Many librarians, and researchers, fear that unless licensing and technical issues are resolved, moves towards a digital environment may impose new barriers, as researchers face restrictions on access to resources which would have formerly been accessible to them in print. With impending funding cuts in higher education institutions’ budgets next year, libraries are already facing increasingly difficult decisions about which subscriptions to keep as cancellations will only add to these problems for researchers. Our report shows that libraries need to ensure they can continue to provide access to content through a range of sources, including interlibrary loans and document supply services, and that they implement efficient, effective and user-friendly systems to ensure researchers can gain easy access.

An idea solution for researchers would be the implementation of a national library membership card to enable access and borrowing rights at all higher education institutions in the UK. However, our study finds that the infrastructure to provide this in higher education institutions is lacking.