When Publishers Become Vendors

Dave Schankweiler, CEO and publisher of Journal Publications Inc., a Harrisburg, Pennsylvania regional publisher, remembers the day he became not just a publisher, but a vendor to publishers too.

Back in 2004, the company, which publishes the Central Penn Business Journal, Central Penn Parent, and NJ Biz, launched a new survey, called Best Companies in Pennsylvania. It used an outside survey firm to do the first report. The night the winners were presented was a huge success. "That night," Schankweiler remembers, "it was loud, and there was a countdown and a lot of excitement. And that's exactly when we decided to change the company, because we were coming down from the high of the event. We said, ‘Why don't we take this out into the market and do it as a service to other publishing companies?' "

Magazine publishers are by nature entrepreneurial types. They like to tinker with their businesses. They're incessantly launching all kinds of media products, from Web sites to custom publishing, events, databases, books, supplements, spinoffs. But there aren't a lot like Dave Schankweiler. Most media companies tend to stick to their knitting and limit their creative impulses to media products.

Some companies, though, are transforming themselves into a different kind of hybrid, media companies that have branched out into businesses traditionally occupied by publishing-industry vendors. Gulfstream Media, the Fort Lauderdale, Florida-based regional publisher is one. Gulfstream is the parent company of Magazine Manager, a popular ad-sales management software. UBM's TechWeb is another. Its sister company UBM Studios develops in-house virtual events for tech publisher UBM as well as for external clients.

The advantages are obvious. Non-traditional activities offer fertile areas for new revenue growth. Publishers have a built-in understanding of what publishing companies need, and a great network of their peers. The challenges of the approach are classical: Why get into a non-core business? Why distract, and possibly risk, your company by trying to be something you're not?

In this report, we take a look at several of these new hybrid companies.

Journal Publications Inc.
Harrisburg, Pennsylvania
Media products: Central Penn Business Journal, Central Penn Parent, NJ Biz
Non-media products: Best Companies Group, Black Rhino Web design services, PageTurnPro, a digital-magazine service

For Schankweiler, the Best Companies Group is where it got started, and he hasn't looked back yet. The company, with 105 employees and about $20 million in revenue, attributes about a third of that revenue to non-publishing sources. "We thought that with the recession and with print, we said, ‘Let's hedge our bets and see what else we can do,' " Schankweiler says. "The best thing it's done is we went through the recession with no layoffs, and we continue to be very profitable. That revenue really helped us keep doing the things we like to do."

Best Companies, says group president Peter Burke, has 36 publishing clients across the country and in Canada. "What made us appealing to other publishers is that we were publishers," Burke says. "I ran the day-to-day operations of a business journal for seven years, and we know what publishers are looking for. They want good content and they want something that will generate revenue for them. We can do the sales, the Web site, the program, the promotional advertising, the registration system, for our clients."

Equally important for the business to succeed, Burke says, is the network of publishing relationships that only a fellow publisher can tap. "The growth was purely me going to other publishers and other organizations," he says. "We started adding them by going to our publishing buddies from the Association of Area Business Publications. We also had other states who knew we were doing this and reached out to us."

Also significant, he adds, were non-publishing prospects and partners, such as human-resource associations and state chambers of commerce.

Alongside the Best Companies Group came different non-media businesses, including the Black Rhino Web-development firm, which serves state associations, state agencies and advertisers in the Journal Publications magazines. Black Rhino has about 30 clients. The PageTurnPro digital-magazine product has 300 clients, Schankweiler says.

Internally, the various business units are arranged as separate silos, with each division head reporting to Schankweiler. Only 15 of the company's 105 employees are working in the non-media businesses, with just six in the Best Companies Group, which Schankweiler describes as having "nothing to do with publishing."

Are there lessons to be imparted? Yes, decidedly so, Schankweiler says. "The key is to look at the scale. You don't want to do something if you're going to generate $100,000k or $150,000. Don't do it for $50,000. You can do that with a supplement. Think big."

Summit Media Group
Chicago
Media Products: Packaging World, Automation World, Healthcare Packaging, 
Greener Package, Shelf Impact, Contract Packaging
Non-media products: Mediadroit and LeadWise

One of the hottest new lines of business for media companies is lead-generation, where e-media advertising and communications is converted into specific leads for advertisers. This is done through now "traditional" products like Webinars and white-paper downloads, and increasingly, through automated response-based software, which serves information to Web users based on their prior browsing activities.

Many publishers have lead-generation programs and protocols in house, but few have built a lead-gen solutions business that they market to other publishers. Summit Media Group is one company that has built such a business. It created Mediadroit in 2008 to sell its in-house technology to other publishers.

Mediadroit president and Summit Media Group vice president David Newcorn built all three generations of lead-generation technology, and leads the effort to market Mediadroit's main products, LeadWise and AccelaWorks.

Newcorn describes the genesis of the business: "For years, publishers had come up to us at conferences asking if we could somehow license our lead-gen technology to them," he says. "But it wasn't until we were at a point a couple years ago looking at rebuilding our lead generation from scratch that we could make this a reality. Our thinking was, as long as we were rebuilding it, let's add the extras necessary to make it work for any publisher, regardless of ad server, content-management system, circ vendor, and other variables. Then we can bring it out into the market as a platform designed by publishers, for publishers."

The result was LeadWise, into which Summit baked several years of lessons it had learned about running a lead-gen business. The platform is built from the ground up on Drupal, Newcorn says. "We're big fans of the platform because it goes beyond CMS, and allows us to do things that wouldn't be possible with other open-source content-management systems," he says. "LeadWise has been out for a couple years now and is mature and stable. We've learned a lot about what we'd like to incorporate in the next version. We have plans on the drawing board to make the product even more flexible."

Newcorn declined to say how many publisher-customers Mediadroit has, but he described the evolving revenue model, and how the first iteration was a major misfire. In the beginning, he says, publishers were charged a fairly hefty start-up fee of $10,000, with a monthly fee that started at $1,500. Those numbers actually went up depending on how many brands a publisher had. "Publishers who looked at LeadWise loved the product, but the pricing was too much for what essentially was an unknown," Newcorn says. "The responsibility of creating a new lead-gen business was entirely squarely on the shoulders of our customer."

The combination of the high pricing, the recession, and the state of publishing in general, prevented the business from gaining as much traction as had been hoped, so Newcorn look at the vendor community for some ideas. The result was a brand-new revenue model that requires no up-front fee, no monthly fee, no annual fee, and no out-of-pocket fees. "Instead, it's a revenue share on the back end for all new revenue that came in as a result of products the publisher can sell powered by LeadWise," Newcorn says. "And to ensure that there's revenue to share, we now include templates that allow publishers to begin making money immediately out of the gate with new lead-gen products. Publishers who have looked at the new model love it."

Newcorn says he's given a lot of thought to how the new business differs from traditional publishing. "It's completely different in that we are more like a software company than a publishing company," he notes. "But since we're still a publishing company, we think we understand publishing better than any vendor ever could. It's in our DNA. I admit it's a bit schizophrenic. In a perfect world we'd have some cloning machines around here so we can put more effort into the sales and marketing end of Mediadroit. But once we sign up a client, they love the software and stay. We continually refine the product for Summit's use, and any improvements we make get rolled out across the platform for all our customers."

One area where both businesses are similar is in customer service, Newcorn says. "We bend over backwards for our media customers in our Summit Media business, and that same level of service is present in our Mediadroit business."

IDG Enterprise
Framingham, Massachusetts
Media products: CIO, Computerworld, CSO, InfoWorld, ITworld, Network World
Non-media products: LeadAccel

IDG, the technology-publishing giant, has a long history of creating non-publishing businesses, including a venture-capital firm and, in 1999, Accela Communications, marketing technology company that provides software and services to produce, deliver and measure interactive video communications.

Now, its IDG Enterprises unit has created a new business called LeadAccel, a lead-production business that includes finding the leads, scoring them and nurturing the leads once they're found. Unlike the other two companies above, which are targeted at other publishers, this service is aimed at IDG Enterprise advertisers.

But certain characteristics of the business are similar to Mediadroit and Journal Publications. For example, says Brian Glynn, SVP, Digital, and publisher of IDG Enterprise. "Part of this is viewing IDG Enterprise not as a publisher but as a digital-centric organization," he says. "The database is the focal point of our business. As we spend more time with clients, and get deeper into their businesses, it became a sales management role and us helping to fill the sales funnel for a marketing organization."

And IDG's status as a media company is "hugely valuable," Glynn adds. Lead-generation businesses succeed or fail on the basis of quality content, and media companies are best equipped to deliver that content. "It's what brings users to our sites," Glynn says. "It all dovetails."

Sales of LeadAccel will be handled by existing IDG Enterprise sales professionals and it will be sold as part of the marketing continuum that includes print, events and a variety of e-media products.

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